Justia Contracts Opinion Summaries

The Supreme Court accepted certified questions from the United States Court of Appeals for the Ninth Circuit in this arbitration dispute, holding that direct benefits estoppel cannot be invoked in a garnishment action to bind the judgment creditor to the terms of the contract because applying the doctrine in this context would contravene Arizona's statutory garnishment scheme.Specifically, the Court answered that in a garnishment action by a judgment creditor against the judgment debtor's insurer claiming that coverage is owed under an insurance policy where the judgment creditor is not proceeding on an assignment of rights, the insurer cannot invoke the doctrine of direct benefits estoppel to bind the judgment creditor to the terms of the insurance contract. View "Benson v. Casa De Capri Enterprises, LLC" on Justia Law

Caldwell signed an agreement to obtain a bail bond for her friend and was unable to pay the premiums. BBBB began collection efforts. Caldwell filed a putative class action. The trial court enjoined BBBB from enforcing bail bond premium financing agreements entered into by Caldwell and other similarly situated persons who had cosigned on behalf of an arrestee without having first been provided with notice under Civil Code 1799.91: if a creditor obtains the signature of more than one person on a consumer credit contract, and the signatories are not married, the creditor must provide the cosigner with a specified cosigner notice describing the financial risks of the transaction.The court of appeal affirmed, rejecting BBBB’s argument that because the Legislature adopted a comprehensive scheme to regulate the conduct of bail bond licensees, it intended to exclude from such transactions the consumer protections applicable to consumer credit contracts. A bail bond premium financing agreement between a cosigner and the bail bond agent is a consumer credit contract subject to the notice provision of section 1799.91 and related statutory protections. While acknowledging that it decision may upend business expectations for bail bond agents, the court declined to apply the injunction only on a prospective basis. View "BBBB Bonding Corp. v. Caldwell" on Justia Law

Plaintiff filed suit under the Electronic Fund Transfer Act (EFTA) against JPMorgan Chase Bank, alleging that she was the victim of unauthorized electronic fund transfers from her checking account at Chase. Chase reimbursed plaintiff for some of those losses, but refused to repay $300,000 of the funds stolen from her account. The district court dismissed plaintiff's complaint at the pleading stage on the ground that her lengthy delay in reporting the unauthorized withdrawals to Chase barred her claims as a matter of law.The Ninth Circuit concluded that the district court misinterpreted the relevant provision of the EFTA and reversed the dismissal of plaintiff's EFTA claim. The panel concluded that, under 15 U.S.C. 1693g(a), a consumer may be held liable for unauthorized transfers occurring after the 60-day period only if the bank establishes that those transfers "would not have occurred but for the failure of the consumer" to timely report the earlier unauthorized transfer reflected on her bank statement. In this case, plaintiff met her pleading burden by alleging facts plausibly suggesting that even if she had reported an unauthorized transfer within the 60-day period, the subsequent unauthorized transfers for which she sought reimbursement would still have occurred. The panel affirmed the district court's dismissal of plaintiff's state law claims, concluding that plaintiff's claim for breach of contract failed because a Privacy Notice appended to her Deposit Account Agreement did not impose any substantive duties on Chase. Furthermore, plaintiff's claim for breach of the implied covenant of good faith and fair dealing failed because the Deposit Account Agreement expressly permitted Chase to close plaintiff’s accounts. View "Widjaja v. JPMorgan Chase Bank, N.A." on Justia Law

Plaintiff Canuto Martinez successfully sued a car dealership, Defendant Larry H. Miller Chrysler Dodge Jeep Ram 104th (“LHM”), for violating section 6-1-708(1)(a), C.R.S. (2021), of the Colorado Consumer Protection Act (“CCPA”). The issue this case presented for the Colorado Supreme Court's review was whether the judgment was final for purposes of appeal when the district court determined that Martinez, as the prevailing plaintiff, was entitled to an award of attorney fees under the CCPA, but the court had not yet determined the amount of those fees. The Supreme Court resolved the tension between Baldwin v. Bright Mortgage Co., 757 P.2d 1072, 1074 (Colo. 1988) and Ferrell v. Glenwood Brokers, Ltd., 848 P.2d 936, 940–42 (Colo. 1993) by reaffirming the bright-line rule established in Baldwin: a judgment on the merits is final for purposes of appeal notwithstanding an unresolved issue of attorney fees. To the extent the Court's opinion in Ferrell deviated from Baldwin, "its approach lacks justification and generates uncertainty, thus undermining the purpose of Baldwin’s bright-line rule." The Court concluded that both litigants and courts were best served by the bright-line rule adopted in Baldwin. The Court therefore overruled Ferrell and the cases that followed it to the extent those cases deviated from Baldwin’s rule concerning the finality of a judgment for purposes of appeal. Applying the Baldwin rule here, the Court affirmed the judgment of the court of appeals dismissing LHM’s appeal in part as untimely, though under different reasoning. View "LHM Corp v. Martinez" on Justia Law

Sandra Gleason filed suit against Charles Halsey and Jim McDonough d/b/a Jim McDonough Home Inspection ("McDonough"), seeking to recover for damage that Gleason allegedly incurred as a result of defendants' allegedly negligent and/or fraudulent conduct associated with Gleason's purchase of a house from Halsey and McDonough's inspection of the house. Although Gleason's claims against Halsey and McDonough involve different legal theories, the issue underlying the claims was essentially the same: whether the house was inspected. The issue underlying Gleason's claims against Halsey was whether McDonough's inspection of the house could be credited to Gleason for purposes of determining whether Gleason may assert an argument under the health or safety exception to the doctrine of caveat emptor; the issue underlying Gleason's claims against McDonough appeared to be whether McDonough owed Gleason a duty in inspecting the house or in consulting with Gleason as she personally inspected the house. The Alabama Supreme Court found that Gleason's claims against Halsey, the judgment on which was certified as final under Rule 54(b), and Gleason's claims against McDonough that remain pending in the circuit court "are so closely intertwined that separate adjudication would pose an unreasonable risk of inconsistent results." As a result, the Court concluded that the circuit court exceeded its discretion in certifying the June 23, 2021, order granting Halsey's summary-judgment motion as final. The Court therefore dismissed the appeal. View "Gleason v. Halsey" on Justia Law

The federally-recognized Native American Tribe (in California) started an online lending business, allegedly operated by non-tribal companies owned by non-tribal Defendants on non-tribal land. The Plaintiffs are Virginia consumers who received online loans from tribal lenders while living in Virginia. Although Virginia usury law generally prohibits interest rates over 12%, the interest rates on Plaintiffs’ loans ranged from 544% to 920%. The Plaintiffs each electronically signed a “loan agreement,” “governed by applicable tribal law,” and containing an “Arbitration Provision.” The borrowers defaulted and brought a putative class action against tribal officials and two non-members affiliated with the tribal lenders.The district court denied the defendants’ motion to compel arbitration and motions to dismiss on the ground of tribal sovereign immunity except for a Racketeer Influenced and Corrupt Organizations Act (RICO) claim. The Fourth Circuit affirmed. The choice-of-law clauses of this arbitration provision, which mandate exclusive application of tribal law during any arbitration, operate as prospective waivers that would require the arbitrator to determine whether the arbitration provision impermissibly waives federal substantive rights without recourse to federal substantive law. The arbitration provisions are unenforceable as violating public policy. Substantive state law applies to off-reservation conduct, and although the Tribe itself cannot be sued for its commercial activities, its members and officers can be. Citing Virginia’s interest in prohibiting usurious lending, the court refused to enforce the choice-of-law provision. RICO does not give private plaintiffs a right to injunctive relief. View "Hengle v. Treppa" on Justia Law

The Zylstras purchased their RV from a non-party dealership for $91,559.15. A one-year warranty covered portions of the RV manufactured by DRV. “Written notice of defects subject to warranty coverage must be given to the selling dealer or DRV … within 30 days after the defect is discovered.” The owner is required to take the RV to the selling dealer or factory for repair. Each DRV vehicle is custom-built for the purchaser. The Zylstras took the vehicle in for punch-list items and for warranty repairs. During a subsequent long trip, Zylstra discovered that the black waste tank valve was leaking and that sewage had been leaking into the insulation throughout the RV's underbelly. He could not find a DRV authorized dealer but an independent mobile technician came and completed the repair. After the leak, the Zylstras stopped using the RV out of concern for their health. They contend that it is not, and never has been, fit for its ordinary purpose of recreational use.They filed a complaint alleging breach of express and implied warranty, violation of the Magnuson-Moss Warranty Act (MMWA), and violation of state consumer protection laws. The Seventh Circuit affirmed summary judgment in favor of DRV. Even in the light most favorable to the Zylstras, DRV never had a reasonable opportunity to repair the defects as required under the warranty. View "Zylstra v. DRV, LLC" on Justia Law

After completing MoneyGram's Transfer Send Form, Fisher, a 63-year-old veteran with poor eyesight, initiated Moneygram money transfers at California Walmart stores, one for $2,000 to a Georgia recipient, and another for $1,530 to a Baton Rouge recipient. The funds were delivered to the intended recipients. Fisher never turned over the Send Form to read the Terms and Conditions, which included an arbitration requirement. He would have been unable to read the six-point print without a magnifying glass. Fisher sued MoneyGram, claiming that the transfers were induced by a “scammer,” and that MoneyGram knew its system was used by scammers but failed to warn or protect customers; MoneyGram’s service was used frequently in fraudulent transactions because the money was immediately available at a Walmart store or other MoneyGram outlet. Other services (bank transfers) place a temporary hold on funds to discourage fraudulent transactions. Fisher alleged MoneyGram had been the subject of an FTC injunction, requiring it to maintain a program to protect its consumers.Fisher’s class action complaint cited the unfair competition law. The court of appeal affirmed the denial of MoneyGram’s petition to compel arbitration. The provision was unenforceable as procedurally and substantively unconscionable, and not severable. The small font, placement, and “take it or leave it nature” were “indications” of procedural unconscionability. The one-year limitations period, a requirement that any plaintiff pay arbitration costs and fees, and waiver of attorneys’ fees were substantively unconscionable “in the aggregate.” View "Fisher v. MoneyGram International, Inc." on Justia Law

The United States Court of Appeals for the Tenth Circuit certified a question of law to the Oklahoma Supreme Court on whether Progressive Northern Insurance Company's Underinsured Motorist (UM) Exclusion--which operated to deny uninsured motorist coverage to insureds who recover at least the statutorily mandated minimum in the form of liability coverage--contravened Oklahoma's Uninsured Motorist Statute, codified at 36 O.S. section 3636. The Supreme Court responded "yes:" Because of the sweeping nature of the UM Exclusion contained in the insurance policy at issue, Progressive found a way to entirely avoid providing the promised coverage. "[A]n insurer in Oklahoma cannot deprive its policyholder of uninsured-motorist coverage for which a premium has been paid through an exclusion that effectively erases its policyholder's choice to purchase that coverage in the first place. We conclude that Progressive's UM Exclusion contravenes section 3636 and is therefore void as against public policy." View "Lane v. Progressive Northern Ins. Co." on Justia Law

Craig Stark entered into a contract with McCarthy Corporation to construct a storage facility for recreational vehicles and boats. The relationship turned sour after McCarthy sent Stark an invoice for work Stark believed he had already paid for in full. After the parties were unable to resolve their dispute, Stark terminated McCarthy’s contract. McCarthy then filed a lien against Stark’s property and brought suit for breach of contract and to foreclose its lien. Stark, Stark Investment Group, and U.S. Bank, Stark’s construction lender on the project, counterclaimed for breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent misrepresentation, slander of title by the recording of an unjust lien, and breach of the Idaho Consumer Protection Act (“ICPA”). After a bench trial, the district court largely agreed with Stark's counterclaims and dismissed McCarthy's complaint. McCarthy appealed the district court’s findings, damages award, and attorney fees award. Finding no reversible error, the Idaho Supreme Court affirmed the district court's holdings that McCarthy breached the contract between the parties and McCarthy violated the ICPA. View "McCarthy Corporation v. Stark Investment Group" on Justia Law