Justia Contracts Opinion Summaries

The United States Court of Appeals for the Third Circuit certified two questions of New Jersey law to the New Jersey Supreme Court arising from two putative class actions brought under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA). Plaintiffs David and Katina Spade claimed that on or about April 25, 2013, they purchased furniture from a retail store owned and operated by defendant Select Comfort Corporation. They alleged that Select Comfort’s sales contract included the language prohibited by N.J.A.C. 13:45A-5.3(c). The Spades also alleged the sales contract that Select Comfort provided to them did not include language mandated by N.J.A.C. 13:45A-5.2(a) and N.J.A.C. 13:45A-5.3(a). The Third Circuit asked: (1) whether a violation of the Furniture Delivery Regulations alone constituted a violation of a clearly established right or responsibility of the seller under the TCCWNA and thus provided a basis for relief under the TCCWNA; and (2) whether a consumer who receives a contract that does not comply with the Furniture Delivery Regulations, but has not suffered any adverse consequences from the noncompliance, an “aggrieved consumer” under the TCCWNA? The New Jersey Supreme Court answered the first certified question in the affirmative and the second certified question in the negative. View "Spade v. Select Comfort Corp." on Justia Law

Linderman bought an Indianapolis house in 2004 and lived there with her ex-husband, their children, and her parents. In 2013, Linderman left and stopped paying the mortgage loan. The others left in 2014. The unoccupied structure was vandalized. U.S. Bank, which owns the note and mortgage, started foreclosure proceedings. The vandalism produced insurance money that was sent to the Bank. The city notified Linderman of code violations. Linderman hired a contractor. In 2015 the Bank disbursed $10,000 for repairs. The contractor abandoned the job. The house was vandalized twice more; a storm damaged the roof. Linderman has not hired a replacement contractor or asked the Bank for additional funds but inquired about the status of the loan and the insurance money. The Bank sent a response. Asserting that she had not received that response, Linderman sued under the Real Estate Settlement Procedures Act, 12 U.S.C. 2605(e)(1)(B). The Seventh Circuit affirmed the rejection of her claims. None of Linderman’s problems with her marriage and mental health can be traced to the Bank. Linderman does not explain how earlier access to the Bank’s record of the account could have helped her; some of her asserted injuries are outside the scope of the Act. The contract between Linderman and the Bank, not federal law, determines how insurance proceeds must be handled. Contract law also governs the arrangement between Linderman and the contractor. View "Floyd v. U.S. Bank National Association" on Justia Law

At age 56, Newman purchased a long-term-care insurance plan MetLife, opting for one of MetLife’s non-standard options for paying her insurance premiums, “Reduced-Pay-at 65.” From the outset, Newman paid the elevated premium associated with her Reduced-Pay option. When she reached age 65, her premium was cut in half. When Newman was 67 years old, she was startled to discover that MetLife that year more than doubled her insurance premium. The Seventh Circuit reversed the dismissal of Newman’s proposed class action, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The allegations raised in the complaint were enough to entitle Newman to prevail on the liability phase of her contract claim and to go forward on her remaining claims. The policy language is at least ambiguous, because it can be read reasonably to fix a person’s premium, if she had opted for the Reduced-Pay option. Illinois construes ambiguous contracts against the insurer. Newman’s complaint also alleged facts that plausibly show that MetLife’s policy was both deceptive and unfair under the Illinois Consumer Fraud Act and adequately alleged fraudulent concealment and reasonable reliance. View "Newman v. Metropolitan Life Insurance Co" on Justia Law

A seller’s fraudulent statements about the fitness of a vehicle for the purpose for which it was purchased make disclaimers in purchase documents stating that the buyer purchased the vehicle “as is” ineffective.The district court in this case awarded relief to the buyer on both fraud and breach of warranty theories. The Supreme Court affirmed, holding (1) the buyer’s fraudulent statements about the fitness of the vehicle being sold for the purpose for which the vehicle was purchased made the “as is” disclaimers of implied warranties in the purchase documents ineffective under Minn. Stat. 336.2-316(3)(a); and (2) under the Uniform Commercial Code, a party may seek remedies for fraud, including breach of warranty, even after the rescission of a purchase contract, and therefore, the district court did not err in awarding damages under both fraud and breach of an implied warranty theories of liability. View "Sorchaga v. Ride Auto, LLC" on Justia Law

A wine dealer sold millions of dollars’ worth of counterfeit wine to an unsuspecting wine collector. When the collector discovered the fraud, he filed an insurance claim based on his “Valuable Possessions” property insurance policy. The insurance company denied the claim. The collector sued for breach of contract. The trial court ruled in favor of the insurance company, sustaining its demurrer. The Court of Appeal concurred with the trial court: the collector suffered a financial loss, but there was no loss to property that was covered by the property insurance policy. View "Doyle v. Fireman's Fund Insurance Co." on Justia Law

After paying a total of $15,493.00 on his $5,000 loan, MacDonald filed a putative class action concerning the loan agreement. He cited RICO and New Jersey state usury and consumer laws, arguing that the agreement is usurious and unconscionable for containing a provision requiring that all disputes be resolved through arbitration conducted by a representative of the Cheyenne River Sioux Tribe (CRST) and a clause that delegates questions about the arbitration provision’s enforceability to the arbitrator. No CRST arbitral forum exists. The agreement also purported to waive all of the borrower’s state and federal statutory rights. The district court denied a motion to compel arbitration. The Third Circuit affirmed, concluding that the agreement directs arbitration to an illusory forum without a provision for an alternative forum, and the forum selection clause is not severable, so that the entire agreement to arbitrate, including the delegation clause, is unenforceable. View "MacDonald v. Cashcall Inc." on Justia Law

After paying a total of $15,493.00 on his $5,000 loan, MacDonald filed a putative class action concerning the loan agreement. He cited RICO and New Jersey state usury and consumer laws, arguing that the agreement is usurious and unconscionable for containing a provision requiring that all disputes be resolved through arbitration conducted by a representative of the Cheyenne River Sioux Tribe (CRST) and a clause that delegates questions about the arbitration provision’s enforceability to the arbitrator. No CRST arbitral forum exists. The agreement also purported to waive all of the borrower’s state and federal statutory rights. The district court denied a motion to compel arbitration. The Third Circuit affirmed, concluding that the agreement directs arbitration to an illusory forum without a provision for an alternative forum, and the forum selection clause is not severable, so that the entire agreement to arbitrate, including the delegation clause, is unenforceable. View "MacDonald v. Cashcall Inc." on Justia Law

In this case involving an arbitration provision in short-term loan contracts the Supreme Court affirmed the judgment of the court of appeals ruling (1) the borrowers’ claims against the lender came within the arbitration provision, and (2) the lender did not waive its right to arbitrate by providing information to the district attorney that checks written to the lender by the borrowers had been returned for insufficient funds.The borrowers sued the lender, claiming that the lender wrongfully used the criminal justice system to collect unpaid loans by filing false charges against them. The lender responded by filing a motion to compel arbitration. The trial court denied the motion, concluding that the arbitration clause was inapplicable because the borrowers' claims related solely to the lender’s illegal use of the criminal justice system and that the lender waived its right to arbitration by substantially invoking the judicial process. The court of appeals reversed. The Supreme Court affirmed, holding (1) the borrowers’ claims were within the scope of the arbitration provision; and (2) the lender did not substantially invoke the judicial process, and therefore, there was no evidence to support the trial court’s finding the the lender waived its right to arbitrate. View "Henry v. Cash Biz, LP" on Justia Law

In this case involving an arbitration provision in short-term loan contracts the Supreme Court affirmed the judgment of the court of appeals ruling (1) the borrowers’ claims against the lender came within the arbitration provision, and (2) the lender did not waive its right to arbitrate by providing information to the district attorney that checks written to the lender by the borrowers had been returned for insufficient funds.The borrowers sued the lender, claiming that the lender wrongfully used the criminal justice system to collect unpaid loans by filing false charges against them. The lender responded by filing a motion to compel arbitration. The trial court denied the motion, concluding that the arbitration clause was inapplicable because the borrowers' claims related solely to the lender’s illegal use of the criminal justice system and that the lender waived its right to arbitration by substantially invoking the judicial process. The court of appeals reversed. The Supreme Court affirmed, holding (1) the borrowers’ claims were within the scope of the arbitration provision; and (2) the lender did not substantially invoke the judicial process, and therefore, there was no evidence to support the trial court’s finding the the lender waived its right to arbitrate. View "Henry v. Cash Biz, LP" on Justia Law

The Third Circuit Court of Appeals certified a question of Pennsylvania law to the Pennsylvania Supreme Court. Appellant Jobe Danganan’s contracted with Appellee Guardian Protection Services (“Guardian”), a Pennsylvania-headquartered business, for home security equipment and services at his then-home in Washington, D.C. The contract signed by Appellant, a standardized form agreement employed by Guardian, contained, inter alia, a choice-of-law provision, stating that the “Agreement shall be governed by the laws of Pennsylvania.” Another clause required that any suit or legal proceeding pertaining to the Agreement be brought in the other party’s district or county of residence and mandated that the parties consent to jurisdiction in such venue. Prior to the expiration of the Agreement’s purported three-year initial term, Appellant moved to California and sold his Washington, D.C. house, notifying Guardian of his intent to cancel the contract and related home protection services. However, Guardian continued to bill Appellant, citing provisions of the Agreement that it claimed authorized ongoing charges through the contract’s term, regardless of cancellation attempts. Appellant filed a complaint in the Court of Common Pleas of Philadelphia County on behalf of himself and a putative class of nationwide plaintiffs who were subject to the same form contract. His claims for relief were predicated exclusively on Pennsylvania statutory grounds, namely, the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL") and Pennsylvania’s Fair Credit Extension Uniformity Act. The matter was removed to federal district court, and Guardian moved to dismiss, arguing that Appellant had not, pursuant to the UTPCPL, demonstrated a "sufficient nexus" between the Commonwealth and the improper conduct alleged in the complaint. In response to the first certified question, the Pennsylvania Supreme Court held that a non- Pennsylvania resident may bring suit under the UTPCPL against a Commonwealth-headquartered business based on transactions that occurred out-of-state. Furthermore, the Court concluded that its answer to the first issue eliminated the predicate to the second question certified for review. The matter was thus returned to the Third Circuit Court of Appeals. View "Danganan v. Guardian Protection Svc." on Justia Law