Justia Contracts Opinion Summaries

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

In this action challenging an insurance company’s doubling of Plaintiff’s insurance premium, the Seventh Circuit reversed the district court’s dismissal of Plaintiff’s complaint for failure to state a claim, holding that Plaintiff was entitled to relief on her contract claim and that the allegations Plaintiff raised were enough to permit her to go forward on her other theories.When Plaintiff was sixty-seven years old, she discovered that Metropolitan Life Insurance Company (MetLife) more than doubled her insurance premium. Plaintiff brought this lawsuit against MetLife on behalf of herself and a proposed class, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The district court granted MetLife’s motion to dismiss for failure to state a claim, concluding that the insurance policy unambiguously permitted MetLife to raise Plaintiff’s premium. The First Circuit disagreed, holding that the allegations raised in the complaint were enough to entitle Plaintiff to prevail on the liability phase of her contract claim and to go forward on her remaining claims. View "Newman v. Metropolitan Life Insurance Co." on Justia Law

Plaintiff filed suit against CarMax, alleging breaches of express and implied warranties, intentional and negligent misrepresentation, breach of contract, unfair competition under Business and Professions Code section 17200 (UCL), and a violation of the Consumer Legal Remedies Act (CLRA). When plaintiff purchased her car at a CarMax dealership, she was not informed that there was an outstanding safety recall relating to the stop lamp switch in the vehicle. In regard to the alleged breach of the implied warranty of merchantability, the Court of Appeal concluded that CarMax's express limitations on the remedies available applied to such a breach. The court explained that plaintiff obtained the remedy authorized under the contract and its limitations for a breach of warranty. However, plaintiff alleged sufficient facts to establish CarMax engaged in unfair or deceptive practices in violation of the CLRA, and plaintiff pleaded sufficient facts to establish CarMax had a duty to disclose the safety recall. Finally, plaintiff stated a cause of action under the UCL where the violation of the CLRA served as the predicate violation of law necessary to establish the unlawful practice variety of unfair competition that was actionable under the UCL. Therefore, the court reversed the trial court's judgment. View "Gutierrez v. CarMax Auto Superstores California" on Justia Law

After RAC Acceptance East, LLC swore out a warrant for Mira Brown’s arrest for theft by conversion of furniture that she had rented from RAC, Brown filed a lawsuit against RAC alleging malicious prosecution and other torts. The trial court entered an order granting RAC’s motion to compel Brown to arbitrate her claims pursuant to the arbitration agreement incorporated into the parties’ rental agreement. The Court of Appeals affirmed that order, concluding that whether RAC had waived its right to demand arbitration by its conduct in initiating the related criminal proceeding against Brown was a matter for the court to decide and that the trial court had correctly ruled that RAC did not waive arbitration. The Georgia Supreme Court granted certiorari, and affirmed the Court of Appeals’ judgment on the ground that the delegation provision in the parties’ arbitration agreement clearly gave the arbitrator, not the courts, the authority to determine that RAC did not waive by prior litigation conduct its right to seek arbitration, and the arbitrator’s decision on the waiver question could not be properly challenged as legally erroneous. View "Brown v. RAC Acceptance East, LLC" on Justia Law