Justia Contracts Opinion Summaries

Debra Stevenson and Eugene Smith co-own a property for which Stevenson initially took out a loan from Wells Fargo. After defaulting, she refinanced with Fremont Investment & Loan, which paid off the Wells Fargo loan. Stevenson defaulted again and filed for bankruptcy. HSBC Bank, as Fremont's successor, sought to enforce its interest in the property through equitable subrogation, claiming the right to stand in Wells Fargo's position.In bankruptcy court, HSBC was found to be the holder of the note and entitled to equitable subrogation for the amount used to pay off the Wells Fargo loan. The federal district court adopted this decision, and the D.C. Circuit affirmed, holding that HSBC could enforce its interest despite Fremont's knowledge of Smith's co-ownership and refusal to sign the loan documents.The District of Columbia Court of Appeals reviewed the Superior Court's grant of summary judgment to HSBC. The court held that Stevenson and Smith were collaterally estopped from relitigating issues decided in federal court, including HSBC's standing and entitlement to equitable subrogation. The court also rejected their Truth in Lending Act (TILA) rescission argument, as it had been previously litigated and decided against them. The court affirmed the Superior Court's ruling, finding no genuine issues of material fact and that HSBC was entitled to judgment as a matter of law. View "Stevenson v. HSBC Bank USA" on Justia Law

Kenneth and Janet Lathrop purchased a motorhome from a dealer in California, manufactured by Thor Motor Coach, Inc. They later sued the dealer and Thor under the Song-Beverly Consumers Warranty Act and the Consumer Legal Remedies Act (CLRA), alleging defects in the motorhome and failure to perform necessary repairs. Thor moved to stay the action based on a forum selection clause in its warranty, which designated Indiana as the exclusive forum for disputes and included a jury trial waiver and an Indiana choice-of-law clause. Thor acknowledged these provisions were unenforceable under California law and offered to stipulate that California substantive rights would apply in an Indiana court.The Superior Court of Los Angeles County granted Thor’s motion to stay, finding the forum selection clause mandatory and not unreasonable. The court placed the burden on the Lathrops to show that enforcing the clause was unreasonable. The Lathrops appealed, arguing that the trial court applied the wrong standard and that Thor did not meet its burden to show that litigating in Indiana would not diminish their unwaivable rights under California law.The California Court of Appeal, Second Appellate District, Division Seven, reviewed the case and concluded that the trial court erred by placing the burden on the Lathrops instead of Thor. The appellate court held that Thor did not meet its burden to show that litigating in Indiana would not substantially diminish the Lathrops’ rights under the Song-Beverly Act and the CLRA. The court also found that enforcing the forum selection clause based on Thor’s proposed stipulation would violate California public policy and that the stipulation was insufficient to protect the Lathrops’ unwaivable statutory rights. Consequently, the appellate court reversed the trial court’s order granting the motion to stay and directed the trial court to deny the motion. View "Lathrop v. Thor Motor Coach, Inc." on Justia Law

Santanu Das, a sales associate at Tata Consultancy Services, participated in a compensation incentive plan that promised a bonus exceeding $400,000 for achieving certain sales targets. Das met the target but was paid less than $100,000. He sued Tata under Illinois law, which requires employers to pay all agreed-upon compensation. Tata argued that disclaimers in the incentive plan negated any agreement to pay the bonus. The district court dismissed Das’s complaint, leading to this appeal.The United States District Court for the Northern District of Illinois initially dismissed Das’s claims without prejudice. Das amended his complaint, adding breach of contract and fraudulent misrepresentation claims. The district court dismissed the repleaded claims with prejudice but allowed Das to replead the new claims. Das chose to appeal only the Wage Act and fraudulent misrepresentation claims. The district court found that the disclaimers in the incentive plan prevented the formation of an agreement to pay wages and that Das’s fraudulent misrepresentation claim lacked the necessary particularity.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court found that Illinois law does not treat disclaimers as necessarily preventing the formation of mutual assent to terms. The court noted that past practices between Das and Tata could establish mutual assent. The court concluded that Das had plausibly alleged that Tata agreed to pay him the full bonus, reversing the district court’s dismissal of the Wage Act claim. However, the court affirmed the dismissal of the fraudulent misrepresentation claim, as Das failed to allege a scheme to defraud.The Seventh Circuit reversed the district court’s decision on the Wage Act claim and remanded the case for further proceedings. The dismissal of the fraudulent misrepresentation claim was affirmed. View "Das v. Tata Consultancy Services Limited" on Justia Law

Michael Terpin, a cryptocurrency investor, sued AT&T Mobility, LLC after hackers gained control over his phone number through a fraudulent "SIM swap," received password reset messages for his online accounts, and stole $24,000,000 of his cryptocurrency. Terpin alleged that AT&T failed to adequately secure his account, leading to the theft.The United States District Court for the Central District of California dismissed some of Terpin's claims for failure to state a claim and later granted summary judgment against him on his remaining claims. The court dismissed Terpin's fraud claims and punitive damages claim, holding that he failed to allege that AT&T had a duty to disclose or made a promise with no intent to perform. The court also held that Terpin failed to allege facts sufficient to support punitive damages. On summary judgment, the court ruled that Terpin's negligence claims were barred by the economic loss rule, his breach of contract claim was barred by the limitation of liability clause in the parties' agreement, and his claim under Section 222 of the Federal Communications Act (FCA) failed because the SIM swap did not disclose any information protected under the Act.The United States Court of Appeals for the Ninth Circuit affirmed the district court's dismissal of Terpin's fraud claims and punitive damages claim, agreeing that Terpin failed to allege a duty to disclose or an intent not to perform. The court also affirmed the summary judgment on Terpin's breach of contract claim, holding that consequential damages were barred by the limitation of liability clause. The court affirmed the summary judgment on Terpin's negligence claims, finding them foreclosed by the economic loss rule. However, the Ninth Circuit reversed the summary judgment on Terpin's claim under Section 222 of the FCA, holding that Terpin created a triable issue over whether the fraudulent SIM swap gave hackers access to information protected under the Act. The case was remanded for further proceedings on this claim. View "TERPIN V. AT&T MOBILITY LLC" on Justia Law

Douglass Sloan provided a $60,000 short-term loan to Carlos Allen for property rehabilitation, with a 60-day term and a 20% fixed return rate. If unpaid within 60 days, the loan accrued an additional 2% every subsequent 60 days. The loan was subject to the maximum interest rate allowed by D.C. law if not repaid within 60 days. Sloan sought to collect the debt, leading to a dispute over whether the loan's interest rate was usurious, as D.C. law caps interest rates at 24% per annum.The Superior Court of the District of Columbia initially ruled that Allen had waived his usury defense by not raising it for nearly seven years. The court awarded Sloan $256,946.46 plus $97,450 in attorney’s fees and costs. On appeal, the District of Columbia Court of Appeals upheld the attorney’s fees but remanded the case for reconsideration of the usury defense waiver. The trial court then found no substantial prejudice to Sloan from Allen’s delay and ruled the loan usurious, reducing the award to $39,026.46, the remaining principal, plus the affirmed attorney’s fees.The District of Columbia Court of Appeals reviewed the case again. It upheld the trial court’s findings that Allen had not waived his usury defense and that the loan was usurious, as it effectively charged a 34.7% interest rate in its first year. The court rejected Sloan’s arguments against these findings but agreed that Sloan was entitled to post-judgment interest on the award from the date of the initial October 2020 judgment. The court also dismissed Allen’s cross-appeal, which challenged the validity of the loan and the attorney’s fees, as these issues had been resolved in a prior decision. The case was remanded for the imposition of post-judgment interest on the $39,026.46 award. View "Sloan v. Allen" on Justia Law

Ken Johansen filed a lawsuit against Liberty Mutual, alleging violations of the Telephone Consumer Protection Act (TCPA). Liberty Mutual had contracted with Digitas, Inc. for marketing services, which included ensuring compliance with legal requirements. Johansen's complaint stemmed from telemarketing calls he received, which were traced back to Spanish Quotes, a subcontractor of Digitas. Liberty Mutual sought indemnification from Digitas under their Master Services Agreement (MSA), which included a warranty and indemnification clause.The United States District Court for the District of Massachusetts reviewed the case and found that Digitas had breached its contractual duty to indemnify Liberty Mutual. The court partially granted Liberty Mutual's motion for summary judgment, determining that Digitas had violated its warranty by allowing telemarketing practices that led to Johansen's complaint. The court also found that Liberty Mutual had met the preconditions for triggering Digitas's indemnity obligation. However, the court did not determine the damages and closed the case, leading Digitas to appeal.The United States Court of Appeals for the First Circuit reviewed the appeal. The court affirmed the district court's decision, agreeing that Digitas breached its warranty and that Liberty Mutual satisfied the preconditions for indemnification. The appellate court concluded that the MSA did not require a finding of actual liability for the indemnity obligation to be triggered. The court also found that Liberty Mutual had provided Digitas with the opportunity to control the defense, which Digitas did not properly assume. The case was remanded for further proceedings to address any remaining issues, including the determination of damages. View "Liberty Mutual Insurance v. Digitas, Inc." on Justia Law

In this case, the plaintiff purchased a new 2014 Kia Optima and soon experienced issues with the vehicle's transmission. Despite multiple visits to the dealership, the problem persisted. The plaintiff requested a buyback from Kia Motors America, Inc. (Kia), but Kia initially declined, citing an inability to replicate the issue. Eventually, Kia offered to repurchase the vehicle, but the plaintiff found the terms unacceptable and continued to use the car while pursuing legal action.The Los Angeles County Superior Court found in favor of the plaintiff, awarding restitution and a civil penalty for Kia's willful violation of the Song-Beverly Consumer Warranty Act. The jury awarded $42,568.90 in restitution and $85,317.80 in civil penalties, totaling $127,976.70. Kia filed post-trial motions to reduce the restitution amount and to strike the civil penalty, arguing that certain costs should not be included and that there was insufficient evidence of willfulness. The trial court partially granted Kia's motions, striking the civil penalty but upholding the restitution amount.The California Court of Appeal, Second Appellate District, reviewed the case. The court held that the restitution award should exclude the cost of the manufacturer’s rebate, the optional theft deterrent device, the optional service contract, and certain insurance premiums. The court found that these costs were not recoverable under the Act. However, the court found substantial evidence to support the jury's finding that Kia knowingly violated the Act or did not act with a good faith and reasonable belief that it was complying. The court affirmed the trial court's order for a new trial on the issue of the civil penalty, directing that the new trial be consistent with its opinion and limited to the 21-month period between Kia's violation and the plaintiff's lawsuit. View "Valdovinos v. Kia Motors America, Inc." on Justia Law

In 2007, Dennis Collins, Suzanne Collins, David Butler, and Lucia Bott purchased long-term care insurance policies from Metropolitan Life Insurance Company (MetLife). They also bought an Inflation Protection Rider, which promised automatic annual benefit increases without corresponding premium hikes, though MetLife reserved the right to adjust premiums on a class basis. In 2015, 2018, and 2019, MetLife informed the plaintiffs of significant premium increases. The plaintiffs filed a class action in 2022, alleging fraud, fraudulent concealment, violations of state consumer protection statutes, and breach of the implied covenant of good faith and fair dealing under Illinois and Missouri law.The United States District Court for the Eastern District of Missouri dismissed the case, ruling that the filed rate doctrine under Missouri and Illinois law barred the plaintiffs' claims. Additionally, the court found that the plaintiffs bringing claims under Missouri law failed to exhaust administrative remedies. The plaintiffs appealed, arguing that the filed rate doctrine did not apply, they were not required to exhaust administrative remedies, and their complaint adequately alleged a breach of the implied covenant.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo and affirmed the district court's dismissal. The appellate court held that the plaintiffs' complaint failed to state a claim upon which relief could be granted. The court found that MetLife's statements about premium expectations were not materially false and that the plaintiffs did not sufficiently allege intentional fraud or fraudulent concealment. The court also concluded that the statutory claims under the Missouri Merchandising Practices Act and the Illinois Consumer Fraud and Deceptive Business Practices Act were barred by regulatory exemptions. Lastly, the court determined that the implied covenant of good faith and fair dealing was not breached, as MetLife's actions were expressly permitted by the policy terms. View "Collins v. Metropolitan Life Insurance Co." on Justia Law

In this case, the plaintiff purchased a new 2014 Kia Optima and soon experienced issues with the vehicle's reverse gear. Despite multiple visits to the dealership, the problem persisted. The plaintiff requested a buyback from Kia Motors America, Inc. (Kia), but Kia's investigations, including installing a flight recorder, did not confirm the defect. Kia eventually offered to repurchase the vehicle, but the plaintiff rejected the offer and continued to use the car until filing a lawsuit under California’s Song-Beverly Consumer Warranty Act (the Act).The Superior Court of Los Angeles County found in favor of the plaintiff, awarding restitution and a civil penalty for Kia's willful violation of the Act. Kia filed posttrial motions challenging the restitution amount and the civil penalty. The court partially granted Kia's motions, striking the civil penalty for insufficient evidence but denying the motion to reduce the restitution amount.The California Court of Appeal, Second Appellate District, reviewed the case. The court held that the restitution award should not include the cost of the optional service contract, certain insurance premiums, and other specific amounts. The court affirmed the trial court's decision to grant a new trial on the civil penalty, finding substantial evidence that Kia may have had a good faith and reasonable belief that the vehicle was not defective.The appellate court directed the trial court to amend the judgment to exclude the non-recoverable amounts from the restitution award and to conduct a new trial on the civil penalty, limited to the period before the lawsuit was filed. The court clarified that a violation of the Act is willful only if it is deliberate, knowing, or not based on a good faith and reasonable belief of compliance. View "Valdovinos v. Kia Motors America, Inc." on Justia Law

Circle of Seven, LLC, left a Dodge Ram truck on a foreclosed property. The new property owner hired Bottoms Towing & Recovery to remove the truck. Bottoms Towing later sought to sell the truck to cover unpaid towing and storage fees. Circle of Seven contested the sale and the lien amount, arguing that the towing company had used the truck without authorization, which should reduce the lien.The Superior Court of Nash County held a hearing where Circle of Seven presented testimony from its managing member and an employee. The court found that Bottoms Towing had driven the truck and made unnecessary alterations, reducing the lien by $1,427.14 for maintenance and $62.50 for unauthorized use. Circle of Seven appealed, claiming the reduction was insufficient.The North Carolina Court of Appeals affirmed the trial court's decision, with a divided opinion. The majority found that the trial court's findings were supported by competent evidence. The dissent argued that Bottoms Towing unlawfully converted the truck for personal use and that the lien should be reduced based on the truck's loss in market value due to this conversion.The North Carolina Supreme Court reviewed the case based on the dissent. The Court held that it could not address the dissent's theory because Circle of Seven had not raised the conversion argument or presented evidence on the truck's value in the lower courts. The Court emphasized that appellate courts should not address issues not raised by the parties. Consequently, the Supreme Court affirmed the decision of the Court of Appeals. View "Bottoms Towing & Recovery, LLC v. Circle of Seven, LLC" on Justia Law