Justia Contracts Opinion Summaries

Robert and Janet McKeage (Relators) sued Bass Pro Outdoor World in a five-count petition for charging a document preparation fee for purchasing a boat. Relators subsequently sought class certification of both in-state and out-of-state customers based upon the purchase agreement's choice of law provision, which required the application of Missouri law to all transactions. The circuit court certified a class that was limited to contracts entered into within the state. Relators sought relief by way of a writ of prohibition. The Supreme Court granted the writ, holding that the circuit court abused its discretion by limiting the putative class members to only those whose transactions occurred in Missouri where the class of plaintiffs that Relators sought to certify was limited to those who were charged a document preparation fee and whose contracts contained the Missouri choice of law provision.

The Faigins owned a lot in the Diamante subdivision. Diamante asserted a lien on the Faigins' lot for failure to pay monthly membership dues and thereafter filed a complaint in foreclosure on the lot. The Faigins filed a motion for class certification so that they could be sued as representative parties on behalf of all lot owners in the Diamante subdivisions. The circuit court denied the motion. The Supreme Court affirmed, holding (1) although the circuit court abused its discretion by basing part of its decision on the question of commonality upon the ability of the proposed class to withstand a Ark. R. Civ. P. 12(b)(6) motion, (2) the element of commonality was lacking in this case where there were only seven lot owners who were in foreclosure and the Faigins' defenses to the complaint were not common to the overwhelming majority of the proposed class, and (3) because Ark. R. Civ. P. 23 requires that all elements be present before class certification is appropriate, and at least one element was lacking here, class certification was appropriately denied.

The issue before the Supreme Court concerned a dispute between Petitioners Donia Townsend and several other home purchasers and Defendant Quadrant Corporation and its parent companies over an arbitration clause in the home purchasers' individual purchase contracts. Several years after the home purchases, Townsend and the other purchasers jointly filed suit in superior court against Quadrant alleging outrage, fraud, unfair business practices, negligence, negligent misrepresentation, rescission and breach of warranty. In support of these allegations, they claimed that Quadrant knowingly engaged in shoddy workmanship in building the homes, and that this resulted in serious construction defects that caused personal injuries relating to mold, pests, and poisonous gases. They claimed that the arbitration clause in their purchase agreements was unenforceable. The superior court denied Quadrant's motion to compel arbitration. The Court of Appeals reversed. Upon review, the Supreme Court affirmed the appellate court's holding that the homeowners’ procedural unconscionability claim that pertained to the entire purchase contract, including the arbitration clause, was to be decided by an arbitrator.

Merchants challenged 2010 N.J. Laws Chapter 25, amending the unclaimed property statute, N.J. Stat. 46:30B, to provide for escheat of stored value cards (gift cards). Chapter 25 presumes cards to be abandoned after two years of inactivity and requires issuers to transfer remaining value to the state. Issuers must obtain name and address of the purchaser or owner of each card. If the issuer's state exempts cards from its unclaimed property statute, unredeemed balances of cards previously-issued in New Jersey, where information was not recorded, must be reported to New Jersey. The address where the card issued or sold is presumed to be the owner's domicile. The district court enjoined retroactive application of Chapter 25 and prospective enforcement of the place-of-purchase presumption, but declined to enjoin data collection and two-year abandonment provisions. The Third Circuit affirmed. Chapter 25 substantially impaired contractual relationships by imposing unexpected obligations and did not reasonably accommodate the rights of the parties in light of the public purpose. The abandonment period is not preempted by the Credit CARD Act, 15 U.S.C. 1693l-1(c). The place-of-purchase presumption is preempted by federal common law, under which the first opportunity to escheat belongs to the state of the last known address of the creditor, shown by the debtor's records. If the primary rule does not apply, the right to escheat is with the state in which the debtor is incorporated.

Arrow Financial Services filed a complaint against Sarah Guiliani alleging breach of contract and unjust enrichment. Arrow then filed a motion for summary judgment seeking to establish that Arrow owned a credit card account registered to Guiliani and that Guiliani owed an unpaid balance of $5044 on the account. In support of its motion, Arrow asserted in an affidavit that it was the assignee of Guiliani's credit card account with Washington Mutural. The district court granted Arrow's motion and awarded Arrow $3493, plus interest and court costs. The Supreme Court vacated the district court's judgment, holding that the district court incorrectly granted summary judgment in favor of Arrow because disputes remained as to material facts regarding the balance due on the account and its assignment to Arrow.

JLB Corporation, a mortgage brokering service, entered into an agreement with Bonnie Hargis to refinance her home. JLB then prepared Hargis's loan application and other financial disclosure documents. JLB alleged it played no role in drawing the note or deed of trust, which were prepared by third parties, and it did not charge for their preparation. Hargis, however, filed a three-count petition against JLB, alleging, inter alia, that JLB engaged in the unauthorized practice of law. The trial court granted summary judgment in favor of JLB on all counts. The Supreme Court (1) affirmed the grant of summary judgment to JLB as to the first two counts relating to the unauthorized practice of law where the record showed that JLB assisted Hargis only in preparing financial documents and did not show that JLB procured or assisted in the drawing of Hargis' note, deed of trust, or other legal documents; and (2) reversed the grant of summary judgment to JLB on the third count alleging unjust enrichment, as JLB's summary judgment motion failed to negate any element of Hargis' unjust enrichment claim. Remanded.

Liberty Group (Liberty) retained Reliable Copy Service (Reliable) to provide services in connection with litigation. Later, Reliable filed a complaint in a Pennsylvania court of common pleas in an effort to collect on the sums owed. The Pennsylvania court subsequently entered a default judgment against Liberty. Following the end of the litigation in the Pennsylvania court, a Maine superior court entered a judgment in favor of Reliable and issued a writ of execution at Reliable's request. Liberty filed a motion for relief from judgment, arguing that the Pennsylvania default judgment was not enforceable in Maine because the Pennsylvania default judgment was void. The superior court denied the motion. The Supreme Court affirmed, holding (1) the Pennsylvania judgment suffered from no jurisdiction defect or due process impediment that would render it void pursuant to Me. R. Civ. P. 60(b)(4); and (2) Liberty's procedural due process rights were not violated when Reliable requested and received from the Pennsylvania court an increased damages award.

Gene Shields, an agent for State Farm Insurance Companies, opened an account with Bankcorp Bank. The owner of the account was State Farm. Shields's office manager subsequently diverted funds that were due to be deposited into the account, and Shields allegedly suffered at least $77,925 in losses as a result of over 100 overdrafts on the account. Shields sued Bancorp Bank for negligence in failing to notify him of overdrafts. Bancorp moved to compel arbitration based on the account's arbitration clause. The circuit court denied the motion to compel, and Bancorp appealed. At issue on appeal was whether the parties' 2005 agreement to modify the contract entered into by the parties in 1982 controlled when Shields signed the agreement but State Farm was not a party to the contract. The Supreme Court affirmed, holding that the 2005 agreement, which contained the arbitration provision, was not binding because the agreement was entered into in contravention of the rights of the account owner, State Farm.

A group of investors (Borrowers) bought a golf course by contributing part of the purchase amount in cash and financing the remaining balance through a nonrecourse loan with Community Bank of Nevada (CBN). To facilitate the sale, William Walters entered into a separate guaranty with CBN where he personally guaranteed the loan. Prior to the Borrowers' default and the eventual foreclosure of the golf course, Walters filed a complaint against CBN, asserting causes of action for declaratory relief and breach of the implied covenant of good faith and fair dealing. CBN counterclaimed, asserting breach of guaranty against Walters. The district court granted summary judgment in part to CBN, concluding that no genuine issues of material fact existed as to Walters' guaranty liability to CBN. Walters filed a petition for a writ compelling the district court to vacate its partial summary judgment in favor of CBN and to preclude CBN from recovering any amount from Walters under his guaranty. The Supreme Court denied the writ, holding (1) CBN complied with the deficiency application requirements of Nev. Rev. Stat. 40, and (2) CBN was not attempting double recovery because double recovery was not an issue in this case.

The parties to this lawsuit claimed rights to a punch press used in the manufacturing business of now-defunct Vitco Industries. Plaintiff, Gibraltar Financial Corporation, held a perfected security interest in Vitco's tangible and intangible property, including its equipment. Defendants, several entities including Prestige Equipment, who had acquired the press, and Key Equipment Finance, claimed that the security interest did not cover the press because the press was not Vitco's equipment, but rather, the press had been leased to Vitco by Key Equipment. The trial court granted summary judgment in favor of Defendants after concluding that the lease was a true lease. The court of appeals affirmed. The Supreme Court reversed, holding that genuine issues of material fact existed regarding whether the press was leased. The Court noted that no evidence was on the record relating to the economic expectations of Vitco and Key Equipment at the time the transaction was entered into. Remanded.