Justia Contracts Opinion Summaries

Plaintiff Blanca Gonzalez, and Monserate Diaz purchased a home as tenants in common. Diaz borrowed the downpayment from Cityscape Mortgage Corporation (Cityscape) and executed a note. Plaintiff did not sign the note. Plaintiff and Diaz secured that loan by mortgaging their home to Cityscape. Over time, Plaintiff fell behind on the payments and U.S. Bank obtained a foreclosure judgment. The trial court ordered that the home be sold to satisfy the judgment. Before the sheriffâs sale, Plaintiff entered into a written agreement with Defendant Wilshire Credit Corporation (Wilshire), U.S. Bankâs servicing agent. Plaintiff was represented by a Legal Services attorney who helped negotiate the agreement. Plaintiff missed four payments to Wilshire. A scheduled sheriffâs sale was cancelled when the parties entered into a second agreement. Plaintiff was contacted and dealt with directly; neither Wilshire nor U.S. Bank notified the Legal Services attorney. Although Plaintiff had not missed a single payment required by the second agreement, instead of dismissing the foreclosure action as promised, Wilshire sent a letter to Plaintiff noting that the second agreement was about to expire and that a new agreement needed to be negotiated to avoid foreclosure. Plaintiff contacted the Legal Services attorney. When the attorney questioned Wilshire, it could not explain how it had come to the arrears amount set in the second agreement, or why Plaintiff was not deemed current on the loan. Plaintiff filed a complaint alleging that Wilshire and U.S. Bank engaged in deceptive and unconscionable practices in violation of the CFA. The trial court granted summary judgment in favor of Wilshire and U.S. Bank, finding that the CFA did not apply to post-judgment settlement agreements entered into to stave off a foreclosure sale. The Appellate Division reversed and reinstated plaintiffâs CFA claim. Upon review, the Supreme Court held that the post-foreclosure-judgment agreements in this case constituted stand-alone extensions of credit. In fashioning and collecting on such a loan, a lender or its servicing agent cannot use unconscionable practices in violation of the CFA.

Thirteen-year-old Efrain Ramos-Domingo was killed by a Union Pacific Railroad Company train. Two days later, Efrain's mother, Manuela Gonzalez signed a document releasing Union Pacific from liability for Efrain's death in exchange for $15,000. Manuela later filed a complaint in district court for wrongful death and breach of fiduciary duty. Union Pacific filed a motion to dismiss Manuela's complaint, arguing that the release barred Manuela's claims. The district court sustained the motion to dismiss with respect to the wrongful death claim but overruled the motion with respect to the fiduciary duty claim. The district court then granted Union Pacific's motion for summary judgment on the remaining claim, finding that there was no fiduciary duty owed by Union Pacific to Manuela. The Supreme Court affirmed in part and reversed in part, holding (1) the district court erred in dismissing Manuela's wrongful death claim because Manuela alleged facts that, if proved, could demonstrate that the release was void on the basis of its failure to represent a binding mutual understanding of the parties or was voidable as the product of fraud, overreaching or duress; and (2) the district court correctly concluded that Union Pacific owed no fiduciary duty to Manuela. Remanded.

Plaintiff, on behalf of himself and similarly situated individuals, brought an action against Chase, alleging that it increased his interest rates retroactively to the beginning of this payment cycle after his account was closed to new transactions as a result of a late payment to Chase or another creditor. The court had previously issued an opinion reversing the district court's dismissal of most of plaintiff's federal and state claims. However, Chase sought Supreme Court review of the court's decision and the Supreme Court reversed with respect to the federal claim and remanded for further proceedings. Consequently, the court withdrew its prior opinion and, consistent with the Supreme Court's ruling, affirmed the district court's dismissal of plaintiff's first cause of action under the Truth in Lending Act (TILA), 15 U.S.C. 1601-1615, for failure to notify of rate increase, as well as plaintiff's sixth cause of action for breach of contract for failure to notify him "of any change if required by applicable law." Although the Supreme Court's decision did not specifically address the court's ruling on plaintiff's state law claims, the court held: as Delaware law permitted the actions taken by Chase, the district court correctly concluded that plaintiff's second, third, and fourth state law causes of action were foreclosed; plaintiff's fifth cause of action failed to state a claim for consumer fraud under 6 Del. C. 2513(a); and plaintiff's seventh cause of action failed to state a claim for breach of an implied duty of good faith. Therefore, the court affirmed the judgment of the district court.

Liberty Mutual sued Pella in the district court for declaratory judgment where the suit was sought to determine the scope of Liberty Mutual's obligation, under general commercial liability (GCL) policies issued to Pella, to reimburse Pella's defense costs in two underlying lawsuits. Both parties appealed the judgment of the district court. The court held that the district court did not err in concluding that Liberty Mutual's duty to reimburse Pella's defense costs should be determined by looking at the allegations in the complaint to determine if they stated a covered claim where Liberty Mutual would still have no duty to defend even if it had to reimburse defense costs in a suit where an "occurrence" was alleged but not yet an established fact. The court also held that because the underlying suits did not allege an "occurrence," Liberty Mutual did not owe Pella a duty to reimburse its costs in defending either action. Therefore, the court need not address Liberty Mutual's alternative argument. The court further held that the district court did not commit reversible error in granting summary judgment to Liberty Mutual. The court finally held that, in light of its conclusion that Liberty Mutual had no duty to reimburse Pella's defense costs in the underlying suits, the court need not address the issue of defense costs. Accordingly, the court affirmed the district court's grant of summary judgment to Liberty Mutual on Pella's bad-faith counterclaim. The court reversed the district court's order granting summary judgment to Pella on Liberty Mutual's claim for declaratory judgment and remanded with instructions to enter declaratory judgment in favor of Liberty Mutual.

Judith Berry brought negligence and consumer protection claims against defendants National Medical Services and Compass Vision after her urinalysis tests conducted as part of Berry's participation in the Kansas Nurses Assistance Program (KNAP) showed positive results, which meant Berry tested positive for substance abuse in violation of Berry's KNAP agreement. Berry claimed Defendants were negligent in designing, implementing, promoting, and managing their testing protocol and that Defendants knew that because she was a participant in KNAP, her nursing license would be in jeopardy if she tested positive. The district court dismissed Berry's petition with prejudice for failure to state a claim upon which relief may be granted. The court of appeals reversed on the negligence claim, finding that Berry was a foreseeable plaintiff, that the probability of harm was foreseeable, and that there was no public policy against imposing a duty on Defendants. The Supreme Court affirmed, holding (1) Berry was a foreseeable plaintiff and the probability of harm was foreseeable; and (2) there was no public policy to extend protection to Defendants simply because they contracted with a government agency. Remanded.

Deutsche Bank National Trust Company, as trustee in trust for the registered holders of Ameriquest Mortgage Securities, Inc., appealed from a summary judgment entered in the district court in favor of Donald and Kim Pelletier on the bank's complaint for foreclosure. The district court concluded that Deutsche Bank had failed to dispute facts asserted by the Pelletiers demonstrating that they had asserted a right of rescission. On appeal, the Supreme Court affirmed the grant of summary judgment, but because the district court's order reached only the point of determining that the Pelletiers were entitled to rescission, the Court remanded for further proceedings to effectuate the rescission.

3M Company sued Inspired Technologies, Inc. (ITI) for allegedly unfair and false advertising, in violation of the Lanham Act, 15 U.S.C. 1051, et seq., and the Minnesota Uniform Deceptive Trade Practices Act (MDPTA), Minnesota Statutes 325D.43-325D.48, alleging that ITI engaged in an advertising campaign for its Frog Tape product that depicted 3M Tape as performing poorly in certain respects. ITI tendered a defense of the lawsuit to its liability-insurance carrier, AMCO Insurance Company (AMCO), and the lawsuit ultimately settled. Following the settlement, AMCO filed the instant declaratory judgment action against ITI, seeking a declaration that it did not owe ITI any duty to defend or indemnify because the insurance policy's knowledge-of-false exclusion excluded the 3M suit from coverage. The court found that the two interrogatory answers upon which the district court relied did not reflect that 3M alleged ITI's knowledge of falsity as to all the purportedly unfair advertising. Consequently, the court held that AMCO failed to satisfy its burden of demonstrating, as a matter of law, that every claim in 3M's complaint fell clearly outside the policy's coverage. Accordingly, because 3M alleged at least one arguably coverable claim, AMCO owed ITI a duty under Minnesota law to defend the entire suit and therefore, the district court's grant of summary judgment was reversed and remanded.

This case arose when plaintiffs filed a nationwide consumer class action against Life of the South Insurance Company (Life of the South). At issue was whether Life of the South had a right to enforce against plaintiffs the arbitration clause in the loan agreement, between plaintiffs and the car dealership where they purchased their vehicle, where the loan agreement lead plaintiffs to enter into a separate credit life insurance contract with Life of the South. The court held that the loan agreement did not show, on its face or elsewhere, an intent to allow anyone other than plaintiffs, the car dealership, and Chase Manhattan, and the assignees of the dealership of Chase Manhattan, to compel arbitration of a dispute and Life of the South was none of those. The court also held that because the only claims plaintiffs asserted were based on the terms of their credit life insurance policy with Life of the South, which did not contain an arbitration clause, equitable estoppel did not allow Life of the South to compel plaintiffs to arbitrate. Accordingly, the court affirmed the district court's denial of Life of the South's motion to compel arbitration.

This case arose when appellant alleged claims of tortuous interference with contract or business expectancy and violation of the Arkansas Deceptive Trade Practices Act (ADTPA), Ark. Code Ann. 4-88-101, et seq. Appellant subsequently sought a temporary retraining order and preliminary injunction after appellee terminated appellant's patient privileges at a residential nursing home. The court held that appellant did not meet the factors in the Dataphase Syst. Inc. v. C.L. Syst., which evaluated whether to issue an injunction. Consequently, the court held that the district court did not abuse its discretion in denying the motion for a preliminary injunction and the judgment was affirmed.

BAC Home Loans Servicing, LP (formerly known as Countrywide Home Loans Servicing, LP); Countrywide Home Loans of Texas, Incorporated; and Countrywide Home Loans, Incorporated appealed an order for remand where the district court dismissed the lone federal claim under the Truth in Lending Act (TILA), 15 U.S.C. 1601-1667f, and declined to exercise supplemental jurisdiction over the remaining state law claims. Defendants argued that this was an abuse of discretion because Countrywide Home Loans of Texas was improperly joined and thus the district court had diversity jurisdiction over the state law claims. Plaintiffs argued that there was no improper joinder and that defendants waived any right to argue improper joinder or the existence of diversity jurisdiction when they failed to remove the action to federal court within 30 days of service of the original complaint that listed Countrywide Home Loans of Texas. The court held that defendants carried their burden of proving improper joinder; the district court had jurisdiction over the state law claims at the time of remand; and the exercise of that jurisdiction was mandatory. Accordingly, the court reversed the district court's decision to remand the state law claims to Texas state court and remanded for further proceedings.