Justia Contracts Opinion Summaries

Plaintiff US Bank National Association appealed a trial court order that granted summary judgment to Defendant Homeowner Christine Kimball and dismissed with prejudice US Bankâs foreclosure complaint for lack of standing.  On appeal, US Bank argued that it had standing to prosecute the foreclosure claim and that the courtâs dismissal with prejudice was in error.  Homeowner cross-appealed, arguing that the court erred in not addressing her claim for attorneyâs fees. Homeowner purchased the property in question in June 2005.  To finance the purchase, she executed an adjustable rate promissory note in favor of Accredited Home Lenders, Inc. (Accredited).  The note was secured by a mortgage deed to Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for Accredited. In 2009, US Bank filed a foreclosure complaint for Homeownerâs failure to make required payments.  The complaint alleged that the mortgage and note were assigned to US Bank by MERS, as nominee for Accredited.  Attached to the complaint was a copy of the instrument signed by a "Duly Authorized Agent" of MERS.  The promissory note was also attached to the complaint and appended to it was an undated allonge signed by a corporate officer of Accredited, endorsing the note in blank. Homeowner moved for summary judgment claiming, among other things, that US Bank failed to present sufficient evidence that it held homeownerâs note and corresponding mortgage. Because neither note submitted by US Bank was dated, the court concluded that there was no evidence that the note was endorsed to US Bank before the complaint was filed.  Therefore, the court held that US Bank lacked standing to bring the foreclosure action.  Following a hearing, the court denied the motions for reconsideration and to amend the complaint.  The court concluded that US Bank had submitted a defective complaint and the deficiencies were not mere technicalities, but essential items, without which the case could not proceed.  The court held that US Bank lacked standing when the complaint was filed, and dismissed the complaint âwith prejudice.â  Upon review of the trial record and briefs submitted by the parties, the Supreme Court affirmed the trial court's decision in all respects but for the 'with prejudice': "this may be but an ephemeral victory for homeowner.  Absent adjudication on the underlying indebtedness, the dismissal cannot cancel her obligation arising from an authenticated note, or insulate her from foreclosure proceedings based on proven delinquency." The Court dismissed the foreclosure complaint and remanded the case for consideration of the parties' fees dispute.

This case concerned the application of payments made in connection with a real estate transaction between Kang Park and Marsha Park and Gary Stanford. The district court granted summary judgment to the Parks, determining, as a matter of law, that none of the payments Stanford submitted to the Parks could be credited toward a personal guaranty Stanford had made on the note payable to the Parks. The court of appeals affirmed the district court's grant of summary judgment, concluding that no evidence indicated the Parks had actual knowledge that Stanford intended for the past payments to apply to his guaranty and no agreement or contractual provision expressly required the Parks to make such an application. On certiorari, the Supreme Court reversed, holding (1) the court of appeals applied the wrong test in its holding, and rather, a rule in which payments are credited toward a personal guaranty when the recipient of the payments has a reasonable basis to know the payments were submitted in satisfaction of the guaranty governed the application of payments toward a personal guaranty; and (2) genuine issues of material fact precluded summary judgment under the rule and the record required further development. Remanded.

Plaintiffs, seeking to represent a class of customers with poor credit who purchased used automobiles from defendants, appealed from a judgment of the district court dismissing their complaint for failure to state a claim upon which relief could be granted. The complaint asserted that defendants violated the Truth in Lending Act (TILA), 15 U.S.C. 1601, et seq., and various state laws by burying hidden finance charges in the prices that plaintiffs were charged for these automobiles where defendant advertised the newer, more valuable used cars in its inventory at market prices, but sold the older, less valuable used cars to subprime credit customers for prices substantially higher than the market prices listed in the same guide. The court held that because the complaint did not contain any allegation for which it could plausibly be inferred that defendants failed to disclose a finance charge to plaintiffs, the judgment of the district court was affirmed.

This case arose when elderly widow Dorothy Chase Stewart filed for bankruptcy in 2007 and Wells Fargo Bank filed a proof of claim with the bankruptcy court reciting debts owed from an outstanding mortgage on Ms. Stewart's house. The bankruptcy court subsequently found that Wells Fargo's mortgage claims exhibited systematic errors arising from its highly automated, computerized loan-administration program and issued an injunction requiring Wells Fargo to audit every proof of claim it had filed on or filed after April 13, 2007; to provide a complete loan history on every account and file that history with the appropriate court; and "to amend...proofs of claim already on file to comply with the principles established in this case and [In re] Jones." Wells Fargo appealed, challenging the claim amount and the injunction. The court vacated the injunction as exceeding the reach of the bankruptcy court. Because neither the injunction nor the calculation of Ms. Stewart's debt was properly before the court, the court dismissed as moot Wells Fargo's appeal of legal rulings underlying the bankruptcy court's interpretation of the mortgage.

Eric and Martha Hankins executed a promissory note and mortgage on their residence in favor of the lender, Option One Mortgage Corporation, which later assigned the mortgage and note to Deutsche Bank. A loan modification agreement changed the lender to Liquidiation Properties. When the Hankinses stopped making payments on the note, Liquidation filed a complaint for foreclosure against the Hankinses. Deutsche Bank then assigned the mortgage to Liquidiation, which, in turn, assigned the mortgage and note to Kondaur Capital Corporation. Liquidation then moved to substitute Kondaur as the named plaintiff. The Hankinses did not challenge the motion to substitute, and the district court granted the motion. The district court then entered summary judgment in favor of Kondaur. Martha Hankins appealed. The Supreme Court vacated the judgment of the district court, holding (1) the district court did not err in substituting Kondaur as the named plaintiff because the substitution did not alter the underlying allegations of the foreclosure action or tend to produce a manifest injustice; and (2) entry of summary judgment was error because the record did not establish the essential elements of a foreclosure action without dispute as to genuine issues of material fact. Remanded.

Alabama Title Loans, Inc., Accurate Adjustments, LLC and Kevin Sanders all appealed a trial court order that denied their motions to compel arbitration filed against them by Plaintiff Kimberly White. In 2009, Ms. White borrowed money from Alabama Title Loans (ATL), securing the loan with an interest in her automobile. ATL required Ms. White to surrender the title to the automobile. The title-loan agreement contained an arbitration clause. Ms. White subsequently paid off her loan and borrowed more money against her car several more times. In August 2009, Ms. White said she went to ATL ready to pay off her loan in full. In January 2010, ALT contracted with Accurate Adjustments to conduct a "self-help" repossession of Ms. White's automobile. The police were called, and Accurate and ATL were required to release the automobile when it could not produce the title they claimed gave them the right to repossess. Ms. White filed suit alleging multiple theories: assault and battery, negligence, wantonness, trespass, wrongful repossession and conversion. At trial, the court denied the title-loan parties' motion to compel arbitration without making any findings of fact. Based on the broad language of the arbitration clause in the title-loan agreements executed by Ms. White, the Supreme Court held that the trial court should have granted the title-loan parties' motions to compel arbitration. The Court reversed the trial court's decision and remanded the case for further proceedings.

Steven Kilian leased a Mercedes-Benz vehicle with financing by Mercedes-Benz Financial. After the car required numerous repairs, Kilian returned the car to Mercedes-Benz USA and sought a refund under Wisconsin's Lemon Law. Mercedes-Benz USA accepted the returned vehicle and refunded $20,847 to Kilian. Because Mercedes-Benz USA did not immediately pay off the lease with Mercedes-Benz Financial, Mercedes-Benz Financial commenced collection actions to obtain payment from Kilian. Kilian filed suit under the Lemon Law to stop enforcement of the lease. While Kilian's action was pending in circuit court, Mercedes-Benz paid off the lease to Mercedes-Benz Financial. The circuit court granted summary judgment in favor of Mercedes-Benz Financial, finding that Kilian did not suffer a pecuniary loss when Mercedes-Benz Financial continued to enforce the lease after the vehicle was returned. The court of appeals affirmed. The Supreme Court reversed, holding (1) Kilian could maintain an action for equitable relief under the Lemon Law and Mercedes-Benz Financial's actions violated the Lemon Law; and (2) Kilian prevailed in his action when Mercedes-Benz Financial voluntarily ceased enforcement of the lease after Kilian filed suit, and as the prevailing party, Kilian was entitled to attorney fees, disbursements, and costs. Remanded.

Plaintiffs William and Vivian Allen contracted defendant V and A Brothers, Inc. (V&A) to landscape their property and build a retaining wall to enable the installation of a pool. At the time, V&A was wholly owned by two brothers, Defendants Vincent DiMeglio, who subsequently passed away, and Angelo DiMeglio. The corporation also had one full-time employee, Defendant Thomas Taylor. After V&A completed the work, Plaintiffs filed a two-count complaint naming both corporate and individual defendants. The first count was directed solely to V&A and alleged that the corporation breached its contract with Plaintiffs by improperly constructing the retaining wall and using inferior backfill material. The second count was directed to the corporation and Vincent's estate, Angelo, and Taylor individually, alleging three "Home Improvement Practices" violations of the state Consumer Fraud Act (CFA). Before trial, the trial court granted the individual defendants' motion to dismiss the complaint against them, holding that the CFA did not create a direct cause of action against the individuals. Plaintiffs' remaining claims were tried and the jury returned a verdict in favor of plaintiffs on all counts, awarding damages totaling $490,000. The Appellate Division reversed the trial court's order dismissing the claims against the individual defendants under the CFA. The panel remanded the matter to determine whether any of the individual defendants had personally participated in the regulatory violations that formed the basis for Plaintiffs' CFA complaint. The panel precluded relitigation of the overall quantum of damages found by the jury in the trial against the corporate defendant. Upon review, the Supreme Court held that employees and officers of a corporation might be individually liable under the CFA for acts they undertake through the corporate entity. Furthermore, individual defendants are not collaterally estopped from relitigating the quantum of damages attributable to the CFA violations. The Court remanded the case for further proceedings.

Elgene Phillips was driving his truck when the truck hydroplaned, ran off the road, and rolled over. Phillips died as a result of the accident. As administratrix of the decedent's estate, petitioner Shelia Haynes filed a wrongful death action, alleging that the seatbelt in the decedent's trunk was defective. Chrysler, the manufacturer of the decedent's truck, and Autoliv, the manufacturer of the seatbelt, were named as defendants. The parties settled for $150,000, but the agreement did not contain an apportionment between the two defendants regarding who was responsible for that amount. After Chrysler declared bankruptcy, petitioner filed a motion to sever claims against Chrysler and a motion to compel Autoliv to pay the entire amount of the settlement. The circuit court denied petitioner's motions, and as a result petitioner received only $65,000 in settlement proceeds. The Supreme Court reversed, holding that (1) the terms of the contract were unambiguous, and Autolive was bound by the underlying agreement; and (2) by cashing Autolive's check for $65,000, the petitioner and Autolive did not reach an accord and satisfaction under the facts of the case.

This lawsuit arose from the dispute between the parties about how much appellant was obligated to pay appellee for auto-glass goods and services rendered on behalf of appellant's insureds. Appellants appealed from the district court's orders dismissing its counterclaim that appellee violated Minnesota's anti-incentive statute, Minn. Stat. 325F.783, granting summary judgment in favor of appellee on appellant's counterclaim for breach of contract, and denying appellant's motion to vacate the arbitration award. The court held that, given the plain language of the statute and the ordinary meaning of the terms of rebate and credit, appellee's practice did not violate the anti-incentive statute. The court also held that even if the blast faxes at issue constituted offers to enter into unilateral contracts, appellee rejected the offers when its actions failed to conform to the terms of the offer. The court further held that the arbitration award did not require reversal or new proceedings because the award was based on the finding that appellant failed to pay the competitive price standard set forth in the applicable endorsement and Minnesota law.