Justia Contracts Opinion Summaries

Sanchez Energy Corporation, a gas producer, underwent Chapter 11 bankruptcy in 2019 due to significant debt, with its reorganization plan confirmed in April 2020. The company, later renamed Mesquite Energy, Inc., owned valuable fossil fuel reserves in the Comanche Field, Texas, and had several high-cost contracts for gathering, processing, transporting, and marketing natural gas and natural gas liquids. Carnero G&P, L.L.C., a midstream services provider, had a contract with Sanchez to serve as a backup provider. After Sanchez’s reorganization, Mesquite entered into new agreements with other parties to lower its midstream costs, which Carnero claimed breached its surviving contract.Following the bankruptcy, Carnero filed a state court lawsuit against Mesquite and other parties, asserting state law claims based on the new agreements. The suit was removed to the United States Bankruptcy Court for the Southern District of Texas, which denied Carnero’s request to remand and ultimately dismissed the case on the pleadings, finding it had “related-to” jurisdiction under 28 U.S.C. § 1334. The bankruptcy court reasoned that the dispute pertained to the implementation of the reorganization plan and that Carnero was barred from challenging the new agreements due to its failure to object during the bankruptcy proceedings. The United States District Court for the Southern District of Texas affirmed the bankruptcy court’s decision.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the jurisdictional question de novo. The Fifth Circuit held that the bankruptcy court lacked post-confirmation “related-to” jurisdiction over Carnero’s state law contract claims, as the dispute did not pertain to the implementation or execution of the reorganization plan. The court found that the new agreements were not executory contracts under the plan and that Carnero was not barred from pursuing its claims. The Fifth Circuit reversed the lower courts’ judgments and remanded the case with instructions to remand to state court. View "Carnero G&P v. SN EF Maverick" on Justia Law

RTI, LLC and RTI Holdings, LLC sought to construct a specialized clinical research facility in Brookings, South Dakota, designed for animal health research trials with stringent air filtration and ventilation requirements. Acting as the general contractor, RTI hired designArc Group, Inc. as architect and several contractors, including Pro Engineering, Inc., Ekern Home Equipment Company, FM Acoustical Tile, Inc., and Trane U.S. Inc., to design and build the facility. After completion in April 2016, RTI experienced significant issues with air pressure, ventilation, and ceiling integrity, leading to contamination problems that disrupted research and resulted in financial losses.The Circuit Court of the Third Judicial Circuit, Brookings County, reviewed RTI’s claims for breach of contract and breach of implied warranties against the architect and contractors. All defendants moved for summary judgment, arguing that RTI’s claims were based on professional negligence and required expert testimony, which RTI failed to provide. The circuit court agreed, finding RTI’s CEO unqualified as an expert, and granted summary judgment to all defendants. The court also denied RTI’s motion to amend its complaint to add negligence claims, deeming the amendment untimely and futile due to the lack of expert testimony.The Supreme Court of the State of South Dakota affirmed the summary judgment for designArc, Pro Engineering, and FM Acoustical, holding that expert testimony was required for claims involving specialized design and construction issues, and that RTI’s CEO was not qualified to provide such testimony. However, the court reversed the summary judgment for Trane and Ekern, finding genuine issues of material fact regarding Trane’s alleged faulty installation and Ekern’s potential vicarious liability. The court also reversed the denial of RTI’s motion to amend the complaint, concluding the proposed amendments were not futile and would not prejudice Trane or Ekern. The case was remanded for further proceedings. View "RTI, LLC v. Pro Engineering" on Justia Law

A company developed a specialized vehicle-mounted stairway, with design work primarily performed by the founder’s son, who was promised equity in the business but never received it due to the majority owner’s repeated refusals. The son, with his father’s assistance, eventually obtained a patent for the design, which he used as leverage to seek compensation. Negotiations between the parties failed, leading to the father’s removal as company president and the company filing suit against both the father and son. The company alleged breach of fiduciary duty, misappropriation of trade secrets, business conspiracy, unjust enrichment, fraud, and breach of contract, while the son counterclaimed for patent infringement.The United States District Court for the Eastern District of Virginia granted summary judgment to the father and son on all claims except a breach of contract claim against the father and the son’s patent counterclaim. The court found most claims time-barred or unsupported by evidence, and later, the company voluntarily dismissed its remaining claim. The son’s patent was invalidated by a jury. The district court also awarded attorneys’ fees and costs to the father as the prevailing party under the company’s operating agreement.The United States Court of Appeals for the Fourth Circuit reviewed the case de novo and affirmed the district court’s rulings. The appellate court held that the company’s claims were either time-barred under the applicable statutes of limitations or failed on the merits, as there was no evidence the son benefited from the patent or that he had signed a non-disclosure agreement. The court also affirmed the award of attorneys’ fees and costs to the father, finding no error in the district court’s application of Delaware law or its determination of the prevailing party. View "Mission Integrated Technologies, LLC v. Clemente" on Justia Law

A marketing and e-commerce company based in Nevada provided services for the Kanye 2020 presidential campaign at the request of a group of Arizona-based political consultants (the Lincoln defendants). The company began work without a written contract, relying on assurances that terms would be formalized later. It created campaign materials, built a website, and managed digital operations, but was never paid for its work. The company sued Kanye 2020 and the Lincoln defendants in the United States District Court for the District of Wyoming, alleging breach of contract, breach of the implied duty of good faith and fair dealing, and unjust enrichment.The District of Wyoming found it lacked personal jurisdiction over the Lincoln defendants and transferred those claims to the District of Arizona under 28 U.S.C. § 1631, citing concerns about potential statute of limitations issues. The court dismissed the claims against Kanye 2020 for failure to state a claim, but did so without prejudice. Kanye 2020 moved for reconsideration, seeking dismissal with prejudice, but the Wyoming court declined, stating it no longer had jurisdiction after the transfer.On appeal, the United States Court of Appeals for the Tenth Circuit held that it lacked jurisdiction to review the interlocutory transfer order. The court affirmed the dismissal of the contract claims against Kanye 2020, finding the complaint failed to plausibly allege the existence of an oral or implied contract or unjust enrichment, as there were insufficient communications or notice to Kanye 2020 regarding payment expectations. However, the Tenth Circuit held that the district court erred in concluding it lacked jurisdiction to consider Kanye 2020’s motion for reconsideration. The case was remanded for the district court to determine whether the dismissal of the claims against Kanye 2020 should be with prejudice. View "SeedX v. Lincoln Strategy" on Justia Law

After purchasing a home with wooded acreage in Santa Cruz, the buyers discovered issues they believed the sellers had failed to disclose, including matters related to the septic system, property condition, and logging operations. The real estate transaction was governed by a standard form agreement that required the parties to attempt mediation before resorting to litigation or arbitration, and provided that the prevailing party in any dispute would be entitled to recover reasonable attorney fees, except as limited by the mediation provision.Following the sale, the buyers sued the sellers for breach of contract and fraud. The sellers filed a cross-complaint. After a three-day bench trial in the Santa Cruz County Superior Court, the court found in favor of the sellers on all claims and on their cross-complaint, determining that the sellers were the prevailing parties and entitled to recover attorney fees and costs, with the amount to be determined in post-trial proceedings. The sellers then moved for attorney fees and costs. The trial court denied the motion for attorney fees, concluding that the sellers’ initial refusal to mediate the dispute, as required by the contract, barred them from recovering attorney fees, even though they later expressed willingness to mediate before the buyers filed suit. The court also denied the motion for costs without prejudice due to procedural deficiencies.On appeal, the California Court of Appeal, Sixth Appellate District, held that the trial court’s initial statement regarding entitlement to attorney fees was interlocutory and not a final judgment on the issue. The appellate court further held that the sellers’ initial refusal to mediate did not automatically preclude them from recovering attorney fees if they later agreed to mediate before litigation commenced. The court reversed the postjudgment order denying attorney fees and remanded for further proceedings to determine whether the sellers effectively retracted their refusal to mediate before the lawsuit was filed. The denial of costs was affirmed due to the sellers’ failure to file a proper costs memorandum. View "Evleshin v. Meyer" on Justia Law

A commercial real estate broker and consultant partnered with three brothers who owned an architecture and construction company to develop and lease a commercial property. They planned to form a limited liability company (LLC) as equal members, contributing professional services and cash, but did not formalize their agreement in writing. After a dispute arose over a broker commission, the brothers executed a backdated operating agreement that excluded the broker from LLC membership. The broker alleged he was unfairly cut out of the deal and sued for breach of contract and unjust enrichment.The Marshall Circuit Court granted summary judgment to the brothers on the contract claim, finding that Indiana law required written confirmation for LLC membership, which the broker lacked. The court also denied the broker’s request for a jury trial on the unjust enrichment claim, holding that both the claim and the defense of unclean hands were equitable issues for the judge. After a bench trial, the court ruled against the broker on unjust enrichment, finding he failed to prove his claim and that unclean hands barred recovery.On appeal, the Indiana Court of Appeals reversed, holding that initial LLC membership could be established by oral agreement and that unjust enrichment claims for money damages were legal claims entitled to a jury trial. The Indiana Supreme Court granted transfer, vacating the appellate decision.The Indiana Supreme Court held that LLC membership under the Business Flexibility Act requires either a written operating agreement or written confirmation, and the broker was not a member as a matter of law. However, genuine factual disputes remained regarding whether the brothers breached an agreement to make him a member, precluding summary judgment. The Court also held that unjust enrichment claims for money damages are legal claims subject to a jury trial, and the unclean hands doctrine may be asserted as a defense. The judgment was vacated and the case remanded for a jury trial on both claims. View "Andrew Nemeth Properties, LLC v. Panzica" on Justia Law

Scott Drewry, a former police sergeant with the Greybull Police Department, left his position following an internal investigation into his conduct during a DUI investigation and other disciplinary issues. After his resignation, Drewry and the Town of Greybull entered into a settlement agreement that included a non-disparagement clause prohibiting the Town and Chief Brenner from making negative statements about Drewry regarding the investigation, termination, or resignation. Later, when Drewry was offered employment with the Basin Police Department, Chief Brenner issued a memorandum to Greybull officers and local officials, stating that Drewry had a history of deception and would not be considered a credible witness in Greybull investigations. Drewry sued for breach of the settlement agreement, defamation per se, and intentional infliction of emotional distress.The District Court of Big Horn County granted summary judgment to Chief Brenner and the Town on all claims. The court found that the non-disparagement clause only covered the blood draw investigation and that the memorandum was truthful and conditionally privileged. It also concluded that Chief Brenner was entitled to qualified immunity, precluding the tort claims, and that there was insufficient evidence of extreme and outrageous conduct for the emotional distress claim.The Supreme Court of Wyoming reviewed the case de novo. It held that qualified immunity barred Drewry’s claims for defamation per se and intentional infliction of emotional distress against both Chief Brenner and the Town, affirming summary judgment on those claims. However, the court found that the phrase “the investigation” in the settlement agreement’s non-disparagement clause was ambiguous, creating genuine issues of material fact about its scope and whether the memorandum breached the agreement. The court reversed the summary judgment on the breach of contract claim and remanded for further proceedings. View "Drewry v. Brenner" on Justia Law

In April 2018, Mark Fiechtner was involved in a motor vehicle accident in Lincoln County, South Dakota, caused by another driver, Caitlyn Belliveau, who lost control on icy roads. Fiechtner subsequently experienced neck pain, headaches, vision problems, and memory issues, seeking treatment from various healthcare providers. He held an insurance policy with American West Insurance Company, which paid the $10,000 medical benefits limit. Fiechtner also received the $100,000 liability limit from Belliveau’s insurer. He then sought $900,000 in underinsured motorist (UIM) benefits from American West, but was offered only $10,000. After unsuccessful negotiations, Fiechtner sued American West for breach of contract, bad faith, punitive damages, and attorney fees.The case was tried in the Circuit Court of the Second Judicial Circuit, Lincoln County, South Dakota. At trial, evidence showed that American West’s investigation of the UIM claim was limited and did not include contacting Fiechtner or his healthcare providers, nor reviewing prior claim notes. The jury found in favor of Fiechtner on all counts, awarding $400,000 for breach of contract, $250,000 for bad faith, $890,000 in punitive damages, and attorney fees. The circuit court denied American West’s post-trial motions for judgment as a matter of law and for a new trial.The Supreme Court of the State of South Dakota reviewed the case. It affirmed the circuit court’s denial of American West’s motions, holding that sufficient evidence supported the jury’s findings of bad faith and punitive damages, and that the circuit court did not clearly err in awarding attorney fees under SDCL 58-12-3. The Supreme Court also found no abuse of discretion in the circuit court’s evidentiary rulings. View "Fiechtner v. American West Ins." on Justia Law

Neil Maune and Marcus Raichle formed a general partnership known as the Maune Raichle Law Firm, which later took out life insurance policies for each partner, naming the partnership as beneficiary. In 2011, Maune, Raichle, and three others established a new law firm, MRHFM, governed by an operating agreement containing an arbitration clause and a delegation provision referencing the American Arbitration Association rules. MRHFM took over premium payments for the life insurance policies, but only Raichle’s policy was amended to name MRHFM as beneficiary. After Maune’s death, the death benefit from his policy was paid to the original partnership, not MRHFM. The Estate of Neil Maune sued Raichle and the partnership, alleging wrongful retention of the insurance proceeds, tortious interference, unjust enrichment, and breach of fiduciary duty.The Circuit Court of St. Louis County denied the defendants’ motion to compel arbitration, reasoning that the partnership was not a party to the operating agreement and thus could not enforce its arbitration provision. The Estate argued that Maune and Raichle signed the agreement only as members and managers of MRHFM, not as partners of the original partnership, and that the claims did not fall within the scope of the arbitration agreement.The Supreme Court of Missouri reviewed the case de novo and held that, under Missouri’s aggregate theory of partnerships, the partnership has no legal existence separate from its partners. Because Maune and Raichle were the only partners and signed the operating agreement in their individual capacities, they bound themselves and the partnership to the arbitration agreement. The Court further held that, due to the delegation provision, questions about the scope of the arbitration agreement must be decided by the arbitrator. The Supreme Court of Missouri vacated the circuit court’s order and remanded with instructions to compel arbitration. View "Maune vs. Raichle" on Justia Law

An attorney with over two decades of experience brought suit against an insurance company and its agent after his life insurance policy lapsed due to a missed payment. He claimed to have cured the lapse by paying the overdue premium and submitting required information, and alleged that the insurer confirmed reinstatement before later refunding his payment and rescinding the reinstatement. The insurer denied ever reinstating the policy and asserted it had expired by its own terms. The attorney filed suit in state court, alleging breach of contract and other claims. After removal to federal court, the parties mediated and signed a settlement memorandum outlining five essential terms, including a $10,000 payment to the plaintiff and mutual releases. The memorandum stated that final settlement language would use standard contractual terms.After mediation, the plaintiff refused to sign the draft settlement agreement, objecting to a non-reliance clause he claimed was not discussed during mediation. He also began raising new questions about the status of his insurance policy. He moved to vacate the settlement and sought further discovery, while the defendants moved to enforce the settlement. The United States District Court for the Western District of Missouri held an evidentiary hearing, which the plaintiff missed, and then granted the defendants’ motion to enforce the settlement and denied the plaintiff’s motions. The plaintiff’s motion for rehearing was also denied.On appeal, the United States Court of Appeals for the Eighth Circuit held that the settlement memorandum contained all essential terms and that the non-reliance clause in the draft agreement was standard language, not a material new term. The court found no clear error in the district court’s factual findings and no abuse of discretion in denying a new hearing. The Eighth Circuit affirmed the district court’s judgment enforcing the settlement. View "Schlecht v. Goldman" on Justia Law