Justia Contracts Opinion Summaries

The case concerns a dispute arising from a real estate transaction involving an 80-acre property in Livermore, California. Guinnane Construction Co., Inc. entered into a contract to purchase an interest in the property from the Petersons, after being assigned the DeLimas’ right of first refusal. Defendants, including Edmund Jin, his real estate agent Stephen Marc Chess, and Chess’s firm, interfered with this transaction by negotiating a purchase with the Petersons despite knowledge of the right of first refusal. The Petersons ultimately sold their interest to Jin, prompting Guinnane to file a successful specific performance action against the Petersons and the subsequent conveyance of the property interest to Guinnane.After prevailing in the specific performance action, Guinnane filed a new lawsuit in the Alameda County Superior Court against Jin, Chess, and Chess’s firm, seeking damages for inducement of breach of contract and intentional interference with contractual relations. Guinnane was awarded compensatory damages, including the attorney fees incurred in the specific performance action. Guinnane then sought to recover the attorney fees incurred in prosecuting this subsequent “tort of another” action against the defendants. The trial court, presided over by Judge Victoria Kolakowski, denied Guinnane’s motion for these additional fees.On appeal, the Court of Appeal of the State of California, First Appellate District, Division Two, reviewed whether, under the tort of another doctrine, Guinnane could recover attorney fees incurred in the action against the tortfeasors themselves. The court held that such fees are not recoverable under the tort of another doctrine, as it allows recovery only for fees incurred in litigation with third parties necessitated by the defendant’s tort, not for fees incurred in suing the tortfeasor. The court affirmed the posttrial order denying Guinnane’s motion for these attorney fees. View "Guinnane Construction Co., Inc. v. Chess" on Justia Law

The plaintiff, a Hawaii resident, entered into a National Employment Agreement with Cardiovascular Systems, Inc. (CSI), a Minnesota-based medical device company, to serve as District Sales Manager for Hawaii. The agreement required him to complete mandatory training in Minnesota before he could work fully in Hawaii. He attended training in Minnesota for a total of twelve days over two visits during early 2023 and participated in remote meetings from Hawaii. Shortly after completing training, CSI terminated his employment. The plaintiff alleged that his termination was in retaliation for reporting illegal conduct in violation of federal law, while CSI claimed it was due to his conduct. Subsequently, Abbott Laboratories, Inc. acquired CSI.The plaintiff first filed a complaint in Minnesota state court against Abbott Laboratories, Inc. (ALI) under the Minnesota Whistleblower Act (MWA). ALI removed the case to federal court and moved to dismiss the complaint. After an unsuccessful attempt to amend his complaint, the plaintiff voluntarily dismissed the action and refiled a nearly identical complaint, later amending it to add CSI as a defendant and a claim under the Hawaii Whistleblowers’ Protection Act (HWPA). The defendants again moved to dismiss, and the plaintiff sought to further amend the complaint to add more details and another defendant.The United States District Court for the District of Minnesota granted the motion to dismiss, holding that the plaintiff did not qualify as an “employee” under the MWA because he neither performed “services for hire” nor maintained ongoing physical presence in Minnesota, and that he had waived his HWPA claim by agreeing to a Minnesota choice-of-law provision in his employment contract. The Eighth Circuit Court of Appeals affirmed, concluding that the district court correctly applied Minnesota law, enforced the choice-of-law provision, and properly denied leave to amend as futile. View "Ghosh v. Abbott Laboratories" on Justia Law

Two former seasonal employees of a ski resort were injured in a snowmobile accident after being laid off from their jobs. The accident occurred when, two days after their termination, they returned to the resort to drop off uniforms and accepted a ride from a current employee on a company snowmobile to attend a gathering organized by other former employees. The snowmobile crashed, causing serious injuries. Prior to their employment, both injured parties had signed a release agreement that waived the resort’s liability for injuries sustained from activities on resort property, including those caused by the resort’s negligence. The agreement specified that a free ski pass was consideration for the waiver.Both individuals brought lawsuits against the resort alleging vicarious liability for the employee’s negligence and direct liability for its own negligence. The Third District Court, Summit County, granted summary judgment in favor of the resort on the vicarious liability claims, finding no evidence the employee was acting within the scope of employment during the snowmobile ride. However, the district court denied summary judgment on the direct liability claims, relying on Pugmire v. Oregon Short Line Railroad Co., a 1907 Utah Supreme Court decision holding that employer-employee agreements waiving liability for employer negligence are void as contrary to public policy.On interlocutory appeal, the Supreme Court of the State of Utah affirmed the dismissal of the vicarious liability claims, concluding that there was no factual basis for a jury to find the employee acted within the course and scope of his employment. The court reversed the district court’s ruling on direct liability, holding that Pugmire applies only to releases for work-related injuries and does not bar enforcement of the waiver in this case, where the injuries occurred outside the employment context. The case was remanded for consideration of any other arguments regarding the release agreement. View "Deer Valley v. Olson" on Justia Law

The plaintiffs, who were long-time friends of the defendants, invested significant sums in a biopharmaceutical company controlled by the defendants. The defendants did not disclose that the company was in serious financial distress, under a substantial obligation to a lender, and prohibited from incurring additional debt. The investment was structured through promissory notes, which included false warranties regarding the company’s financial status and claimed the formation of a new entity that never materialized. Instead of funding a new venture, the defendants used the investment to pay off existing company debt. Less than two years later, the company declared bankruptcy, making the notes essentially worthless.The plaintiffs brought claims under federal and Massachusetts securities laws, the Massachusetts consumer protection statute, and for common law fraud and negligent misrepresentation in the United States District Court for the District of Massachusetts. The defendants moved to dismiss the action, relying on a forum selection clause in the promissory notes requiring litigation in Delaware courts. The district court granted the motion and dismissed the case without prejudice, concluding that the clause applied to the plaintiffs’ claims.On appeal, the United States Court of Appeals for the First Circuit reviewed the dismissal de novo. The plaintiffs argued that their claims did not “arise out of” the notes and that the forum selection clause was unenforceable as contrary to Massachusetts public policy. The First Circuit rejected both arguments, holding that the claims arose from the notes and that the plaintiffs did not meet the heavy burden required to invalidate the clause on public policy grounds. The First Circuit affirmed the district court’s dismissal without prejudice, leaving the plaintiffs free to pursue their claims in the contractually designated Delaware courts. View "Manzo v. Wohlstadter" on Justia Law

This case arose from a contractual dispute involving a commercial lease. Michael Scheinker, who later passed away and was succeeded by Jennifer O’Leary, leased property to Green America Inc. Walter Jones III signed the lease on behalf of Green America and also signed a guarantee clause, making him personally responsible for obligations under the lease, including attorney fees. After disputes developed, Green America initiated litigation against Scheinker. Scheinker successfully compelled arbitration, where he asserted claims against Green America and Jones. The arbitrator issued an award in Scheinker’s favor, finding Jones liable as guarantor. Scheinker then sought to confirm the arbitration award in the Superior Court of Riverside County.The Superior Court confirmed the arbitration award against Green America but denied the petition as to Jones, citing lack of personal jurisdiction since Jones had not been joined as a party before the matter was sent to arbitration. The court also expressly declined to rule on Jones’s request to vacate the arbitration award. Afterward, Jones moved for attorney’s fees and costs, arguing he was the prevailing party under Civil Code section 1717. The Superior Court denied attorney’s fees, reasoning that no party prevailed on the contract because the merits of enforceability as to Jones had not been resolved. The court did not separately address Jones’s request for costs.The California Court of Appeal, Fourth Appellate District, Division One, reviewed the case. It held that the Superior Court acted within its discretion in denying Jones’s motion for attorney’s fees, finding that Jones had obtained only an interim victory and the substantive contract issues remained unresolved. However, the appellate court found that Jones was entitled to reasonable court costs under Code of Civil Procedure section 1032, as he was a defendant in whose favor a dismissal was entered. The order was affirmed as to attorney’s fees and remanded for the award of costs to Jones. View "O'Leary v. Jones" on Justia Law

Several former executives and employees of a storage company were terminated or allegedly constructively terminated and subsequently brought claims against the company and its principals for wrongful termination, retaliation, harassment, and related causes of action. The company, in turn, sued two of the former executives, alleging breach of contract and misuse of confidential information, including forwarding company emails to personal accounts. The emails at issue contained communications from the company’s legal counsel and were allegedly attorney-client privileged. After their terminations, the former employees provided these emails to their attorney for use in their lawsuits against the company.The Superior Court of Orange County considered the company’s motions to disqualify the law firm representing the former employees, based on the firm’s possession and use of the disputed emails. The court found the emails were privileged and that the company held the privilege. However, it denied the motions, reasoning that the employees had been intended recipients of the emails, that privileged content would not be used to the company’s disadvantage, and that the emails were central to both parties’ claims.On appeal, the California Court of Appeal, Fourth Appellate District, Division Three, held that the trial court abused its discretion. The appellate court determined that the proper analytical framework for attorney disqualification, as set forth in State Comp. Ins. Fund v. WPS, Inc., should apply not only to inadvertently disclosed privileged material but also to situations where an attorney receives material that was impermissibly taken from the privilege holder without authorization. The appellate court found the trial court erred in its legal analysis, failed to properly apply the relevant standard regarding future prejudice, and made unsupported findings. The court reversed the trial court’s orders and remanded for reconsideration of the disqualification motions under the correct legal standards. View "Guardian Storage Centers v. Simpson" on Justia Law

A former employee brought a class action lawsuit against her former employer, alleging violations of California wage and hour laws and other employment-related statutes. After the complaint was filed, the employer entered into approximately 954 individual settlement agreements with other employees, providing cash payments in exchange for releases of claims. The plaintiff did not sign such an agreement but moved for class certification and later sought to invalidate the individual settlements on the grounds of fraud and coercion, arguing the employer misrepresented the litigation’s status and the scope of the settlements.The Superior Court of San Bernardino County partially granted the motion, ruling that the individual settlement agreements were voidable due to fraud or duress and ordered that a curative notice be sent to affected employees. The court’s notice advised that employees could rescind their agreements and join the class action, but did not require immediate repayment of settlement funds to the employer. The employer objected, arguing the notice should have informed employees that they might be required to return the settlement money if they rescinded and the employer ultimately prevailed in the litigation. The trial court declined to include this language, instead following certain federal cases that allowed offsetting the settlement amount against any recovery but did not require repayment before judgment.The California Court of Appeal, Fourth Appellate District, Division Two, reviewed the case on a writ. The court held that under California Civil Code sections 1689, 1691, and 1693, employees who rescind their settlement agreements may be required to repay the consideration they received, but repayment can be delayed until final judgment unless the employer shows substantial prejudice from delay. The court also found the trial court retains equitable authority to adjust repayment at judgment under section 1692. The appellate court directed the trial court to reconsider the curative notice in accordance with these principles. Each side was ordered to bear their own costs on appeal. View "The Merchant of Tennis, Inc. v. Superior Court" on Justia Law

Two lender plaintiffs provided a large loan to several special purpose entities (“Borrowers”) under a Loan and Security Agreement, which secured the loan with the Borrowers’ assets. The ultimate parent companies of the Borrowers (“Guarantors”) guaranteed repayment of the loan but did not pledge any of their own assets as collateral. After the lenders received information suggesting the Borrowers’ collateral was insufficient or encumbered, they accelerated the loan and demanded immediate payment of over $609 million. When neither the Borrowers nor the Guarantors could pay, the lenders filed suit for breach of contract and requested a temporary restraining order and preliminary injunction to freeze the assets of both the Borrowers and the Guarantors, expressing concern that these assets would be dissipated before a judgment could be enforced.The United States District Court for the Southern District of New York granted the injunction, including against the Guarantors’ assets. The Guarantors and related parties argued that, under Grupo Mexicano De Desarrollo, S.A. v. Alliance Bond Fund, Inc., the District Court lacked authority to freeze their assets because the plaintiffs had no lien or equitable interest in them. The District Court found Grupo Mexicano distinguishable and declined to modify the injunction.On appeal, the United States Court of Appeals for the Second Circuit held that the lenders did not have a lien or equitable interest in the Guarantors’ assets, as their claim was for contract damages and not for relief giving rise to an equitable interest in specific property. The court concluded that Grupo Mexicano precluded the freezing of the Guarantors’ assets under these circumstances. The Second Circuit vacated the portion of the District Court’s preliminary injunction restraining the Guarantors’ assets and remanded for further proceedings. The court made no ruling regarding the Borrowers’ assets, as that part of the injunction was not challenged. View "Leadenhall Capital Partners LLP v. Advantage Capital Holdings, LLC" on Justia Law

Gregory Parzych served as president of ZipBy USA, LLC, a parking technology company, after previously founding and selling a similar company, TCS. While employed by ZipBy, Parzych entered into several agreements restricting conflicts of interest and disclosure of confidential information. In 2020, Parzych learned that TCS might be for sale. He advised ZipBy’s owner against pursuing the acquisition, then secretly attempted to purchase TCS for himself via a shell company, using financial information he had obtained as a ZipBy executive. ZipBy discovered his actions, terminated his employment, and, along with affiliates, sued Parzych for breach of fiduciary duty, breach of contract, misappropriation of trade secrets, trademark infringement, and false designation.After a jury trial in the United States District Court for the District of Massachusetts, the jury found for ZipBy on all claims, awarding compensatory and exemplary damages. The district court later granted judgment as a matter of law for Parzych on the trade secret claims, striking the exemplary damages but upholding the other verdicts and damages. The court also entered a permanent injunction barring Parzych from acquiring TCS and awarded ZipBy a portion of its attorneys’ fees. Parzych appealed, contesting evidentiary rulings, denial of a trial continuance, and the fee award, while ZipBy cross-appealed the judgment on the trade secret claims.The United States Court of Appeals for the First Circuit affirmed the district court’s judgment. It held that the district court did not abuse its discretion in admitting ZipBy’s expert lost-profits testimony, excluding late-disclosed evidence, or denying a trial continuance due to counsel’s COVID-19 infection. The appellate court agreed with the district court’s judgment as a matter of law against ZipBy’s trade secret claims, finding insufficient evidence that Parzych’s actions constituted trade secret misappropriation. Finally, the fee award was affirmed as a reasonable enforcement of the IP Agreement’s fee-shifting provision. View "ZipBy USA LLC v. Parzych" on Justia Law

A purchaser entered into a condominium sales contract with a developer, which incorporated an escrow agreement between the developer and an escrow company. The purchaser was not a signatory to the escrow agreement, nor was the escrow company a party to the sales contract. After the purchaser defaulted on the sales contract by failing to make the required closing payment, the developer sent notices of default and contract termination, copying the escrow company. The termination notices included instructions regarding the disposition of the purchaser’s escrowed deposits—one letter indicated the developer would retain fifteen percent of the purchase price as liquidated damages, while a later letter stated the intent to retain the entire deposit. The escrow company subsequently released the entire escrow balance to the developer.Prior to this appeal, the Circuit Court of the First Circuit granted summary judgment in favor of the escrow company on the purchaser’s claims for breach of contract and breach of fiduciary duty, finding that the escrow company had complied with the escrow agreement as incorporated into the sales contract. The Intermediate Court of Appeals (ICA) affirmed denial of the purchaser’s partial summary judgment motion but vacated summary judgment for the escrow company on the breach of contract and fiduciary duty claims. The ICA found a genuine issue of material fact as to whether the escrow company breached its duties by releasing all funds after receiving what it characterized as conflicting instructions from the developer.The Supreme Court of the State of Hawai‘i held that the escrow company strictly complied with the terms of the escrow agreement, which, upon default and proper written notice, required release of all escrowed funds to the developer. The court concluded there was no genuine issue of material fact regarding breach of contract or fiduciary duty. The court vacated the ICA’s judgment regarding those claims and affirmed summary judgment for the escrow company, remanding only the issue of attorney fees to the ICA. View "Yamaguchi v. Title Guaranty Escrow Services, Inc." on Justia Law