Justia Contracts Opinion Summaries

A property insurance dispute arose between a church in Albany, Georgia, and its insurer following storm damage in 2014. The church's property, which included asbestos tile roofs, was insured under an all-risks policy. After the storm, the insurer's adjuster estimated repair costs at $2,300, but the church's contractor estimated over $1.3 million for full roof replacement. The church sued for breach of contract and bad faith. In 2018, Hurricane Michael caused further damage, and the church filed a claim with a different insurer, obtaining a lower repair estimate. The original insurer argued that the church's failure to disclose this second claim constituted a material misrepresentation.The United States District Court for the Middle District of Georgia excluded evidence of the alleged misrepresentation, finding it irrelevant. The jury awarded the church $1.75 million in damages, and the insurer's motion for a new trial was denied. The insurer appealed, arguing that the exclusion of misrepresentation evidence was erroneous and that the damages award was speculative and contrary to the policy terms.The United States Court of Appeals for the Eleventh Circuit reviewed the case. It found that the insurer had waived its misrepresentation defense by not objecting during trial and by explicitly withdrawing the defense. The court also held that the jury's award, which included increased construction costs due to delays, was supported by sufficient evidence and did not constitute double recovery when combined with prejudgment interest. The court affirmed the district court's rulings and the jury's verdict. View "Central Baptist Church of Albany Georgia Inc v. Church Mutual Insurance Co." on Justia Law

A corporation, its controlling stockholder, and associated individuals were sued by a minority stockholder for breach of contract, fraudulent concealment, and other claims. The defendants moved to dismiss the lawsuit based on forum non conveniens, citing mandatory forum selection clauses in the corporation’s certificate of incorporation and bylaws, which required stockholder lawsuits to be brought in the Delaware Court of Chancery. The trial court denied the motion, and the Court of Appeal denied a petition for writ of mandate, holding that the forum selection clauses were unenforceable because they would deprive the plaintiff of the right to a jury trial, which is not recognized in the Delaware Court of Chancery.The California Supreme Court reviewed the case to determine whether the lower courts were correct in declining to enforce the forum selection clauses on the basis that they would deprive the plaintiff of a jury trial. The Court of Appeal had found that the lack of a jury trial right in Delaware was dispositive and did not consider other arguments against enforcement of the forum selection clause.The California Supreme Court concluded that the lower courts were incorrect in their reasoning. The court held that forum selection clauses serve vital commercial purposes and should generally be enforced. It emphasized that California’s strong public policy in favor of the right to a jury trial applies to California courts and does not extend to other forums. Therefore, a forum selection clause is not unenforceable simply because it requires litigation in a jurisdiction that does not afford the same right to a jury trial as California. The court reversed the judgment of the Court of Appeal and remanded the case for further proceedings to consider other arguments against the enforcement of the forum selection clause. View "EpicentRx v. Superior Ct." on Justia Law

Employers’ Innovative Network and its president, Jeff Mullins, entered into contracts with Bridgeport Benefits, Capital Security, and other parties to secure a new health insurance policy for their employee healthcare benefit plan. The relationship between the parties deteriorated, leading Employers’ Innovative Network to file a lawsuit in West Virginia state court in April 2018, alleging breach of contract, fraud, slander, and violations of the West Virginia Unauthorized Insurers Act. The case was removed to federal court but was stayed pending arbitration in Bermuda, as stipulated in the contracts.The arbitration was conducted in Bermuda, where the arbitrator, Delroy Duncan, ruled in favor of the defendants. Employers’ Innovative Network later challenged Duncan’s impartiality, citing conflicts of interest, but the Bermuda Arbitration Institute upheld Duncan’s position. The plaintiffs did not appeal this decision to the Bermuda Supreme Court. Subsequently, the defendants sought to enforce the arbitral award in the United States under Chapter 2 of the Federal Arbitration Act (FAA), and the Southern District of West Virginia granted their request, rejecting the plaintiffs’ public policy defense.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court vacated the district court’s decision and remanded the case for further fact-finding to determine whether Chapter 1 or Chapter 2 of the FAA applies. The appellate court noted that the arbitration might be governed by Chapter 1, which includes an “evident partiality” defense, or by Chapter 2, which does not explicitly include such a defense but allows for non-enforcement on public policy grounds. The court emphasized the need to clarify the citizenship of Capital Security and the nature of the parties’ relationship to determine the applicable chapter. View "Employers' Innovative Network, LLC v. Bridgeport Benefits, Inc." on Justia Law

Crowley Government Services, Inc. ("Crowley") entered into a contract with the Department of Defense United States Transportation Command ("USTRANSCOM") in 2016 to provide transportation coordination services, which involved hiring motor carriers to transport freight. The General Services Administration ("GSA"), not a party to the contract, began auditing Crowley's bills under a provision of the Transportation Act of 1940, claiming Crowley overbilled USTRANSCOM by millions of dollars. GSA sought to recover these overcharges by garnishing future payments to Crowley.The United States District Court for the District of Columbia dismissed Crowley's Administrative Procedure Act ("APA") claims, holding that the claims were essentially contractual and fell within the exclusive jurisdiction of the Court of Federal Claims. The D.C. Circuit reversed, finding that Crowley's suit was not a contract claim and remanded the case. On remand, the District Court held that GSA could audit both carriers and non-carriers but agreed with Crowley that the USTRANSCOM Contracting Officer's interpretations governed any GSA audits. The court enjoined GSA from issuing Notices of Overcharge ("NOCs") contrary to the Contracting Officer's determinations.The United States Court of Appeals for the District of Columbia Circuit reviewed the case and held that 31 U.S.C. § 3726(b) allows GSA to audit only bills presented by carriers and freight forwarders. The court found that Crowley is not a carrier because it does not physically transport freight nor is it contractually bound to help perform the movement of goods. Consequently, the court reversed the District Court's decision on the scope of § 3726(b) and remanded for further proceedings, permanently enjoining GSA from conducting postpayment audits of Crowley's bills. View "Crowley Government Services, Inc. v. General Services Administration" on Justia Law

Plaintiff Gravel & Shea PC sued defendant Costello, Valente & Gentry, P.C., claiming unjust enrichment for receiving attorney’s fees without compensating plaintiff for work done to procure a settlement. The dispute arose from lawsuits involving an employee’s injury at work and his employer’s worker’s compensation insurance. Plaintiff represented the employer in a lawsuit against its insurer, Cornerstone Risk Management, LLC, while defendant represented the employee in a personal-injury lawsuit against the employer. The employee settled with Lloyd’s of London, Cornerstone’s professional-liability insurer, and defendant received its contingency fee from the settlement proceeds.The Superior Court, Chittenden Unit, Civil Division, granted summary judgment to plaintiff, concluding that under the common-fund doctrine, equities required defendant to contribute to plaintiff’s attorney’s fees. The court found that plaintiff’s efforts in the Cornerstone action led to the settlement from which defendant received its fees. The court also held a bench trial on damages and awarded damages to plaintiff. Defendant appealed, arguing that the trial court improperly expanded the common-fund doctrine and that the facts did not support a claim of unjust enrichment.The Vermont Supreme Court reviewed the case and reversed the trial court’s order granting summary judgment to plaintiff. The Supreme Court held that the common-fund doctrine did not apply because there was no common fund created by plaintiff’s efforts that benefitted both parties. The court emphasized that the common-fund doctrine is limited to cases where a party’s efforts create a fund that benefits others who did not contribute to the litigation costs. The court remanded the case for the trial court to enter summary judgment in favor of defendant, concluding that plaintiff could not maintain an unjust-enrichment claim under the circumstances. View "WWSAF Special Partners Group, LLC (Series D) v. Costello, Valente & Gentry, P.C." on Justia Law

A dispute arose between a surety bond company, Granite Re, Inc. (Granite), and a creditor bank, United Prairie Bank (UPB), over entitlement to funds held by a receiver in a receivership action. Granite issued payment bonds to Molnau Trucking LLC (Molnau) for public works projects, but Molnau defaulted on both the projects and loans from UPB. The issue was whether Granite or UPB had priority to the bonded contract funds held by the receiver. Granite argued for priority under equitable subrogation, having paid laborers and suppliers, while UPB claimed priority under the UCC, having perfected its security interests in Molnau’s accounts receivable before Granite issued the bonds.The district court granted summary judgment in favor of UPB, recognizing Granite’s equitable subrogation rights but ruling that UPB’s perfected security interest had priority. The court of appeals affirmed, applying a “mistake of fact” standard from mortgage context case law, which Granite did not meet.The Minnesota Supreme Court reviewed the case and held that the “mistake of fact” standard does not apply to performing construction sureties. The court concluded that Granite, as a surety, has the right to equitable subrogation without needing to show a mistake of fact. The court further held that a surety’s right to equitable subrogation is not a security interest subject to the UCC’s first-in-time priority rule. Instead, a performing surety has priority over a secured creditor regarding bonded contract funds.The Minnesota Supreme Court reversed the court of appeals’ decision and remanded the case to the district court for entry of judgment in favor of Granite, allowing Granite to request redistribution of the bonded contract funds. View "In re Receivership of United Prairie Bank v. Molnau Trucking LLC" on Justia Law

A bank holding company sued two guarantors for breach of their personal guaranties on a $1.5 million loan extended to an entity they were involved with. The guarantors argued that the bank holding company lacked standing to sue because there was no written assignment of the loan documents from the original lender, a bank, to the holding company. The district court admitted the written assignment into evidence and found that the holding company had standing. The court also granted summary judgment in favor of the holding company, finding the guarantors liable under the terms of their guaranties.The guarantors had counterclaimed against the holding company and other parties, alleging fraudulent concealment, fraudulent misrepresentation, civil conspiracy, and breach of the implied covenant of good faith and fair dealing. They argued that the bank and its president conspired with a now-deceased individual to conceal the financial instability of the individual’s entities, which led to the guarantors entering into the guaranties. The district court found no genuine issue of material fact regarding these counterclaims and granted summary judgment for the holding company.The guarantors also attempted to file a document in which the personal representative of the deceased individual’s estate confessed judgment against the estate. The district court ruled this filing a nullity, as the personal representative’s appointment had been terminated before the filing, and he was not authorized to act on behalf of the estate.The Nebraska Supreme Court affirmed the district court’s rulings, holding that the holding company had standing, the guarantors were liable under the guaranties, and the counterclaims were unsupported by evidence. The court also upheld the ruling that the purported confession of judgment was a nullity. View "Henderson State Co. v. Garrelts" on Justia Law

Clinton Mahoney, the sole member and manager of Mahoney & Associates, LLC, signed an agreement obligating the company to contribute to the Railroad Maintenance and Industrial Health and Welfare Fund, an employee benefit fund. When the Fund could not collect delinquent contributions from Mahoney & Associates, it sued Mahoney personally, citing a personal liability clause in the agreement. The district court granted summary judgment to the Fund, concluding that Mahoney was personally liable based on the clause.The United States District Court for the Central District of Illinois initially entered judgment on July 31, but it did not comply with Federal Rule of Civil Procedure 58. Mahoney filed a notice of appeal on September 26, and the district court later entered a corrected judgment on October 11. Mahoney filed a second notice of appeal the same day. The district court had awarded the Fund attorneys’ fees based on the trust agreement.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court found that there was a genuine dispute of material fact regarding Mahoney’s intent to be personally bound by the trust agreement, as he signed the memorandum in a representative capacity, which conflicted with the personal liability clause. The court concluded that this issue could not be resolved at summary judgment. The court also addressed Mahoney’s laches defense but found it waived due to his failure to address relevant complications. Consequently, the Seventh Circuit reversed the district court’s grant of summary judgment and vacated the award of attorneys’ fees, remanding the case for further proceedings. View "Railroad Maintenance and Industrial Health & Welfare Fund v. Mahoney" on Justia Law

Roy McAlister invented and patented technologies related to clean fuels and incorporated McAlister Technologies, L.L.C. (MT) to hold and license these patents. In 2009, MT entered into a licensing agreement with Advanced Green Technologies, L.L.C. (AGT), which later retained Loeb & Loeb, L.L.P. for patent matters. Conflicts arose, leading McAlister to terminate the agreement, alleging AGT's breach. McAlister and MT claimed that Loeb & Loeb's actions clouded their patents, causing prospective licensees to back out, resulting in lost profits.The Superior Court in Maricopa County granted summary judgment in favor of Loeb & Loeb on the lost profit damages, finding the plaintiffs' evidence speculative and lacking reasonable certainty. The court excluded the plaintiffs' expert testimony on damages and ruled against them on claims for trespass to chattel, slander of title, and aiding and abetting, but allowed claims for breach of fiduciary duty and negligent supervision to proceed. Plaintiffs conceded no triable damages remained and stipulated to final judgment against them.The Arizona Court of Appeals affirmed the exclusion of the expert testimony and the summary judgment on most lost profit claims but reversed on a $5 million initial payment claim, remanding for further proceedings. It also reversed the summary judgment on trespass to chattel and slander of title claims.The Arizona Supreme Court reviewed the case, focusing on the lost profit damages and trespass to chattel claim. It concluded that the plaintiffs failed to prove the lost profit damages with reasonable certainty, as material terms of the prospective licensing agreement were unresolved. Consequently, the court affirmed the summary judgment in favor of Loeb & Loeb on the lost profit damages and trespass to chattel claim, vacating the relevant parts of the Court of Appeals' decision. The case was remanded to the Superior Court for further proceedings on the slander of title claim. View "McAlister v. Loeb" on Justia Law

The case involves a dispute between Peter Lowes and Amy Thompson, formerly Amy Lowes, regarding a nondisparagement clause in their stipulated divorce judgment. Lowes alleged that Thompson breached this clause by describing him as her "abuser" during a political campaign interview. Thompson filed a special motion to strike the breach of contract claim under Oregon’s anti-SLAPP statute, which aims to quickly dismiss nonmeritorious claims arising from protected speech. The trial court granted Thompson’s motion, but the Court of Appeals reversed, concluding that the nondisparagement clause waived Thompson’s right to the anti-SLAPP statute’s protections.The Deschutes County Circuit Court initially granted Thompson’s special motion to strike, finding that her statements were protected under the anti-SLAPP statute and that Lowes failed to show a probability of prevailing on his claim. The Court of Appeals reversed this decision, holding that the nondisparagement clause constituted a waiver of Thompson’s anti-SLAPP protections, thus making it unnecessary to evaluate whether Lowes could prevail on his claim.The Oregon Supreme Court reviewed the case and disagreed with the Court of Appeals. The Supreme Court held that the nondisparagement clause did not clearly indicate an intention to waive the procedural protections of the anti-SLAPP statute. Therefore, the clause alone could not defeat Thompson’s special motion to strike. The Supreme Court reversed the Court of Appeals' decision in part and remanded the case back to the Court of Appeals to determine whether Lowes met his burden of establishing a probability of prevailing on his breach of contract claim. View "Lowes v. Thompson" on Justia Law