Justia Contracts Opinion Summaries

A law firm sought to recover over $1.7 million in fees and costs for representing the Los Angeles County Sheriff, Alex Villanueva, and the Sheriff’s Department in litigation initiated by the County of Los Angeles. Due to a conflict of interest, the County’s Board of Supervisors offered Villanueva independent counsel, allowing him to select his attorney but reserving discretion over compensation. Villanueva chose the law firm, which entered into an engagement agreement with him. The County, however, sent its own retainer agreement to the firm, which the firm refused to sign. The firm continued its representation but was never paid. After the firm demanded arbitration under its engagement agreement, the County and related plaintiffs filed suit seeking a declaration that no valid agreement to arbitrate existed and an injunction against the arbitration.The Superior Court of Los Angeles County granted a preliminary injunction, then summary judgment for the County plaintiffs, finding the Sheriff lacked authority to enter into the engagement agreement. The court denied the law firm’s post-judgment motion for leave to file a cross-complaint, citing both untimeliness and bad faith. The firm then filed a separate lawsuit against the County and related defendants, asserting breach of contract and related claims. The trial court sustained the County’s demurrer, dismissing the complaint with prejudice on grounds that the claims were compulsory cross-claims in the earlier action and for failure to allege compliance with the Government Claims Act.The California Court of Appeal, Second Appellate District, Division Eight, affirmed both the judgment in the County’s action and the dismissal of the law firm’s separate lawsuit. The court held that the Sheriff did not have authority to retain counsel on his own; only the Board of Supervisors could contract for legal services. The law firm’s claims were barred as compulsory cross-claims and for failure to comply with the Government Claims Act. View "County of Los Angeles v. Quinn Emanuel Urquhart & Sullivan, LLP" on Justia Law

A company based in the Commonwealth of the Northern Mariana Islands (CNMI), which provides computer and networking services, entered into a contract with a California-based distributor of Microsoft products. The CNMI company sought to purchase Microsoft software to fulfill a government contract. After a series of communications and assurances that the software would meet the CNMI government’s specifications, the CNMI company paid over $800,000 to the distributor, which then delivered the software directly to the CNMI government. The software did not conform to the required specifications, leading the government to cancel its contract with the CNMI company and request a refund. The CNMI company, in turn, sought a refund from the distributor, which offered a partial refund minus a cancellation fee. The CNMI company objected and filed suit alleging fraud, breach of contract, promissory estoppel, and unjust enrichment.The United States District Court for the Northern Mariana Islands dismissed the case for lack of personal jurisdiction over the California distributor. The district court relied on a then-binding Ninth Circuit panel decision, which was later vacated and replaced by an en banc decision. The district court did not address whether the claims arose out of the distributor’s contacts with the CNMI or whether exercising jurisdiction would be reasonable.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s dismissal. The Ninth Circuit held that the CNMI company alleged sufficient facts to establish specific personal jurisdiction over the California distributor. The court found that the distributor purposefully availed itself of the privilege of doing business in the CNMI and purposefully directed its actions toward the CNMI. The court also concluded that the claims arose out of the distributor’s contacts with the CNMI and that exercising jurisdiction would not be unfair or unjust. View "SUPERTECH, INC. V. MY CHOICE SOFTWARE, LLC" on Justia Law

Delta Airlines contracted with Lands’ End to supply new uniforms for its employees, which were manufactured overseas and distributed to approximately 64,000 workers. After the uniforms were issued, many employees reported that the garments transferred dye onto other surfaces and caused a range of health symptoms, including skin irritation and respiratory issues. Two groups of Delta employees filed lawsuits: one group sought damages for property damage and breach of express warranty as intended beneficiaries of the contract between Delta and Lands’ End, while the other group pursued personal injury claims, alleging the uniforms were defectively manufactured or designed and that Lands’ End failed to warn of these defects.The United States District Court for the Western District of Wisconsin consolidated the actions and, after discovery, granted summary judgment in favor of Lands’ End on all claims. For the personal injury claims, the court excluded the plaintiffs’ expert testimony on defect and causation, finding the opinions unreliable under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc. The court also found that the plaintiffs failed to present sufficient evidence that the uniforms were defective or that any defect caused their injuries. On the breach of warranty claim, the court determined that Lands’ End had not breached the contract’s satisfaction guarantee because plaintiffs had not returned their uniforms as required by the contract’s terms.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The Seventh Circuit held that the exclusion of the plaintiffs’ expert testimony was not an abuse of discretion, as the experts failed to reliably establish defect or causation. The court also held that summary judgment on the breach of warranty claim was proper because the contract’s return requirement was reasonable and not an unlawful limitation on the express warranty. The district court’s judgment was affirmed in full. View "Gilbert v Lands' End, Inc." on Justia Law

A homebuyer entered into an agreement to purchase a property in Titusville, Pennsylvania, and, before completing the purchase, orally contracted with a home inspector to perform an inspection. The inspector delivered a report that did not disclose any structural or foundational issues. Relying on this report, the buyer purchased the property. The following winter, a burst pipe led to the discovery of significant defects, including the absence of a proper foundation and improper ductwork, which had not been disclosed in the inspection report. The buyer filed suit against the inspector more than two years after the report was delivered, alleging violations of the Pennsylvania Home Inspection Law, breach of contract, and violations of the Unfair Trade Practices and Consumer Protection Law.The Court of Common Pleas of Crawford County overruled most of the inspector’s preliminary objections and denied a motion for judgment on the pleadings, finding ambiguity in the statute governing the time to bring actions arising from home inspection reports. The trial court reasoned that the statute could be interpreted as either a statute of limitations or a statute of repose and declined to grant judgment for the inspector. On appeal, the Superior Court reversed, holding that the statute in question was a statute of repose, not a statute of limitations, and that all of the buyer’s claims were time-barred because they were filed more than one year after the inspection report was delivered.The Supreme Court of Pennsylvania reviewed whether the relevant statutory provision, 68 Pa.C.S. § 7512, is a statute of repose or a statute of limitations. The Court held that the statute is a statute of repose, barring any action to recover damages arising from a home inspection report if not commenced within one year of the report’s delivery, regardless of when the claim accrues. The Court affirmed the Superior Court’s judgment. View "Gidor v. Mangus" on Justia Law

This dispute arose from the use of easements on subdivided property in Yellowstone County, Montana. After a series of conveyances, Patti and Steve Schubert owned Tract 7B-2, which benefited from a 30-foot-wide access easement across neighboring Tract 7B-1, owned by Jeremy and Tynagh Toepp. The Schuberts installed a large electric gate, keypad, and package box within the easement, and engaged in activities such as removing vegetation and using heavy equipment, which the Toepps claimed damaged their property and overburdened the easement. The Schuberts also challenged the Toepps’ rights to use a shared well. The parties attempted to resolve their disputes through mediation, resulting in a signed Memorandum of Understanding (MOU), but disagreements persisted over the interpretation and scope of the settlement, particularly regarding the gate and the use of the easement.The Thirteenth Judicial District Court, Yellowstone County, heard cross-motions to enforce the MOU. Sitting without a jury, the District Court found the MOU to be a binding agreement that implied the Schuberts’ encroaching gate could remain in place. The court limited the Schuberts’ use of the access easement to ingress and egress only, prohibited unnecessary removal of vegetation, and awarded attorney fees to the Toepps, finding the Schuberts had unreasonably multiplied the proceedings by insisting on additional terms not included in the MOU.On appeal, the Supreme Court of the State of Montana reversed the District Court’s conclusion that the MOU allowed the encroaching gate to remain, holding that the MOU did not contemplate a gate easement and that the gate constituted an unlawful encroachment requiring removal. The Supreme Court affirmed the District Court’s limitation of the easement to ingress and egress and its award of attorney fees to the Toepps, finding no abuse of discretion. The case was remanded for entry of judgment consistent with these holdings. View "Schubert v. Toepp" on Justia Law

Several healthcare employees in Colorado, including those at the University of Colorado Hospital Authority and South Denver Cardiology Associates, were terminated after refusing to comply with their employers’ COVID-19 vaccination mandates. These mandates, implemented in 2021, required employees to either be vaccinated or obtain a medical or religious exemption. The plaintiffs declined vaccination and did not seek exemptions, resulting in their dismissal.Following their terminations, the plaintiffs filed separate lawsuits in the United States District Court for the District of Colorado, asserting nearly identical claims. They alleged violations of statutory, constitutional, and contractual rights, including claims under 42 U.S.C. § 1983, state-law breach of contract and tort claims, and an implied private right of action under the Food, Drug, and Cosmetic Act. The defendants moved to dismiss on grounds such as sovereign immunity, qualified immunity, and failure to state a claim. The district courts dismissed all claims, finding that the plaintiffs had not adequately pled any viable legal theory. The courts also denied the plaintiffs’ requests to amend their complaints after judgment was entered.On appeal, the United States Court of Appeals for the Tenth Circuit reviewed the dismissals de novo. The court held that none of the statutes cited by the plaintiffs—including the Emergency Use Authorization statute, the PREP Act, and 10 U.S.C. § 980—unambiguously conferred individual rights enforceable under § 1983. The court also found that the constitutional claims, including those based on due process and equal protection, were not adequately pled and that the breach of contract claim was waived for lack of argument. The Tenth Circuit affirmed the district courts’ judgments, holding that the plaintiffs failed to state any claim upon which relief could be granted and that the lower courts did not abuse their discretion in denying leave to amend. View "Timken v. South Denver Cardiology Associates" on Justia Law

A commercial landlord and tenant entered into a lease for office space, which was later amended to include a limited personal guaranty by an officer of the tenant. The guaranty, often referred to as a "good guy" guaranty, stated that the guarantor would be liable for the tenant’s monetary obligations under the lease up to the date the tenant and its affiliates had completely vacated and surrendered the premises, provided the landlord was given at least thirty days’ notice. The tenant stopped paying rent and utilities in 2020, notified the landlord of its intent to vacate, and surrendered the premises at the end of November 2020.The landlord sued both the tenant and the guarantor in the Supreme Court, New York County, seeking unpaid rent and expenses from before and after the surrender, as well as attorneys’ fees. The Supreme Court initially granted summary judgment to the landlord for pre-vacatur damages but denied summary judgment for post-vacatur damages pending further discovery. Upon reargument, the Supreme Court granted summary judgment for post-vacatur damages as well, holding both the tenant and guarantor jointly and severally liable. The Appellate Division, First Department, affirmed, reasoning that the guaranty required the landlord’s written acceptance of the surrender for the guarantor’s liability to end.The New York Court of Appeals reviewed the case and reversed the lower courts’ decisions. The Court of Appeals held that, under the terms of the guaranty, the guarantor’s liability ended when the tenant vacated and surrendered the premises, and that liability was not conditioned on the landlord’s acceptance of the surrender. The court found that the language of the guaranty was clear and did not require the landlord’s written acceptance, and that interpreting it otherwise would render key provisions superfluous. The court denied the landlord’s motions for summary judgment on post-vacatur damages. View "1995 CAM LLC v. West Side Advisors, LLC" on Justia Law

Pro-Mark Services, Inc., a general contracting construction company, obtained payment and performance bonds from Hartford Accident and Indemnity Company as required by the Miller Act. To facilitate this, Pro-Mark and other indemnitors entered into a General Indemnity Agreement (GIA) with Hartford, assigning certain rights related to bonded contracts. Later, Pro-Mark entered into two substantial business loan agreements with Capital Credit Union (CCU), secured by most of Pro-Mark’s assets, including deposit accounts. Recognizing potential conflicts over asset priorities, Hartford and CCU executed an Intercreditor Collateral Agreement (ICA) to define their respective rights and priorities in Pro-Mark’s assets, distinguishing between “Bank Priority Collateral” and “Surety Priority Collateral,” and specifying how proceeds should be distributed.After Pro-Mark filed for chapter 7 bankruptcy in the United States Bankruptcy Court for the District of North Dakota, CCU placed an administrative freeze on Pro-Mark’s deposit accounts and moved for relief from the automatic stay to exercise its right of setoff against the funds in those accounts. Hartford objected, claiming a superior interest in the funds based on the GIA and ICA. The bankruptcy court held hearings and, after considering the parties’ briefs and stipulated facts, granted CCU’s motion, allowing it to set off the funds. The bankruptcy court found CCU had met its burden for setoff and determined Hartford did not have a sufficient interest in the deposited funds, focusing on the GIA and North Dakota’s Uniform Commercial Code, and not the ICA.On appeal, the United States Bankruptcy Appellate Panel for the Eighth Circuit held that while the bankruptcy court had authority to adjudicate the priority dispute, it erred by failing to analyze the parties’ respective rights under the ICA, which governed the priority of distributions. The Panel reversed the bankruptcy court’s order and remanded the case for further proceedings consistent with its opinion. View "Hartford Accident and Indemnity Company v. Capital Credit Union" on Justia Law

Carol Rose, a prominent figure in the American Quarter Horse industry, entered into a series of agreements with Lori and Philip Aaron in 2013. The Aarons agreed to purchase a group of Rose’s horses at an auction, lease her Gainesville Ranch with an option to buy, and employ her as a consultant. The relationship quickly soured after the auction, with both sides accusing each other of breaches. Rose locked the Aarons out of the ranch and asserted a stable keeper’s lien for charges exceeding those related to the care of the Aarons’ horses. The Aarons paid the demanded sum and removed their horses. Litigation ensued, including claims by Jay McLaughlin, Rose’s former trainer, for damages related to the value of two fillies.The bankruptcy filings by Rose and her company led to the removal of the ongoing state-court litigation to the United States Bankruptcy Court. After trial, the bankruptcy court ruled in favor of the Aarons on their breach of contract and Texas Theft Liability Act (TTLA) claims, awarding damages and attorneys’ fees, and in favor of McLaughlin on his claim. The United States District Court for the Eastern District of Texas reversed the bankruptcy court’s rulings on the Aarons’ claims and McLaughlin’s claim, vacating the damages and fee awards.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s reversal of the damages award for the Aarons’ breach of contract claim, holding that the Aarons failed to prove damages under any recognized Texas law measure. The Fifth Circuit reversed the district court’s judgment on the TTLA claim, holding that Rose’s threat to retain the Aarons’ horses for more than the lawful amount could constitute coercion under the TTLA, and remanded for further fact finding on intent and causation. The court also reversed and remanded the judgment regarding McLaughlin’s claim, finding his damages testimony legally insufficient. The court left the issue of attorneys’ fees for further proceedings. View "Rose v. Equis Equine" on Justia Law

Two plaintiffs, each holding checking accounts with a bank, brought a class action lawsuit challenging the bank’s practices regarding overdraft fees. One plaintiff alleged that the bank breached its contract by charging multiple overdraft fees on transactions that did not initially overdraw the account but were later settled when the account was already overdrawn. The other plaintiff claimed a breach of contract when the bank charged multiple overdraft fees for repeated attempts to process a single payment that was returned for insufficient funds. Both plaintiffs sought to represent similarly situated customers.The Shawnee District Court granted the bank’s motion to dismiss, relying on a contract provision requiring customers to notify the bank of any “errors or improper charges” within 30 days of receiving their account statement. The court found this notice provision unambiguous and concluded that, because the plaintiffs did not provide timely notice, they were barred from bringing their claims. The Kansas Court of Appeals reversed, holding that the term “improper charges” in the contract was ambiguous and that the district court improperly engaged in fact-finding at the motion to dismiss stage. The appellate court determined that whether the notice provision applied was a factual question and that the ambiguity should be construed against the bank as the contract’s drafter.The Supreme Court of the State of Kansas reviewed the case and agreed with the Court of Appeals that the term “improper charges” was ambiguous. The Supreme Court went further, holding that this ambiguity must be construed against the bank, and as a matter of law, the notice provision did not apply to the overdraft fees at issue. The Supreme Court affirmed the judgment of the Court of Appeals, reversed the district court’s dismissal, and remanded the case for further proceedings. View "Harding v. Capitol Federal Savings Bank " on Justia Law