Justia Contracts Opinion Summaries

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

Fetch! Pet Care, Inc., a nationwide franchisor of pet-care services, alleged that a group of former franchisees coordinated to exit their franchise agreements and start competing businesses, allegedly misappropriating Fetch!’s branding, client lists, intellectual property, and trade secrets. The franchisees contended that the newer “2.0” franchise model imposed high fees, delivered poor support, and led to high attrition, while some “1.0” franchisees claimed they were forced out of the system unexpectedly, leaving them no choice but to start their own businesses. A franchisee association was formed, and many franchisees sent rescission notices and pursued arbitration. Fetch! responded by filing suit for breach of contract, trademark infringement, and misappropriation of trade secrets, and sought injunctive relief to prevent the franchisees from operating competing businesses or using its intellectual property.The United States District Court for the Eastern District of Michigan held evidentiary hearings and granted Fetch!’s motion for a temporary restraining order and preliminary injunction in part, ordering defendants to stop using Fetch!’s trademarks and cease communication with current Fetch! franchisees, but denied broader injunctive relief. The court reasoned that a full injunction could harm ongoing arbitration proceedings and found sufficient evidence to invoke the doctrine of unclean hands against Fetch!, based on allegedly deceptive conduct in selling franchises. Fetch! timely appealed the district court’s order.The United States Court of Appeals for the Sixth Circuit reviewed the district court’s application of the unclean hands doctrine for abuse of discretion and affirmed. The appellate court held that the district court acted within its discretion in denying broad injunctive relief based on Fetch!’s bad faith and deceptive marketing practices as an underlying cause of franchisee conduct. The court clarified standards for irreparable harm and affirmed the partial denial of preliminary injunction, relying on the doctrine of unclean hands rather than other defenses. View "Fetch! Pet Care, Inc. v. Atomic Pawz Inc." on Justia Law

A pedestrian was fatally struck by a vehicle on a public roadway in Riverside, California. The decedent’s family sued the City of Riverside and others for wrongful death and dangerous condition of public property. In response, the City filed a cross-complaint against various contractors and their insurers, including Design Services, Inc. (DSI) and RLI Insurance Company (RLI). The City alleged that DSI had contracted to perform street lighting evaluations and upgrades, and that the contract required DSI to obtain insurance from RLI naming the City as an additional insured. The City contended RLI refused to defend and indemnify the City against the wrongful death lawsuit, despite its obligations under the policy.The Superior Court of Riverside County sustained RLI’s demurrer without leave to amend, finding that under Royal Globe Ins. Co. v. Superior Court, a plaintiff may not sue both the insurer and the insured in the same action. The court held that joining RLI in the same lawsuit as its insured, DSI, would risk prejudice by alerting the jury to the existence of insurance, in violation of California Evidence Code section 1155. The court dismissed the City’s cross-complaint as to RLI but allowed the City to pursue its claims in a separate action.The California Court of Appeal, Fourth Appellate District, Division One, reversed the judgment of dismissal. The appellate court held that the prohibition on joining an insurer and its insured in the same action does not apply when the City, as an additional insured, asserts its own contractual rights against RLI. The court found the City’s contractual privity with RLI distinguishable from the situation in Royal Globe and noted that any risk of prejudice could be addressed through severance or bifurcation. The case was remanded for further proceedings on the City’s claims against RLI. View "City of Riverside v. RLI Insurance Co." on Justia Law

After experiencing significant water damage in their home when a water heater malfunctioned in July 2017, the plaintiffs hired the defendant company to remediate the damage. The parties executed an agreement that included a prominent clause limiting the time to bring any claim related to the contract to one year from when the plaintiffs knew or should have known of the cause of action. The defendant did not commence the remediation work, and the plaintiffs eventually hired another company. Despite this, their home developed extensive mold and was ultimately demolished. Nearly three years after becoming aware of the defendant’s failure to perform, the plaintiffs filed a lawsuit alleging unfair and deceptive trade practices.The case was first reviewed by the Superior Court of Mecklenburg County, which granted summary judgment in favor of the defendant, concluding that the plaintiffs’ claim was barred by the contractual one-year limitation period. The plaintiffs appealed, and the North Carolina Court of Appeals vacated the trial court’s order. The Court of Appeals held that the one-year contractual limitation was unenforceable as applied to claims under the Unfair and Deceptive Trade Practices Act (UDTPA), reasoning that public policy and the statute’s purpose precluded contractual abrogation of the four-year limitation period established by N.C.G.S. § 75-16.2.Upon discretionary review, the Supreme Court of North Carolina reversed the Court of Appeals. The Supreme Court held that, absent a statute prohibiting it, parties may contractually shorten the period for bringing claims, including UDTPA claims, so long as the agreed period is reasonable. The legislature had not prohibited such contractual limitation periods, and the one-year period was not shown to be unreasonable. Thus, the trial court’s grant of summary judgment in favor of the defendant was proper. The Supreme Court reversed the decision of the Court of Appeals. View "Warren v. Cielo Ventures, Inc" on Justia Law

A law firm provided legal services to a construction business owned by Nick Muntjan. Before the engagement, Nick’s father, Paul Muntjan, orally promised to pay for the firm’s services. The firm then sent an engagement letter addressed to both Nick and Paul, but neither signed it. Subsequently, Paul sent several emails to the firm in which he discussed payment for the services, referenced invoices, and used language indicating shared responsibility for payment. Some payments were made using Paul’s credit card, but a significant balance remained unpaid.To recover the unpaid fees, the law firm sued Paul Muntjan in the District Court, Wake County, alleging breach of contract. After a bench trial, the court found that Paul had promised to pay for the firm’s services and concluded that his promise was an “original promise,” not subject to the statute of frauds, so no written agreement was required. The court entered judgment in favor of the law firm.Paul appealed, and the North Carolina Court of Appeals reversed the trial court’s decision. The majority found that Paul’s promise was a collateral guaranty to pay his son’s debts and therefore must satisfy the statute of frauds, which requires such an agreement to be in writing and signed. The majority also found that Paul’s emails did not clearly express a written promise to pay and thus did not satisfy the statute. A dissenting judge argued that the statute of frauds was satisfied by the emails.The Supreme Court of North Carolina reviewed the case and held that Paul’s emails constituted a sufficient written memorandum of his oral guaranty to pay the debts, satisfying the statute of frauds under N.C.G.S. § 22-1. Thus, the Supreme Court reversed the decision of the Court of Appeals. View "Smith Debnam Narron Drake Saintsing & Myers, LLP v. Muntjan" on Justia Law

A renewable energy developer was awarded a standard-offer contract in 2014 to build a solar facility in Bennington, Vermont, with a requirement to commission the project by 2016. The developer repeatedly sought and received extensions to this deadline, while simultaneously pursuing a certificate of public good (CPG), which is also required for construction. The Public Utility Commission (PUC) granted the CPG in 2018, but it was appealed, reversed, and ultimately denied on remand due to violations of local land conservation measures and adverse impacts on aesthetics. The Vermont Supreme Court affirmed the final CPG denial in 2023.While litigation over the CPG was ongoing, the developer continued to seek extensions of its standard-offer contract’s commissioning milestone. The fifth extension request, filed in 2021, asked for a deadline twelve months after the Supreme Court’s mandate in the CPG appeal. The hearing officer recommended granting it, but the PUC did not act on the request until 2024, by which time the developer’s CPG had been finally denied. The PUC dismissed the fifth extension request as moot, finding the contract had expired by its own terms. The PUC also denied the developer’s motion for reconsideration and a sixth extension request, on the same grounds.On appeal, the Vermont Supreme Court reviewed the PUC’s actions with deference, upholding its factual findings unless clearly erroneous and its discretionary decisions unless there was an abuse of discretion. The Court held that the PUC properly concluded the requested extension was moot, the contract was null and void by its terms, and there was no abuse of discretion. The Court also rejected arguments that the PUC’s actions were inconsistent with other cases or violated constitutional rights. The orders of the PUC were affirmed. View "In re Petition of Apple Hill Solar LLC" on Justia Law

A redevelopment project in Tunica County, Mississippi, involved a distressed property previously operated as a casino. The county sought to acquire the property from its private owner, TJM Properties, Inc., with plans to redevelop it into a convention center complex. Plaintiffs, including Don Hewitt, Advanced Technology Building Solutions, LLC (ATBS), and Tunica Hospitality & Entertainment, LLC (TH&E), invested significant sums in anticipation of becoming the developer and manager under a series of agreements and extensions. However, the purchase option was never exercised, and a senior lienholder ultimately foreclosed on the property.The Tunica County Chancery Court found that the plaintiffs never acquired title, held no enforceable lien, and were not parties to the key asset-purchase agreement. The court dismissed their claims with prejudice, holding that they lacked a legally cognizable property interest, standing to assert a claim, or entitlement to relief. Additionally, the chancery court enforced a previous agreed order requiring the plaintiffs to pay $200,000 to TJM for property maintenance, a payment that was never made.The Supreme Court of Mississippi reviewed the case and affirmed the chancery court’s dismissal of all claims with prejudice. The court held that the plaintiffs had no valid or enforceable lien on the property because they were not licensed contractors, performed no actual construction, and had previously waived any lien rights by consent order. The court also found no error in enforcing the $200,000 judgment and concluded that the plaintiffs lacked standing to challenge the transfer of funds between the county and TJM. The judgment of the Tunica County Chancery Court was therefore affirmed. View "Hewitt v. TJM Properties, Inc." on Justia Law

USAA Savings Bank closed Michael Goff’s credit card account, providing him with inconsistent explanations for its actions. Goff pursued arbitration under the arbitration agreement contained in his credit card contract, seeking actual and punitive damages. The agreement allowed the arbitrator to award punitive damages but explicitly required a post-award review of such damages, with procedural protections and a written, reasoned explanation, before any punitive damages award could become final.An arbitrator held an evidentiary hearing and determined that USAA had violated the Equal Credit Opportunity Act by failing to provide Goff with adequate notice upon closing his account. Despite finding that Goff suffered no actual damages, the arbitrator awarded $10,000 in punitive damages and over $77,000 in attorney’s fees. USAA requested the post-award review mandated by the agreement, but the arbitrator declined, citing American Arbitration Association rules, and finalized the award without conducting the review.USAA filed a motion in the United States District Court for the Northern District of Illinois, seeking to vacate the arbitral award on the ground that the arbitrator had exceeded her authority by disregarding the post-award review requirement. The district court acknowledged the arbitrator’s error but confirmed the award, concluding it nonetheless “drew from the essence of the arbitration agreement.” USAA appealed, and Goff sought sanctions.The United States Court of Appeals for the Seventh Circuit held that the arbitrator exceeded her authority by ignoring the arbitration agreement’s clear requirement for a post-award review of punitive damages. The court determined there was no “possible interpretive route” to support the arbitrator’s action, vacated the district court’s judgment, denied Goff’s motion for sanctions, and remanded with instructions to refer the matter back to the original arbitrator for proceedings consistent with the agreement. View "USAA Savings Bank v Goff" on Justia Law

A former high-level employee left her position at a company after receiving incentive equity agreements that included non-compete, non-solicitation, and confidentiality provisions. She subsequently joined a competitor. The company alleged that she breached those provisions by working for the competitor and that, in the short time since her move, at least five important clients had also moved to the competitor, an unusual loss rate for the business. The employee’s role at her former employer was not confined to a single region, and she was involved in high-level strategic decisions affecting company operations nationwide. The restrictive covenants at issue included an 18-month, nationwide non-compete and were supported by incentive units that would vest over time or upon sale of the company.After the company filed suit, the Court of Chancery of the State of Delaware denied a temporary restraining order but expedited proceedings. The defendants moved to dismiss. The company amended its complaint with more detailed allegations. The Court of Chancery granted the motion to dismiss, holding that the non-compete was unenforceable due to its breadth and the minimal value of the consideration provided, and that the allegations of breach of the non-solicitation and confidentiality provisions were conclusory. It also dismissed related tortious interference claims.On appeal, the Supreme Court of the State of Delaware reviewed the dismissal de novo. The Supreme Court held that the Court of Chancery improperly drew inferences against the employer at the pleading stage and failed to credit factual allegations supporting the claims. The Supreme Court found it was reasonably conceivable that the non-compete, non-solicitation, and confidentiality provisions could be enforceable, and that the complaint sufficiently alleged breaches. The Supreme Court reversed and remanded for further proceedings, limiting its holding to the adequacy of the pleadings and expressing no view on ultimate enforceability. View "Payscale Inc. v. Norman" on Justia Law