Justia Contracts Opinion Summaries

A Minnesota thoroughbred horse breeding and racing company and its CEO became dissatisfied with the legal work of three separate law firms in various matters, including business contract drafting and litigation. They hired an attorney employed by a national law firm to pursue legal malpractice claims against their prior counsel. Engagement letters for some of this representation included a provision selecting Ohio law to govern the attorney-client relationship. The malpractice actions against the original firms were unsuccessful, with adverse judgments in both federal and state courts. Following these outcomes, the company and CEO sued their new attorneys in federal court in Minnesota, alleging malpractice, breach of contract, breach of fiduciary duty, and fraud. The defendants counterclaimed for unpaid legal fees.The United States District Court for the District of Minnesota dismissed the malpractice, contract, and fiduciary duty claims related to two of the underlying matters (those involving Dorsey and Foley) as time-barred under Ohio’s one-year statute of limitations, which the court applied pursuant to the contractual choice-of-law provision. The court held that plaintiffs did not meet the rare standard for substituting Minnesota’s longer statute of limitations. For the remaining malpractice claim (involving Rambicure), the district court granted summary judgment to the defendants because plaintiffs failed to serve the expert disclosure affidavit required by Minnesota law within the deadline, and expert testimony was necessary to establish a prima facie case. The court also dismissed related fraud claims on the same grounds.The United States Court of Appeals for the Eighth Circuit affirmed. It held that Ohio’s one-year statute of limitations barred the malpractice, contract, and fiduciary duty claims arising from the Dorsey and Foley matters. It also held that dismissal of the Rambicure-related claims and the fraud claims for failure to serve the required expert disclosure affidavit was proper, as expert testimony was necessary to support those claims. The court affirmed the district court’s judgment in favor of the defendants on all claims. View "Everest Stables, Inc. v. Porter, Wright LLP" on Justia Law

A married couple, both active-duty military members, separated after nearly two decades of marriage and executed a notarized separation agreement in 2020 while stationed in Okinawa. The agreement provided that the wife would receive $1,500 per month in maintenance until divorce, 20% of the husband’s military retirement pay upon his retirement, and be named as beneficiary of his Survivor Benefit Plan (SBP). The wife later initiated a divorce in South Dakota, and the parties submitted a stipulation and settlement agreement incorporating key provisions from their separation. The divorce decree was filed in February 2021. Over time, the husband failed to make some required maintenance payments and, after retiring, did not pay the wife her portion of his retirement nor complete the SBP paperwork. The wife sought contempt and modifications, while the husband argued compliance was impossible due to deficiencies in the decree.The Circuit Court of the First Judicial Circuit, Charles Mix County, declined to hold the husband in contempt, finding the divorce decree’s orders too vague for enforcement. The court denied modification of the property division, found no fraud or coercion, and refused to vacate the decree. It reduced the wife’s retirement share from 20% to 16.1% using a coverture formula, ordered payment of $5,000 in arrears plus 8% interest, and instructed the husband to effectuate the SBP. Both parties appealed.The Supreme Court of the State of South Dakota affirmed in part and reversed in part. It held that reducing the wife’s retirement share below the agreed 20% was error, as was applying an 8% rather than the statutory 10% interest rate to arrears. The court remanded for correction of those issues, but affirmed the denial of contempt, refusal to vacate the decree, and the exclusion of additional payments for stimulus or tax refunds. The court also found no due process violations or abuse of discretion in declining to take sworn testimony. View "Shevling v. Major" on Justia Law

The case concerns the United States Postal Service’s contract for canine explosive-detection services. The USPS awarded the contract to K2 Solutions, Inc. (“K2”), while Global K9 Protection Group (“Global K9”) and Michael Stapleton Associates, Ltd. were unsuccessful bidders. Global K9 filed a bid protest in the United States Court of Federal Claims, initially challenging the evaluation of its bid but not directly alleging misconduct by K2. K2 received notice of the original complaint and chose not to intervene, believing the government would adequately defend its interests.The Claims Court case evolved when Global K9 filed an amended complaint under seal, adding new allegations that K2 had materially misrepresented its capabilities during the bidding process. Contrary to court rules and the protective order, Global K9 did not file a redacted public version of the amended complaint, and K2 did not receive notice of these new allegations. The Claims Court ultimately found that K2 had made a material misrepresentation and issued an injunction disqualifying K2 from contract performance. After learning of the injunction, K2 moved to intervene, but by then, the USPS had terminated K2’s contract for default, relying in part on the court’s findings.K2 appealed the denial of its motion to intervene. The United States Court of Appeals for the Federal Circuit held the case was not moot because K2’s interests in contesting the misrepresentation finding remained live in separate proceedings. However, the appellate court affirmed the Claims Court’s decision that K2’s motion to intervene was untimely, as K2 could have sought intervention upon learning of the amended complaint’s existence. The Federal Circuit also found that K2 was not a necessary party because it failed to act promptly to protect its interests. The judgment of the Claims Court was affirmed. View "GLOBAL K9 PROTECTION GROUP, LLC v. US " on Justia Law

A hedge fund manager, his personal attorney, and an expert in affordable housing formed a business complex to invest in affordable housing projects. The business was successful and expanded, with the expert, Blodgett, bringing in a new partner, Tatum, and building a tax credit investment arm. Blodgett and Tatum, believing they deserved more equity, devised plans either to restructure the company or to leave and start a competitor. During these efforts, Blodgett shared confidential information with family offices and advisors. When their restructuring plan was rejected, they moved toward departure. An attorney for the business, monitoring internal emails, discovered evidence that Blodgett was preparing to launch a new venture. Blodgett was terminated for cause, and his equity interests were purportedly canceled.Blodgett initiated arbitration, alleging breach of his employment agreement, while two affiliates of the business sued him in the Delaware Court of Chancery for breach of LLC agreements; Blodgett counterclaimed, asserting improper cancellation of his equity. The arbitrator found Blodgett breached his employment agreement’s confidentiality provisions but ruled that only his equity in pending deals could be canceled. Blodgett’s equity in non-pending deals remained protected, as the LLC agreements did not provide an independent right to cancel his interests.In the Court of Chancery of the State of Delaware, the court held that Blodgett was entitled to summary judgment. The court found that Blodgett’s conduct was in his capacity as an employee, governed by his employment agreement, not as a member under the LLC agreements. The court had previously granted summary judgment to Blodgett on the issue of improper equity cancellation and reaffirmed this, clarifying that the LLC agreements did not provide an independent basis for forfeiture. The court granted summary judgment for Blodgett and directed further proceedings on remedies for the improper cancellation of his equity in non-pending deals. View "Fairstead Capital Management LLC v. Blodgett" on Justia Law

A Puerto Rican international banking entity, which operated under an offshore charter and was regulated by Puerto Rico’s Office of the Commissioner of Financial Institutions, maintained a master account with the Federal Reserve Bank of New York. In 2019, following a federal investigation into potential anti-money laundering violations involving a Venezuelan client, the entity’s offices were raided and its account was temporarily suspended. After the investigation concluded with a fine and compliance improvements, the account was restored under stricter risk-mitigation terms. However, in 2022 and 2023, the Federal Reserve Bank determined the entity had not met required compliance standards and ultimately terminated the master account, citing serious risk concerns related to money laundering and deficiencies in compliance programs.The entity sued in the United States District Court for the Southern District of New York, seeking to compel reinstatement of its account and damages. It claimed a statutory entitlement to a master account under the Federal Reserve Act, as amended by the Monetary Control Act, and brought claims under the Administrative Procedure Act, Mandamus Act, Declaratory Judgment Act, the Fifth Amendment, and New York contract law, among others. The district court denied preliminary relief and dismissed all claims, holding that the relevant statutes did not create a nondiscretionary entitlement to a master account and finding failures in both standing and the plausibility of the claims.The United States Court of Appeals for the Second Circuit affirmed. It held that the Federal Reserve Act does not grant depository institutions a statutory or nondiscretionary right to a master account; instead, regional Reserve Banks retain discretion over account access. The court further found that the plaintiff lacked standing to sue the Federal Reserve Board of Governors, failed to plausibly allege contract or constitutional claims, and that amendment of the complaint would be futile. The district court’s judgment was affirmed in all respects. View "Banco San Juan Internacional, Inc. v. Fed. Rsrv. Bank of N.Y., Bd. of Governors of the Fed. Rsrv." on Justia Law

BMK Enterprises purchased a commercial property from Bailey Enterprises in 2018. As part of the transaction, the parties agreed to a provision granting BMK a right of first refusal if Bailey decided to sell the adjacent Bolinger Property, which contained storage units. In 2019, Bailey informed BMK of its intent to sell the Bolinger Property, but BMK did not purchase it at that time. Bailey later sold the Bolinger Property to a third party in 2021 without further notice to BMK. BMK subsequently filed suit against Bailey for breach of contract and breach of the implied covenant of good faith and fair dealing, alleging that Bailey failed to honor the right of first refusal provision. BMK also sued the real estate broker and agent involved in the sale, but those claims were dismissed and are not part of this appeal.The District Court of the Eighteenth Judicial District granted summary judgment in favor of Bailey. It concluded that the right of first refusal provision was unenforceable as a matter of law because it inadequately described the property subject to the right and failed to specify the price, rendering the contract provision ambiguous and void. The court declined to consider extrinsic evidence to clarify the parties’ intent, reasoning that the ambiguity could not be resolved through legal canons or extrinsic evidence.The Supreme Court of the State of Montana reviewed the District Court’s decision de novo. It held that while the provision was ambiguous, the District Court erred by not considering extrinsic evidence to ascertain the parties’ intent and resolve the ambiguity. The Supreme Court reversed the District Court’s grant of summary judgment and remanded the case for further proceedings to determine whether extrinsic evidence could clarify the object of the contract and render the right of first refusal enforceable. View "BMK Enterprises v. Bailey" on Justia Law

In January 2015, the plaintiff loaned money to Pradhi, Inc., a corporation controlled by the defendant, under a written agreement requiring repayment within one year at zero percent interest. No payments were made during the one-year repayment period, which ended in January 2016. Beginning in June 2021, over five years after the loan was due, the defendant made three $1,000 payments, with the first two checks referencing the loan in their memo sections. The defendant later denied owing the debt, and refused to provide a personal guarantee. The plaintiff filed suit in July 2024, alleging breach of contract and fraud.The Superior Court of San Diego County reviewed the case. The defendants responded with a demurrer, arguing that the claims were barred by the statute of limitations. The plaintiff opposed, asserting that the check annotations constituted a written acknowledgment of the debt sufficient to revive it under Western Coal and Mining Co. v. Jones. The trial court sustained the demurrer without leave to amend, finding that the four-year statute of limitations for written contracts had expired by January 2020, and that the payments made after that date could not revive the barred claim. The court distinguished Western Coal, noting that it involved a new, signed agreement rather than check annotations.The California Court of Appeal, Fourth Appellate District, Division One, reviewed the trial court’s decision de novo. The court held that the claims were barred by the statute of limitations and concluded that the check annotations did not constitute a sufficient written acknowledgment to create a new contract or revive the cause of action. The judgment of dismissal was affirmed, and costs were awarded to the defendant. View "Dawadi v. Adhikari" on Justia Law

After suffering a car accident more than 40 years ago, the plaintiff lost the use of her arms and legs and required substantial assistance with daily activities. She worked for a regional education agency for over three decades, during which her employer began offering group long-term care insurance through the defendant insurer. The policy was “guaranteed issue,” so preexisting conditions were not a barrier to enrollment, but it contained an “existing-loss provision” excluding coverage for losses of daily living activities that already existed on the policy’s effective date. The plaintiff, after consulting with both agency specialists and the insurer—without fully disclosing her limitations—enrolled in the policy and paid premiums for nearly 20 years. Upon retiring, she filed a claim for benefits based on her longstanding impairments. Her claim was denied, as her limitations predated the policy’s effective date.The plaintiff sued in state court, alleging breach of contract, fraudulent misrepresentation, and bad faith. After the case was removed to the United States District Court for the Northern District of Iowa, the defendant moved for summary judgment. The district court granted summary judgment to the insurer and dismissed the case, finding that the policy’s plain language did not cover losses existing before coverage began and that the plaintiff could not rely on the reasonable-expectations doctrine or statutory protections for preexisting conditions to obtain coverage.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the district court’s judgment. The Eighth Circuit held that under the unambiguous terms of the policy and applicable Iowa law, the insurer was not required to cover losses that predated the effective date of coverage. The court also rejected the plaintiff’s arguments based on Iowa statutes, administrative rules, and the reasonable-expectations doctrine, as well as her claims for bad faith and fraudulent misrepresentation, concluding that the insurer had a reasonable basis for denial. View "Child v. Unum Life Insurance Co. of America" on Justia Law

A company providing paratransit and microtransit services under contract with a regional public transportation authority subcontracted another company to supply vehicles and drivers. After several months, the subcontractor terminated the agreement and brought suit against the transportation company and the authority, asserting claims including breach of contract, quantum meruit, tortious interference, fraud, and negligent misrepresentation. The fraud claim centered on alleged false representations made to induce the subcontract.The trial court (Texas District Court) ruled on a motion to dismiss under Texas Rule of Civil Procedure 91a, which allows dismissal if pleadings show no legal or factual basis for relief. The court dismissed the fraud and other tort claims against all defendants, as well as the breach of contract claim against the transportation authority and its primary contractor. It limited potential contract damages as to the contractor’s subsidiary and severed and abated remaining claims. The subcontractor appealed the dismissal of its claims against the main transportation company.The Court of Appeals for the Fifth District of Texas reversed in part, finding that the breach of contract and fraud claims against the main transportation company had a basis in law and that its statutory immunity under Texas Transportation Code § 452.056(d) was not conclusively established. The Supreme Court of Texas, reviewing only the fraud claim, held that the statutory immunity did apply. Because the pleadings showed the transportation company was contractually performing the authority’s function, and the authority itself would be immune from a fraud claim (an intentional tort), the company was likewise immune from liability for fraud. Accordingly, the Supreme Court of Texas reversed the Court of Appeals’ judgment and reinstated the trial court’s dismissal of the fraud claim. The case was remanded for further proceedings on any remaining claims. View "MV TRANSPORTATION, INC. v. GDS TRANSPORT, LLC" on Justia Law

The case centers on an economic development agreement between a city and county in Texas and a private foundation, aimed at fostering the construction of a retail shopping center anchored by a Gander Mountain store. The city and county pledged portions of future sales-tax revenues to the foundation, which used the funds to secure a construction loan for the facility. The agreements required that the tax proceeds be used solely to repay the construction debt. Gander Mountain operated for eleven years before closing its store, but the shopping center continued to generate significant economic activity and tax revenue, with the former anchor tenant’s space later occupied by another retailer.After Gander Mountain’s closure in 2015, the city and county ceased payments, claiming the public purpose of the grants had ended. They sought declaratory relief in the District Court of Navarro County, arguing that continued payments would be unconstitutional under the Texas Constitution’s Gift Clauses. The district court granted summary judgment to the city and county, ruling that the closure ended the public purpose and that the agreements lacked sufficient controls to ensure public purposes were met. The Court of Appeals for the Tenth District of Texas affirmed, holding that the economic development grants remained subject to the Gift Clauses and that the agreements failed to satisfy their requirements.The Supreme Court of Texas reviewed the case and held that economic-development grants authorized by article III, section 52-a of the Texas Constitution remain subject to the Gift Clauses. The Court determined that the lower courts erred by focusing narrowly on the operation of a specific store rather than the broader public purpose of economic development. It held that the agreements likely satisfied the constitutional requirements of public purpose, consideration, and adequate controls, and that summary judgment was improper. The Supreme Court of Texas reversed the lower courts’ judgments and remanded the case for further proceedings. View "JPMORGAN CHASE BANK, N.A. v. CITY OF CORSICANA AND NAVARRO COUNTY" on Justia Law