Justia Contracts Opinion Summaries

A consumer purchased a licorice product manufactured by a Minnesota company, relying on packaging that stated the product was “Naturally Flavored,” “Natural Strawberry & Raspberry Flavored Licorice,” and “Free of . . . Artificial Colors & Flavors.” The consumer later learned, through laboratory testing, that the product contained DL malic acid, which is an artificial flavor created from petrochemical sources. The consumer alleged that this ingredient rendered the product’s labeling false or misleading, and filed a putative class action in California, asserting claims for violation of the California Consumers Legal Remedies Act, unjust enrichment, and breach of express warranty.The United States District Court for the Southern District of California dismissed the complaint with prejudice. The court found that the complaint failed to plead with sufficient particularity that the malic acid was artificial, thus not meeting the heightened pleading standard of Federal Rule of Civil Procedure 9(b). The district court also held that the plaintiff did not plausibly allege that a reasonable consumer would be misled by the product’s labeling, reasoning that the labels did not explicitly state the product was “all natural” or “100% natural,” and that the ingredients list disclosed both natural and artificial ingredients.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s dismissal. The appellate court held that the complaint satisfied Rule 9(b) because it identified the specifics of the alleged fraud and provided details about the laboratory testing. The court also held that the plaintiff plausibly alleged that a reasonable consumer could be misled by the product’s claim to be free of artificial flavors when it allegedly contained an artificial flavor. The case was remanded for further proceedings. View "TRAMMELL V. KLN ENTERPRISES, INC." on Justia Law

The dispute centers on allegations of breach of contract and related claims involving a credit card account that the defendant allegedly opened with a national bank. The bank claimed that the defendant opened the account, used it for purchases and cash advances, and then defaulted by failing to make the required payments, leaving a substantial unpaid balance. The defendant denied the material allegations in her answer to the complaint.After the initial pleadings, the bank moved for summary judgment in the Kent County Superior Court, asserting that there were no material facts in dispute and it was entitled to judgment as a matter of law. Importantly, the bank’s motion was not initially accompanied by any supporting affidavits or exhibits. The defendant filed an affidavit in opposition, pointing out the lack of any supporting affidavit from the bank. On the day of the hearing, the bank submitted an affidavit by emailing it to the hearing justice’s clerk, rather than filing and serving it in accordance with procedural rules. Despite the defendant’s objections to this late submission and improper service, the Superior Court granted summary judgment in favor of the bank, relying on the belated affidavit. Final judgment was entered, and the defendant appealed.The Supreme Court of Rhode Island reviewed the Superior Court’s grant of summary judgment de novo. The Supreme Court found that the bank’s failure to timely file and serve the affidavit, as required by Rule 6(c) of the Superior Court Rules of Civil Procedure, prejudiced the defendant’s ability to respond. The Supreme Court held that the hearing justice erred in relying on the untimely affidavit and in not postponing the hearing. The judgment of the Superior Court was vacated, and the case was remanded for further proceedings consistent with the Supreme Court’s opinion. View "American Express National Bank v. Perretta" on Justia Law

An Oklahoma company, formed to acquire mineral rights in Appalachia, alleged that two Texas parties failed to convey certain West Virginia mineral interests as contractually agreed. The Oklahoma company, which included non-Texas owners and participants, had funded the purchase of these rights, but a number of mineral deeds were recorded in the name of the Texas seller rather than the buyer. As a result, royalties from those mineral rights were paid to the seller. The Oklahoma plaintiff sought to compel the Texas defendants to reform the deeds, perform their contractual obligations, declare the plaintiff’s entitlement to the royalties, and enjoin the defendants from transferring the disputed interests.The 141st District Court in Tarrant County, Texas, denied the defendants’ plea to the jurisdiction and ultimately granted summary judgment for the plaintiff, awarding specific performance, deed reformation, declaratory relief, an injunction, and monetary relief. The court found it had jurisdiction over the parties and the contract, even though the mineral rights were located in West Virginia. On appeal, the Court of Appeals for the Second District of Texas reversed, holding that Texas courts lacked subject-matter jurisdiction because the suit’s gravamen was the adjudication of title to foreign (West Virginia) real property.The Supreme Court of Texas reviewed the matter and disagreed with the appellate court’s application of the so-called “gist” rule. The Supreme Court held that Texas courts with personal jurisdiction over the parties may issue in personam judgments concerning contractual obligations to convey out-of-state real property, as long as the judgment binds only the parties and does not purport to establish or alter title to the property by the court’s own force. The Supreme Court reversed the appellate court’s judgment and remanded for consideration of remaining issues. View "BRAXTON MINERALS III, LLC v. BAUER" on Justia Law

The case involves disputes among the descendants of Roy and Grace Whittenburg, who were beneficiaries of separate trusts holding interests in a large ranch spanning New Mexico and Colorado. After years of litigation over the ranch’s ownership, the parties signed two settlement agreements: a Partial Settlement Agreement (PSA) and a later Compromise Settlement Agreement (CSA). These agreements were intended to resolve their disputes, with provisions for partitioning the ranch and a clause designating Texas as the forum for enforcement. When the parties could not agree on partitioning, a group led by Angela Kate initiated partition proceedings in New Mexico, as allowed by the agreements. Another group, led by John Burk, opposed the partition, resulting in protracted litigation and additional attorney’s fees.The 251st District Court of Randall County, Texas, after a bench trial, found John Burk had breached the settlement agreements by opposing the partition in the New Mexico litigation, causing Angela Kate to incur $216,112 in extra attorney’s fees. Despite these findings, the trial court entered a take-nothing judgment, holding that the attorney’s fees from the New Mexico litigation were not recoverable as damages. The Court of Appeals for the Seventh District of Texas affirmed, reasoning that the American Rule barred recovery of such fees as damages for breach of contract.The Supreme Court of Texas reversed the Court of Appeals. It held that the American Rule does not bar recovery of attorney’s fees incurred in prior litigation as damages for breach of a settlement agreement, provided the breach was not itself the basis for that prior litigation. Because the fees at issue resulted from litigation initiated before John Burk’s breach, Angela Kate was entitled to recover those excess fees as actual damages. The Court also held she could seek reasonable attorney’s fees for the Texas suit, remanding for reconsideration of the appropriate amount. View "WANG v. WHITTENBURG" on Justia Law

A real estate transaction in Shelby County, Alabama, gave rise to this dispute. In 2007, a property owner named Ellison financed the purchase of her home with a loan secured by a mortgage, which was eventually sold to U.S. Bank Trust National Association and serviced by SN Servicing Corporation. After Ellison defaulted, U.S. Bank bought property at a foreclosure sale. Due to confusion over addresses and a lack of a survey, U.S. Bank and its agent mistakenly believed they were selling the Ellison property, a valuable bricked double-wide trailer, to Marco J. Bonilla. Bonilla purchased the property for $95,000, but later discovered that the deed conveyed a different and less valuable property. He was unable to resell the property he believed he owned.Bonilla sued U.S. Bank and SN Servicing in the Shelby Circuit Court, asserting claims for conversion, breach of contract, negligence, wantonness, and sought rescission of the deed. Both sides moved for summary judgment. The circuit court granted summary judgment for Bonilla on all claims, rescinded the transaction, ordered Bonilla to execute a quitclaim deed returning the property, and awarded him $114,000 in compensatory damages, $14,913.70 in interest, and $75,000 in punitive damages for wantonness. The court denied the defendants’ postjudgment motion without a hearing.On appeal, the Supreme Court of Alabama affirmed summary judgment for Bonilla on his claims for conversion, breach of contract, and negligence, as well as the compensatory and interest awards. However, the Court reversed the summary judgment on the wantonness claim and the award of punitive damages, holding that wantonness involves disputed factual issues concerning the defendants’ mental state that should be determined by a jury. The case was remanded for further proceedings on wantonness and punitive damages. View "U.S. Bank Trust National Association v. Bonilla" on Justia Law

This case involves two individuals who guaranteed loans for their business by executing promissory notes and trust deeds, which conveyed several real properties as security to a bank. After the business defaulted on the loans and entered bankruptcy, the bank sold both the business and the individuals’ properties through judicial foreclosure and trustee sales. The bank subsequently sought a deficiency judgment against the guarantors for the remaining debt, asserting that they owed over $3 million, while the guarantors argued that they should receive credit for the fair market value of the properties sold, in accordance with Nebraska’s antideficiency statute.The District Court for Johnson County granted summary judgment to the bank, finding the guarantors liable under their guarantees without credit for the property values. The court relied on a waiver provision in the guarantees, which stated that the guarantors waived any defense based on the bank not obtaining the fair market value of the collateral. The court also denied the guarantors’ motion for reconsideration or new trial, prompting the guarantors to appeal.The Nebraska Supreme Court reviewed the case de novo. It held that the antideficiency statute, Neb. Rev. Stat. § 76-1013, applies not only to borrowers but also to guarantors when their obligation is secured by a trust deed and a trustee sale occurs. The court determined that the waiver provision in the guarantees was unenforceable as a matter of public policy, given the legislative mandate of § 76-1013. Furthermore, the court found that evidence such as assessed values and appraisals raised a genuine issue of material fact regarding the fair market value of the properties at the time of the trustee sales. The court reversed the district court’s grant of summary judgment and remanded for further proceedings. View "American Exch. Bank v. Topp" on Justia Law

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