Justia Contracts Opinion Summaries

An energy company, seeking to address disposal challenges associated with wastewater from its hydraulic fracturing operations, engaged a water technology firm to design and construct a specialized treatment facility. The two sides entered into a series of agreements, culminating in a comprehensive contract for the facility’s construction. Before this final contract was executed, the water technology firm discovered that its design would not meet the energy consumption requirements critical to the energy company, but did not disclose this information. The firm also failed to reveal risks associated with a proposed design change that could affect the quality of the facility’s waste byproduct. Relying on the firm’s representations, the energy company signed the contract and later approved the design change. When the facility failed to meet contractual specifications—producing unusable waste and exceeding power limits—the energy company terminated the contract and sued for breach and fraud.The case was tried in the Denver District Court, which found that the water technology firm had fraudulently induced the energy company into signing the contract by concealing and failing to disclose material facts. The trial court held that the economic loss rule did not bar the fraud claim because the misconduct occurred prior to contract formation. The court awarded the energy company substantial damages and attorney fees. On appeal, the Colorado Court of Appeals affirmed, though it reasoned that the contracts were interrelated but found an independent tort duty still existed.The Supreme Court of Colorado reviewed whether the economic loss rule barred the fraud claim. The Court held that the interrelated contracts doctrine does not apply when each contract is a stand-alone transaction and that the fraudulent conduct occurred before the governing contract was executed, inducing its formation. Therefore, the economic loss rule does not bar the fraud claim. The judgment was affirmed, and the case was remanded for a determination of reasonable attorney fees. View "Veolia Water Techs. v. Antero Treatment LLC" on Justia Law

A business entity, through its principal, attempted to lease a commercial property in Kansas City, Missouri, from the property owner’s company. Both parties signed a lease document; however, the space for the “Commencement Date” was left blank. After negotiations soured—particularly following concerns from neighboring business owners about the potential use and branding of the property—the landlord refused to provide the tenant with keys or possession. The tenant did not provide a requested business plan and, shortly thereafter, the landlord leased the property to a different tenant. The would-be tenant had already paid a security deposit and incurred expenses in anticipation of opening its business.The tenant company filed suit in the United States District Court for the Western District of Missouri, raising claims including breach of contract and racial discrimination. Several months later, after the property was re-leased, the tenant moved for a preliminary injunction and temporary restraining order to compel the landlord to grant possession. At the hearing, the tenant conceded its request for injunctive relief was based solely on the breach of contract claim. The district court denied both the motion for a preliminary injunction and a motion for reconsideration, finding the lease failed to satisfy Missouri’s statute of frauds because the commencement date—an essential term—was not included in the writing, and further finding the tenant failed to show irreparable harm.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the district court’s denial of both motions. The Eighth Circuit held that, under Missouri law, a lease for longer than one year must include all essential terms, including the commencement date, in a signed writing, and that parol evidence cannot supply missing essential terms. Because the lease lacked the commencement date, the tenant failed to show a likelihood of success on the merits, and failed to demonstrate irreparable harm. The court also found no abuse of discretion in denying reconsideration. View "Euphoric, LLC v. 4128 Broadway, LLC" on Justia Law

After her property experienced water intrusion, a homeowner sued her neighbor, whose property was the source of the problem. The neighbor, in defending the lawsuit, hired a construction consulting firm to inspect both properties and to create an expert report recommending repairs. The recommendations from this report formed the basis of a settlement between the homeowner and her neighbor, and repairs were performed accordingly. After the settlement and repairs, the water intrusion problem recurred, leading the homeowner to file a new lawsuit against the consulting firm, alleging that its recommendations were negligent and defective.In the Superior Court of Orange County, the consulting firm filed an anti-SLAPP motion, asserting that its actions were protected as statements made in the course of litigation. The trial court granted the motion concerning certain claims, but denied it for claims of negligence and breach of contract as a third-party beneficiary, reasoning these arose from conduct rather than protected statements. On appeal, the California Court of Appeal previously affirmed the trial court’s partial denial, finding that the remaining claims were not based on protected activity, and remanded for further proceedings on those claims.Upon remand, the consulting firm moved for judgment on the pleadings, contending that the litigation privilege under California Civil Code section 47(b) barred the remaining claims. The California Court of Appeal, Fourth Appellate District, Division Three, affirmed the trial court’s judgment in favor of the consulting firm. The court held that the litigation privilege applied because the firm’s formulation of repair recommendations was necessarily related to a communicative act (the expert report) prepared in the course of litigation, and thus barred the homeowner’s negligence and third-party beneficiary claims. The judgment in favor of the consulting firm was affirmed. View "Fazel v. Pete Fowler Construction Services" on Justia Law

Technicians employed by the defendant performed installation, maintenance, inspection, testing, repair, and replacement of fire alarms, fire sprinklers, and security system equipment under contracts with public entities in New York. These contracts varied in their language regarding the payment of prevailing wages: some disclaimed any obligation to pay prevailing wages, some were silent, and a few expressly based payment on prevailing wage rates. All contracts included a clause providing that any action against the defendant had to be brought within one year of accrual.The plaintiffs brought a proposed class action in the United States District Court for the Northern District of New York, alleging, among other claims, that they were owed prevailing wages as third-party beneficiaries of the contracts. The District Court granted the defendant’s motion for partial summary judgment, finding that the breach of contract claims were time-barred by the contractual limitation period, that the contracts did not expressly entitle plaintiffs to prevailing wages, and, in the alternative, that plaintiffs were not covered by the prevailing wage law. On appeal, the United States Court of Appeals for the Second Circuit held that plaintiffs were covered by Labor Law § 220 but certified two questions to the New York Court of Appeals regarding the implicit inclusion of prevailing wage promises in public works contracts and the enforceability of shortened contractual limitation periods.The New York Court of Appeals held that the promise to pay prevailing wages is implicit in every public works contract covered by Labor Law § 220, regardless of whether that promise appears in the contract’s text. As a result, employees may bring third-party beneficiary breach of contract claims to enforce the prevailing wage requirement. The Court further held that contractual agreements to shorten the statute of limitations for such claims are unenforceable. The Court answered the first certified question in the affirmative and the second in the negative. View "Walton v Comfort Sys. USA (Syracuse), Inc." on Justia Law

A commercial meat supplier delivered frozen meat products to a distributor over a series of transactions, each accompanied by an invoice. The distributor did not pay all of the invoices, claiming that some of the meat was spoiled, while the supplier insisted that the distributor simply failed to pay what was owed and invented the spoiled-meat justification later. The supplier sued for breach of contract and, alternatively, for quantum meruit (an equitable claim for the value of goods or services provided), seeking payment for the unpaid invoices. The distributor counterclaimed for breach of contract, alleging damages from the spoiled meat.At trial in a Texas district court, the jury was asked whether the distributor failed to comply with the agreements to pay for the meat and answered no. However, the jury found in favor of the supplier on its quantum meruit claim and awarded damages. The jury found that a reasonable attorney’s fee for the supplier’s attorneys was $0. The trial court entered judgment for the supplier on the quantum meruit claim and awarded the supplier its requested attorney’s fees, disregarding the jury’s finding. The Fourth Court of Appeals affirmed the trial court’s judgment on both quantum meruit and attorney’s fees.The Supreme Court of Texas concluded that the supplier’s provision of meat was covered by express agreements between the parties and, as a matter of law, quantum meruit recovery is barred when a valid contract governs the subject matter. Because the supplier was not entitled to recover in quantum meruit, it also could not recover attorney’s fees. The Supreme Court of Texas reversed the relevant portions of the court of appeals’ judgment and rendered a take-nothing judgment in favor of the distributor. View "CHAMPION FOOD SERVICE, INC. v. PROALAMO FOODS, L.L.C." on Justia Law

The Office of the Special Deputy Receiver (OSD), an Illinois non-profit that manages receiverships for insolvent insurance companies, purchased a Financial Institution Bond from Hartford Fire Insurance Company. The bond included coverage for computer systems fraud and for electronic mail initiated transfer fraud, subject to certain exclusions. Hackers infiltrated OSD’s Chief Financial Officer’s email account via a spear phishing attack, impersonated the CFO, and sent fraudulent instructions to other OSD employees, resulting in unauthorized wire transfers and a loss of nearly $4 million.OSD filed claims with both Hartford and another insurer. Hartford denied coverage, asserting that an exclusion in the bond applied to the loss. OSD sued both insurers in the United States District Court for the Northern District of Illinois, seeking declaratory relief and alleging breach of contract. The district court granted Hartford’s motion to dismiss under Rule 12(b)(6), finding that the policy’s exclusion for losses resulting from fraudulent instructions sent to OSD by email applied, and denied the other insurer’s motion. OSD later voluntarily dismissed its claims against the second company, and judgment was entered.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the dismissal de novo. The court held that the exclusion in Rider 17 of the Hartford bond unambiguously barred coverage for losses resulting from fraudulent email instructions sent to OSD—even if the sender was impersonating an internal employee—because the exclusion focused on the recipient, not the sender. The court found no ambiguity or conflict between the exclusion and other coverage provisions, and concluded that OSD’s losses fell outside the scope of coverage. The Seventh Circuit affirmed the district court’s dismissal of OSD’s claims against Hartford. View "Office of the Special Deputy Receiver v Hartford Fire Insurance Company" on Justia Law

The Incorporated Village of Freeport and Freeport Plaza West, LLC entered into a contract for the purchase and development of several parcels of land. The agreement stipulated that the closing would occur within 30 days after Freeport Plaza West received all required approvals. The Village alleged that Freeport Plaza West obtained the necessary approvals but failed to close on the property within the contractual timeframe. In response, Freeport Plaza West filed a counterclaim, alleging that the Village had effectively breached the contract by forcing a premature closing and refusing to accept necessary development documentation. Importantly, Freeport Plaza West did not file a notice of claim with the Village regarding its counterclaim.After the Village brought suit for breach of contract, Freeport Plaza West answered and asserted its counterclaim. The Village, in turn, raised as a defense that Freeport Plaza West had failed to satisfy all conditions precedent, including the statutory notice of claim requirement under CPLR 9802. Nearly a year and a half into the litigation and shortly before the scheduled trial, the Village moved to dismiss the counterclaim for the lack of a timely notice of claim. Supreme Court denied the motion, applying equitable estoppel against the Village due to its litigation conduct and finding no prejudice from the absence of formal notice. The Appellate Division reversed, concluding that the Village’s actions did not amount to misleading conduct warranting equitable estoppel and dismissed the counterclaim.The New York Court of Appeals affirmed the Appellate Division’s order. The Court held that CPLR 9802’s notice of claim requirement applies strictly to contract actions against villages, including counterclaims, and that equitable estoppel against a municipality is only warranted in rare and unusual circumstances involving misconduct or misleading behavior, which were not present here. The failure to file a notice of claim barred Freeport Plaza West’s counterclaim. View "Incorporated Vil. of Freeport v Freeport Plaza W., LLC" on Justia Law

Two sisters became involved in a business dispute after one sister contributed $200,000 to the other for the purchase of four residential properties, expecting an equal share of profits from their rental or sale. The properties were titled solely in the recipient sister’s name, who later sold one and kept all proceeds. After attempts to secure her ownership interest failed, the contributing sister filed suit, asserting claims including breach of contract and unjust enrichment, seeking return of her investment and her share of profits.The Eighth Judicial District Court in Clark County initially entered a default against the defendant for failing to timely answer, but this was later set aside. As the trial approached, the defendant moved to exclude evidence of damages, arguing that the plaintiff had not provided an adequate computation of damages as required by NRCP 16.1. The court gave the plaintiff another chance to supplement her computation but she failed to comply in time. The court granted the motion to exclude all evidence of damages, then dismissed the complaint with prejudice, reasoning that without damages there was nothing left to litigate.The Supreme Court of the State of Nevada reviewed the case. The court held that the district court correctly required a computation of damages because the claims sought tangible, quantifiable losses. However, it found that by granting the motion to exclude all damages evidence—which resulted in dismissal with prejudice—the district court imposed a case-terminating sanction. Under Nevada law, before issuing such a sanction, the court must analyze the factors set out in Young v. Johnny Ribeiro Building, Inc. Because the district court failed to conduct this analysis, the Supreme Court vacated the dismissal and remanded for further proceedings consistent with the required standards. View "ZHANG VS. ZHANG" on Justia Law

A Mississippi construction company, operating under the name MCA Construction, Inc., entered into a contract with an Alabama property owner to perform site development work on a residential subdivision in Baldwin County. The contract was executed on February 11, 2021, and at that time, the company held an Alabama general contractor’s license with a “Building Construction” (BC) classification and an unlimited bid limit. Shortly before executing the contract, the city engineer raised questions regarding whether the BC classification was adequate for the planned utility work (such as water and sewer installation) and indicated that an additional “Municipal and Utility” (MU) classification might be required before such work began. MCA sought clarification from the state licensing board and subsequently obtained the MU classification in May 2021, before starting the utility work.The property owner, RAM-Robertsdale Subdivision Partners, LLC, along with related parties, later alleged that MCA had performed defective work and failed to pay subcontractors, and they brought suit in Baldwin Circuit Court. MCA filed counterclaims for breach of contract and fraud, asserting that it had not been fully paid for its work. The RAM parties moved for summary judgment, arguing that the contract was void because MCA was not properly licensed with the MU classification at the time the contract was executed.The Baldwin Circuit Court granted summary judgment for the RAM parties, holding that the contract was void because MCA was not “duly licensed” for all aspects of the work at the time of contracting. MCA appealed. The Supreme Court of Alabama reviewed the statutory and regulatory framework, noting that MCA had a valid BC license, acted in good faith, and obtained the MU classification before performing utility work. The Supreme Court of Alabama held that substantial compliance with the licensing statute was sufficient in these circumstances and that voiding the contract was not warranted. The court reversed the summary judgment and remanded for further proceedings. View "Construction Services, LLC v. RAM-Robertsdale Subdivision Partners, LLC" on Justia Law

A business operating a restaurant and bar near Memorial Stadium in Lincoln, Nebraska, leased its space from a landlord and claimed an exclusive right, under its lease, to sell alcohol in a specific outdoor area called the Common Area. Another business, which also operated a restaurant nearby, entered into agreements with the same landlord to sell alcohol from a space adjacent to the Common Area during Nebraska football home games. The new competitor sold alcohol through windows to customers standing in the Common Area, which the first business claimed violated its exclusive rights and harmed its sales.After learning of the competitor’s plans, the original bar sent a cease-and-desist letter, which was ignored. The bar then sued the competitor, alleging tortious interference with contract and with a business expectancy, seeking both damages and injunctive relief. Both sides submitted affidavits and evidence during discovery. The District Court for Lancaster County granted summary judgment in favor of the competitor, finding no evidence that the competitor’s actions went beyond valid competition or that it induced the landlord to breach the lease’s exclusivity provision. The court also struck certain portions of the plaintiff’s affidavit on evidentiary grounds.The Nebraska Supreme Court affirmed the district court’s judgment. It held that to prevail on claims for tortious interference with contract or business expectancy, a plaintiff must show intentional and unjustified interference beyond valid competition. The Court found no evidence that the competitor induced the landlord to breach the lease or engaged in improper means; mere knowledge that entering a new agreement would conflict with an existing contract was insufficient. The Court also agreed that the competitor’s conduct constituted valid competition, not actionable interference, and that any evidentiary rulings by the district court did not affect the outcome. View "Bar at the Yard v. Friends Family" on Justia Law