Justia Contracts Opinion Summaries

Articles Posted in Contracts
by
In this case, Damien T. Davis and Johnetta H. Lane ("the plaintiffs") filed suit against Nissan North America, Inc. and Nissan of San Bernardino ("Nissan") after they allegedly bought a faulty Nissan vehicle with a defective transmission. Nissan attempted to compel arbitration as per the arbitration clause in the sale contract between plaintiffs and the dealership. However, the trial court denied the motion, ruling that Nissan, not being a party to the contract, could not invoke the clause based on the doctrine of equitable estoppel.Nissan appealed the decision, arguing that the trial court erred by refusing to compel arbitration based on equitable estoppel. However, the Court of Appeal, Fourth Appellate District Division One, State of California, agreed with the trial court's ruling reasoning that Nissan's reliance on the doctrine of equitable estoppel was misplaced. It explained that equitable estoppel applies when a party's claims against a non-signatory are dependent upon the underlying contractual obligations. Here, the plaintiffs' claims were not founded on the sale contract's terms, but rather on Nissan's statutory obligations under the Song-Beverly Act relating to manufacturer warranties. The court concluded that the plaintiffs are pursuing their statutory and tort claims in court, and there was no inequity in allowing them to do so.Therefore, Nissan's motion to compel arbitration was denied, and the trial court's order was affirmed. View "Davis v. Nissan North America, Inc." on Justia Law

by
The case concerns a dispute between LKQ Corporation and its former Plant Manager, Robert Rutledge, who resigned from the company and joined a competing firm. LKQ sought to recover proceeds Rutledge realized from multiple stock sales over many years, based on a forfeiture-for-competition provision in their Restricted Stock Unit Agreements.The key legal issue revolves around the applicability of Delaware law on forfeiture-for-competition provisions. These provisions require former employees to forfeit a monetary benefit upon joining a competitor. The Delaware Supreme Court held in a recent case that such provisions are not subject to a reasonableness review. However, the United States Court of Appeals for the Seventh Circuit found it unclear whether this ruling applies outside the context of highly sophisticated parties.The Court of Appeals affirmed the lower court's judgment in favor of Rutledge on the breach of the Restrictive Covenant Agreements and unjust enrichment claims. However, due to the complexity of the Delaware law issue, the Court decided to certify questions to the Delaware Supreme Court for clarification. Specifically, the certified questions ask whether the Delaware Supreme Court's ruling on forfeiture-for-competition provisions applies outside the limited partnership context and, if not, what factors inform its application. View "LKQ Corporation v. Rutledge" on Justia Law

by
In a dispute between tenured faculty members and Tufts University, the faculty members alleged that the university's policies requiring them to cover half of their salary with external research funding and reducing their laboratory space violated their tenure rights to economic security and academic freedom. These policies, instituted between 2016 and 2019, led to a decrease in the plaintiffs' salaries and full-time status, and their laboratory space was reduced or closed entirely when they failed to meet the external funding requirements.The Supreme Judicial Court of Massachusetts noted that tenure contracts are defined by their specific terms and must be understood in the context of the academic community's norms and expectations. The court found that the term "economic security" in the tenure contracts was ambiguous and further evidence was needed to determine whether the reductions in salary and full-time status violated the economic security provided in the tenure contracts. However, the court concluded that neither economic security nor academic freedom guaranteed the plaintiffs specific lab space.The court reversed the lower court's judgment in favor of Tufts on the compensation policies, remanding the case for further proceedings. However, it affirmed the lower court's judgment that the laboratory space guidelines did not violate the plaintiffs' tenure rights. The court also left unresolved the plaintiffs' claims under the Wage Act, as it was dependent on the outcome of the compensation dispute. View "Wortis v. Trustees of Tufts College" on Justia Law

by
The United States Court of Appeals for the Eighth Circuit heard an appeal brought by DRE Health Corporation, a personal protective equipment (PPE) wholesaler, against a district court's decision to deny its motion to stay litigation and compel arbitration under the Federal Arbitration Act (FAA) with Anhui Powerguard Technology Company, a Chinese PPE manufacturer. Anhui had filed a breach-of-contract action alleging that DRE Health failed to pay for over $9 million in fulfilled purchase orders.The crux of the case revolved around an agreement between the parties where Anhui agreed to reduce DRE Health's debt in exchange for the latter's promise to purchase additional shipments of gloves. This agreement stipulated that future disputes would be subjected to binding arbitration, but the court had to determine whether this stipulation was conditional on DRE Health's completion of initial payments.The court, applying the series-qualifier canon of contract interpretation and Missouri law, determined that the prefatory phrase in the agreement, “AFTER THE INITIAL PAYMENT OF $1,970,000.00 USD,” served as a condition precedent to all the obligations enumerated in the agreement, including the agreement to arbitrate. As DRE Health had not completed the initial payment, there was no contract between the parties to arbitrate.The court thus affirmed the district court’s judgment, concluding that the parties did not agree to submit their dispute to arbitration. View "Anhui Powerguard Tech Co, Ltd v. DRE Health Corporation" on Justia Law

by
The case involves Purpose Built Families Foundation, a Florida nonprofit that received federal grants from the Department of Veterans Affairs to serve veterans and their families. In 2022, the Department notified the Foundation that activities and payments under five grants would be terminated or withheld due to "major fiscal mismanagement activities". The Foundation sued the Secretary of Veterans Affairs under the Administrative Procedure Act and received a temporary restraining order. Subsequently, the Department withdrew the challenged notices and the Secretary moved to dismiss the action as moot. The district court granted the motion.The United States Court of Appeals for the Eleventh Circuit affirmed the decision of the district court. The court held that the case was moot, as the Department's withdrawal of the notices meant the Foundation's claims could not provide meaningful relief. It also ruled that neither the voluntary-cessation nor the capable-of-repetition-yet-evading-review exceptions to mootness applied. The court stated that the Department's subsequent actions, including a more robust process and new termination notices, were materially different from the original notices. Therefore, a lawsuit challenging the new termination notices would involve materially different allegations and answers. The court concluded that the Foundation would have ample opportunity for judicial review of the legality of the new terminations, once the administrative process was completed. View "Purpose Built Families Foundation, Inc. v. USA" on Justia Law

by
The United States Court of Appeals for the Ninth Circuit heard an appeal by Cathay Pacific Airways Limited, from a district court's decision denying its motion to compel arbitration in a class action lawsuit. The plaintiffs, Winifredo and Macaria Herrera, alleged that Cathay Pacific breached their contract by failing to issue a refund following flight cancellations for tickets they purchased through a third-party booking website, ASAP Tickets.The court ruled that when a non-signatory, in this case Cathay Pacific, seeks to enforce an arbitration provision, an order denying a motion to compel arbitration based on the doctrine of equitable estoppel is reviewed de novo. Applying California contract law, the court held that the plaintiffs' allegations that Cathay Pacific breached its General Conditions of Carriage were intimately intertwined with ASAP’s alleged conduct under its Terms and Conditions. Thus, it was appropriate to enforce the arbitration clause contained in ASAP’s Terms and Conditions.Accordingly, the court reversed the district court’s denial of Cathay Pacific’s motion to compel arbitration and remanded with instructions to either dismiss or stay the action pending arbitration of the plaintiffs’ breach-of-contract claim. View "HERRERA V. CATHAY PACIFIC AIRWAYS LIMITED" on Justia Law

by
This case from the United States Court of Appeals for the Eighth Circuit involves a dispute between Midwest Medical Solutions, LLC and Exactech U.S., Inc. This is the second time the case has come before the court. The initial appeal by Midwest was regarding a summary judgment in favor of Exactech, which was based on the district court's interpretation of a non-compete clause in the parties' Sales Agreement. The Court of Appeals reversed the summary judgment, finding the clause unambiguous, and remanded the case for further proceedings.In the latest appeal, Exactech contends that the district court erred by denying its motion for leave to replead two counterclaims. Exactech had initially included these counterclaims in its pleadings but later removed them, believing they had been rendered moot by the district court's order interpreting the disputed contract language in Exactech's favor. Exactech attempted to reintroduce these counterclaims after the Court of Appeals reversed the summary judgment. The district court denied Exactech's motion to amend its pleadings, citing Exactech's lack of diligence in adhering to scheduling deadlines and the absence of changed circumstances that would justify its delay.The Court of Appeals affirmed the district court's decision. It found that the district court did not abuse its discretion in denying Exactech's motion to amend, as Exactech had failed to establish good cause for amending the scheduling order. The court noted that Exactech had voluntarily chosen not to replead these counterclaims in its amended pleadings, and that this decision could not be considered a changed circumstance. The court further noted that Exactech could have pleaded these counterclaims in the alternative, rather than omitting them entirely. View "Midwest Medical Solutions, LLC v. Exactech U.S., Inc." on Justia Law

by
Marvin Jackson attended a World Wrestling Entertainment (WWE) event and alleges that a pyrotechnics blast caused him to lose most of his hearing in his left ear. The tickets were purchased as a surprise gift by his nephew, Ashton Mott, on SeatGeek.com. All ticket purchases required agreement to various terms and conditions, including an arbitration agreement, and stated that entry to the event would constitute acceptance of these terms. Jackson sued WWE in Texas state court for negligence, but WWE moved the case to federal court and requested arbitration per the ticket agreement. The district court granted WWE’s motion, stating that Mott acted as Jackson's agent and that Jackson was therefore bound by the terms of the ticket, including the arbitration agreement.Jackson appealed the decision, arguing that Mott did not have the authority to act on his behalf and therefore the arbitration agreement should not be enforceable against him. The United States Court of Appeals for the Fifth Circuit disagreed with Jackson's argument. The court held that although Mott purchased the tickets without Jackson's knowledge or control, he acted as Jackson’s agent when he presented the ticket on Jackson's behalf for admittance to the event. The ticket's terms and conditions were clear that use of the ticket would constitute acceptance of the arbitration agreement. Therefore, the court affirmed the district court's decision to compel arbitration, as the arbitration agreement is enforceable against Jackson. View "Jackson v. World Wrestling" on Justia Law

by
The case involves Applied Medical Distribution Corporation (Applied) suing its former employee, Stephen Jarrells, for misappropriation of trade secrets, breach of a contract governing Applied’s proprietary information, and breach of fiduciary duty. The trial court granted Applied’s posttrial motion for a permanent injunction and awarded Applied partial attorney fees, costs, and expenses.On appeal, the Court of Appeal of the State of California affirmed in part, reversed in part, and remanded for further proceedings. The court concluded that Applied was the prevailing party on the misappropriation cause of action and was entitled to a permanent injunction to recover its trade secrets and prevent further misappropriation. The court also found that Applied was entitled to an award of the reasonable attorney fees, costs, and expenses it incurred to obtain injunctive relief.However, the court disagreed with the trial court's decision to mechanically award only 25 percent of the incurred attorney fees and costs because Applied prevailed on only one of four claims it asserted. The court found that the trial court erred in how it determined the amount awarded by failing to address the extent to which the facts underlying the other claims were inextricably intertwined with or dependent upon the allegations that formed the basis of the one claim on which Applied prevailed. The court also found that the trial court erred in excluding certain expert witness fees from the damages calculation presented to the jury.Finally, the court concluded that the trial court erred by granting a nonsuit on whether Jarrells’s misappropriation was willful and malicious, and remanded for a jury trial on this issue. If the jury finds the misappropriation was willful and malicious, the court shall decide whether attorney fees and costs should be awarded to Applied and, if so, in what amount. View "Applied Medical Distribution Corp. v. Jarrells" on Justia Law

by
The Supreme Court of Mississippi has once again ruled on the case of Robert Stratton, who has been fighting for the possession of his 1949 International KB 3/4-ton truck. In 2006, Stratton left his truck at a repair shop. In 2009, Jerry McKey, who had bought the shop, refused to return the truck unless Stratton paid storage fees. This led to a series of legal battles, with Stratton ultimately being awarded possession of the truck and $1350 in damages, and McKey being denied his claim for storage fees.In 2021, Stratton discovered his truck, which he had believed to be destroyed, restored and in Brookhaven, Mississippi. He filed a motion to vacate the previous court decisions, arguing that the truck's existence invalidated the previous rulings. However, the Supreme Court of Mississippi disagreed. It affirmed the trial court's denial of Stratton's motion to vacate, stating that Stratton is entitled to immediate possession of the truck and $1350 in damages, and he owes McKey no storage fees.The court found no grounds for Stratton's claims of fraud or new evidence, and it emphasized the importance of finality in court judgments. It also noted that the trial court had considered the potential of a double award to Stratton, but chose not to alter its judgment because Stratton's initial complaint had requested damages on multiple claims. The court concluded that the decision to deny Stratton's motion to vacate was within the trial court's discretion and should remain undisturbed. View "Stratton v. McKey" on Justia Law