Justia Contracts Opinion Summaries

Epsilon, an Ohio corporation with a principal place of business in Texas, entered into Joint Operating Agreements (JOAs) with companies, including Chesapeake, an LLC whose sole member is an Oklahoma citizen, to develop natural gas in Pennsylvania. The JOAs require Chesapeake to “have full control of all operations on the Contract Area.” Chesapeake can be removed as Operator for good cause by a vote of the other JOA parties. The JOAs allow the “Non-Operator parties” to propose new well sites. The others have 30 days to decide whether to participate. The work is then ordinarily performed by Chesapeake. If Chesapeake does not approve the project, the Consenting Parties designate a Consenting Party as Operator. Chesapeake opposed wells proposed by Epsilon, then blocked Epsilon from operating the proposed project unilaterally.Epsilon sought a declaration to drill without Chesapeake’s participation. Chesapeake moved to dismiss the suit for failure to join the other JOA co-signatories. The district court dismissed for failure to state a claim. The Third Circuit remanded. The other contracting parties are required (Fed. R. Civ. P. 19(a)(1)). A declaratory judgment interpreting the JOAs to authorize a single Consenting Party to propose the drilling of a new well would affect all their interests. However, other Absent JOA Parties are citizens of Texas who cannot be feasibly joined without defeating diversity and destroying subject matter jurisdiction. Deciding whether to proceed without them requires findings by the trial judge. View "Epsilon Energy USA Inc. v. Chesapeake Appalachia LLC" on Justia Law

The Appellants, investors in the securities of AmTrust Financial Services, Inc., appealed from a district court judgment dismissing their complaint for failure to state a claim under Sections 11, 12, and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 against AmTrust, various AmTrust corporate officers and board members, AmTrust’s outside auditor, and multiple underwriters of AmTrust’s sale of securities. The district court determined that certain public misstatements relating to AmTrust’s recognition of revenue generated by its extended warranty contracts and the expenses associated with its payment of discretionary employee bonuses were non-actionable statements of opinion.The Second Circuit affirmed in part, vacated in part, and remanded. The court vacated the dismissal of the Appellants’ Section 11 claims against the AmTrust Defendants and the Director Defendants, the Section 12(a)(2) claims against AmTrust, and the Section 15 claims against the Officer Defendants and Director Defendants relating to AmTrust’s accounting for certain warranty contracts and bonuses. The court vacated the dismissal of the Appellants’ claims under Section 11 and Section 12(a)(2) against the Underwriter Defendants relating to AmTrust’s accounting for certain warranty contracts and bonuses. The court concluded that Appellants have adequately established standing under Section 12(a)(2) by alleging that they purchased securities pursuant to the “pertinent offering documents” or in the relevant offerings underwritten by the defendants. View "New England Carpenters Guaranteed Annuity and Pension Funds v. AmTrust" on Justia Law

The First Circuit affirmed the judgment of the Title III court confirming a plan of adjustment that permitted the discharge of the Commonwealth of Puerto Rico from its obligation to pay Plaintiff the entire amount of a settlement it had entered into with the Commonwealth regarding the Commonwealth's milk regulation scheme, holding that there was no error.Plaintiff and the Commonwealth of Puerto Rico litigated for years their dispute over the Commonwealth's milk regulation scheme. The dispute was resolved by settlement, after which the Commonwealth entered Title III proceedings to adjust the Commonwealth's sovereign debt. Under the plan of adjustment, the Commonwealth was no longer obligated to pay Plaintiff the full amount specified in the parties' settlement. Plaintiff subsequently brought this action challenging that decision. The Title III court discharged the Commonwealth from its obligation to pay Plaintiff the full amount specified in the settlement and overruled Plaintiff's objections to the Plan. The First Circuit affirmed, holding that Plaintiff's arguments on appeal failed. View "Financial Oversight & Management Bd. for P.R. v. Cooperativa de Ahorro y Credito" on Justia Law

Geringer Capital, Inc., Roger Geringer and Tricycle Entertainment, LLC (collectively Geringer parties) moved to preclude Jeffrey Konvitz, Blue Rider Finance, Inc.’s counsel of record, from testifying at trial in support of Blue Rider’s claim that the Geringer parties fraudulently induced Blue Rider to enter into a settlement agreement that did not accurately reflect the terms negotiated by the parties. The Geringer parties subsequently clarified that their motion should be considered, in the alternative, a motion to disqualify Konvitz. The court granted the motion and disqualified Konvitz, finding the integrity of the judicial process would be impaired if Konvitz served in dual roles. On appeal Blue Rider contends the court should have denied the motion due to the Geringer parties’ excessive delay in raising the issue.   The Second Appellate District reversed. The court concluded that Konvitz’s representation of Blue Rider at trial while also testifying on its behalf would “detract from the proper administration of justice,” the trial court quoted this general description of the basis for the advocate-witness rule, as well as comments explaining the parallel rule in the ABA Model Rules of Professional Conduct (ABA Model Rule 3.7) and in the ABA’s former Model Code of Professional Responsibility, all pointing to the conclusion that the roles of advocate and witness are inconsistent. The court then added its own observation that these dual roles create the risk of error and confusion, and “the trier of fact will constantly keep wondering whether the advocate-witness is acting under the appropriate role such that it will distract from the arguments and evidence presented.” View "Geringer v. Blue Rider Finance" on Justia Law

Ceska zbrojovka Defence SE (“CZ Czech”) was a firearms manufacturer based in the Czech Republic. To do business in the United States, it had several subsidiaries, including CZ USA, CZ Czech’s Kansas-based subsidiary. Vista Outdoor, Inc. was a Minnesota company that designed, manufactured, and marketed outdoor recreation and shooting products. In November 2018, Vista and CZ Czech entered into an expense reimbursement agreement covering CZ Czech’s potential acquisition of a Vista firearm brand. Under the contract, Vista was obligated to reimburse CZ Czech for certain reasonable expenses in connection with its evaluation and negotiation of the proposed transaction. Even though the sale was not consummated, Vista refused CZ Czech’s subsequent reimbursement demands. CZ USA, not CZ Czech, filed a federal diversity action in the District of Kansas against Vista for breach of contract. The "twist" was that there was no contract between CZ USA and Vista, nor was CZ USA a beneficiary of the contract. CZ Czech, soon realizing the mistake, attempted to amend the complaint under Rule 15 of the Federal Rules of Civil Procedure and substitute itself as the party-plaintiff. The district court declined, finding that the original complaint controlled and that CZ USA, as a non-party to the contract, lacked standing to sue, meaning the court lacked subject-matter jurisdiction over the dispute. To this, the Tenth Circuit concurred and affirmed: the district court lacked subject-matter jurisdiction and correctly dismissed the lawsuit. View "Ceska Zbrojovka Defence SE ("CZ") v. Vista Outdoor" on Justia Law

The Supreme Judicial Court affirmed the judgment of the superior court judge granting summary judgment in favor of BSC Companies, Inc., BSC Group, Inc., and the companies' president (collectively, BSC) in this action brought by BSC's former employees alleging claims under the Prevailing Wage Act, Mass. Gen. Laws ch. 149, 26-27H, holding that the contracts at issue were not governed by the Act, and BSC was not required to pay its employees a prevailing wage pursuant to the contracts.At issue were two professional engineering services contracts awarded by the Department of Transportation (MassDOT) to BSC. The contracts were not competitively bid and were not awarded to the lowest bidder, unlike contracts for public works construction projects governed by the Act. Further, the contracts did not specify that BSC's employees would be paid at least a prevailing wage determined by the Department of Labor Standards. The superior court judge granted summary judgment to BSC. The Supreme Court affirmed, holding that Plaintiffs were not entitled to a prevailing wage for their work under the professional services contracts. View "Metcalf v. BSC Group, Inc." on Justia Law

The First Circuit affirmed the district court's order entering summary judgment in favor of Defendant with respect to Plaintiff's assertion that he was wrongfully deprived of thousands of dollars in commissions he alleged he was due, holding that there was no error.After he resigned, Plaintiff brought suit against Defendant, his former employer, asserting claims for nonpayment of wages under the Act, breach of contract, unjust enrichment, and quantum meruit. Defendant successfully removed the action to federal district court, which granted summary judgment in favor of Defendant. The First Circuit affirmed, holding that the district court (1) did not err in granting in part Defendant's motion to strike certain portions of his response to the summary judgment motion; and (2) did not err in granting summary judgment against Plaintiff on his claims. View "Klauber v. VMware, Inc." on Justia Law

K.C. Hopps, Ltd., sued its insurer, The Cincinnati Insurance Company, seeking coverage for lost business income incurred during the COVID-19 pandemic. Cincinnati moved for summary judgment based on K.C. Hopps’s inability to show physical loss or damage, which the district court denied. After the jury returned a verdict for Cincinnati, K.C. Hopps renewed its motion for judgment as a matter of law and moved for a new trial. The district court denied both motions.   The Second Appellate District affirmed. The court explained that K.C. Hopps alleged that COVID-19 particles were present at its properties. The court wrote that has repeatedly rejected similar claims for COVID-19-related business interruptions because the insured did not sufficiently allege physical loss or damage. The court explained that even if K.C. Hopps could show actual contamination of its properties, any possible contamination was not the cause of its lost business income. K.C. Hopps did not limit its operations because COVID-19 particles were found at its properties—it did so because of the shutdown orders. K.C. Hopps remained open until government orders limited its operations. And even if its premises weren’t contaminated, K.C. Hopps “would have been subject to the exact same restrictions.” View "K.C. Hopps, Ltd. v. The Cincinnati Insurance Co." on Justia Law

In November 2018, Marriott International, Inc., announced that hackers had breached one of its guest reservation databases, giving them access to millions of guest records. Customers across the country began filing lawsuits, which were consolidated into multidistrict litigation in Maryland. Plaintiffs then moved to certify multiple class actions against Marriott and Accenture LLP, an IT service provider that managed the database at issue. The district court obliged in part. It certified classes for monetary damages on breach of contract and statutory consumer-protection claims against Marriott under Rule 23(b)(3) of the Federal Rules of Civil Procedure. It also certified “issue” classes on negligence claims against Marriott and Accenture under Rule 23(c)(4), limited to a subset of issues bearing on liability.   The Fourth Circuit granted Defendants’ petitions to appeal the district court’s certification order and now concludes that the order must be vacated. The court found that the district court erred in certifying damages classes against Marriott without first considering the effect of a class action waiver signed by all putative class members. And because the existence of damages classes against Marriott was a critical predicate for the district court’s decision to certify the negligence issue classes, that error affects the whole of the certification order. Accordingly, the court vacated the district court’s certification order. View "Peter Maldini v. Accenture LLP" on Justia Law

A man and woman and the man’s grandmother decided to buy a home that they would share. They also decided that because the woman qualified for a mortgage with better terms than the others, the mortgage would be in her name. The grandmother sold her home to provide money to buy the shared home and signed a gift letter to enable the woman to qualify for a mortgage. The relationship between the man and woman deteriorated and she tried to sell the home. She refused to repay the grandmother the money the grandmother had contributed to the home purchase. The grandmother sued her. The superior court determined that the grandmother had not provided the money as a gift. The court also concluded that a written agreement the woman had signed confirmed their oral agreement to jointly buy the home and that therefore their agreement did not violate the statute of frauds. The court ordered the woman to repay the grandmother the money she had contributed to the home purchase, as well as a portion of the grandmother’s attorney’s fees. The woman appealed. Finding no reversible error, the Alaska Supreme Court affirmed the superior court’s decision. View "Shields v. Clark" on Justia Law