Justia Contracts Opinion Summaries

In 2016, the Village of Schaumburg enacted an ordinance requiring commercial and multifamily properties to route fire alarm signals directly to a regional emergency-dispatch center. This ordinance aimed to reduce fire department response times and had financial benefits for the Village. Several alarm companies, which previously used a different model for transmitting alarm signals, claimed that the ordinance caused them to lose business and led to more expensive and lower-quality alarm services for customers.The alarm companies sued the Village, alleging that the ordinance violated the Contracts Clause and tortiously interfered with their contracts and prospective economic advantage. The United States District Court for the Northern District of Illinois initially dismissed the federal claims and relinquished jurisdiction over the state-law claims. On appeal, the Seventh Circuit reversed in part, allowing the Contracts Clause claim to proceed. However, on remand, the district court granted summary judgment for the Village, finding that the alarm companies failed to provide evidence that the ordinance caused customers to breach existing contracts or that the Village intended to interfere with their business relationships.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The court held that the alarm companies did not present sufficient evidence to show that the ordinance caused customers to breach contracts or that the Village acted with the intent to harm the alarm companies' businesses. The court also found that the alarm companies' claims of tortious interference with prospective economic advantage failed because the Village's actions were motivated by public safety and financial considerations, not a desire to harm the alarm companies. View "Alarm Detection Systems, Inc. v. Village of Schaumburg" on Justia Law

Avanzalia Panamá and its parent company, Avanzalia Solar, built a solar plant in Panama and sought to connect it to the El Coco substation, owned by Goldwind USA's affiliate, UEPI. Avanzalia alleged that Goldwind tortiously blocked their access to the substation, preventing them from selling electricity. Avanzalia filed a complaint with Panama's Autoridad de Servicios Públicos (ASEP), which required them to submit updated electrical studies and obtain an access agreement with UEPI. Despite obtaining the agreement, Avanzalia faced further delays and was unable to connect to the substation until May 2020.The United States District Court for the Northern District of Illinois granted summary judgment to Goldwind. The court found that Avanzalia could not satisfy the Illinois state law requirement for tortious interference, which necessitates that the defendant's actions be directed at a third party. The court also applied collateral estoppel, concluding that ASEP's findings were binding and precluded Avanzalia's claims related to pre-access agreement delays.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court affirmed the district court's decision to afford comity to ASEP's order and apply collateral estoppel, barring Avanzalia's claims related to pre-access agreement delays. However, the appellate court found that the district court erred in not considering the impossibility theory of tortious interference under Restatement (Second) of Torts § 766A. The court vacated the summary judgment on this issue and remanded for further proceedings to determine whether Goldwind wrongfully prevented Avanzalia from performing its contractual obligations. The judgment was affirmed in all other respects. View "Avanzalia Solar, S.L. v. Goldwind USA, Inc." on Justia Law

CPI Security Systems, Inc. filed a lawsuit against Vivint Smart Home, Inc., alleging that Vivint engaged in deceptive practices to lure away CPI’s customers. Vivint sales representatives falsely claimed that Vivint had acquired CPI, that CPI was going out of business, or that Vivint needed to upgrade CPI’s equipment. These tactics led many CPI customers to switch to Vivint, causing significant losses for CPI. A jury found Vivint liable for violating the Lanham Act, the North Carolina Unfair and Deceptive Trade Practices Act (UDTPA), and for committing the common-law torts of unfair competition and tortious interference with contracts. The jury awarded CPI $49.7 million in compensatory damages and $140 million in punitive damages.The United States District Court for the Western District of North Carolina upheld the jury’s verdict. Vivint appealed, raising several issues, including the requirement of CPI’s reliance on false statements for the UDTPA claim, the sufficiency of evidence supporting the damages award, the application of North Carolina’s cap on punitive damages, and the admission of prejudicial evidence.The United States Court of Appeals for the Fourth Circuit reviewed the case and found no reversible error. The court held that CPI was not required to prove its own reliance on Vivint’s false statements to establish a UDTPA claim, as the claim was based on unfair competition rather than fraud. The court also found that the evidence presented by CPI was sufficient to support the jury’s damages award. Additionally, the court ruled that the district court correctly applied North Carolina’s cap on punitive damages by considering the total compensatory damages awarded. The court further held that the district court did not abuse its discretion in denying Vivint’s motion to bifurcate the trial or in its evidentiary rulings. The reassignment of the trial judge post-trial did not warrant a new trial. Consequently, the Fourth Circuit affirmed the district court’s judgment. View "CPI Security Systems, Inc. v. Vivint Smart Home, Inc." on Justia Law

In this residential landlord-tenant dispute, the tenants, Michael Gogal and Hildy Baumgartner-Gogal, entered into a lease with landlords, Xinhui Deng and Jianhua Wu. The lease included a clause that capped recoverable litigation costs and attorney’s fees at $1,000. After successfully suing the landlords for retaliatory eviction, the tenants were awarded a monetary judgment and attorney’s fees exceeding the $1,000 cap. They then sought to recover additional litigation costs under California Code of Civil Procedure section 1032(b). The landlords argued that the lease’s $1,000 cap barred any further cost recovery.The Superior Court of San Diego County initially ruled in favor of the landlords, enforcing the $1,000 cap. However, after further arguments from the tenants, the court reversed its decision, allowing the tenants to recover nearly $14,000 in costs. The court reasoned that enforcing the cap would contravene the public policy intent of California Civil Code section 1942.5, which aims to protect tenants from abusive landlord conduct.The California Court of Appeal, Fourth Appellate District, reviewed the case. The main issue was whether parties to a contract could waive their statutory right to recover litigation costs under section 1032(b) through a pre-dispute agreement. The appellate court concluded that section 1032(b) establishes a default rule allowing prevailing parties to recover costs but does not prohibit parties from waiving this right by agreement. The court found that such waivers are consistent with Civil Code section 3513, which allows the waiver of rights intended for private benefit. The appellate court reversed the lower court’s order, directing it to strike the tenants’ memorandum of costs, thereby enforcing the $1,000 cap stipulated in the lease. View "Gogal v. Deng" on Justia Law

Jonathan and Angela McOmber purchased a home from Shane and Keri Thompson. After the purchase, the McOmbers discovered significant issues with the property, including dry rot, mold, and water damage, which were not anticipated. They also found that the roof leaked and was not professionally installed, and that the previous owner had rewired parts of the kitchen improperly. The McOmbers relied on the sellers’ disclosures, which indicated that a drainage problem had been fixed and that there were no current mold issues or roof leaks. The McOmbers did not conduct an independent property inspection.The McOmbers filed a lawsuit against the Thompsons for breach of duty to disclose/fraud, common law fraud, and breach of contract, among other claims. The district court dismissed Angela McOmber from two of the claims and denied the McOmbers’ motion to add a claim for constructive trust. The district court granted summary judgment in favor of the Thompsons, finding that they had complied with the Property Condition Disclosure Act by disclosing known defects. The court also awarded attorney fees to the Thompsons based on a provision in the Real Estate Purchase and Sale Agreement (REPSA). The McOmbers’ motion for reconsideration was denied.The Supreme Court of Idaho reviewed the case and affirmed the district court’s decisions in part, reversed in part, and remanded. The court held that the Thompsons complied with the disclosure requirements and that the McOmbers failed to raise a genuine dispute of material fact regarding the falsity of the Thompsons’ statements. The court also found that the district court did not err in denying the motion to amend the complaint or the motion for reconsideration. However, the court reversed the award of attorney fees against Angela McOmber, as she was not a party to the REPSA, and remanded for the district court to issue an amended judgment. Neither party was awarded attorney fees on appeal. View "McOmber v. Thompson" on Justia Law

A property insurance dispute arose between a church in Albany, Georgia, and its insurer following storm damage in 2014. The church's property, which included asbestos tile roofs, was insured under an all-risks policy. After the storm, the insurer's adjuster estimated repair costs at $2,300, but the church's contractor estimated over $1.3 million for full roof replacement. The church sued for breach of contract and bad faith. In 2018, Hurricane Michael caused further damage, and the church filed a claim with a different insurer, obtaining a lower repair estimate. The original insurer argued that the church's failure to disclose this second claim constituted a material misrepresentation.The United States District Court for the Middle District of Georgia excluded evidence of the alleged misrepresentation, finding it irrelevant. The jury awarded the church $1.75 million in damages, and the insurer's motion for a new trial was denied. The insurer appealed, arguing that the exclusion of misrepresentation evidence was erroneous and that the damages award was speculative and contrary to the policy terms.The United States Court of Appeals for the Eleventh Circuit reviewed the case. It found that the insurer had waived its misrepresentation defense by not objecting during trial and by explicitly withdrawing the defense. The court also held that the jury's award, which included increased construction costs due to delays, was supported by sufficient evidence and did not constitute double recovery when combined with prejudgment interest. The court affirmed the district court's rulings and the jury's verdict. View "Central Baptist Church of Albany Georgia Inc v. Church Mutual Insurance Co." on Justia Law

A corporation, its controlling stockholder, and associated individuals were sued by a minority stockholder for breach of contract, fraudulent concealment, and other claims. The defendants moved to dismiss the lawsuit based on forum non conveniens, citing mandatory forum selection clauses in the corporation’s certificate of incorporation and bylaws, which required stockholder lawsuits to be brought in the Delaware Court of Chancery. The trial court denied the motion, and the Court of Appeal denied a petition for writ of mandate, holding that the forum selection clauses were unenforceable because they would deprive the plaintiff of the right to a jury trial, which is not recognized in the Delaware Court of Chancery.The California Supreme Court reviewed the case to determine whether the lower courts were correct in declining to enforce the forum selection clauses on the basis that they would deprive the plaintiff of a jury trial. The Court of Appeal had found that the lack of a jury trial right in Delaware was dispositive and did not consider other arguments against enforcement of the forum selection clause.The California Supreme Court concluded that the lower courts were incorrect in their reasoning. The court held that forum selection clauses serve vital commercial purposes and should generally be enforced. It emphasized that California’s strong public policy in favor of the right to a jury trial applies to California courts and does not extend to other forums. Therefore, a forum selection clause is not unenforceable simply because it requires litigation in a jurisdiction that does not afford the same right to a jury trial as California. The court reversed the judgment of the Court of Appeal and remanded the case for further proceedings to consider other arguments against the enforcement of the forum selection clause. View "EpicentRx v. Superior Ct." on Justia Law

Employers’ Innovative Network and its president, Jeff Mullins, entered into contracts with Bridgeport Benefits, Capital Security, and other parties to secure a new health insurance policy for their employee healthcare benefit plan. The relationship between the parties deteriorated, leading Employers’ Innovative Network to file a lawsuit in West Virginia state court in April 2018, alleging breach of contract, fraud, slander, and violations of the West Virginia Unauthorized Insurers Act. The case was removed to federal court but was stayed pending arbitration in Bermuda, as stipulated in the contracts.The arbitration was conducted in Bermuda, where the arbitrator, Delroy Duncan, ruled in favor of the defendants. Employers’ Innovative Network later challenged Duncan’s impartiality, citing conflicts of interest, but the Bermuda Arbitration Institute upheld Duncan’s position. The plaintiffs did not appeal this decision to the Bermuda Supreme Court. Subsequently, the defendants sought to enforce the arbitral award in the United States under Chapter 2 of the Federal Arbitration Act (FAA), and the Southern District of West Virginia granted their request, rejecting the plaintiffs’ public policy defense.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court vacated the district court’s decision and remanded the case for further fact-finding to determine whether Chapter 1 or Chapter 2 of the FAA applies. The appellate court noted that the arbitration might be governed by Chapter 1, which includes an “evident partiality” defense, or by Chapter 2, which does not explicitly include such a defense but allows for non-enforcement on public policy grounds. The court emphasized the need to clarify the citizenship of Capital Security and the nature of the parties’ relationship to determine the applicable chapter. View "Employers' Innovative Network, LLC v. Bridgeport Benefits, Inc." on Justia Law

Crowley Government Services, Inc. ("Crowley") entered into a contract with the Department of Defense United States Transportation Command ("USTRANSCOM") in 2016 to provide transportation coordination services, which involved hiring motor carriers to transport freight. The General Services Administration ("GSA"), not a party to the contract, began auditing Crowley's bills under a provision of the Transportation Act of 1940, claiming Crowley overbilled USTRANSCOM by millions of dollars. GSA sought to recover these overcharges by garnishing future payments to Crowley.The United States District Court for the District of Columbia dismissed Crowley's Administrative Procedure Act ("APA") claims, holding that the claims were essentially contractual and fell within the exclusive jurisdiction of the Court of Federal Claims. The D.C. Circuit reversed, finding that Crowley's suit was not a contract claim and remanded the case. On remand, the District Court held that GSA could audit both carriers and non-carriers but agreed with Crowley that the USTRANSCOM Contracting Officer's interpretations governed any GSA audits. The court enjoined GSA from issuing Notices of Overcharge ("NOCs") contrary to the Contracting Officer's determinations.The United States Court of Appeals for the District of Columbia Circuit reviewed the case and held that 31 U.S.C. § 3726(b) allows GSA to audit only bills presented by carriers and freight forwarders. The court found that Crowley is not a carrier because it does not physically transport freight nor is it contractually bound to help perform the movement of goods. Consequently, the court reversed the District Court's decision on the scope of § 3726(b) and remanded for further proceedings, permanently enjoining GSA from conducting postpayment audits of Crowley's bills. View "Crowley Government Services, Inc. v. General Services Administration" on Justia Law

Plaintiff Gravel & Shea PC sued defendant Costello, Valente & Gentry, P.C., claiming unjust enrichment for receiving attorney’s fees without compensating plaintiff for work done to procure a settlement. The dispute arose from lawsuits involving an employee’s injury at work and his employer’s worker’s compensation insurance. Plaintiff represented the employer in a lawsuit against its insurer, Cornerstone Risk Management, LLC, while defendant represented the employee in a personal-injury lawsuit against the employer. The employee settled with Lloyd’s of London, Cornerstone’s professional-liability insurer, and defendant received its contingency fee from the settlement proceeds.The Superior Court, Chittenden Unit, Civil Division, granted summary judgment to plaintiff, concluding that under the common-fund doctrine, equities required defendant to contribute to plaintiff’s attorney’s fees. The court found that plaintiff’s efforts in the Cornerstone action led to the settlement from which defendant received its fees. The court also held a bench trial on damages and awarded damages to plaintiff. Defendant appealed, arguing that the trial court improperly expanded the common-fund doctrine and that the facts did not support a claim of unjust enrichment.The Vermont Supreme Court reviewed the case and reversed the trial court’s order granting summary judgment to plaintiff. The Supreme Court held that the common-fund doctrine did not apply because there was no common fund created by plaintiff’s efforts that benefitted both parties. The court emphasized that the common-fund doctrine is limited to cases where a party’s efforts create a fund that benefits others who did not contribute to the litigation costs. The court remanded the case for the trial court to enter summary judgment in favor of defendant, concluding that plaintiff could not maintain an unjust-enrichment claim under the circumstances. View "WWSAF Special Partners Group, LLC (Series D) v. Costello, Valente & Gentry, P.C." on Justia Law