Justia Contracts Opinion Summaries

In this insurance dispute brought by Insured seeking declarations that the policies issued by Insurer covered the losses it had suffered from repairing and remediating its physical space to accommodate the health necessities brought about by the COVID-19 pandemic, holding that the allegations did not trigger the primary coverage provided by the relevant policies.Insured asserted that it suffered hundreds of millions of dollars for health and safety protocols and modifications to its stores due to the presence of COVID-19. After Insurer denied coverage Insured brought this lawsuit. Insurer moved to dismiss the complaint, after which Insured filed a motion to certify a question of law to the Court of Appeals. The Court of Appeals answered that when a first-party, all-risk property insurance policy covers "all risks of physical loss or damage" to insured property from any cause unless excluded, coverage is not triggered when a toxic, noxious, or hazardous substance such as COVID-19 is physical present in the indoor air of that property, is also present on and can later be dislodged from physical items on the property, and causes a loss of the functional use of the property. View "Tapestry, Inc. v. Factory Mutual Insurance" on Justia Law

The Supreme Judicial Court vacated the judgment of the district court dismissing Plaintiff's action for breach of contract and awarding Defendant attorney fees, holding that the district court abused its discretion.The parties in this case formerly lived together at a Saco residence. When they closed on the property the parties entered a contract where, in exchange for Plaintiff assuming responsibility for the down payment, Defendant agreed to assume a greater share of other expenses. Defendant later moved out of the property and filed a partition action, denying the existence of a contract. Plaintiff brought this action alleging breach of contract. On the same day, Plaintiff filed a motion to consolidate the parties' partition, and contract claims. The district court granted Defendant's motion to dismiss and awarded her attorney fees. The Supreme Judicial Court vacated the judgment below, holding (1) the district court abused its discretion by failing to consolidate the two actions; and (2) because Defendant never pleaded abatement, the district court erred in applying the remedy sua sponte. View "Indorf v. Keep" on Justia Law

The surety (“Colonial”) for the prime contractor (“Hirani”) challenged the district court’s award of quantum meruit damages on the Miller Act claim of the subcontractor (“ACC”), and the district court’s award as double recovery for the subcontractor. The subcontractor continues to challenge the district court’s denial of recovery under the Miller Act for the reasonable value of its superintendent’s services at the job site.   The DC Circuit affirmed the district court’s judgment except to remand for the district court to expressly address whether there would be impermissible double recovery for the subcontractor. The court wrote that even if D.C. contract law caps the subcontractor’s restitution recovery against the prime contractor to expectation damages and does not permit recovery in quantum meruit where there is an express contract, no such limit applies to the claim against the surety under the Miller Act. Second, the court explained it need not resolve the surety’s contention that the district court awarded the subcontractor double recovery. Further, given that the construction work at issue had to be supervised and inspected for conformance with the subcontract and other requirements, such as government quality control standards, the superintendent’s on-site supervisory work constitutes “labor” within the meaning of the Miller Act. View "USA v. Hirani Engineering & Land" on Justia Law

PHI Group, Inc. (“PHI”), offers helicopter services for numerous global customers in the oil and gas, air medical, technical services, and healthcare industries. Zurich American Insurance Company (“Zurich”) sold an “all-risk” insurance policy covering PHI. PHI sued Zurich in a civil action in diversity to recover economic losses for the partial interruption of its business during the COVID pandemic. The district court dismissed PHI’s claims because its losses were not caused by a physical loss or damage to corporeal property, its claims were not novel in the post-pandemic legal environment, and the Fifth Circuit has resolved comparable cases similarly.   The Fifth Circuit affirmed. The court explained that PHI alleged a material difference in the insurance policies in Q Clothier and here. In Q Clothier, the policy covered “direct physical loss of or physical damage” to property, while here, the policy covers “direct physical loss or damage” to property. But the Fifth Circuit has found no ambiguity here, regardless of whether “physical” modifies only loss or both loss and damage. Further, PHI has not established any facts that indicate that coronavirus caused direct physical loss or damage, which remains at the crux of any recovery under its insurance policy. Regardless of the contamination exclusion, PHI does not have a plausible claim for coverage. An exclusion cannot create coverage that does not exist under the plain meaning of the policy. View "PHI Group v. Zurich American Insurance" on Justia Law

Plaintiff signed an arbitration contract with an employer called Intelex Enterprises, LLC. While working for Intelex, Plaintiff also worked for other firms (Other Firms). These Other Firms were legally separate from Intelex but functionally related to it. The Other Firms did not contract for arbitration with Plaintiff. After termination, Plaintiff sued the Other Firms but not Intelex: Intelex has never been a party to the case. The Other Firms moved to compel arbitration based on Plaintiff’s agreement with Intelex. The trial court denied the Other Firms’ motion to enforce a contract they had not signed.   The Second Appellate District affirmed. The court held that the Other Firms cannot equitably estop Defendant because they do not show she is trying to profit from some unfair action. They have no proof of agency. And they are not third-party beneficiaries of Intelex’s contract. The court explained that the Other Firms point to six places in the record they say show agency, but these materials do not measure up. The citation to Plaintiff’s complaint spotlights text that omits Intelex and cannot show agency. A different citation is to their attorney’s declaration recounting irrelevant procedural history. Other citations refer to Plaintiff’s admission that she worked for both Intelex and the Other Firms. This admission does not establish agency. View "Hernandez v. Meridian Management Services, LLC" on Justia Law

In 2014, EMS entered into a payment processing agreement with Procom, a business owned by Gaal that sold historical tours. The Agreement was executed by Gaal, who signed a personal-guaranty provision. It contained terms relating to “chargebacks,” which occurred when a Procom customer’s transaction was declined or canceled after EMS had credited Procom’s account for the purchase; EMS repaid the money to the Procom customer, then charged Procom for that money plus a fee. In 2019, EMS and Procom executed a second agreement, which contained an explicit integration clause; the guaranty provision was not signed by Gaal but by another Procom employee. During the COVID-19 pandemic, many customers canceled purchases with Procom, resulting in $10 million in chargebacks. Procom is involved in Chapter 7 bankruptcy proceedings. EMS filed a creditor’s proof of claim and sued Gaal. The district court dismissed for failure to state a claim, finding that the 2019 Agreement superseded the 2014 agreement “in all material respects,” including replacing Gaal’s guaranty.The Sixth Circuit affirmed in part, upholding the district court’s consideration of the bankruptcy filing for purposes of determining when chargebacks occurred and its finding that the 2019 Agreement replaced the 2014 Agreement rather than merely supplementing it. The court reversed in part, holding that any chargeback related to transactions occurring before the execution of the 2019 Agreement arose under the 2014 Agreement. View "Electronic Merchant Systems LLC v. Gaal" on Justia Law

The First Circuit affirmed the judgment of the district court determining that this case could not be adjudicated and dismissing the suit, holding that there was no error.Plaintiff, a foreign counterterrorism corporation, brought this lawsuit seeking an order freezing some of its Massachusetts assets based on allegations that a former government official misappropriated billions of dollars from the corporation. Defendants argued that the funds were lawfully received in connection with clandestine operations that were sometimes undertaken alongside the United States government. The United States government then asserted the state secrets privilege and successfully got state secrets and other information excluded from the case. The district court dismissed the suit, concluding that it could not examine the claims and defenses or award the preliminary equitable relief sought without weighing the privileged information and risking disclosure of state secrets. The First Circuit affirmed, holding that Plaintiff failed to demonstrate that it was entitled to any of the relief it requested. View "Sakab Saudi Holding Co. v. Aljabri" on Justia Law

This case arose from a dispute regarding the excavation of lots located in the The Grove Subdivision between plaintiff Hidden Grove LLC (“Hidden Grove”), the developer of The Grove, and homeowner defendants Richard and Lisa Brauns (the Braunses). In 2011, the Braunses purchased a home located on Lot 14 of The Grove from a third party not involved in this litigation. The next day, the Braunses purchased Lot 15 from Hidden Grove for $100,000. They also acquired a right of first refusal to purchase Lots 16 and 17. The surface elevations of Lots 16 and 17 were eight feet higher than that of Lot 15. Because the Braunses intended to add on to their home and build a swimming pool on Lot 15, they sought to lower the elevation of Lots 16 and 17 to match the elevation of the lots previously purchased. Hidden Grove agreed the Braunses could lower the elevation of Lots 16 and 17, at their own expense. Before the parties executed a written agreement setting forth the engineering specifications for the excavation, work began in January 2013 on oral permission of Hidden Grove. In June 2013, after the excavation was near completion, disputes arose between the parties, specifically as to whether the Braunses were required to extend the retaining wall onto Lots 16 and 17. When Richard Brauns told Hidden Grove that the wall would terminate at the boundary of Lot 15 and 16, Hidden Grove ordered the Braunses to stop work and “get off the property.” Hidden Grove filed suit against the Braunses alleging breach of contract and requesting specific performance of concluding the excavation and construction of a retaining wall through the backs of Lots 16 and 17. The Louisiana Supreme Court granted review in this matter to review the court of appeal’s determination that Hidden Grove could not assert a claim for enrichment without cause under Civil Code article 2298 for failure to establish the “no other remedy at law” element of the claim. The Court concluded the court of appeal erred and remanded the matter to the court of appeal for consideration of pretermitted issues. View "Hidden Grove, LLC v. Brauns" on Justia Law

Continental Resources, Inc. operates an input well on Timothy and Tracy Browns’ land in Harding County, South Dakota. The Browns sued Continental, seeking compensation for damage to the surface of their land and Continental’s use of their pore space. Continental removed the case to federal court and twice moved for partial summary judgment. The district court granted both motions, finding that Plaintiffs: (1) released Continental from liability for surface damage; and (2) could not recover damages under South Dakota law for Continental’s pore space use.   The Eighth Circuit affirmed. The court explained that section 45-5A-4 clearly articulates three categories of compensable harm. Plaintiffs sought damages for lost use, which is not one of the categories. They try to infuse ambiguity into the statutory scheme by pointing to Chapter 45-5A’s purpose and legislative findings sections. While these sections may help a court interpret ambiguous statutory language, the court found none in Section 45-5A-4. Accordingly, the court held that Plaintiffs have not suffered compensable harm under South Dakota law, so the district court did not err in granting summary judgment. View "Timothy Brown v. Continental Resources, Inc." on Justia Law

In this dispute over an arbitration clause within a contract, the Supreme Court held that the minor children who joined Plaintiffs, their parents, in bringing this action seeking damages for construction defects in their home may be compelled to arbitrate along with their parents on the basis of direct-benefits estoppel.Plaintiffs, Tony and Michelle Ha, signed a purchase agreement with Taylor Woodrow Communities-League City, Ltd. to build a home in Texas. The agreement included an arbitration provision. The Has sued both Taylor Woodrow Communities-League City, Ltd. and Taylor Morrison of Texas, Inc., for negligent construction and other claims, alleging the home developed significant mold problems due to construction defects. Plaintiffs' second amended petition named both Tony and Michelle and their three children. Taylor Morrison moved to compel arbitration, but the trial court denied the motion as it pertained to Michelle and the children. The court of appeals affirmed. The Supreme Court reversed, holding that when a family unit resides in a home and files suit for factually intertwined construction-defect claims concerning the home, a nonsignatory spouse and minor children have accepted direct benefits under the signatory spouse’s purchase agreement such that they may be compelled to arbitrate through direct-benefits estoppel. View "Taylor Morrison of Texas, Inc. v. Ha" on Justia Law