Justia Contracts Opinion Summaries

The Supreme Court affirmed the judgment of the district court dismissing this action brought by Millard Gutter Company against Shelter Mutual Insurance Company seeking to recover damages for breach of insurance contracts and for first-party bad faith, holding that the district court did not err in concluding that Millard Gutter did not have standing to assert first-party bad faith claims against Shelter.After a storm, Millard Gutter obtained assignments from various policyholders of Shelter. Thereafter, Millard filed suit against Shelter in its own name, as assignee, alleging breach of contract and first-party bad faith in failing to settle the claims. The district court granted Shelter's motion to dismiss, concluding that the complaint did not contain sufficient factual allegations to establish standing to assert first-party bad faith claims. The Supreme Court affirmed, holding that Millard Gutter lacked standing to prosecute the policyholders' tort actions for first-party bad faith against Shelter. View "Millard Gutter Co. v. Shelter Mutual Insurance Co." on Justia Law

The Supreme Court reversed the judgment of the circuit court dismissing Ashland, LLC's claim against Virginia-American Water Company for an alleged breach of contract, holding that the circuit court erred in concluding that Va. Const. art. IX, 4 deprived it of jurisdiction to adjudicate Ashland's contract claim.Ashland filed suit against Virginia-American, which provided water to Ashland pursuant to a tariff issued by the State Corporation Commission, after a power outage disrupted water service to Ashland, resulting in $515,000 in damages due to lost business and profits. Ashland's complaint asserted a breach of contract claim based on an alleged violation of the tariff. The circuit court concluded that the promulgation of a tariff by the Commission is an action of the Commission, and therefore, the circuit court lacked jurisdiction. The Supreme Court reversed, holding that circuit courts are free to read and then apply the terms of a tariff as adopted by the Commission as necessary to resolve a common law dispute. View "Ashland, LLC v. Virginia-American Water Co." on Justia Law

Two former students of Tulane University, on behalf of a putative class of current and former students, sued the University for failing to provide a partial refund of tuition and fees after Tulane switched from in-person instruction with access to on-campus services to online, off-campus instruction during the COVID-19 pandemic. The district court agreed with Tulane that the student's complaint should be dismissed for failure to state a claim.   The Fifth Circuit reversed and remanded. The court concluded that the claim is not barred as a claim of educational malpractice because the Students do not challenge the quality of the education received but the product received. Second, the court rejected Tulane’s argument that the breach-of-contract claim is foreclosed by an express agreement between the parties because the agreement at issue plausibly does not govern refunds in this circumstance. And third, the court concluded that Plaintiffs have not plausibly alleged that Tulane breached an express contract promising in-person instruction and on-campus facilities because Plaintiffs fail to point to any explicit language evidencing that promise. But the court held that Plaintiffs have plausibly alleged implied-in-fact promises for in-person instruction and on-campus facilities. Moreover, the court found that the Students’ alternative claim for unjust enrichment may proceed at this early stage. Finally, genuine disputes of material fact regarding whether Plaintiffs saw and agreed to the A&DS preclude reliance on the agreement at this stage. Thus, Plaintiffs have plausibly alleged a claim of conversion. View "Jones v. Admin of the Tulane Educ" on Justia Law

Rock Hemp contracted with CBDINC to purchase 6,000 hemp seeds. CBDINC is a fictitious business name used by Dunn, Davies, and Kolodny (Appellees). The contract contains an arbitration clause requiring “[a]ny dispute arising out of this Agreement” be resolved through “binding arbitration” in Denver, Colorado. Disappointed with CBDINC’s hemp seeds, Rock sued the Appellees individually, not CBDINC, in Wisconsin state court. The Appellees removed the case to federal court and moved to dismiss the case for failure to comply with the arbitration clause. Rock sought remand under 28 U.S.C. 1447.The Seventh Circuit affirmed the judgment in favor of the Appellees. Based on the date when Rock “specifically disclose[d] the amount of monetary damages sought,” the district court correctly found that removal was timely. The Appellees did not fully litigate the merits of the case in state court. The allegations in the complaint make clear that CBDINC was not a distinct legal entity from the Appellees, and Rock does not allege it was confused or deceived by the use of the d/b/a; the district court correctly concluded that the contract is valid and Appellees have standing to enforce it. View "Rock Hemp Corp. v. Dunn" on Justia Law

This appeal and cross-appeal involved a residential lease agreement with an option to purchase executed by Tony Hiett, Sr., and his wife Kelly Hiett ("the tenants") and Beverlye Brady ("the landlord"). According to the tenants, they accepted the first option to purchase the property presented in the landlord's email and began making monthly holdover rental payments of $2,500. And, in April 2017, they informed the landlord that they had obtained financing and were ready to close on the property by April 30, 2017. The landlord, however, refused to convey title to the property because, she claimed, the tenants had never responded to her email; thus, according to the landlord, the option to purchase had expired. The tenants thereafter stopped paying rent under the lease agreement, but continued to occupy the property, and sued the landlord, seeking specific performance of the option to purchase. The landlord counterclaimed, asserting a claim for ejectment and a claim of breach of contract, based on unpaid rent and late fees owed under the lease agreement. The Alabama Supreme Court affirmed the judgment entered on the jury's verdict in favor of the tenants on their specific-performance claim and against the landlord on her ejectment claim. The Supreme Court reversed the judgment entered on the jury's verdict in favor of the landlord on her breach-of-contract claim based on the inadequacy of damages awarded, and the Court remanded the case with directions to the trial court to grant a new trial as to only that claim, unless the tenants consented to an additur. View "Hiett v. Brady" on Justia Law

Appellant in his capacity as Litigation Trustee for the Erickson Litigation Trust, appeals the dismissal of his avoidance and recovery claims under the bankruptcy laws. In broad terms, these claims seek avoidance of settlement releases approved in Delaware state court, as well as two payments related to Erickson Air-Crane, Inc.’s acquisition of Evergreen Helicopters, Inc. (EHI) (the “Evergreen Transaction”).   The Fifth Circuit affirmed the dismissal of the claims relating to the settlement releases and reversed in part the dismissal of the payments relating to the Evergreen Transaction itself. The court concluded that consistent with Besing and Erlewine, there was reasonable equivalence as a matter of law. The Delaware settlement “should not be unwound by the federal courts merely because of its unequal division of [settlement proceeds].” Further, the court wrote that Appellant’s attempt to attack the Delaware releases as actually fraudulent transfers also fails. The court wrote it saw no error in the lower court's conclusion that Appellant failed to adequately plead actual fraud, and his arguments on appeal do not convince the court otherwise. Moreover, the court found that acting in his specific capacity, Appellant is not enjoined by the Delaware settlement from asserting creditor claims that arose only under the Bankruptcy Code. View "Ogle v. Morgan, et al" on Justia Law

The Fifth Circuit affirmed the district court’s order denying Klairmont Korners, L.L.C. (“Klairmont”) claim that a debtor’s decision to reject a commercial lease pursuant to 11 U.S.C. Section 365 should not receive deference under the business judgment rul Klairmont Korners, L.L.C. (“Klairmont”) appeals a district court order denying its claim that a debtor’s decision to reject a commercial lease pursuant to 11 U.S.C. Section 365 should not receive deference under the business judgment rule because of “bad faith, whim, or caprice” inherent in a third party’s negotiations with Klairmont.   The Fifth Circuit affirmed. The court explained that Klairmont’s contentions fail under this court’s own standard for overcoming the business judgment rule, as well as the “bad faith” test Klairmont encourages us to adopt. The court explained that Klairmont’s position is untenable, even under the test it proposes the court adopt from another circuit, under which courts should not defer to a debtor’s decision under Section 365 that is “the product of bad faith, or whim, or caprice.” Klairmont misunderstands this standard, urging the court to hold that any bad faith involved in the bankruptcy proceedings should prompt a bankruptcy court to decline a debtor’s decision regarding an executory contract. That is not the test these other courts have adopted. Klairmont will not find relief in asserting that the debtor’s decision deserves no deference under the business judgment rule.     . View "Klairmont Korners, L.L.C." on Justia Law

Appellant Today’s IV filed a civil complaint against respondents Los Angeles County Metropolitan Transportation Authority and Regional Connector Constructors for their “unreasonable” construction of an underground subway line in downtown Los Angeles, which affected the Westin Bonaventure Hotel and Suites (the Bonaventure), owned by Today’s IV.   Today’s IV alleged claims for nuisance and inverse condemnation due to 1) respondents’ use of the cut-and-cover construction method instead of the tunnel boring machine method; 2) construction work during nights and weekends, which was particularly harmful to the Bonaventure’s operation as a hotel; 3) violation of certain noise limits; and 4) interference with access to the Bonaventure. Today’s IV alleged lost contracts, including a $3.3 million airline contract, and loss of business. It requested compensatory and punitive damages from Respondents.   The trial court found no liability and entered judgment in favor of Respondents. The Second Appellate District affirmed. The court explained that the first two circumstances that justify an inverse condemnation claim are not applicable here, as Appellant does not contend that its property has been physically invaded or physically damaged. Thus, Appellant necessarily relies upon the intangible intrusion theory. To recover under this theory, Appellant must be able to establish its property suffered from an intangible intrusion burdening the property in a way that is direct, substantial, and peculiar to the property itself. View "Today's IV, Inc. v. L.A. County Metropolitan Transportation Auth." on Justia Law

The Supreme Court affirmed the judgment, decree of foreclosure, and order of sale by the district court, and the orders and actions contained within these documents, holding that there was no error or abuse of discretion.Thermal Design, Inc. filed a complaint to foreclose its construction lien against Mark and Pam Duffy and Central Copters, Inc. The complaint also asserted claims against TNT Building Systems. A jury found that TNT, acting as an agent of Central Copters, entered into a contract with Thermal Design for the insulation system, and both TNT and Central Copters were jointly and severally liable for breaching the contract with Thermal Design. As to a crossclaim between TNT and Central Copters, the jury found that both parties breached their agreement but that only TNT incurred damages. The district court entered a final order restating that, as a matter of law, Thermal Design had a valid construction lien attaching to both the Duffys’ real property and Central Copters’ building that should be foreclosed. The Supreme Court affirmed, holding that the district court did not err or abuse its discretion in the proceedings below. View "Thermal Design, Inc. v. Thorson" on Justia Law

Appellant Advanced Indicator and Manufacturing, Inc. claims its building was damaged by Hurricane Harvey’s winds. Advanced’s insurer, Acadia Insurance Company, determined that the damage to the building was caused by poor maintenance and routine wear and tear. When Acadia denied Advanced’s claim, Advanced sued. Advanced filed a motion to remand the case to state court   The district court granted Acadia’s motion and granted summary judgment on Advanced’s extra-contractual claims. The Fifth Circuit affirmed the district court’s denial of the motion to remand, reversed the grant of summary judgment on Advanced’s claims, and remanded the matter to the district court.   The court explained that Advanced’s argument is unavailing because it fails to consider Flagg’s command that “the district court must examine the plaintiff’s possibility of recovery against that defendant at the time of removal.” At the time of removal, then, it would have been proper for the district court to find that “there is no possibility of recovery by [Advanced] against an in-state defendant.” Accordingly, the differences between Sections 542A.006(b) and 542.006(c) are not material as long as the insurer elects to accept liability for the agent before removal. The court held that summary judgment was not warranted on Advanced’s breach of contract claim given the evidence Advanced has put forth. This conclusion requires the reversal of the district court’s dismissal of Advanced’s other claims. View "Adv Indicator v. Acadia Ins" on Justia Law