Justia Contracts Opinion Summaries

The United States Court of Appeals for the Eleventh Circuit certified questions of Georgia law to the Georgia Supreme Court about life-insurance law. The basic question for the Supreme Court was whether a person could legally take out an insurance policy on his own life with the intent to turn around and sell that policy to a third party who had no “insurable interest” in the policyholder’s life. The person seeking to recover on the life-insurance policy in this case said that such a policy was legal if a third party was not involved in causing the policy to be procured. The insurance company says that with or without such third-party involvement, such a policy was an illegal wagering contract and therefore void, relying on some Georgia case law. But as it turned out, that case law was interpreting and applying old statutes. In 1960, the Georgia General Assembly repealed those statutes and replaced them with new statutory language that codified some, but not all, of the old decisional law, and the new language did not even hint at the unilateral-intent-based limitation that the insurance company advanced. So the Supreme Court answered the certified questions: under Georgia law, a life-insurance policy taken out by the insured on his own life with the intent to sell the policy to a third party with no insurable interest, but without a third party’s involvement when the policy was procured, was not void as an illegal wagering contract. View "Crum v. Jackson National Life Ins. Co." on Justia Law

Vought sued for the balance due on his contract for the renovation of Stock’s house, additional compensation under a disputed change order, and penalties for the violation of a prompt-payment statute, Civil Code section 8800. Stock did not dispute the unpaid amount Vought had earned for finished work, including approved change orders, but disputed the claim for additional compensation and sought liquidated damages for delay. The court held that Vought was entitled to the undisputed balance due plus approximately half the disputed amount of additional compensation; that Stock was entitled to approximately half the amount he claimed as liquidated damages; and that Stock had not violated section 8800 by withholding final payment. The court held that neither side was entitled to attorney fees under section 8800 or to costs under Code of Civil Procedure section 1032.The court of appeal affirmed in part. Stock was not prohibited from withholding the $79,000 otherwise due based on his good faith claim for liquidated damages. Vought was not relieved of the obligation to pay liquidated damages for the delay that it caused although it was not responsible for the entire delay. Neither party was the prevailing party under section 8800 but Vought was the prevailing party for purposes of recovering costs under section 1032; it secured a “net monetary recovery.” View "Vought Construction Inc. v. Stock" on Justia Law

Stackpole (Purchaser) makes car parts. Precision (Seller) makes automotive subcomponents. In 2014, Seller gave Purchaser quotes on pumps, making “[a]cceptance of order” subject to APQP [Advanced Product Quality Planning Review]. Purchaser issued a “Letter of Intent” to buy 1.1 million 10R/10L shafts and 306,000 Nano shafts. Seller's employee signed the letter, which provided that Purchaser would issue purchase orders for actual shipments. The purchase orders contained six pages of supplemental terms, allowing Purchaer to “terminate . . . this contract, at any time and for any reason, by giving written notice,” and providing that purchase orders would “not become binding” until the additional provisions were “signed and returned.” Seller did not sign the purchase orders but shipped parts to Purchaser for two years. In 2017, Seller stated that it needed a price increase or it would have to halt production. Purchaser agreed to price increases “under duress and protest,” then sued for breach of contract. Seller counterclaimed, alleging that Purchaser had impermissibly withheld its approval to make the parts by an automatic rather than manual process.The district court awarded Purchaser summary judgment, finding the parties had formed a contract “for successive performances.” “indefinite in duration.” Michigan law makes such contracts presumptively terminable upon “reasonable notification” A jury awarded $1 million. The Sixth Circuit affirmed. The Letter of Intent constituted a contract, notwithstanding the failure to engage in APQP. No contextual factor suggests a right to terminate the Letter of Intent without notice. View "Stackpole International Engineered Products, Ltd.. v. Angstrom Automotive Group, LLC" on Justia Law

Riegel, seeking to build a condominium development in Isla Mujeres, formed ISLA and borrowed millions of dollars from the Hovdes. The project failed. More than 10 years later, the Hovdes sued ISLA and Riegel.The district court granted the defendants summary judgment on the claim based on the Mortgage Note, citing the 10-year limitations period, and later holding that the limitations defense could be asserted against Riegel as the guarantor. The Seventh Circuit affirmed. An acceleration clause provided that if a Default occurred, the outstanding unpaid principal and interest would automatically become immediately due, triggering the 10-year limitations period. One such “Default” was an “Act of Bankruptcy,” defined to include admitting in writing the inability to pay debts as they mature. Two emails sent by Riegel to the Hovdes constituted an admission in writing of inability to pay debts: an August 7, 2008 email, asking for an advance to pay a tax bill, and a subsequent email indicating that all construction workers had been suspended. The language does not require actual insolvency; it merely requires an admission of an inability to pay the debts, whether or not true. The terms “continuing, absolute, and unconditional” are terms of art when used in guarantees and do not waive the limitations defense. View "Hovde v. ISLA Development LLC" on Justia Law

The Supreme Court affirmed the decision of the court of appeals reversing the judgment of the district court affirming the decision of the Sibley-Ocheyedan Community School District to terminate Plaintiff's teaching contract, holding that the school district violated the law when it terminated Plaintiff's contract.Administrators at the school district required Plaintiff, a high school teacher, to participate in an "intensive assistance program" described in Iowa Code chapter 284. The school district's policy implementing chapter 284 required teachers to participate in the program at minimum six months and at most twelve months. The school district, however, fired Plaintiff before she'd been given six months to carry out her responsibilities in the program. The district court affirmed the school board's decision, but the court of appeals reversed. The Supreme Court affirmed, holding that the school district unlawfully terminated Plaintiff's contract before giving her the requisite period to participate in the intensive assistance program. View "Braaksma v. Bd. of Directors of Sibley-Ocheyedan Community School District" on Justia Law

The City of Los Angeles (City) entered into a contract with defendant and respondent PricewaterhouseCoopers, LLC (PWC) to modernize the billing system for the Los Angeles Department of Water and Power (LADWP). PWC filed a motion for sanctions under Code of Civil Procedure sections 2023.010 and 2023.030 of the Civil Discovery Act nine months after the case was dismissed with prejudice, seeking monetary sanctions for egregious misuse of the discovery process while the litigation was pending. The trial court awarded $2.5 million in sanctions. On appeal from the postjudgment order, in response to a letter from this court inviting additional briefing pursuant to Government Code section 68081, the sanctioned party contends the Discovery Act does not authorize the trial court to award monetary sanctions under section 2023.030 alone or together with section 2023.010.   The Second Appellate District reversed the postjudgment order and remanded the matter for the trial court to enter a new and different order on the issue of monetary sanctions based on discovery provisions authorizing the imposition of sanctions in this case. The court explained that although the trial court had jurisdiction to entertain PWC’s motion for sanctions and discretion to find it was timely filed, the order awarding sanctions must be reversed and remanded to allow the trial court to award PWC’s reasonable expenses incurred as a result of sanctionable conduct under provisions of the Discovery Act other than sections 2023.010 and 2023.030. View "City of L.A. v. PricewaterhouseCoopers, LLC" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the court of appeals reversing in part the trial court's grant of summary judgment in favor of the City of Barbourville on all of Plaintiff's claims holding that the reasoning of the trial court was sound.Plaintiff sustained burns on the bottom of her feet after visiting a water park owned by the City, requiring eventual amputation of a portion of her foot. Plaintiff sued the City, bringing claims under theories of premises liability, strict liability, and breach of contract. The trial court granted summary judgment in favor of the City on all claims. The court of appeals reversed the summary judgment on the premises liability claim and otherwise affirmed. The Supreme Court reversed in part, holding that the trial court correctly granted summary judgment in favor of the City on Plaintiff's strict liability, breach of contract, and premises liability claims. View "City of Barbourville v. Hoskins" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the circuit court in this action brought by Plaintiff to determine custody, child support, and shared parenting of the parties' child and on Defendant's counterclaim for breach of an implied contract and unjust enrichment, holding that the circuit court erred in part.In his counterclaim, Defendant argued that the parties had impliedly agreed that they would jointly own the marital home and that he would receive equity in the home acquired through his financial contributions toward the home mortgage. In response, Plaintiff claimed that she owned the home and that Defendant simply paid her rent while living there. The circuit court denied Defendant's claims, concluded that the parties' relationship was that of a landlord and tenant and awarded back rent, and determined shared child support and parenting issues. The Supreme Court reversed in part, holding that the circuit court (1) erred when it awarded Plaintiff back rent; (2) erred in determining the amount of back child support due; and (3) did not otherwise err or abuse its discretion. View "Murphey v. Pearson" on Justia Law

The Supreme Court quashed the conclusion of the Second District Court of Appeal affirming the trial court's order denying Defendant Suarez Trucking's motion to enforce a settlement agreement with Plaintiff Adam Souders, holding that a binding settlement agreement was formed in this case.Plaintiff filed a tort action against Defendant. Plaintiff made an offer of settlement, and in response, Defendant filed a notice of acceptance. The Second District, however, concluded that Defendant could only manifest its acceptance of the offer by reciting back the offer's terms. The Supreme Court quashed the decision below, holding that there was no basis to support the Section District's conclusion that a settlement contract could only be formed by performance or that Defendant's acceptance was otherwise defective. View "Suarez Trucking FL Corp. v. Souders" on Justia Law

The Court of Appeals reversed the order of the appellate division in this case, holding that an indemnification provision in the partnership agreement between Plaintiff and Defendant lacked express language or indicia of the parties' "unmistakably clear" intent to indemnify each other for attorney's fees in an action between them concerning the contract.After Defendant unsuccessfully brought a partnership dissolution action Plaintiff commenced this action seeking attorney's fees and costs incurred defending the dissolution action, claiming that Defendant waived the benefit of the American Rule, under which a prevailing party in litigation generally may not recover attorney's fees from the losing party, by agreeing to the indemnification provision in the parties' partnership agreement. Supreme Court granted summary judgment for Defendant, and appellate division affirmed. The Court of Appeals affirmed, holding that nothing in the agreement made "unmistakably clear" that the partners intended to permit recovery for attorney's fees in an action between them on the contract. View "Sage Systems, Inc. v. Liss" on Justia Law