Justia Contracts Opinion Summaries

Atlanta Gas Light Company and Southern Company Gas contracted with United States Infrastructure Corporation (USIC) to locate and mark gas lines in Georgia. In 2018, USIC failed to mark a line, leading to a gas explosion that seriously injured three people. The injured parties settled with USIC but not with Atlanta Gas Light. After being sued in Georgia state court, Atlanta Gas Light sought defense and indemnification under USIC’s excess liability policy issued by Navigators Insurance Company, claiming status as an additional insured. Navigators denied coverage, asserting Atlanta Gas Light was not an additional insured for these claims because they were based solely on Atlanta Gas Light's conduct.Before the United States District Court for the Southern District of Indiana, Atlanta Gas Light sued Navigators for breach of contract, breach of fiduciary duty, and bad faith. The district court dismissed claims related to Navigators’s conduct prior to USIC’s primary policy exhaustion but allowed the breach of contract claim to proceed. On summary judgment, the district court ruled that Atlanta Gas Light was an additional insured under the excess policy and denied Navigators's motion as to breach of contract. The court entered final judgment for Atlanta Gas Light, and both parties appealed aspects of the ruling.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. It held that, under Indiana law and the policies’ language, Atlanta Gas Light was an “additional insured” because its liability in the underlying suits arose, at least in part, from USIC’s acts or omissions. The court also held that Navigators had no duty to defend or indemnify Atlanta Gas Light before the primary policy was exhausted, and that Navigators’s denial of coverage, based on a nonfrivolous interpretation of the policy, did not constitute bad faith or breach any fiduciary duty. View "Atlanta Gas Light Company v Navigators Insurance Company" on Justia Law

Taylor L. Wood, her husband, and her son received medical care from physicians employed by Intermountain Emergency Physicians, PLLC (IEP). The resulting medical debt was assigned to Medical Recovery Services, LLC (MRS) for collection. After Wood’s attorneys alleged violations of state law, the Woods and IEP entered into a settlement that discharged the debt and provided payment to the Woods. Nevertheless, MRS later sued Wood to collect the same debt. Wood responded by counterclaiming and bringing IEP into the case as a third-party defendant, relying on the settlement agreement. MRS dismissed its complaint upon learning of the prior settlement, and all claims were eventually dismissed by the court.After judgment was entered, both sides sought a determination of the prevailing party and an award of attorney fees. The District Court of the Seventh Judicial District, Bingham County, found that Wood was the prevailing party over MRS and ordered MRS to pay Wood’s costs and attorney fees, concluding that MRS’s complaint was frivolous due to lack of proper investigation and communication regarding the settlement. MRS and IEP filed a first motion for reconsideration of the fees order, which was denied. They then filed a second motion for reconsideration, also denied, and subsequently appealed.The Supreme Court of the State of Idaho reviewed the case. It held that it lacked jurisdiction to review the district court’s order awarding costs and attorney fees to Wood because MRS and IEP’s notice of appeal from that order was untimely under Idaho Appellate Rule 14(a). The court did have jurisdiction to review the denial of the second motion for reconsideration, but because MRS and IEP failed to provide argument or authority on that issue, they waived it. The Supreme Court affirmed the district court’s denial of the second motion for reconsideration. View "Medical Recovery Services, LLC v. Wood" on Justia Law

A minor league baseball team in Oregon lost its longstanding affiliation with a Major League Baseball (MLB) club after MLB restructured its relationship with minor league teams in 2020. The team’s owner alleges that a minority owner of an MLB franchise, who also served on the board and a negotiation committee of the national minor league association, acted to reduce the number of minor league clubs for personal gain, which resulted in the team’s exclusion from the new affiliation structure. The owner claims that the association’s rules left it dependent on the board and committee members to protect its interests.The United States District Court for the District of New Jersey dismissed the owner’s complaint, finding that it failed to plausibly allege the existence of a fiduciary relationship between the board member and the team. The owner appealed, arguing that fiduciary duties arose under Florida’s non-profit statute, by contract, or by implication due to the structure of the association and the interactions between the parties.The United States Court of Appeals for the Third Circuit reviewed the District Court’s dismissal de novo. The Third Circuit held that Florida’s non-profit statute does not create a fiduciary duty from a director to the members of the non-profit, only to the corporation itself. The court also found no express or implied fiduciary duty arising from contractual provisions or the surrounding circumstances. The court distinguished direct and derivative actions and concluded that the complaint did not allege facts to support a direct or implied fiduciary relationship. Accordingly, the Third Circuit affirmed the District Court’s dismissal of the complaint for failure to state a claim. View "Sports Enterprises Inc v. Goldklang" on Justia Law

480 King Street, LLC hired Glick/Boehm & Associates, Inc. (GBA), an architectural firm, to design and administer construction of a stair tower. 480 King alleged that GBA negligently designed elements of the project, including the elevator, electrical, HVAC, windows, and stairs, and also failed to properly administer construction, resulting in code violations and additional costs. As the statute of limitations was approaching, 480 King filed its complaint without the expert affidavit required by the South Carolina Frivolous Civil Proceedings Sanctions Act, later submitting an affidavit from Louis Hackney, a professional engineer, attesting to deviations from the standard of care in both design and contract administration.The Circuit Court of Charleston County, after allowing time for the affidavit, ultimately dismissed all claims against GBA, finding Hackney was not qualified to opine on the standard of care for architects. On appeal, the South Carolina Court of Appeals affirmed the dismissal of negligent design claims but reversed as to claims for negligent construction administration, finding Hackney qualified under statutory standards for expert witnesses. The appellate court also reversed dismissal of breach of contract and warranty claims, remanding them for further proceedings.The Supreme Court of South Carolina affirmed in part and reversed in part. It held that the expert witness affidavit requirement under section 15-36-100 does not mandate the affiant be from the same profession as the defendant, provided the statutory qualifications are met. Hackney’s affidavit was sufficient for the negligent construction administration claim, but not for negligent architectural design, as he declined to opine on the latter. Claims for negligent supervision were subsumed under construction administration. The breach of contract claim may proceed only as to construction administration, while breach of warranty and negligent design claims were properly dismissed. The disposition was affirmed in part and reversed in part. View "Blanchard v. 480 King Street, LLC" on Justia Law

The case centers on a dispute between a former employee and his employer regarding an alleged agreement to transfer company stock. The plaintiff, who had worked for the employer for many years and was promoted several times, claimed that he was promised a portion of stock if he remained employed through a specific date. This promise was allegedly memorialized in a 2018 letter from one of the company’s owners. After the plaintiff fulfilled his employment commitment but did not receive the stock, he sued the company and several individuals for promissory estoppel, fraud, and breach of contract.Previously, the District Court of the Fourth Judicial District, Ada County, reviewed the case. The court granted summary judgment to two individual defendants, dismissing them from the suit. The plaintiff’s claims against the remaining defendants proceeded to a bench trial. After trial, the district court found in favor of the company and its owner on all counts, concluding there was no enforceable contract due to the absence of an essential term—price—and insufficient evidence of fraud. The court also awarded attorney fees to both the company and the owner.The Supreme Court of the State of Idaho affirmed the district court’s dismissal of the breach of contract and fraud claims, agreeing that the 2018 letter did not create an enforceable contract and that there was no clear and convincing evidence of fraud. The Supreme Court also affirmed the award of attorney fees to the owner but vacated the fee award to the company, finding the company’s initial fee request procedurally deficient. The case was remanded for entry of an amended judgment consistent with these findings. Attorney fees and costs on appeal were awarded to the owner, but not to the company. View "York v. Kemper Northwest, Inc." on Justia Law

A publicly traded investment banking corporation entered into a stockholders agreement with an entity controlled by its founder in 2014, contemporaneous with its initial public offering. The agreement granted the founder’s entity extensive governance rights, including restrictions on board actions and control over board and committee composition, provided certain ownership and other conditions remained met. These arrangements and the founder’s control were disclosed in the company’s IPO prospectus and subsequent public filings. Nearly nine years later, a Class A stockholder filed suit seeking a declaratory judgment that key provisions of the stockholders agreement were facially invalid under Section 141(a) of the Delaware General Corporation Law, which vests management authority in the board of directors unless otherwise provided in the certificate of incorporation.The Court of Chancery of the State of Delaware denied the company’s time-bar and laches defenses, holding that if the challenged provisions violated Section 141(a), they were void rather than voidable, and therefore not subject to equitable defenses like laches. The court further reasoned that the alleged statutory violation was ongoing, so the claim was not untimely even though it was brought many years after the agreement was executed. The court proceeded to find that several provisions of the stockholders agreement facially violated Section 141(a), declared them void and unenforceable, and later awarded attorney fees to the plaintiff.On appeal, the Supreme Court of the State of Delaware reversed. It held that to the extent the challenged provisions conflicted with Section 141(a), they were voidable—not void—and thus subject to equitable defenses, including laches. The Supreme Court concluded that the plaintiff’s claim accrued when the agreement was executed in 2014, that the delay in bringing suit was unreasonable, and that the claim was barred by laches. The Supreme Court vacated the declaratory judgment and fee award, declining to reach the merits of the facial validity of the agreement’s provisions. View "Moelis & Company v. West Palm Beach Firefighters' Pension Fund" on Justia Law

Daevieon Towns purchased a new Hyundai Elantra in 2016, and over the next 19 months, the car required multiple repairs for alleged electrical and engine defects. In March 2018, either Towns or his wife, Lashona Johnson, requested that Hyundai buy back the defective vehicle. Before Hyundai acted, the car was involved in a collision, declared a total loss, and Johnson’s insurance paid her $14,710.91.Towns initially sued Hyundai Motor America in the Superior Court of Los Angeles County for breach of express warranty under the Song-Beverly Consumer Warranty Act. As trial approached, Towns amended his complaint to add Johnson as a plaintiff, arguing she was the primary driver and responsible for the vehicle. The trial court allowed the amendment, finding Johnson was not a buyer but permitted her to proceed based on its interpretation of Patel v. Mercedes-Benz USA, LLC. At trial, the jury found for Towns and Johnson, awarding damages and civil penalties. However, the court reduced the damages by the insurance payout and adjusted the prejudgment interest accordingly. Both parties challenged the judgment and costs in post-trial motions.The California Court of Appeal, Second Appellate District, Division Four, reviewed the case. It held that only a buyer has standing under the Act, so Johnson could not be a plaintiff. The court also held that third-party insurance payments do not reduce statutory damages under the Act, following the Supreme Court’s reasoning in Niedermeier v. FCA US LLC. Furthermore, prejudgment interest is available under Civil Code section 3288 because Hyundai’s statutory obligations do not arise from contract. The court affirmed in part, reversed in part, and remanded for the trial court to enter a modified judgment and reconsider costs. View "Towns v. Hyundai Motor America" on Justia Law

Following Hurricane Laura, a Texas-based company, Top Notch Movers, provided moving services in Alabama and Louisiana to Shamrock Enterprises, an Alabama-based LLC. Top Notch sent a demand letter to Shamrock seeking payment for over $170,000 in unpaid invoices. Subsequently, Top Notch filed suit in Texas for nonpayment, listing Shamrock’s principal office as a Foley, Alabama address and seeking substituted service via the Texas Secretary of State under section 5.251(1)(A) of the Texas Business Organizations Code. The Secretary of State attempted to forward process to the Foley address, but the mailing was returned as undeliverable. Shamrock did not appear, and Top Notch obtained a default judgment, which was also mailed to the same address and returned.Shamrock later initiated a restricted appeal, arguing that service of process was improper. The Court of Appeals for the Thirteenth District of Texas affirmed the default judgment, finding that Shamrock was amenable to substituted service under the cited statute and that the Secretary of State’s Whitney certificate constituted irrebuttable proof of proper service.The Supreme Court of Texas reviewed the case and determined that even if Shamrock was subject to substituted service under section 5.251(1)(A), the record did not show that process was forwarded to the statutorily required address—Shamrock’s “most recent address . . . on file with the secretary of state.” The court clarified that a Whitney certificate only proves that process was sent to the address provided, not that the statutory requirements were met, and strict compliance is necessary for a valid default judgment. Therefore, the Supreme Court of Texas reversed the judgment of the Court of Appeals, vacated the default judgment, and remanded the case to the trial court for further proceedings. View "SHAMROCK ENTERPRISES, LLC v. TOP NOTCH MOVERS, LLC" on Justia Law

An individual who founded a Michigan biomedical research company sold a majority stake in 2019 to four defendants but retained a minority interest, later becoming dissatisfied with the company’s management and moving out of state. The new owners aimed to expand the company but withheld information from the plaintiff about their efforts to secure financing, including discussions with Avista Capital Partners, a venture capital firm that ultimately made a large investment. The plaintiff sold his shares in December 2020 for a price based on an annual valuation, prior to Avista’s capital infusion that significantly increased the company’s value. The plaintiff later sued, alleging violations of federal and state securities laws, breach of fiduciary duty under Michigan law, and various fraud and contract claims based on the defendants’ failure to disclose material facts about the company’s pursuit of equity financing and Avista’s interest.The case was first heard in the United States District Court for the Western District of Michigan. That court denied the defendants’ motion to dismiss but, following discovery, granted summary judgment in favor of the defendants on all counts. The court concluded that the omissions were not material under federal securities law and, applying Delaware law and a federal standard, also found no materiality for the breach of fiduciary duty claim under Michigan law.On appeal, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s summary judgment as to the federal securities law claims, the Michigan Uniform Securities Act claim, and the contract-based claims, holding that the omissions were not material under the applicable federal standards. However, the Sixth Circuit reversed the summary judgment for the Michigan common-law fiduciary duty and fraud claims, finding the district court had applied an incorrect legal standard and that genuine disputes of material fact remained. The case was remanded for further proceedings on the fiduciary duty and fraud counts. View "Boyd v. Northern Biomedical Research Inc." on Justia Law

A dispute arose regarding the sale of property located at 301 Harris Avenue in Providence, Rhode Island. The plaintiff, 1100 North Main LLC, sought to purchase property from the Providence Firefighters Realty Corp. (the Firefighters), contingent on the Firefighters acquiring replacement property. The Firefighters entered into negotiations with the defendant, Shoreby Hill Properties, Inc., to purchase the Harris Avenue property. After several communications, the Firefighters signed a draft purchase and sales agreement for the property, but the defendant refused to execute it and reportedly accepted another offer. The plaintiff then filed a complaint seeking declaratory, equitable, or monetary relief based on the alleged contract, and recorded two notices of lis pendens against the Harris Avenue property.In the Providence County Superior Court, the defendant moved to dismiss the complaint, quash the lis pendens, and sought sanctions. The plaintiff argued that the attorneys’ communications constituted assent and that a purported assignment from the Firefighters gave the plaintiff standing. Before the Superior Court justice issued a decision, the plaintiff attempted to amend its complaint to add factual allegations and clarify standing. The trial justice dismissed the complaint and quashed the lis pendens, finding that the allegations failed to satisfy the statute of frauds and did not establish standing. The motion to amend was denied as futile, as no enforceable contract was found.On appeal, the Supreme Court of Rhode Island reviewed whether a binding contract existed under the statute of frauds and whether denial of the motion to amend was proper. The Supreme Court held that the unsigned purchase and sales agreement did not satisfy the statute of frauds and no binding contract existed. The Court affirmed the Superior Court’s dismissal of the complaint, quashing of the lis pendens, and denial of the motion to amend. View "1100 North Main LLC v. Shoreby Hill Properties, Inc." on Justia Law