Justia Contracts Opinion Summaries

Several former members of the rock band Supertramp entered into a 1977 publishing agreement with their bandmates and manager, allocating specific percentages of songwriting royalties among themselves. These royalties were distributed according to the agreement for decades. In 2018, two of the principal songwriters and their publishing company stopped paying royalties to the plaintiffs, prompting the plaintiffs to file a breach of contract action. The dispute centered on whether the agreement could be unilaterally terminated or whether the obligation to pay royalties continued as long as the songs generated income.After the case was removed to the United States District Court for the Central District of California, the court ruled as a matter of law that the defendants could terminate the agreement after a “reasonable time,” finding no express or implied duration in the contract. The case proceeded to a jury trial, which found in favor of the defendants, concluding that the contract had been terminated after a reasonable time. The plaintiffs appealed this decision.The United States Court of Appeals for the Ninth Circuit reviewed the case and applied California contract law, which requires courts to first look for an express duration in the contract, then to determine if a duration can be implied from the contract’s nature and circumstances, and only if neither is found, to construe the duration as a reasonable time. The Ninth Circuit agreed there was no express duration but held that the contract’s nature implied a duration: the obligation to pay royalties continues as long as the songs generate publishing income, ending only when the copyrights expire and the works enter the public domain. The court reversed the district court’s judgment and remanded with instructions to enter judgment for the plaintiffs on liability. View "Thompson v. Hodgson" on Justia Law

A business owner, who held a 50% stake in a group of skilled-nursing and real estate companies, personally guaranteed a $77 million loan arranged by a bank for those companies and others managed by his business partner. The loan was part of a refinancing effort after the companies’ prior lender declared a default. The owner signed both an initial guaranty agreement and a subsequent reaffirmation of that guaranty. Within a year, the companies defaulted on the new loan, and it was later revealed that the business partner had engaged in fraudulent check-kiting. The bank demanded repayment from the guarantors, including the owner, who then argued that he had been fraudulently induced into signing the guaranty because the bank failed to disclose material financial risks related to his partner and the companies.The Hamilton County Court of Common Pleas granted summary judgment to the bank, finding that the owner had waived defenses under the guaranty agreement, that the bank owed no duty to disclose information about the companies’ financial condition, and that the owner could not establish fraudulent inducement. On appeal, the First District Court of Appeals reversed, holding that as a surety, the owner could assert a defense based on the bank’s alleged failure to disclose facts that materially increased his risk, adopting the “doctrine of increased risk” from Section 124(1) of the Restatement (First) of Security.The Supreme Court of Ohio reviewed the case and reversed the appellate court’s decision. The court held that, under Ohio law, parties to an arm’s-length transaction do not owe each other a duty to disclose unknown facts that materially increase risk, unless a special relationship of trust or confidence exists. This rule applies regardless of whether one party is a guarantor or surety. The court reinstated the trial court’s grant of summary judgment in favor of the bank. View "Huntington Natl. Bank v. Schneider" on Justia Law

A married couple, who wed in 2020 and share a young child, purchased an engineering business together using loans secured by the wife’s premarital home. After their separation in 2023, the wife petitioned for divorce. The parties entered into interim agreements regarding custody, child support, and business management, but the husband repeatedly violated these orders by failing to make required payments, misusing business funds, and withholding financial disclosures. The wife raised concerns about the husband’s substance abuse and erratic behavior, providing evidence of his alcohol and marijuana use, as well as incidents of intoxication during child exchanges and at work. The husband denied these allegations but admitted to some problematic behavior in written communications.The Thirteenth Judicial District Court, Yellowstone County, held multiple hearings, finding the husband in contempt several times for violating court orders. At trial, the court heard testimony and reviewed evidence regarding the husband’s parenting, financial conduct, and the parties’ competing proposals for the business. The court found the wife more credible, sanctioned the husband for discovery violations, and ultimately awarded her primary custody of the child, with the husband’s parenting time to be phased in only after he completed chemical dependency and mental health evaluations. The court also awarded the wife sole ownership of the business and her premarital home, requiring her to assume all related debts.The Supreme Court of the State of Montana affirmed the District Court’s decisions. It held that the finding regarding the husband’s failure to make full financial disclosures was supported by substantial evidence and not clearly erroneous. The Supreme Court also found no abuse of discretion in conditioning the husband’s parenting time on completion of evaluations or in awarding the business to the wife, as these decisions were equitable and consistent with Montana law. View "In re Marriage of Boeshans" on Justia Law

Russell Johnson, a resident of a continuing care retirement community operated by Stoneridge Creek, filed a class action lawsuit alleging that Stoneridge Creek unlawfully increased residents’ monthly care fees to cover its anticipated legal defense costs in ongoing litigation. Johnson claimed these increases violated several statutes, including the Health and Safety Code, the Unfair Competition Law, the Consumer Legal Remedies Act (CLRA), and the Elder Abuse Act, and breached the Residence and Care Agreement (RCA) between residents and Stoneridge Creek. The RCA allowed Stoneridge Creek to adjust monthly fees based on projected costs, prior year per capita costs, and economic indicators. In recent years, Stoneridge Creek’s budgets for legal fees rose sharply, with $500,000 allocated for 2023 and 2024, compared to much lower amounts in prior years.The Alameda County Superior Court previously denied Stoneridge Creek’s motion to compel arbitration, finding the RCA’s arbitration provision unconscionable. Johnson then moved for a preliminary injunction to prevent Stoneridge Creek from including its litigation defense costs in monthly fee increases. The trial court granted the injunction, finding a likelihood of success on Johnson’s claims under the CLRA and UCL, and determined that the fee increases were retaliatory and unlawfully shifted defense costs to residents. The court also ordered Johnson to post a $1,000 bond.The California Court of Appeal, First Appellate District, Division Four, reviewed the case and reversed the trial court’s order. The appellate court held that the fee increases did not violate the CLRA’s fee-recovery provision or other litigation fee-shifting statutes, as these statutes govern judicial awards of fees, not how a defendant funds its own legal expenses. The court further concluded that Health and Safety Code section 1788(a)(22)(B) permits Stoneridge Creek to include reasonable projections of litigation expenses in monthly fees. However, the court remanded the case for the trial court to reconsider whether the fee increases were retaliatory or excessive, and to reassess the balance of harms and the appropriate bond amount. View "Johnson v. Stoneridge Creek Pleasanton CCRC" on Justia Law

A resident of a memory-care facility in Massachusetts alleged that the facility’s court-appointed receiver, KCP Advisory Group, LLC, conspired with others to unlawfully evict residents, including herself, by falsely claiming that the local fire department had ordered an emergency evacuation. The resident, after being transferred to another facility, filed suit in the United States District Court for the District of Massachusetts, asserting several state-law claims against KCP and other defendants. The complaint alleged that KCP’s actions violated statutory and contractual notice requirements and were carried out in bad faith.KCP moved to dismiss the claims against it, arguing that as a court-appointed receiver, it was entitled to absolute quasi-judicial immunity. The district court granted the motion in part and denied it in part, holding that while quasi-judicial immunity barred claims based on negligent performance of receivership duties, it did not bar claims alleging that KCP acted without jurisdiction, contrary to law and contract, or in bad faith. The court thus denied KCP’s motion to dismiss several counts, including those for violation of the Massachusetts Consumer Protection Act, intentional infliction of emotional distress, civil conspiracy, fraud, and breach of fiduciary duty. KCP appealed the denial of immunity as to these counts.The United States Court of Appeals for the First Circuit reviewed the district court’s denial of absolute quasi-judicial immunity de novo. The appellate court held that KCP’s alleged acts—removing residents from the facility—were judicial in nature and within the scope of its authority as receiver. Because KCP did not act in the absence of all jurisdiction, the court concluded that quasi-judicial immunity barred all of the resident’s claims against KCP. The First Circuit therefore reversed the district court’s denial of KCP’s motion to dismiss the specified counts. View "Suny v. KCP Advisory Group, LLC" on Justia Law

The dispute centers on approximately 930 acres of agricultural land owned by two trusts near Pocatello, Idaho. The trusts entered into a purchase and sales agreement with a developer, Millennial Development Partners, to sell a strip of land for a new road, Northgate Parkway, which was to provide access to their property. The trusts allege that Millennial and its partners, along with the City of Pocatello, failed to construct promised access points and infrastructure, and that the developers and city officials conspired to devalue the trusts’ property, interfere with potential sales, and ultimately force a sale below market value. The trusts claim these actions diminished their property’s value and constituted breach of contract, fraud, interference with economic advantage, regulatory taking, and civil conspiracy.After the trusts filed suit in the District Court of the Sixth Judicial District, Bannock County, the defendants moved for summary judgment. The trusts sought to delay the proceedings to complete additional discovery, arguing that the defendants had not adequately responded to discovery requests. The district court denied both of the trusts’ motions to continue, struck their late response to the summary judgment motions as untimely, and granted summary judgment in favor of the defendants, dismissing the case with prejudice and awarding attorney fees to the defendants. The trusts appealed these decisions.The Supreme Court of the State of Idaho affirmed the district court’s denial of the trusts’ motions to continue, finding no abuse of discretion. However, it reversed the grant of summary judgment, holding that the district court erred by failing to analyze whether the defendants had met their burden under the summary judgment standard and appeared to have granted summary judgment as a sanction for the trusts’ untimely response. The Supreme Court vacated the judgment and remanded the case for further proceedings, and declined to award attorney fees on appeal. View "Rupp v. City of Pocatello" on Justia Law

A state port authority and a group of related companies entered into a series of letters of intent (LOIs) regarding the possible expansion and operation of a port facility. The final LOI, signed in December 2019, included provisions for confidentiality, exclusivity, and certain legally binding terms, but also stated that it was not a binding agreement to consummate the potential transaction. The port authority’s board approved the LOI and several subsequent extensions, but the board minutes did not include the terms or conditions of the LOI. After negotiations failed, the port authority terminated the LOI. The companies claimed significant losses and alleged the port authority had breached the LOI and misused confidential information.The Harrison County Circuit Court found that the LOI was unenforceable under Mississippi’s “minutes rule,” which requires that public board contracts be sufficiently detailed in the board’s official minutes. The court dismissed all claims based on the LOI, including breach of contract and quantum meruit, but allowed claims for unjust enrichment and misappropriation of trade secrets to proceed. Both parties sought interlocutory appeal, and the appeals were consolidated.The Supreme Court of Mississippi affirmed the lower court’s ruling that the LOI was unenforceable because the board minutes did not contain enough terms to determine the parties’ obligations, and held that the minutes rule was not superseded by the Open Meetings Act. The court also held that unjust enrichment, as an implied contract claim, was barred by the minutes rule and reversed the trial court’s denial of summary judgment on that claim. However, the court affirmed that the companies’ notice of claim regarding misappropriation of trade secrets was sufficient under the Mississippi Tort Claims Act. The case was remanded for further proceedings on the remaining claim. View "The Mississippi State Port Authority at Gulfport v. Yilport Holding A.S." on Justia Law

A trading company and a base oil manufacturer entered into a sales agreement in 2016, under which the manufacturer would serve as the exclusive North American sales representative for a high-quality base oil product distributed by the trading company. The agreement included noncompete provisions and was set to expire at the end of 2021. In late 2020, suspicions arose between the parties regarding potential breaches of the agreement, leading to a series of letters in which the trading company accused the manufacturer of selling a competing product and threatened termination if the alleged breach was not cured. The manufacturer responded by denying any breach and, after further correspondence, declared the agreement terminated. The trading company agreed that the agreement was terminated, and both parties ceased their business relationship.The trading company then filed suit in the United States District Court for the Southern District of Texas, alleging antitrust violations, breach of contract, business disparagement, and misappropriation of trade secrets. The manufacturer counterclaimed for breach of contract and tortious interference. After a bench trial, the district court found in favor of the manufacturer on the breach of contract and trade secret claims, awarding over $1.3 million in damages. However, the court determined that the agreement was mutually terminated, not due to anticipatory repudiation by the trading company, and denied the manufacturer’s request for attorneys’ fees and prevailing party costs.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s finding that the trading company did not commit anticipatory repudiation and that the agreement was mutually terminated. The Fifth Circuit also affirmed the denial of prevailing party costs under Rule 54(d) of the Federal Rules of Civil Procedure. However, the appellate court vacated the denial of attorneys’ fees under the agreement’s fee-shifting provision and remanded for further proceedings on that issue. View "Penthol v. Vertex Energy" on Justia Law

Several residential property owners in the Pauoa Beach Subdivision, part of the Mauna Lani Resort in Hawaiʻi, challenged the use of a residential lot (Lot B) owned by Exclusive Resorts PBL1, LLC (PBL1). PBL1’s parent company operates a luxury destination club, allowing its members to stay at properties like Lot B in exchange for annual dues. The plaintiffs argued that this arrangement constituted a prohibited “commercial use” under the subdivision’s governing documents, which restrict commercial activity but allow short-term rentals.The dispute began in the Circuit Court of the Third Circuit, where the court granted summary judgment in favor of PBL1, finding no violation of the residential use restrictions. On appeal, the Intermediate Court of Appeals (ICA) vacated that decision, holding there was a genuine issue of material fact as to whether PBL1’s use amounted to a “gainful occupation, profession or trade,” and remanded for further factual findings. On remand, the circuit court reinterpreted the project documents and initially found PBL1 to be a commercial owner, but ultimately determined, based on evidence of actual use, that PBL1’s activities did not rise to the level of commercial use. The court denied the plaintiffs’ request for an injunction, and both sides appealed again.The Supreme Court of the State of Hawaiʻi reviewed the case. It affirmed the ICA’s conclusion that PBL1’s use of Lot B did not violate the project documents, agreeing that the law of the case doctrine precluded reinterpreting the documents’ meaning. The court also held that the ICA did not abuse its discretion in awarding costs to PBL1. However, it reversed the ICA’s award of attorney fees to PBL1, holding that the relevant contract only allowed prevailing plaintiffs, not defendants, to recover such fees. The ICA’s judgment was affirmed in all other respects. View "Cowan v. Exclusive Resorts PBL1, LLC" on Justia Law

A Canadian corporation specializing in industrial heaters sought a new supplier and entered negotiations with a South Dakota manufacturer to custom-build 30 heaters. The parties initially agreed to the purchase and sale of 21 units, with a 20% down payment, and later extended the agreement to include the remaining nine units, for a total of 30 heaters at a set price per unit. The manufacturer began production and delivery as payments were made. However, after partial delivery and payment, the buyer stopped making payments, citing performance issues with the heaters and ultimately notified the manufacturer of its intent to terminate the relationship. Despite complaints about the heaters, the buyer did not reject or return any units but continued to accept and sell them until the manufacturer withheld further shipments due to nonpayment.The Circuit Court of the Fifth Judicial Circuit, Day County, South Dakota, granted summary judgment in favor of the manufacturer, finding that there was no genuine dispute of material fact regarding the existence of a contract for 30 heaters and that the buyer breached the agreement by failing to pay and by terminating the contract. The court also found that the manufacturer had taken reasonable steps to mitigate damages and that the buyer had not properly rejected the goods under the Uniform Commercial Code (UCC).On appeal, the Supreme Court of the State of South Dakota reviewed the case de novo. The Supreme Court held that there was no genuine issue of material fact regarding the existence of a contract for the sale of 30 heaters. However, the Court found that there were genuine issues of material fact as to whether the alleged defects in the heaters substantially impaired the value of the whole contract, which could excuse the buyer’s nonperformance under the UCC. The Supreme Court affirmed the lower court’s finding of contract formation, reversed the grant of summary judgment on the breach issue, and remanded for further proceedings. View "Anderson Industries v. Thermal Intelligence" on Justia Law