Justia Contracts Opinion Summaries

A five-year-old child tragically died after being struck by a vehicle driven by an Alltrade employee at an apartment complex owned by Whispering Brook Acquisitions LLC. Alltrade had a commercial general liability policy with Motorists Mutual Insurance Company, while Whispering Brook had a similar policy with First Specialty Insurance Corporation. Both policies contained "other insurance" provisions, which led to a dispute over which insurer was primarily responsible for covering the incident.The Jefferson Circuit Court determined that Alltrade and its employees were insured under First Specialty’s policy. The court found that the "other insurance" provisions in both policies were mutually repugnant excess clauses, meaning neither could claim to be secondary to the other. Consequently, the court ruled that both insurers shared primary liability and must contribute equally to defend and indemnify the insureds. Motorists' argument that First Specialty should be primarily liable due to an indemnification provision in the Service Agreement between Alltrade and Whispering Brook was rejected. First Specialty appealed, and the Court of Appeals reversed the trial court, holding that First Specialty’s provision was a nonstandard escape clause, making Motorists primarily liable.The Supreme Court of Kentucky reviewed the case and reversed the Court of Appeals' decision. The court held that both "other insurance" provisions were mutually repugnant excess clauses, requiring Motorists and First Specialty to share primary liability equally. The court also overruled the earlier decision in Empire Fire & Marine Insurance Co. v. Haddix, which the Court of Appeals had relied upon. Additionally, the court found that Motorists had waived its indemnification argument by not filing a cross-appeal and requesting the Court of Appeals to affirm the trial court's summary judgment. The case was remanded to the Jefferson Circuit Court for further proceedings. View "MOTORISTS MUTUAL INSURANCE COMPANY V. FIRST SPECIALTY INSURANCE CORP." on Justia Law

The case involves a dispute over whether an insurance policy issued by State Auto Property and Casualty Company to Greenville Cumberland Presbyterian Church covered the collapse of the Church’s roof. The Church's roof, part of a one-story sanctuary building, was around 120 years old. In September 2019, during a roof replacement project, a significant section of the roof dropped overnight. An engineer, Harold Gaston, found that the roof trusses had decayed due to long-term water infiltration, causing the roof to collapse. The Church filed a claim with State Auto, which was denied on the basis that the damage did not constitute a collapse under the policy.The Muhlenberg Circuit Court granted summary judgment in favor of State Auto, ruling that there was no collapse as defined by Kentucky precedent in Niagara Fire Ins. Co. v. Curtsinger and Thiele v. Kentucky Growers Ins. Co. The court held that the roof's condition did not meet the "rubble on the ground" standard for collapse.The Kentucky Court of Appeals reversed, finding that the roof had indeed collapsed under the Curtsinger definition, which does not require the building to fall to the ground. The court also found the policy ambiguous and ruled in favor of the Church.The Supreme Court of Kentucky affirmed the Court of Appeals, holding that the policy provided coverage for the actual collapse of any part of the building, including the roof. The court found that the roof had indeed collapsed due to hidden decay and insect damage, and that the Church had taken reasonable steps to mitigate further damage. The court vacated the circuit court’s summary judgment in favor of State Auto and remanded for entry of summary judgment in favor of the Church on its breach of contract claim, and for further proceedings on the Church’s extra-contractual claims. View "STATE AUTO PROPERTY & CASUALTY COMPANY V. GREENVILLE CUMBERLAND PRESBYTERIAN CHURCH" on Justia Law

LKQ Corporation, a Delaware corporation in the auto salvage and recycled parts business, designated certain employees as "Key Persons" eligible for Restricted Stock Units (RSUs) through RSU Agreements. These agreements included non-competition clauses and provisions for forfeiture of RSUs and any stock issued if the employee competed with LKQ within nine months post-departure. Robert Rutledge, a plant manager at LKQ, signed these agreements and received stock under them. In April 2021, Rutledge resigned and joined a competitor shortly after.LKQ sued Rutledge in Illinois federal court for breach of contract and unjust enrichment, seeking to enjoin him from working for a competitor and to recover proceeds from the sale of LKQ stock. The district court dismissed the unjust enrichment claim and granted summary judgment for Rutledge on the contract claims, holding that the non-competition provisions were unreasonable restraints of trade under Illinois law and unenforceable under Delaware law, based on the Court of Chancery's decision in Ainslie v. Cantor Fitzgerald, L.P.The United States Court of Appeals for the Seventh Circuit affirmed the district court's dismissal of the unjust enrichment claim and the summary judgment ruling on the Restrictive Covenant Agreements. However, it was uncertain about the enforceability of the RSU Agreements' forfeiture-for-competition provisions under Delaware law, especially after the Delaware Supreme Court reversed the Court of Chancery's decision in Cantor Fitzgerald. The Seventh Circuit certified two questions to the Delaware Supreme Court regarding the applicability of Cantor Fitzgerald outside the limited partnership context.The Delaware Supreme Court held that the principles from Cantor Fitzgerald, which endorse the employee choice doctrine and prioritize freedom of contract, apply beyond the limited partnership context, including to RSU agreements. The court emphasized that forfeiture-for-competition provisions do not restrict competition or an employee's ability to work and should be treated as enforceable terms subject to ordinary breach of contract defenses. View "LKQ Corp. v. Rutledge" on Justia Law

In 2014, Casey Moyer entered into an agreement with Doug Lasher Construction, Inc. for the construction and purchase of a new home, which was substantially completed in November 2014. Over the next six-and-a-half years, Moyer repeatedly informed Lasher Construction about issues with the home, particularly water leakage, and received assurances that the issues would be fixed. However, the problems persisted, and Moyer and Caitlin Bower filed suit against Lasher Construction in November 2021, alleging breach of contract and violation of the Idaho Consumer Protection Act.The District Court of the Fourth Judicial District of Idaho granted summary judgment in favor of Lasher Construction, ruling that all claims were time-barred under Idaho Code sections 5-241(b) and 5-216, which require that claims arising out of a contract for the construction of real property be brought within five years of the final completion of construction. The court also found that the Idaho Consumer Protection Act claims were time-barred under the two-year statute of limitations provided by Idaho Code section 48-619. The court rejected the homeowners' arguments for equitable estoppel and the repair doctrine, concluding that they failed to show that Lasher Construction prevented them from pursuing their claims within the statutory period.The Supreme Court of Idaho affirmed the district court's decision. The court reaffirmed that the repair doctrine is not available in Idaho and upheld the district court's conclusion that the homeowners failed to establish the elements of equitable estoppel. The court also agreed that the text messages and the July 2, 2021, response to the NORA demand did not constitute enforceable independent contracts. Lasher Construction was awarded attorney fees and costs on appeal as the prevailing party. View "Moyer v. Lasher Construction, Inc." on Justia Law

Jill Brenden appealed an order from the Eighteenth Judicial District Court, Gallatin County, which denied her claims against the estate of her late husband, Robert Brenden. Jill sought reimbursement for expenses and objected to the distribution and valuation of certain property in the estate. Barbara Jensen, Robert's sister and the appellee, sought attorney fees. Jill and Robert had a long-term relationship, cohabitated, and married in 2010. They purchased a home together in 2006 and later built another home on a property Robert inherited. Robert was diagnosed with cancer, which went into remission but later returned. Before his death, Robert designated Barbara as the Payable on Death (POD) beneficiary of his bank account.The District Court found that Jill converted funds from Robert's account after his death, despite her claim that Robert instructed her to transfer the funds before he died. The court admitted bank records as business records, which showed the transfers occurred after Robert's death. Jill continued to access the account and transferred funds to herself without notifying the estate. Barbara intervened in the probate action, filing a third-party complaint against Jill for wrongful conversion and deceit. Jill counterclaimed, alleging unjust enrichment and seeking a constructive trust over the proceeds from the sale of their jointly owned home.The Supreme Court of the State of Montana reviewed the case. It held that the District Court did not abuse its discretion in admitting the bank records as business records. The court affirmed the District Court's finding that Jill converted the funds in Robert's account, as Barbara became the rightful owner upon Robert's death. However, the court found that Jill was entitled to her share of the proceeds from the sale of their jointly owned home, held in a resulting trust. The court denied Barbara's request for attorney fees and remanded the case for further proceedings consistent with its opinion. View "In re Estate of Brenden" on Justia Law

The case involves a monetary dispute between a mother (defendant) and her daughter (plaintiff). The daughter sued her mother and obtained a money judgment. During enforcement proceedings, the mother tendered the judgment amount, prejudgment interest, and interest accrued on a bank account in Shanghai. The dispute centers on whether the mother fully satisfied the judgment.The Superior Court of Los Angeles County found that the mother had tendered the full amount owed and granted her motion to require the daughter to acknowledge full satisfaction of the judgment. The daughter appealed, arguing there was no competent evidence to substantiate the interest amount accrued on the Shanghai bank account and that the court abused its discretion by not enforcing an order for a judgment debtor’s examination of the mother. She also complained about a comment by the trial court that she claimed offended due process.The Court of Appeal of the State of California, Second Appellate District, Division Eight, reviewed the case. The court found no merit in the daughter’s contentions. It held that there was sufficient evidence to conclude the interest was fully paid, noting that the trial court was entitled to consider the totality of the circumstances. The court also found no abuse of discretion in the trial court’s handling of the debtor examination and rejected the claim of judicial bias based on the court’s comment. The court affirmed the trial court’s order, concluding that the mother had satisfied the judgment and awarded her mandatory attorney fees. View "Merrick v. Lau" on Justia Law

A law firm, Kleinbard LLC, provided legal services to the Lancaster County District Attorney's Office, led by then-District Attorney Craig Stedman, to challenge the county commissioners over the use of certain forfeiture assets. Stedman and Kleinbard signed an engagement letter, agreeing that Kleinbard would be compensated for its services. The commissioners, however, refused to pay Kleinbard's invoices exceeding the $5,000 budgeted for legal services, arguing that the additional expenses were unauthorized.The Lancaster County Court of Common Pleas sustained preliminary objections from the defendants, allowing only the $5,000 payment and dismissing the remaining claims. The court ruled that the contract for legal services exceeding the budgeted amount was unenforceable under the County Code, which prohibits contracts that exceed appropriated sums without commissioners' approval.The Commonwealth Court affirmed the lower court's decision, agreeing that Stedman lacked authority to enter into a contract exceeding his budget without commissioners' approval. The court also expressed uncertainty about the nature of the Program Accounts, which Kleinbard claimed were controlled by the District Attorney and funded by program participants, not taxpayer money.The Supreme Court of Pennsylvania reviewed the case and found that the lower courts erred by not accepting as true the well-pleaded facts in Kleinbard's complaint at the preliminary objections stage. The Supreme Court held that the allegations, if true, established that the Program Accounts were not subject to the County Code's appropriation limits. Therefore, the court reversed the Commonwealth Court's decision and remanded the case for further proceedings to determine the nature and control of the Program Accounts. View "Kleinbard, LLC v. Lancaster Co. DA" on Justia Law

In 2014, due to severe drought conditions, the United States Bureau of Reclamation (Reclamation) was unable to meet its water delivery obligations to both the Exchange Contractors and the Friant Contractors under the Central Valley Project (CVP). Reclamation prioritized delivering water to the Exchange Contractors, including water from the San Joaquin River, which resulted in a near-zero allocation to the Friant Contractors. The Friant Contractors and individual growers sued the United States, alleging breach of contract and takings without just compensation.The United States Court of Federal Claims dismissed the Friant Growers' breach of contract claims for lack of standing and dismissed the takings claims for lack of a property interest. The court granted summary judgment to the government on the Friant Contractors' breach of contract claims, concluding that the Exchange Contractors' rights under the Exchange Contract were superior and that Reclamation's actions were not arbitrary, capricious, or unreasonable.The United States Court of Appeals for the Federal Circuit reviewed the case and affirmed the lower court's decision. The court held that the Exchange Contract allowed Reclamation to deliver San Joaquin River water to the Exchange Contractors when necessary, and that the government did not breach the Friant Contract by doing so. The court also found that the government was immune from liability under the Friant Contract because its actions were not arbitrary, capricious, or unreasonable. Finally, the court affirmed the dismissal of the takings claims, concluding that the Friant Contractors and Growers did not have a property interest in the water delivered by Reclamation under California law. View "CITY OF FRESNO v. US " on Justia Law

Majestic Asset Management, LLC, Wintech Development, Inc., Hai Huang, and Jen Huang owned and operated a golf course within a gated community governed by The Colony at California Oaks Homeowners Association. The owners had obligations to maintain the golf course and surrounding areas, secured by a performance deed of trust (PDOT). After failing to meet these obligations, the Association sought judicial enforcement, leading to a foreclosure decree and valuation of the PDOT.The Superior Court of Riverside County initially ruled in favor of the Association, finding the owners in breach of their maintenance obligations and issuing a permanent injunction. When the owners failed to comply, the court appointed a receiver to manage the golf course. After the receiver's efforts proved insufficient, the Association moved for foreclosure. The trial court valued the PDOT at $2,748,434.37, including the cost to repair the golf course and management fees, and ordered foreclosure.The California Court of Appeal, Fourth Appellate District, reviewed the case. The court affirmed the trial court's decision to use the cost of repair ($2,503,500) as the value of the PDOT but found the inclusion of management fees ($244,934.37) inappropriate. The court modified the foreclosure decree to reflect the correct value of $2,503,500. The court also upheld the ruling that the owners would remain bound by the maintenance obligations if they paid the PDOT's value to retain the property, ensuring the Association's right to performance as long as the owners held the golf course.The court concluded that the foreclosure decree was equitable and did not violate foreclosure law or the one form of action rule. The Association was awarded costs and reasonable attorney fees incurred on appeal. View "Majestic Asset Management, LLC v. The Colony at California Homeowners Assn." on Justia Law

The United States Department of the Navy issued a solicitation requesting technical support for its electromagnetic spectrum resources, requiring proposals to be submitted via email by a specified deadline. eSimplicity, Inc. submitted its proposal before the deadline, but it was not received by the Contracting Officer due to the email exceeding the maximum file size and being bounced back. The Navy deemed eSimplicity's proposal untimely and did not consider it.eSimplicity filed a pre-award bid protest with the United States Court of Federal Claims. The Claims Court ruled in favor of eSimplicity, concluding that the file size was an unstated evaluation criterion and that the government control exception could apply to electronically submitted proposals. The court remanded the case for the Navy to reconsider its decision or to take other actions consistent with the court's opinion. Subsequently, the Navy issued an amended solicitation and awarded the contract to eSimplicity.The United States Court of Appeals for the Federal Circuit reviewed the case. The court determined that the appeal was moot because the original solicitation had expired, and the contract had been awarded under a new solicitation. The court found that there was no longer a live controversy, as the issues presented on appeal concerned the now-expired solicitation. The court also rejected the government's argument that the case fell under the "capable of repetition yet evading review" exception to mootness, noting that the government had other opportunities to appeal similar issues in the past but chose not to do so. Consequently, the appeal was dismissed. View "ESIMPLICITY, INC. v. US " on Justia Law