Justia Contracts Opinion Summaries

This appeal involved a challenge to how Geico General Insurance Company (“GEICO”) processed insurance claims under 21 Del. C. 2118. Section 2118 provided that certain motor vehicle owners had to obtain personal injury protection (“PIP”) insurance. Plaintiffs, all of whose claims for medical expense reimbursement under a PIP policy were denied in whole or in part, were either GEICO PIP policyholders who were injured in automobile accidents or their treatment providers. Plaintiffs alleged GEICO used two automated processing rules that arbitrarily denied or reduced payments without consideration of the reasonableness or necessity of submitted claims and without any human involvement. Plaintiffs argued GEICO’s use of the automated rules to deny or reduce payments: (1) breached the applicable insurance contract; (2) amounted to bad faith breach of contract; and (3) violated Section 2118. Having reviewed the parties’ briefs and the record on appeal, and after oral argument, the Delaware Supreme Court affirmed the Superior Court’s ruling that the judiciary had the authority to issue a declaratory judgment that GEICO’s use of the automated rules violated Section 2118. The Supreme Court also affirmed the Superior Court’s judgment as to the breach of contract and bad faith breach of contract claims. The Court concluded, however, that the issuance of the declaratory judgment was improper. View "GEICO General Insurance Company v. Green" on Justia Law

The Supreme Court reversed the judgment of the court of appeals as to attorney's fees in this case concerning whether Defendant, a condominium association, was entitled to attorney's fees after obtaining a take-nothing judgment on claims by Plaintiff, a unit owner, the Supreme Court held that the fee award was authorized by Tex. Prop. Code 82.161(b).Plaintiff sued Defendant for, among other things, fraud, civil conspiracy, breach of contract, and negligence. Defendant filed a counterclaim for declaratory judgment and requested attorney's fees. The trial court granted Defendant's motion on twelve declaratory issues. After a trial, the court granted judgment for Defendant and awarded attorney's fees. The court of appeals affirmed the judgment for Defendant but reversed the award of attorney's fees. The Supreme Court reversed in part, holding that Defendant was a prevailing party under Tex. Prop. Code 82.161(b) and was thus entitled to reasonable attorney's fees. View "Sunchase IV Homeowners Ass'n v. Atkinson" on Justia Law

The Supreme Court reversed the judgment of the court of appeals reversing the judgment of the trial court, rendered pursuant to a jury verdict, that Stephen Stelly owned real property free of any encumbrance, holding that Stelly adequately pleaded a trespass-to-try-title claim.Stelly brought this action against John DeLoach claiming that DeLoach had breached the parties' contract by not delivering a real property deed after Stelly had paid off the debt on the land's original purchase price.The jury entered a verdict in favor of Stelly. The court of appeals reversed, concluding that Stelly pleaded only a breach-of-contract claim, not a trespass-to-try-title claim and that the statute of limitations had run on Stelly's breach of contract claim. The Supreme Court reversed and remanded the case for further proceedings, holding that Stelly adequately pleaded a trespass-to-try-title claim. View "Stelly v. DeLoach" on Justia Law

The Consumer Financial Protection Bureau (“CFPB”) sued Ocwen Financial Corporation (“Ocwen”) and several of its affiliates claiming some of the company's mortgage-servicing practices violated federal law. The CFPB’s suit was resolved by a settlement agreement that was memorialized in a formal consent judgment. The CFPB sued Ocwen a second time, alleging various consumer-protection law violations occurring between January 2014 and February 2017. The district court granted summary judgment to Ocwen on res judicata grounds, reasoning that the 2013 action barred the lawsuit.The CFPB contends that the 2013 action’s res judicata effect should be controlled by that case’s consent judgment, not its complaint and that the underlying settlement agreement shows that the parties didn’t intend to preclude a challenge to any conduct occurring from 2014 onwards. The court reasoned that determining the preclusive effect of a consent judgment requires applying contract law principles. The court found that the res judicata effects of an earlier lawsuit resolved by a consent judgment are measured by reference to the terms of the consent judgment, rather than the complaint. Thus, CFPB may sue Ocwen for alleged violations that occurred between January 2014 and February 2017, if the claims are not covered by the consent judgment’s servicing standard, monitoring, and enforcement regime. View "Consumer Financial Protection Bureau v. Ocwen Financial Corporation, et al." on Justia Law

Cromer, formerly a “managing loan officer” for Union Home Mortgage, agreed to several restrictive covenants, including that he would “not become employed in the same or similar capacity” with a competitive entity. Cromer left Union and started working for Homeside Financial as a “non-producing” branch manager. Union sought a preliminary injunction to enforce Cromer’s restrictive covenants, citing the 2016 Defend Trade Secrets Act, 18 U.S.C. 1836; the Ohio Uniform Trade Secrets Act; the non-compete, confidentiality, and nonsolicitation covenants; the contractual duty of loyalty; and the common law duty of loyalty. Against Homeside, Union alleged tortious interference with business relationships and with contracts.The district court issued an injunction—without any time limitation—prohibiting Cromer, and anyone acting in concert, from “competing with Union Home.” The Sixth Circuit vacated. The injunction failed to satisfy the specificity requirements of FRCP 65(d)(1), was overbroad, and was otherwise improperly granted under the standard for preliminary injunctions. The broad prohibition covers any form of competition, irrespective of Cromer’s employer, job title, or duties, and created an inherent risk that the scope of the injunction exceeds the Agreement that the parties signed. The district court also failed to consider whether the non-compete covenant is reasonable and thus enforceable. View "Union Home Mortgage Corp. v. Cromer" on Justia Law

The plaintiff, SwiftAir, entered into an agreement with the defendant, Southwest Airlines (“Southwest”). Under the agreement, SwiftAir would develop software for Southwest. In turn, Southwest would test the software to determine whether to license it. When Southwest decided not to license the software, SwiftAir filed various breach of contract and fraud claims against Southwest.The trial court granted summary judgment in Southwest’s favor, finding that the Airline Deregulation Act (“ADA”) preempted all but one of SwiftAir’s claims. The remaining claim was presented to a jury, which found in Southwest’s favor.The Second Appellate District affirmed. For a claim to be preempted by the ADA, 1.) the claim must derive from state law, and (2) the claim must relate to airline rates, routes, or services, either by expressly referring to them or by having a significant economic effect upon them. Here, the subject of the contract was providing passengers with inflight entertainment and wireless internet access, which are considered “services” under the ADA. Thus, Southwest did not need to prove that SwiftAir’s claims would have a significant economic effect on Southwest’s services. View "SwiftAir v. Southwest Airlines" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the tax court dismissing Counts I through III of the Attorney General's complaint and granting summary judgment on Count IV, holding that the tax court erred in part.At issue was the scope of three statutes the Attorney General (AG) invoked to challenge an agreement between the Arizona Board of Regents (ABOR) and a private company for the company to construct and operate a hotel and conference center on property owned by ABOR. The Supreme Court held (1) to initiate an action under Ariz. Rev. Stat. 42-1004(E) there must be an applicable tax law to enforce; (2) the AG may bring a quo warranto action pursuant to Ariz. Rev. Stat. 12-2041 to challenge the unlawful usurpation or exercise of a public franchise; and (3) the AG's public-monies claim was subject to the five-year statute of limitations set forth in Ariz. Rev. Stat. 35-212(E). View "State v. Arizona Board of Regents" on Justia Law

Plaintiffs used the defendants’ websites but did not see a notice stating, “I understand and agree to the Terms & Conditions, which includes mandatory arbitration.” When a dispute arose, defendants moved to compel arbitration, arguing that plaintiffs’ use of the website signified their agreement to the mandatory arbitration provision found in the hyperlinked terms.The Ninth Circuit held that plaintiffs did not unambiguously manifest their assent to the terms and conditions when navigating through the websites. As a result, they never entered into a binding agreement to arbitrate their dispute, as required under the Federal Arbitration Act. The panel explained that the courts have routinely enforced “clickwrap” agreements, which present users with specified contractual terms on a pop-up screen requiring users to check a box explicitly stating “I agree” to proceed. However, courts are more reluctant to enforce browsewrap agreements, which provides notice only after users click a hyperlink.Finally, the panel held that the district court properly exercised its discretion in denying the defendants’ motion for reconsideration based on deposition testimony taken two months prior to the district court’s ruling on the motion to compel arbitration. Plaintiffs did not unambiguously manifest their assent to the terms and conditions when navigating the website. Thus, they never entered into a binding agreement to arbitrate. The court affirmed the district court’s order denying the defendants’ motion to compel arbitration. View "DANIEL BERMAN V. FREEDOM FINANCIAL NETWORK LLC" on Justia Law

While driving the co-plaintiffs car, the plaintiff negligently changed lanes and caused a collision, seriously injuring another driver. At the time of the incident at-fault car’s owner had a GEICO insurance policy that provided bodily-injury coverage up to $100,000 per person. The victim and Geico assert they made offers to settle, but the parties never agreed. After the conclusion of the victim's lawsuit, plaintiffs sued GEICO for bad faith, seeking to recover the amounts of the final judgments entered against them that exceeded the $100,000 policy limit. They contended that GEICO had breached its fiduciary duty to them by failing to settle the victim’s case within the policy limit. Plaintiffs challenge Cawthorn v. Auto-Owners Insurance Co 791 F. App’x 60, 65 (11th Cir. 2019), arguing that Florida law doesn’t require that a verdict precede an excess judgment as a prerequisite to proving the causation element of an insurer-bad-faith claim. The court reasoned that plaintiffs' available coverage and final judgments entered against them constituted excess judgments. Thus, plaintiffs could prove causation in their bad-faith case because they were subject to excess judgments. Finally, the court declined to follow Cawthorn because that court incorrectly analyzed Florida's bad-faith law and is unpersuasive. View "Erika L. McNamara v. Government Employees Insurance Company" on Justia Law

A water control and improvement district in Harris County, Texas ("the District"), wanted a new headquarters, so it contracted with a construction company to build one. The District required the company to post a performance bond. The company engaged Philadelphia Indemnity Insurance Co. (“Philadelphia”) to provide that bond, which explicitly stated that changes to the construction contract would not void Philadelphia’s obligations. However, the District’s project manager backed out, which led the District to execute a new agreement without Philadelphia’s knowledge or consent. The District sought what was owed under the performance bond and sued for breach of contract.At issue is whether a 2016 Agreement created a new contract between the District and the construction company or merely amended their 2015 Agreement. The court concluded that the 2016 Agreement was an amendment under Texas law. The court reasoned that the Supreme Court of Texas would examine the text of both agreements to identify the parties' objective intent. The court concluded the 2016 Agreement amended—instead of replaced—the 2015 Agreement. Thus, the court reversed and remanded the case, placing no limits on the matters that the district court may address on remand. View "Harris Cty v. Philadelphia Indem" on Justia Law