Justia Contracts Opinion Summaries

Plaintiff, a Hollywood restaurant, maintained a business interruption insurance policy through Defendant.  In response to COVID-19, the Governor, Mayor of Los Angeles, and several public health agencies ordered Plaintiff to close its restaurant, resulting in the loss of all its business. Plaintiff filed a claim with Defendant insurance company, which was denied based on the grounds that the policy only covered “direct physical loss of or damage to” the property, and expressly excluded coverage for losses resulting from a government order and losses caused by or resulting from a virus. Plaintiff appealed after Defendant's demurrer was sustained without leave to amend.   The California Court of Appeal affirmed the dismissal and held that Plaintiffs cannot establish a breach of contract.  At issue is whether the clause’s requirement can be construed to cover the pandemic-related closure. The court held that under California law a business interruption policy that covers physical loss and damages does not provide coverage for losses incurred by reason of the COVID-19 pandemic. Moreover, the court explained that the fact that loss and damage requirements are sometimes found in exclusionary provisions does not change the plain meaning of the terms. The court noted that even if Plaintiff could bring itself within the coverage clause, the virus exclusion would bar coverage. View "Musso & Frank Grill v. Mitsui Sumitomo Ins. USA" on Justia Law

Dent and RLD (Petitioners) had several supply and marketing contracts with energy companies (Respondents). Respondents terminated the Petitioners' at-will consulting agreements. Petitioners filed an Illinois Supreme Court Rule 224 petition seeking disclosure from Respondents of the names and addresses of three unidentified individuals who might be responsible in damages to Petitioners, alleging that those individuals publicized false and defamatory statements about Dent that caused respondents to terminate their contractual relationships. Petitioners alleged that the unnamed individuals accused Dent of drunken conduct and of sexual misconduct. The appellate court reversed the dismissal of the petition, stating that the circuit court abused its discretion when it sua sponte dismissed the petition based upon its determination that Petitioners knew the identity of Respondents and their attorneys; Respondents and their attorneys were not potential defendants responsible in damages for defamation or breach of contract.The Illinois Supreme Court reinstated the dismissal. The appellate court erred in holding that a section 2-615 motion to dismiss cannot consider affirmative defenses apparent on the face of the petition, such as the existence of qualified privilege. The existence of qualified privilege on the part of the unidentified individuals was apparent from the face of the petition. Respondents, having raised nothing more than a conclusory denial, failed to sufficiently allege abuse of that privilege. View "Dent v. Constellation NewEnergy, Inc." on Justia Law

Dual Diagnosis Treatment Center, Inc., d/b/a Sovereign Health of San Clemente, and its owner, Tonmoy Sharma, (collectively Sovereign) appealed the trial court's denial of Sovereign's motion to compel arbitration of claims asserted by Allen and Rose Nelson for themselves and on behalf of their deceased son, Brandon. The Nelsons alleged a cause of action for wrongful death, and on behalf of Brandon, negligence, negligence per se, dependent adult abuse or neglect, negligent misrepresentation, and fraud. According to the complaint, despite concluding that 26-year-old "Brandon requires 24 hour supervision ... at this time" after admitting him to its residential facility following his recent symptoms of psychosis, Sovereign personnel allowed him to go to his room alone, where he hung himself with the drawstring of his sweatpants. The trial court denied Sovereign's motion to compel arbitration because: (1) the court found Sovereign failed to meet its burden to authenticate an electronic signature as Brandon's on Sovereign's treatment center emollment agreement; and (2) even assuming Brandon signed the agreement, it was procedurally and substantively unconscionable, precluding enforcement against Brandon or, derivatively, his parents. Sovereign challenged the trial court's authentication and unconscionability findings. Finding no reversible error, the Court of Appeal affirmed the trial court's judgment. View "Nelson v. Dual Diagnosis Treatment Center" on Justia Law

Dynamic CRM Recruiting Solutions sued UMA Education in Harris County district court for alleged misappropriation of Dynamic’s software in breach of their licensing agreement (“the Agreement”). UMA removed the action to federal district court, which in turn remanded it to state court based on the parties’ contractual forum selection clause.The Fifth Circuit found that the forum state is Texas, and the Agreement provides that its interpretation shall be governed by Texas law. The court reasoned that contractual choice-of-law clauses are generally valid under Texas law unless they violate one of the limitations set forth in the Restatement (Second) of Conflict of Laws Sec. 187 (1971), and neither party here has argued that this clause is invalid on this ground.Further, since the Agreement provides that disputes arising thereunder must be “brought before the district courts of Harris County”, UMA has contractually waived its right to remove the suit. UMA also argued that the district court abused its discretion in allowing Dynamic to drop its claims for conversion, quantum meruit, lien foreclosure, and violations of the TTLA. The court found that it need not reach the jurisdictional point because the district court properly allowed Dynamic to amend its complaint. Thus, the court affirmed the district court’s ruling. View "Dynamic CRM v. UMA Education" on Justia Law

The Supreme Court reversed the business court's orders in this rent dispute, holding that the business court erred in granting summary judgment to either party.American Bituminous Power Partners, LP (AMBIT) and Horizon Ventures of West Virginia, Inc. created a contractual relationship with a lease agreement. The current rent dispute involved the relationship between the lease, a 1996 settlement agreement, and a 2017 order of the business court. Without resolving the relationship between those documents the business court granted summary judgment to AMBIT on Horizon's claims and summary judgment to Horizon on AMBIT's claims. The Supreme Court reversed, holding that summary judgment was improper because the various agreements were ambiguous and the parties' intent was not clear. View "Horizon Ventures of W. Va., Inc. v. American Bituminous Power Partners, L.P." on Justia Law

Gulfstream, a Georgia corporation, and Oceltip, an Australian company, entered a sales agreement (“Agreement”). Gulfstream terminated the Agreement after Oceltip failed to pay the full amount or cure a defect within the ten-day cure period.Oceltip submitted a demand for arbitration to the AAA, seeking a finding that Gulfstream had anticipatorily repudiated the Agreement and that this conduct suspended Oceltip’s duties, allowing Oceltip to recoup the money it had paid, and entitled Oceltip to damages. On appeal, Oceltip asserts that federal jurisdiction is lacking. It also argues that the district court erred in confirming the arbitration award and denying vacatur because, in Oceltip’s view, the Georgia Arbitration Code’s standards for vacatur—not the FAA’s—govern, and the arbitrators manifestly disregarded the law.First, the court found it has jurisdiction under Sec 203 of the FAA. Next, in resolving the disagreement the court analyzed whether arbitrators’ “manifest disregard of the law” supplies a basis for vacating the award. Under the Georgia Arbitration Code, it does, but federal law—the New York Convention and its implementing statute (Chapter 2 of the FAA)—sets forth seven exclusive grounds for vacatur, which does not include “manifest disregard of the law.” The court concluded that the Agreement’s choice-of-law provision does not supplant federal standards for confirmation or vacatur of an arbitral award, reasoning that the plain meaning of the contractual language does not support Oceltip’s position. Thus, the court affirmed the judgment of the district court. View "Gulfstream Aerospace Corporation v. Oceltip Aviation 1 PTY LTD" on Justia Law

LinkedIn Corp. sent hiQ Labs, Inc. ("hiQ") a cease-and-desist letter, asserting that hiQ violated LinkedIn’s User Agreement. LinkedIn asserted that if hiQ accessed LinkedIn’s data in the future, it would be violating state and federal law, including the CFAA, the Digital Millennium Copyright Act (“DMCA”) and the California common law of trespass.HiQ sought injunctive relief and a declaratory judgment that LinkedIn could not lawfully invoke the CFAA, the DMCA, California Penal Code Sec. 502(c), or the common law of trespass against it. LinkedIn appealed the district court’s decision ordering LinkedIn to withdraw its cease-and-desist letter, to remove any existing technical barriers to hiQ’s access to public profiles, and to refrain from putting in place any legal or technical measures with the effect of blocking hiQ’s access to public profiles.The court affirmed the district court, finding that hiQ currently had no viable way to remain in business other than using LinkedIn public profile data for its “Keeper” and “Skill Mapper” analytics services and that hiQ demonstrated a likelihood of irreparable harm absent a preliminary injunction. The court found that the district court properly determined that the balance of hardships tipped in hiQ’s favor. The court concluded that hiQ showed a sufficient likelihood of establishing the elements of its claim for contract interference, and it raised a question on the merits of LinkedIn’s affirmative justification defense. Finally, the court found that the district court properly determined that the public interest favored hiQ’s position. View "HIQ LABS, INC. V. LINKEDIN CORPORATION" on Justia Law

CSI was awarded a government contract to provide “[a]ir charter services operated by brokers, and various auxiliary services that will be used to support the contract.” After U.S. Immigration and Customs Enforcement (ICE) canceled various removal flights, CSI sought payment ($40,284,548.89) from the Department of Homeland Security. The Civilian Board of Contract Appeals dismissed the action, concluding that the CSI Terms and Conditions, which include “Cancellation Charges” were not incorporated by reference into the Schedule Contract.The Federal Circuit vacated and remanded. The Schedule Contract expressly incorporates at least one document that unambiguously identifies the CSI Terms and Conditions and makes clear such terms and conditions apply to all operations. CSI’s Offer plainly identified the CSI Terms and Conditions—along with the CSI Commercial Sales Practice attachment, its Pricing Policy, and its Commercial Price List—in the “Pricing” section of its table of contents. View "CSI Aviation, Inc. v. Department of Homeland Security" on Justia Law

The Supreme Court held that the Virginia Uniform Arbitration Act, Va. Code 8.01-581.01 to -.016 (VUAA), and the Federal Arbitration Act, 9 U.S.C. 1-16 (FAA), do not compel enforcement of an arbitration clause in a trust.The decedent created an inter vivos irrevocable trust that was divided into three shares for his children and grandchildren. The trust contained an unambiguous arbitration clause. Plaintiff filed a complaint against Defendant, the trust's trustee, alleging breach of duty. Defendant filed a motion to compel arbitration, which the circuit court denied. The Supreme Court affirmed, holding (1) a trust is neither a contract nor an agreement that can be enforced against a beneficiary; and (2) therefore, neither the VUAA nor the FAA compel arbitration. View "Boyle v. Anderson" on Justia Law

This case arises from a dispute regarding a joint financial venture between Noble Capital Fund Management, L.L.C. (“Noble”) and US Capital Global Investment Management, L.L.C. (“US Capital”). Noble created two separate funds, collectively the “Feeder Funds."Noble and the Feeder Funds initiated a JAMS arbitration against US Capital, alleging various claims including the breach of contractual and fiduciary duties. US Capital was unable to pay the arbitration fees, and the JAMS panel terminated the arbitration.On November 24, 2020, Noble and the Feeder Funds sued US Capital in Texas state court for various claims including fraud and fraudulent inducement. US Capital appeals the denial of its motion to compel arbitration and stay judicial proceedings and the denial of its motion to transfer.The court explained the Federal Arbitration Act requires that, where a suit is referable to arbitration, judicial proceedings be stayed until arbitration "has been had." Here, there is no arbitration to return this case to and parties may not avoid resolution of live claims by compelling a new arbitration proceeding after the first proceeding failed. Further, the court found no pendent jurisdiction over the denial of the motion to transfer. The court affirmed the district court’s ruling and dismissed the appeal of the district court’s denial of the motion to transfer. View "Noble Capital Fund v. US Capital Global" on Justia Law