Justia Contracts Opinion Summaries

This case arose due to the failure of a New Jersey couple to pay for their adult son’s stay at a Pennsylvania nonprofit residential facility. It primarily raised a choice-of-law issue in relation to the two states’ filial-support statutes. Alexander Schutt (“Alex”), born in 1986, had severe mental and physical disabilities, including autism and obsessive-compulsive disorder. Alex's parents lived in New Jersey. In 2001, Alex was placed at Melmark, a non-profit residential care facility for intellectually and physically disabled persons, in Delaware County, Pennsylvania. Once Alex turned 21, the Princeton Regional School District stopped paying for his care at Melmark; at that point, payment for his care shifted to the New Jersey Department of Human Services, Division of Developmental Disabilities (NJ-DDD). In July 2011, NJ-DDD informed the Parents Alex would have to be relocated because the agency disapproved Melmark’s rates. NJ-DDD stated that the Parents, as guardians, should pick Alex up at Melmark and NJ-DDD would provide him with an emergency placement pursuant to New Jersey law. Parents did not retrieve Alex from Melmark. In December 2011, NJ-DDD wrote to Parents, stating it would fund Alex’s residence on a permanent basis at an identified facility in New Jersey beginning in January 2012. Unsatisfied, the Parents asked NJ-DDD instead to continue paying for Alex’s care at Melmark. NJ-DDD denied the request and advised the Parents it would stop paying Melmark as of December 31, 2011. Parents filed an administrative appeal in New Jersey in an effort to keep Alex at Melmark. NJ-DDD granted extensions of time to allow for Alex’s transfer to a New Jersey facility, but the agency ultimately informed Parents it would make no further payments to Melmark after March 31, 2012. When that date arrived, neither Parents nor NJ-DDD accepted custody of Alex, leaving Melmark to care for him uncompensated. Nevertheless, Parents continued to pay for off-campus speech classes, art classes, and equestrian therapy for Alex, all of which took place in Pennsylvania. In addition, Parents continued to visit Alex at Melmark almost every weekend even after NJ-DDD’s payments ceased. The Pennsylvania Supreme Court's resolution of the choice-of-law issue vitiated the trial court's basis for concluding the parents did not, in the individual capacity, appreciate Melmark's services. "[I]n weighing the equities, we conclude that it would be inequitable for Parents to retain the benefits they received from Melmark without paying for them. Thus, Melmark has established all three prerequisites for its equitable claims." As such, the Court held the Superior Court erred in finding the trial court properly denied relief on Melmark's equitable claims. View "Melmark, Inc. v. Schutt" on Justia Law

When a federal court sitting in diversity confirms an arbitration award, the preclusion law of the state where that court sits determines the preclusive effect of the award. Plaintiff previously arbitrated breach of contract and related claims against ZTE USA, a wholly-owned subsidiary of defendant ZTE Corp. ZTE Corp. was not a party to the arbitration. After the arbitrator denied plaintiff's claims, the district court confirmed the award under the Federal Arbitration Act (FAA) and the Eleventh Circuit affirmed.In this case, the Ninth Circuit affirmed the district court's dismissal of plaintiff's claim against ZTE Corp., and held that the arbitration award and its confirmation by the district court together barred plaintiff from pursuing its current claims against ZTE Corp under the doctrine of claim preclusion. The panel explained that, because a district court in Florida confirmed the award, Florida law applied. Under Florida law, the court held that claim preclusion barred plaintiff's claims because it sought the same remedy it had previously sought in arbitration. Furthermore, ZTE Corp. is in privity with ZTE USA, and the parties were suing in the same capacity as in the arbitration. View "NTCH-WA, Inc. V. ZTE Corp." on Justia Law

Defendants-Appellees Air Methods Corporation and Rocky Mountain Holdings, LLC provide air ambulance services. Defendants provided air ambulance services to Plaintiffs-Appellants, or in some cases to their minor children. Plaintiffs dispute their obligation to pay the full amounts charged by Defendants because Plaintiffs claim to have never agreed with Defendants on a price for their services. Plaintiffs filed suit, asserting jurisdiction under the Class Action Fairness Act, 28 U.S.C. 1332(d), to determine what, if any, amounts they owe Defendants. Plaintiffs also sought to recover any excess payments already made to Defendants. Defendants moved to dismiss, arguing that Plaintiffs’ claims were pre-empted by the Airline Deregulation Act (ADA), 49 U.S.C. 41713. The district court agreed and dismissed Plaintiffs’ claims with prejudice. The Tenth Circuit affirmed the district court’s dismissal of all Plaintiffs’ breach of implied contract claims, the Scarlett Plaintiffs’ declaratory judgment claim, all Plaintiffs’ unjust enrichment claims, and the Scarlett Plaintiffs’ due process claims; the Court reversed the district court’s dismissal of the Cowen Plaintiffs’ declaratory judgment claim, only with respect to the existence of contracts between the Cowen Plaintiffs and Defendants; and the Court remanded for further proceedings. View "Scarlett v. Air Methods Corporation" on Justia Law

The Supreme Court reversed the judgment of the district court determining that a stipulated settlement entered into by the parties was reasonable, holding that a stipulated settlement entered without the consent of an insurer to resolve litigation between the insured and a third-party claimant will not be presumed reasonable against the insurer when the insurer has been defending the insured throughout the litigation.The liability insurer in this case provided the insured a defense throughout the relevant proceedings but did not confirm coverage under the policy. The insurer declined to settle with Plaintiffs for policy limits and misrepresented the policy limits. Eventually, Plaintiffs entered into a stipulated settlement with the insured. The insurer intervened to challenge the reasonableness of the settlement. The district court found that the settlement agreement was reasonable, determining that the insurer had effectively abandoned its insured. The Supreme Court reversed, holding (1) a court may approve a stipulated judgment as between a third-party claimant and the insured in the underlying liability case, but the agreement will not be presumed reasonable as to the insurer if the insurer did not participate in the settlement and was providing a defense; and (2) the district court's reasonableness determination was based in part on its conclusion that a presumption of reasonableness applied, requiring reversal. View "Draggin'y Cattle Co. v. Junkermier, Clark, Campanella, Stevens, P.C." on Justia Law

In 2016, a hacker tricked an employee into disclosing tax information of about 1,300 Lamps employees. After a fraudulent federal income tax return was filed in the name of Varela, he filed a putative class action on behalf of employees whose information had been compromised. Relying on the arbitration agreement in Varela’s employment contract, Lamps sought to compel arbitration on an individual rather than a classwide basis. The Ninth Circuit affirmed the rejection of the individual arbitration request, authorizing class arbitration. Although Supreme Court precedent held (Stolt-Nielsen, 2010) that a court may not compel classwide arbitration when an agreement is silent on the availability of such arbitration, the Ninth Circuit concluded that Stolt-Nielsen did not apply because the Lamps agreement was ambiguous, not silent, concerning class arbitration.The Supreme Court reversed, Under the Federal Arbitration Act, 9 U.S.C. 2, an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration. Arbitration is strictly a matter of consent. Class arbitration, unlike the individualized arbitration envisioned by the Act, “sacrifices the principal advantage of arbitration—its informality—and makes the process slower, more costly, and more likely to generate procedural morass than final judgment.” Courts may not infer consent to participate in class arbitration absent an affirmative “contractual basis for concluding that the party agreed to do so.” Silence is not enough and ambiguity does not provide a sufficient basis to infer consent. View "Lamps Plus, Inc. v. Varela" on Justia Law

The Supreme Court affirmed in part and vacated in part the judgment of the intermediate court of appeals (ICA) finding that no evidence was introduced at trial to support the jury's findings that Regal Capital Corporation (Regal Corp.) violated the terms of agreements of sale it entered into with Elesther Calipjo for two parcels of land, Regal Capital Co., LLC (Regal LLC) engaged in unfair and deceptive acts or practices, and Jack Purdy was the alter ego of Regal Corp. and Regal LLC, holding that the ICA's holding was error.Based on the alter ego finding, the jury determined that Purdy, too violated the agreements for the two properties and committed unfair and deceptive acts or practices. The Supreme Court held (1) there was evidence to support the jury's verdict that Regal Corp. violated the terms of the agreements, Regal LLC engaged in unfair and deceptive acts or practices, and Purdy was the alter ego of Regal Corp. and Regal LLC; and (2) the ICA erred when it reversed the circuit court's final judgment against Purdy on the breach of contract and unfair and deceptive acts or practices claims. View "Calipjo v. Purdy" on Justia Law

Illinois residents Matlin and Waring (Plaintiffs) co-founded Gray Matter and developed products. In 1999, with the company facing failure, Plaintiffs executed a Withdrawal Agreement, assigning Plaintiffs' intellectual property and patent rights to Gray Matter, but entitling them to royalties on sales. In the following years, Plaintiffs frequently brought Gray Matter to arbitration to enforce their royalty rights. In 2002, Gray Matter filed an assignment of the intellectual property rights with the U.S. Patent and Trademark Office, allegedly without Plaintiff's knowledge, by forging Waring's signature. Gray Matter then sold assets to Swimways, including patent rights. A 2014 binding arbitration determined that Gray Matter did not assign the Withdrawal Agreement to Swimways and that Plaintiffs were owed no further royalties. In 2016, Spin Master acquired Swimways and its intellectual property rights. Plaintiffs sued. Swimways is a Virginia corporation with its principal place of business in Virginia Beach. The Spin Master defendants are Canadian companies with their principal places of business in Toronto. None of the defendants are registered to conduct business in, have employees in, or have registered agents for service of process in Illinois. In response to defendants’ motion to dismiss for lack of personal jurisdiction, Plaintiffs' counsel submitted an online purchase receipt from Swimways’ website and a declaration that he purchased and received a patented product in Illinois. The court dismissed, reasoning that Illinois law governed whether it had personal jurisdiction over the defendants. The Seventh Circuit affirmed, holding that the defendants had insufficient contacts with Illinois to establish either general or specific personal jurisdiction in that state. View "Matlin v. Spin Master Corp." on Justia Law

Defendant Edlighten Learning Solutions appealed a court order denying its petition to compel arbitration. Defendant entered into three contracts with plaintiff Oxford Preparatory Academy. One of the contracts was a management services agreement containing an arbitration clause. The parties subsequently entered into a termination agreement terminating all rights and obligations under the three contracts with the exception of two payment obligations. Defendant contended the court erred by finding the termination agreement terminated the arbitration clause in the management services agreement. Defendant also claimed all of plaintiff’s causes of action fell within the scope of the arbitration clause. After review, the Court of Appeal agreed the parties did not expressly or impliedly terminate the arbitration clause with respect to disputes over the performance, before the termination date, of their respective contractual obligations.; the parties merely divided their respective rights and obligations on a temporal basis. Therefore, the Court reversed and remanded for the trial court to decide whether any of plaintiff’s causes of action fell within the scope of the arbitration clause. View "Oxford Preparatory Academy v. Edlighten Learning Solutions" on Justia Law

Lonnie Beal sued his former employer, Shoals Extrusion, LLC, an aluminum-extrusion business in Florence, Alabama after his employment there was terminated in November 2015. Beal alleged that Shoals Extrusion breached the terms of his employment agreement by refusing to give him severance compensation and benefits to which he claims he was entitled. The Circuit Court entered a summary judgment in favor of Beal and awarded him $80,800. The Alabama Supreme Court found, however, a genuine issue of material fact about whether Beal first breached the terms of the employment agreement and whether such breach excused further performance by Shoals Extrusion under that agreement. Accordingly, the summary judgment was reversed and the case remanded for further proceedings. View "Shoals Extrusion, LLC v. Beal" on Justia Law

James Allen Insurance Brokers (JAIB) and Certain Underwriters at Lloyd’s, London, Subscribing to Certificate No. FRO-100944 (Lloyd’s) petitioned the Mississippi Supreme Court for interlocutory review of the Simpson County, Mississippi Circuit Court’s order granting partial summary judgment in favor of First Financial Bank (FFB). The trial court held that FFB was entitled to insurance proceeds from a fire loss that occurred at Luther and Freda Feazell’s poultry farm, because JAIB and Lloyd’s failed to comply with Mississippi law requiring notice of cancellation of property insurance. JAIM and Lloyd's claimed the Feazells' premium was not received on time; the effective date of the policy at issue here was reset to the date premium was paid. The Supreme Court determined coverage was effective December 13, 2013, and under the terms of the binder, and FFB having been listed in the binder as a mortgagee/loss payee, triggered Miss. Code Ann. Section 83-5-28(1)’s notification requirements. JAIB and Lloyd’s failed to comply with those statutory notification requirements; therefore, they were liable to FFB for its loss. Accordingly, the Supreme Court determined the trial court correctly granted partial summary judgment in favor of FFB. View "James Allen Insurance Brokers and Certain Underwriters at Lloyd's, London, Subscribing to Certificate NO. FRO-100944 v. First Financial Bank" on Justia Law