Justia Contracts Opinion Summaries

Under a 2014 agreement, MCFI, a non-profit organization that provides medical care for individuals with brain injuries, would operate a brain-injury center in MHC’s nursing facility. MHC would handle billing and collections for MCFI's services and remit the funds collected to MCFI after taking its cut. MHC instead redirected MCFI’s funds to pay its employees and other creditors. MCFI sued MHC and MHC’s principal, Nicholson. The district court entered summary judgment against MHC for breach of contract and against Nicholson for conversion and civil theft and awarded MCFI over $2 million in damages, interest, and costs against MHC and Nicholson, jointly and severally. It also awarded MCFI over $200,000 in attorney’s fees and costs against Nicholson alone. The Seventh Circuit affirmed. MCFI had an ownership interest in the BIRC Collections. At most MCFI’s acknowledgment of the security interests of MHC’s creditors only estops MCFI from contesting the interests of those creditors; it does not prevent MCFI from asserting its ownership of the property against MHC. The duty to refrain from converting or stealing the BIRC Collections was entirely independent of the contract. It arose from the common law and Wisconsin statutes. Nicholson was personally involved in the wrongful redirection of those funds through the actions of his agent. View "Milwaukee Center for Independence, Inc. v. Milwaukee Health Care LLC" on Justia Law

In this lawsuit filed by the purchasers of a home against the sellers the Supreme Court reversed the judgment of the district court vacating an arbitration award entered in favor of Sellers and remanded with directions to confirm the arbitration award, holding that the district court erred by finding that arbitration provision in the purchase agreement was unenforceable, vacating the award, and failing to confirm the award.In this action, Purchasers alleged that several defects in the home they purchased had been concealed by Sellers. An arbitrator issued an award in favor of Sellers, finding that no credible evidence supported any of Purchasers' claims. Purchasers filed an application to vacate the arbitration award, and Sellers filed a motion seeking judicial confirmation of the award. The district court entered an order finding the arbitration void and vacating the award, holding that the arbitration provision in the purchase agreement was unenforceable under Nebraska's Uniform Arbitration Act. The Supreme Court reversed, holding that the district court should have confirmed the arbitration award pursuant to Neb. Rev. Stat. 25-2612. View "Garlock v. 3DS Properties, LLC" on Justia Law

The First Circuit affirmed the judgment of the district court granting summary judgment in favor of Insurers in this action brought by Appellants claiming that Insurers' refusal to cover certain legal disputes constituted a breach of their insurance contract, holding that the clear and unambiguous language of the specific litigation exclusion barred coverage of the disputed litigation matters.Appellants filed suit against their primary insurance provider and their secondary insurance providers alleging that Insurers breached their contractual duty to reimburse Appellants for defense costs incurred in connection with the disputed matters. The primary insurer argued that the legal disputes fell under a "specific litigation exclusion" clause in the insurance policy that excepted from coverage claims related to prior matters specified therein. The district court granted summary judgment for Insurers, holding that the prior and disputed matters were sufficiently related such that the exclusion clause applied. The First Circuit affirmed, holding that the specific litigation exclusion barred coverage of the disputed matters because they all involved facts, circumstances, or situations alleged in the prior matters. View "UBS Financial Services Inc. v. XL Specialty Insurance Co." on Justia Law

In this breach of contract action the Supreme Court reversed the portion of the district court's judgment awarding attorney fees as special damages, holding that attorney fees incurred by a plaintiff in bringing a two-party breach-of-contract claim against a defendant do not constitute special damages under the limited exceptions recognized by the Court.While Nevada adheres to the American Rule of attorney fees, the Supreme Court has recognized a narrow and limited exception for attorney fees as special damages. In the instant case, Plaintiffs brought an action against Defendants alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and an accounting. The district court found in favor of Plaintiffs and awarded Plaintiffs attorney fees as special damages and because they were the prevailing parties pursuant to the contract. The Supreme Court affirmed in part and reversed in part, holding (1) attorney fees was properly awarded based on the parties' contractual prevailing party provision; but (2) the district court erred in awarding Plaintiffs attorney fees as special damages for the two-party breach-of-contract action. The Court remanded the matter because the prevailing parties may be entitled to additional attorney fees in light of this opinion. View "Pardee Homes of Nevada v. Wolfram" on Justia Law

The Supreme Court affirmed the order of the district court granting summary judgment in favor of Respondents, a real estate appraisal company and a professional real estate appraiser, as to Appellants' allegations that Respondents' negligence prevented them from refinancing their home loan, holding that Appellants' claims lacked evidentiary support and were based on little more than conclusory allegations and accusations.After purchasing a home, Appellants brought this action against Respondents asserting claims for professional negligence, negligent misrepresentation, breach of the statutory duty to disclose a material fact, and breach of contract as third-party beneficiaries. Specifically, Appellants alleged that Respondents negligently relied on inaccurate information in calculating the home's size and market value, which resulted in a misleading appraisal report and inflated purchase price. The district court granted summary judgment for Respondents. The Supreme Court affirmed and took the opportunity of this case to emphasize the important role of summary judgment in promoting sound judicial economy. View "Boesiger v. Desert Appraisals, LLC" on Justia Law

Emmis bought a directors-and-officers liability policy covering October 1, 2009 to October 1, 2010, from Chubb Insurance. Emmis later bought, from Illinois National, a policy covering liability from October 1, 2011, to October 1, 2012, with an exclusion for any losses in connection with “Event(s),” which included “[a]ll notices of claim of circumstances as reported” under the Chubb policy. In 2012, Emmis tried to gain control of enough of its shares to go private. Shareholders filed suit to stop Emmis’s effort. Emmis reported the suit to Chubb and also sought coverage under the Illinois National policy. Illinois National refused coverage. Emmis sued, seeking damages for breach of contract and breach of the duty of good faith and fair dealing. The district court granted Emmis summary judgment for breach of contract, rejecting Illinois National’s interpretation of the “as reported” language. The Seventh Circuit reversed. Illinois National’s proposed interpretation is correct. The phrase “as reported” has no discernable temporal limitations. Once Emmis reported a claim to Chubb, at any time, then that claim was “reported” and excluded. View "Emmis Communications Corp. v. Illinois National Insurance Co" on Justia Law

The Supreme Court vacated the judgment of the superior court that granted a preliminary injunction in favor of Plaintiffs restraining the City of Woonsocket from changing the terms of Plaintiffs' retiree health insurance, holding that the City had the statutory authority to make changes to Plaintiffs' health care benefits.Plaintiffs, several retried Woonsocket police officers, brought this action against the City and the Woonsocket Budget Commission (the WBC). The superior court granted a preliminary injunction for Plaintiffs and reinstated Plaintiffs' previous postretirement health care benefits. The Supreme Court vacated the judgment, holding that the trial justice (1) did not err when he found that Plaintiffs had a vested contractual right to free lifetime health care benefits; (2) erred when he found that the WBC lacked statutory authority when it adopted the Retiree Resolutions that required Plaintiffs to contribute to their health care expenses; and (3) erred in finding that the WBC violated the Contract Clause of the Rhode Island Constitution when it required Plaintiffs to pay for their health insurance under a new uniform health care plan applicable to all retirees and employees. The Court remanded the case to the trial justice for additional findings. View "Hebert v. City of Woonsocket" on Justia Law

The Supreme Court affirmed the order of the circuit court granting Plaintiffs' motion for class certification in this action alleging that Defendant, which leased with Plaintiffs to drill and sell hydrocarbons from the leased property, improperly suspended royalty payments, holding that the requirements of numerosity and superiority were met.The complaint alleged that the royalty payments were suspended in an effort by Defendant to recoup improper deductions. Plaintiffs moved for class certification, which the trial court granted. Defendant appealed, arguing that Plaintiffs failed to satisfy the numerosity and superiority requirements. The Supreme Court affirmed, holding that the trial court did not abuse its discretion in determining that the numerosity and superiority requirements were satisfied in this case. View "Stephens Production Co. v. Mainer" on Justia Law

laintiff was a car repair business in Rutland, Vermont. Defendant insured the vehicles of dozens of plaintiff’s customers (“the insureds”) who hired plaintiff to repair damage to their vehicles between 2009 and 2014. Over seventy insurance claims, which all arose under identical insurance policies, were combined in this breach-of- contract case. In each instance, defendant paid less than what plaintiff had billed to complete the repair, a "short pay." Plaintiff submitted to defendant a final invoice and a “supplemental report” itemizing each of the repairs performed. For each claim involved in this case, although defendant did not pay a portion of what the repair shop believed was owed under the policy, defendant did pay significant sums. Defendant initially paid what its claims adjuster believed to be covered by the insurance policy after having conducted a visual inspection of the damage. Defendant generally would make at least one additional payment based on information provided by plaintiff after plaintiff disassembled the damaged vehicle in preparation to repair it, a "supplemental payment." After an adjuster’s initial estimate was paid to plaintiff and any supplemental payments were made, there was still an outstanding balance for the repair bill on each claim involved in this case. Plaintiff believed these were covered by the insurance policy yet had been unpaid by the insurer. However, defendant maintained that these unpaid portions of the repair bill between plaintiff and each insured were not covered under the policy. A jury ultimately awarded plaintiff $41,737.89 in damages. After the trial, the court concluded that plaintiff could not show that his assignors were damaged by a breach of contract by defendant and granted defendant's motion for judgment as a matter of law. The Vermont Supreme Court reversed this determination, vacated the judgment that was entered in favor of defendant, and remanded with direction to the superior court to reinstate the jury’s verdict and its award of damages. View "Parker's Classic Auto Works, Ltd. v. Nationwide Mutual Insurance Company" on Justia Law

Corbett’s businesses were governed by separate, substantively identical, Auto Driveaway franchise agreements. Each included non‐compete and non‐disclosure clauses and a 2016 expiration date. Those expiration dates passed. Both parties continued dealing as though the agreements were still in place until November 2017, when Auto Driveaway mailed an offer to renew the contracts for another five years. Corbett never responded but continued operating his franchises as before. Auto Driveaway subsequently learned that Corbett was building an app to compete against the app it had hired Corbett to build. Auto Driveaway suspected that Corbett was using its proprietary work product as a starting point. Corbett was set to launch his app through a new company, InnovAuto, in direct competition with Auto Driveaway. Auto Driveaway filed suit. Months later, Auto Driveaway discovered that Corbett had another competitive auto transport business, Tactical. Auto Driveaway obtained a preliminary injunction, stating that Corbett may not engage in any conduct that might violate the non‐compete clause of the franchise agreement. The court required Auto Driveaway to post a $10,000 bond as security for the injunction. The Seventh Circuit concluded that the district court must revisit the form of the injunction and the amount of security. Nothing covered by the order went beyond the controversy before the court or could have surprised Corbett but it is not a stand-alone separate document that spells out within its four corners exactly what the parties must or must not do. View "Auto Driveaway Franchise Systems, LLC v. Corbett" on Justia Law