Justia Contracts Opinion Summaries

In 2014, Emergency Medical Care Facilities, P.C. (EMCF) filed a putative class action against BlueCross BlueShield of Tennessee, Inc. (BCBST), alleging breach of contract due to a cap on certain payments for medical services. The trial court denied class certification, and the Court of Appeals affirmed. EMCF then voluntarily nonsuited its claims. After a favorable ruling in a separate lawsuit against TennCare, EMCF refiled its case against BCBST, again seeking class certification.The trial court held that collateral estoppel precluded relitigation of class certification, but the Court of Appeals reversed, stating that the prior class certification denial was not final for collateral estoppel purposes because the case had been voluntarily nonsuited.The Supreme Court of Tennessee reviewed the case to determine whether the prior denial of class certification, affirmed on appeal, was entitled to preclusive effect. The Court held that the trial court's and appellate court's decisions denying class certification in the earlier case were final and binding for purposes of collateral estoppel. The Court reasoned that the class certification issue had been fully litigated and decided, and the decision was subject to appeal, which EMCF did not pursue further. Therefore, EMCF was precluded from relitigating the class certification issue in the refiled case.The Supreme Court of Tennessee reversed the Court of Appeals' decision and remanded the case to the trial court, reinstating the order striking the class action allegations against BCBST and VSHP. The Court emphasized that the denial of class certification, affirmed on appeal, was sufficiently final to warrant preclusive effect, preventing EMCF from seeking a do-over on class certification. View "Emergency Medical Care Facilities, P.C. v. BlueCross BlueShield of Tennessee, Inc." on Justia Law

Larry Lawson, former CEO of Spirit AeroSystems, Inc., retired and entered into a Retirement Agreement with Spirit, which allowed him to continue vesting in long-term incentive stock awards as if he were an active employee. This agreement was conditioned on his compliance with a non-competition covenant from his original Employment Agreement. Lawson later engaged with a hedge fund, Elliott Management, which was involved in a proxy contest with Arconic, a competitor of Spirit. Spirit deemed this a violation of the non-competition covenant and ceased payments and stock vesting under the Retirement Agreement.The United States District Court for the District of Kansas held a bench trial and found that Lawson had not violated the non-competition covenant, ruling in his favor. Spirit appealed, and the Tenth Circuit reversed, holding that Lawson had breached the covenant and remanded the case to determine the enforceability of the covenant under Kansas law.On remand, the district court found the non-competition covenant enforceable without applying the reasonableness test from Weber v. Tillman, concluding that the covenant was a condition precedent to the receipt of future benefits, not a traditional non-compete. The court severed the injunctive enforcement mechanism from the covenant, leaving only the condition precedent.The United States Court of Appeals for the Tenth Circuit affirmed the district court's judgment, predicting that the Kansas Supreme Court would not apply the Weber reasonableness test to a non-competition condition precedent to the receipt of future benefits. The court also denied Lawson's motion to certify the question to the Kansas Supreme Court, finding it unnecessary to resolve the issue. View "Lawson v. Spirit Aerosystems" on Justia Law

Dr. William Partin filed a lawsuit against Baptist Healthcare System, Inc. and Dr. Daniel Eichenberger after he resigned from his position. Partin alleged that Baptist and Eichenberger retaliated against him in violation of the Emergency Medical Treatment and Active Labor Act (EMTALA) and brought claims under Indiana law for breach of contract, tortious interference with contractual relations, and defamation. The dispute arose from Partin's treatment of a suicidal patient, J.C., in Baptist's emergency department, where Partin ordered procedures against J.C.'s will, leading to complaints from hospital staff.The United States District Court for the Southern District of Indiana granted summary judgment in favor of Baptist and Eichenberger. The court found that no reasonable jury could conclude that Partin engaged in EMTALA-protected activity or that he was retaliated against for such activity. The court also determined that Partin's breach of contract claim failed because the bylaws did not create a contractual relationship between Partin and Baptist, and his resignation was not under duress. Additionally, the court found no evidence to support Partin's claims of tortious interference with contract or defamation.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The appellate court held that Partin did not engage in EMTALA-protected activity and that his belief in reporting a potential EMTALA violation was not objectively reasonable. The court also agreed that the bylaws did not create a contract between Partin and Baptist and that Partin's resignation was voluntary. Furthermore, the court found that Baptist's actions were justified and not malicious, and that the statements made by Eichenberger and Marksbury were protected by qualified privilege and not made in bad faith. View "Partin v Baptist Healthcare System, Inc." on Justia Law

Virgin Valley Water District (the District) entered into a lease agreement with Paradise Canyon, LLC (Paradise Canyon) in 2011 to provide water shares for irrigating a golf course. The lease included a right of first refusal for Paradise Canyon to renew the lease, with the District having sole discretion to set rental rates after January 1, 2020. In 2019, the District increased the rental rate, leading Paradise Canyon to sue for declaratory relief and damages, alleging bad faith breach of the lease agreement.The Eighth Judicial District Court in Clark County granted partial summary judgment for Paradise Canyon on certain claims and set others for a jury trial. The jury found that the District had breached the lease in bad faith and awarded damages to Paradise Canyon. The District appealed the decision.The Supreme Court of Nevada reviewed the case and found that the lease agreement unambiguously granted the District sole discretion to set rental rates after January 1, 2020. The court held that the trial court erred in allowing the jury to interpret this unambiguous provision and in finding that the District breached the implied covenant of good faith and fair dealing. The Supreme Court also noted several procedural errors, including the trial court's improper judicial notice of its own factfinding, admission of prejudicial evidence, and unfair trial practices that limited the District's ability to present its case.The Supreme Court of Nevada reversed the portions of the trial court's judgment related to the interpretation of the lease renewal provisions and the jury's verdict on the rental rate and damages. The court affirmed the trial court's rulings on beneficial use and other uncontested matters. The case was remanded for further proceedings consistent with the Supreme Court's opinion. View "VIRGIN VALLEY WATER DIST. VS. PARADISE CANYON, LLC" on Justia Law

New England Country Foods, LLC (NECF) alleged that VanLaw Food Products, Inc. (VanLaw) intentionally undercut its business by promising to replicate NECF’s popular barbeque sauce and sell it directly to Trader Joe’s. NECF sued VanLaw in federal court, claiming tortious interference and other claims. The district court dismissed the case based on a clause in their manufacturing contract that limited damages. The United States Court of Appeals for the Ninth Circuit asked the California Supreme Court whether a contract clause that substantially limits damages for intentional wrongdoing is invalid under Civil Code section 1668.The district court dismissed NECF’s complaint, reasoning that the contract allowed only for direct damages and injunctive relief, while NECF sought lost profits, attorneys’ fees, and punitive damages. The court rejected NECF’s argument that section 1668 prevents limiting damages for future intentional conduct, stating it only prevents contracts that completely exempt parties from liability. NECF amended its complaint, but the district court dismissed it with prejudice, citing that parties may limit liability for breach of contract and that the contract did not bar all money damages but limited them to specific types NECF did not suffer. NECF appealed, and the Ninth Circuit sought guidance from the California Supreme Court.The California Supreme Court held that limitations on damages for willful injury to the person or property of another are invalid under section 1668. The court reasoned that the statute’s language and purpose, along with the policy against willful tortious conduct, support this interpretation. The court clarified that section 1668 does not preclude parties from limiting liability for pure breaches of contract absent a violation of an independent duty. The court’s decision ensures that parties cannot contractually limit their liability for intentional torts. View "New England Country Foods v. Vanlaw Food Products" on Justia Law

Intellectual Capitol, Inc., JMI Sports, and JMIS College, LLC (Appellants) obtained contracts through the state procurement process with the South Carolina Workers' Compensation Commission (WCC) and Clemson University (Respondents). Disputes arose under these contracts, leading Respondents to file Requests for Resolution of Contract Controversy with the Chief Procurement Officer (CPO) for the State of South Carolina. Appellants then filed separate declaratory judgment actions in circuit court, challenging the constitutionality of section 11-35-4230 of the South Carolina Code, which grants the CPO exclusive jurisdiction over state contract disputes.The circuit court granted Respondents' motions to dismiss the declaratory judgment actions, ruling that section 11-35-4230 placed exclusive jurisdiction over the State's contract disputes with the CPO. The court also dismissed Appellants' constitutional claims as premature due to their failure to exhaust administrative remedies. Appellants appealed this decision.The South Carolina Supreme Court reviewed the case and affirmed the circuit court's dismissal of the declaratory judgment actions, but modified the reasoning. The Supreme Court held that the contracts between Appellants and Respondents contained a clear choice-of-forum provision, which unambiguously gave the CPO exclusive authority to resolve disputes. By agreeing to this provision, Appellants waived their right to have their disputes decided by a court of the unified judicial system. Consequently, there was no justiciable controversy, rendering the constitutional challenge to section 11-35-4230 a purely academic exercise. The Supreme Court affirmed the circuit court's dismissal of the declaratory judgment actions, as there were no legal rights at issue. View "Intellectual Capital, Inc. v. Chief Procurement Officer" on Justia Law

HIVE Construction, Inc. served as the general contractor for the construction of Masterpiece Kitchen, a restaurant. The contract required HIVE to follow specific architectural plans, including installing two layers of drywall on a wall separating the kitchen and dining area. Instead, HIVE installed one layer of drywall and one layer of combustible plywood without approval. A fire started within the wall, causing significant damage and forcing the restaurant to close. Mid-Century Insurance Company, as the property insurer and subrogee of Masterpiece Kitchen, paid for the damages and then sued HIVE for negligence, alleging willful and wanton conduct.The district court initially allowed Mid-Century to amend its complaint to include a breach of contract claim but later reversed this decision, requiring Mid-Century to proceed with the negligence claim. At trial, the jury found HIVE's conduct to be willful and wanton, awarding damages to Mid-Century. HIVE appealed, arguing that the economic loss rule barred the negligence claim. The Colorado Court of Appeals agreed, reversing the district court's decision and instructing a verdict in HIVE's favor.The Supreme Court of Colorado reviewed the case and concluded that the economic loss rule does not provide an exception for willful and wanton conduct. The court held that the rule barred Mid-Century's negligence claim because the duty HIVE allegedly breached was not independent of its contractual obligations. Consequently, the court affirmed the judgment of the Colorado Court of Appeals, upholding the application of the economic loss rule to bar the negligence claim. View "Mid-Century Ins. Co. v. HIVE Construction" on Justia Law

The buyers of a pharmaceutical business appealed the Superior Court’s dismissal of their fraudulent-inducement and indemnification claims against the sellers. The trial court determined that the buyers had waived their fraudulent-inducement claims and that the indemnification claim was time-barred. The court’s waiver determination was based on its interpretation of a letter agreement between the parties, executed after the buyers’ acquisition of the business and following governmental proceedings involving FDA and Department of Justice investigations. The sellers argued that the letter agreement precluded further litigation, including the buyers’ claims. The buyers contended that the letter agreement only limited the size and scope of claims for losses attributable to the governmental proceedings. The Superior Court agreed with the sellers and dismissed the buyers’ fraudulent-inducement claims.The Superior Court found that the buyers’ indemnification claim was untimely because it was filed more than 60 months after the acquisition closed, as required by the Purchase Agreement. The court rejected the buyers’ argument that the survival period was tolled due to the sellers’ fraudulent concealment, reasoning that the buyers were on inquiry notice of the alleged breaches well within the limitations period.The Supreme Court of Delaware reviewed the case and held that the buyers’ interpretation of the letter agreement was reasonable, as was the sellers’ and the trial court’s. The court found the relevant provision of the letter agreement to be ambiguous, making it inappropriate to dismiss the buyers’ fraudulent-inducement claim. The court also concluded that the buyers adequately pleaded that the sellers had fraudulently concealed the facts giving rise to the indemnification claim, potentially tolling the survival period. Consequently, the court reversed the Superior Court’s judgment and remanded the case for further proceedings. View "LGM Holdings, LLC v. Gideon Schurder" on Justia Law

The case involves a breach of contract action brought by socially disadvantaged farmers against the United States Department of Agriculture (USDA) regarding Farm Service Agency (FSA) loans. The plaintiffs, Lester Bonner and Princess Williams, claimed that the USDA breached an express or implied-in-fact contract by failing to provide debt relief after the Inflation Reduction Act repealed a provision of the American Rescue Plan Act (ARPA) that mandated such relief.The United States Court of Federal Claims dismissed the plaintiffs' complaint for failure to state a claim upon which relief could be granted. The court found that the plaintiffs did not plausibly allege the formation of a contract, as they failed to demonstrate mutuality of intent, lack of ambiguity in offer and acceptance, consideration, and a government representative with actual authority to bind the United States.The United States Court of Appeals for the Federal Circuit reviewed the case and affirmed the lower court's decision. The appellate court held that the plaintiffs did not plausibly allege mutuality of intent to contract, which is a threshold condition for contract formation. The court found that the language of ARPA § 1005, which directed the Secretary of Agriculture to provide payments, did not create a contractual obligation. The court also determined that the FSA-2601 form, which informed recipients of their eligibility for payment, did not demonstrate the government's intent to contract. The court concluded that the statutory grant of payment under ARPA was a gratuity and not a contractual right. Consequently, the Court of Federal Claims' dismissal of the complaint was affirmed. View "BOYD v. US " on Justia Law

Plaintiff Zackary Diamond was injured by a punch from a third party during an altercation in the restricted pit area at Bakersfield Speedway. He alleged that the defendants, Scott Schweitzer, Schweitzer Motorsports Productions, and Christian Schweitzer, were negligent in providing security, responding to the altercation, and undertaking rescue efforts. Defendants moved for summary judgment, arguing that Diamond's claims were barred by a release and waiver of liability form he signed to enter the pit area. The trial court granted the motion, finding the release clear, unequivocal, and broad in scope, covering the negligent conduct alleged.The Superior Court of Kern County granted summary judgment in favor of the defendants, concluding that the release included risks related to racing activities and that the assault was such a risk. The court interpreted the release as covering the type of event that occurred, thus barring Diamond's negligence claims.On appeal, Diamond contended that the release was unenforceable because the injury-producing act was not reasonably related to the purpose of the release, which he described as observing the race from the pit area. The Court of Appeal of the State of California, Fifth Appellate District, concluded that the release met the requirements for enforceability: it was clear, unambiguous, and explicit in expressing the intent to release all liability for Diamond's injury; the alleged acts of negligence were reasonably related to the purpose of the release; and the release did not contravene public policy. The court also found that the defendants adequately raised a complete defense based on the signed release and that Diamond failed to rebut this defense. Consequently, the court affirmed the summary judgment in favor of the defendants. View "Diamond v. Schweitzer" on Justia Law