Justia Contracts Opinion Summaries

The Supreme Court affirmed the order of the district court staying proceedings and compelling Investors to submit all asserted claims against FSC Securities Corp. (FSC) and Rocky Mountain Financial Advisors, LLC and Eric Roshoven (collectively, RMF) to arbitration.On the recommendation of RMF brokers and advisors, Investors purchased securities in Invizeon Corporation through FSC. After Invizeon failed, Investors sued FSC and RMF, alleging that FSC failed adequately to supervise its registered RMF representatives and that RMF wrongfully induced Investors to invest in Invizeon on various grounds. FSC and RMF moved to stay proceedings and compel arbitration before the Financial Industry Regulatory Authority (FINRA). After a hearing, the district court issued an order compelling Investors to submit their claims to arbitration as provided in FSC customer agreement forms. The Supreme Court affirmed, holding that the district court (1) did not err in concluding that Investors knowingly, voluntarily, and intelligently assented to the terms of the standard-form arbitration agreements and validly waived their Montana constitutional rights to full legal redress and jury trial; (2) correctly concluded that the standard-form FSC arbitration agreements were not unconscionable; and (3) correctly compelled Investors to submit their claims against FSC and RMF to arbitration. View "Lenz v. FSC Securities Corp." on Justia Law

Insight Equity, a private-equity firm headquartered in Southlake, Texas, purchased Berry Family Nurseries, a nationwide wholesale nursery company headquartered in Tahlequah, Oklahoma, for $160 million. The Purchase Agreement entered into by the parties contained a Texas choice-of-law provision. The Agreement also contained a five-year non-compete provision, prohibiting the owners of Berry Family Nurseries, Bob Berry and Burl Berry, from owning a competing wholesale nursery company for five years. Park Hill Nursery, a nursery also located in Tahlequah, and owned by the Berrys, was not included in the Agreement, but the Agreement allowed the Berrys to continue to own and operate Park Hill Nursery so long as it did not compete with the newly formed BFN Operations. The parties performed under the terms of the Agreement for approximately three years until the Berrys, through Park Hill Nursery, began selling to several of BFN's largest customers. The Berrys sought a declaration that the restrictive covenants were unenforceable and void under Oklahoma law. BFN filed a counterclaim, seeking injunctive relief and monetary damages for the Berrys' breach of the covenants. Upon review, the Oklahoma Supreme Court concluded the Texas choice-of-law provision was valid, and the non-compete was enforceable under Texas law. The Berrys breached the non-compete, and Park Hill Nursery tortiously interfered with the parties' Agreement. BFN was entitled to injunctive relief through December 7, 2015, and was also entitled to monetary damages. The trial court's determination that BFN was entitled to attorney's fees was not a final judgment, and appeal of that issue was deemed premature. View "Berry & Berry Acquisitions v. BFN Properties" on Justia Law

Insight Equity, a private-equity firm headquartered in Southlake, Texas, purchased Berry Family Nurseries, a nationwide wholesale nursery company headquartered in Tahlequah, Oklahoma, for $160 million. The Purchase Agreement entered into by the parties contained a Texas choice-of-law provision. The Agreement also contained a five-year non-compete provision, prohibiting the owners of Berry Family Nurseries, Bob Berry and Burl Berry, from owning a competing wholesale nursery company for five years. Park Hill Nursery, a nursery also located in Tahlequah, and owned by the Berrys, was not included in the Agreement, but the Agreement allowed the Berrys to continue to own and operate Park Hill Nursery so long as it did not compete with the newly formed BFN Operations. The parties performed under the terms of the Agreement for approximately three years until the Berrys, through Park Hill Nursery, began selling to several of BFN's largest customers. The Berrys sought a declaration that the restrictive covenants were unenforceable and void under Oklahoma law. BFN filed a counterclaim, seeking injunctive relief and monetary damages for the Berrys' breach of the covenants. Upon review, the Oklahoma Supreme Court concluded the Texas choice-of-law provision was valid, and the non-compete was enforceable under Texas law. The Berrys breached the non-compete, and Park Hill Nursery tortiously interfered with the parties' Agreement. BFN was entitled to injunctive relief through December 7, 2015, and was also entitled to monetary damages. The trial court's determination that BFN was entitled to attorney's fees was not a final judgment, and appeal of that issue was deemed premature. View "Berry & Berry Acquisitions v. BFN Properties" on Justia Law

Baek purchased property through his LLC and obtained financing from Labe Bank; Frank was the loan officer. Frank later moved to NCB and asked Baek to move his business, representing that NCB would provide a larger construction loan at a lower rate. In 2006, Baek entered a construction loan with NCB for $11,750,000. Baek executed a loan agreement, mortgage, promissory note, and commercial guaranty. Baek’s wife did not sign the guaranty at closing. NCB maintains that, 18 months after closing, she signed a guaranty. One loan modification agreement bears her signature but Baek‐Lee contends that it was forged and that she was out of the country on the signing date. NCB repeatedly demanded additional collateral and refused to disburse funds to contractors. The Baeks claim that NCB frustrated Baek’s efforts to comply with its demands. In 2010, NCB filed state suits for foreclosure and on the guaranty. The Baeks filed affirmative defenses and a counterclaim, then filed a breach of contract and fraud suit against NCB. The Baeks later filed a federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1964(c), suit alleging fraud. The state court granted NCB summary judgment. The federal district court dismissed, citing res judicata. The Seventh Circuit affirmed. There has been a final judgment on the merits with the same parties, in state court, on claims arising from a single group of operative facts. View "Baek v. Clausen" on Justia Law

Baek purchased property through his LLC and obtained financing from Labe Bank; Frank was the loan officer. Frank later moved to NCB and asked Baek to move his business, representing that NCB would provide a larger construction loan at a lower rate. In 2006, Baek entered a construction loan with NCB for $11,750,000. Baek executed a loan agreement, mortgage, promissory note, and commercial guaranty. Baek’s wife did not sign the guaranty at closing. NCB maintains that, 18 months after closing, she signed a guaranty. One loan modification agreement bears her signature but Baek‐Lee contends that it was forged and that she was out of the country on the signing date. NCB repeatedly demanded additional collateral and refused to disburse funds to contractors. The Baeks claim that NCB frustrated Baek’s efforts to comply with its demands. In 2010, NCB filed state suits for foreclosure and on the guaranty. The Baeks filed affirmative defenses and a counterclaim, then filed a breach of contract and fraud suit against NCB. The Baeks later filed a federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1964(c), suit alleging fraud. The state court granted NCB summary judgment. The federal district court dismissed, citing res judicata. The Seventh Circuit affirmed. There has been a final judgment on the merits with the same parties, in state court, on claims arising from a single group of operative facts. View "Baek v. Clausen" on Justia Law

Nautilus Insurance Company ("Nautilus") and Lyon Fry Cadden Insurance Agency, Inc. ("LFC"), separately petitioned the Alabama Supreme Court for writs of mandamus directing the the trial court to vacate its orders denying their motions to dismiss the action filed against them by Precision Sand Products, LLC ("Precision"). From June 10, 2015, to June 10, 2016, Precision had in place a commercial general-liability insurance policy it had purchased from Nautilus through LFC, an insurance broker. In March 2016, Terry Williams sued Precision seeking recovery for injuries he allegedly suffered on Precision's property during the period the policy was in effect. Pursuant to the terms of the policy, Precision demanded that Nautilus defend and indemnify it against the Williamses' claims. Nautilus agreed, under reservation of rights, to defend Precision against the Williamses' claims. Then Nautilus filed a declaratory-judgment action against Precision and the Williamses at the federal district court, seeking a judgment declaring that, pursuant to an exclusion in the policy, Nautilus was not obligated to defend and indemnify Precision against the Williamses' claims. Precision filed in the Williamses' action a "crossclaim complaint" against Nautilus and LFC ("the state action"), asserting against both Nautilus and LFC various contract and negligence claims. Before the Alabama Supreme Court, LFC argued Precision could not recover against LFC for fraudulently procuring inadequate insurance or for negligently failing to procure adequate insurance unless and until Precision was actually denied coverage for, or a defense against, the Williamses' claims. The Supreme Court found the trial court, as a court of general jurisdiction, clearly had the constitutional and statutory authority to hear the types of claims Precision asserted against LFC. Thus, LFC did not demonstrate it had a clear legal right to dismissal from the state action based on a lack of subject-matter jurisdiction over Precision's claims. Nautilus has demonstrated that, under section 6-5-440 Ala. Code 1975, it had a clear legal right to dismissal from the state action. Accordingly, the Court granted Nautilus's petition and issued the writ directing the trial court to dismiss Nautilus from the state action. Furthermore, the Court determined LFC failed to carry its burden of demonstrating that it had a clear legal right to dismissal from the state action. Accordingly, LFC's petition was also denied. View "Ex parte Nautilus Insurance Company." on Justia Law

SCI Alabama Funeral Services, LLC, d/b/a Elmwood Cemetery and Mausoleum ("SCI"); Service Corporation International; SCI Funeral Services, LLC; Elmwood Cemetery Co.; Phyllis Pesseackey; and Jonathan Wheatley (collectively, "the defendants") appealed an order denying their motion to compel arbitration. The circuit court denied the motion to compel because it concluded that the relevant arbitration provision was unconscionable and thus unenforceable. In 2004, Johnnie Hinton ("Johnnie") signed a contract with SCI to purchase the interment rights to two burial spaces in Elmwood Cemetery. The contract contained an arbitration provision stating that "any claim" that Johnnie "may have" against SCI must be resolved by arbitration. In August 2016, Johnnie's husband, Nathaniel Hinton, passed away. Johnnie began to make arrangements to have Nathaniel buried in one of the two burial spaces to which she had acquired interment rights in 2004. SCI then informed Johnnie that someone else had mistakenly been buried in Nathaniel's space. According to Johnnie's complaint, the space she acquired for Nathaniel is next to the space where her father is buried. At Johnnie's request, SCI disinterred the deceased who was buried in the space Johnnie had acquired and buried him elsewhere so that Nathaniel could be buried in the space; Nathaniel was subsequently buried there. In September 2016, Johnnie sued SCI and the other defendants, alleging breach of contract and several other claims. The defendants moved to compel arbitration, citing the arbitration provision in the contract. Johnnie argued that the arbitration provision was unenforceable because, she said, the contract does not evidence a transaction affecting interstate commerce and the arbitration provision is unconscionable. The circuit court denied the motion to compel, concluding that the arbitration provision is unconscionable. Both substantive unconscionability and procedural unconscionability must be shown to establish unconscionability as a defense to an arbitration provision; these are separate, independent elements. The Alabama Supreme Court determined the arbitration provision in this case was not substantively unconscionable, and did not need to consider the issue of procedural unconscionability. The circuit court erred in denying the motion to compel arbitration. Therefore, the Court reversed the order and remanded the case for the circuit court to enter an order granting the motion to compel arbitration. View "SCI Alabama Funeral Services, LLC v. Hinton" on Justia Law

Terex USA, LLC ("Terex"), petitioned the Alabama Supreme Court for a writ of mandamus directing the Circuit Court to enforce an outbound forum-selection clause contained in a distributorship agreement between Terex and Cowin Equipment Company, Inc. ("Cowin"), and to dismiss Cowin's action against Terex based on improper venue pursuant to Rule 12(b)(3), Ala. R. Civ. P. Before August 2015, Cowin, a heavy-equipment dealer, had served as an authorized dealer of heavy equipment manufactured by the Liebherr Group for approximately 30 years. Cowin alleged Terex, a heavy-equipment manufacturer, began aggressively recruiting Cowin to become a dealer of its equipment in Alabama, Georgia, and Florida. At the time, Warrior Tractor & Equipment Company, Inc. ("Warrior"), was serving as the dealer for Terex's equipment in the region. Based on assurances from Terex that Cowin would be the only Terex dealer in the territory, Cowin allowed its relationship with Liebherr Group to expire. In August 2015, Cowin entered into a distributorship agreement with Terex to sell Terex heavy equipment in Alabama, Georgia, and Florida. Subsequent to entering into the distributorship agreement with Cowin, Terex entered into a new distributorship agreement with Warrior without providing notice to Cowin that Warrior would be reentering the heavy-equipment market. Cowin alleged Terex's failure to give it notice that Warrior would be reentering the market was contrary to common industry practices. Cowin sued Terex and Warrior, asserting various claims arising from Terex's alleged violation of the Alabama Heavy Equipment Dealer Act, sec. 8-21B-1 et seq., Ala. Code 1975 ("the AHEDA"). Terex moved the trial court pursuant to Rule 12(b)(3), Ala. R. Civ. P., to dismiss Cowin's complaint, arguing that venue in Jefferson County was improper because of the forum-selection clause in the distributorship agreement designating either the United States District Court for the Northern District of Georgia or the Georgia state court in Atlanta as the proper forum for any dispute between the parties arising from the distributorship agreement. "An outbound forum-selection clause is exactly the type of provision the legislature intended to prohibit because it would undermine the remedial measures and protections the legislature clearly intended to afford heavy-equipment dealers under the AHEDA; this is especially so as to the outbound forum-selection clause in this case, which also contains a choice-of-law provision designating Georgia law as controlling." The Alabama Supreme Court concluded Terex failed to establish a clear legal right to the relief it sought, so the Court denied its petition for a writ of mandamus. View "Ex parte Terex USA, LLC." on Justia Law

Tommy Brooks Oil Co. (“Brooks Oil”) challenged the trial court’s grant of summary judgment in favor of Jerry Wilburn. According to Brooks Oil, Wilburn Oil Co., Inc. (“Wilburn Oil”) had amassed nearly $1 million in unpaid fuel bills before Brooks Oil refused to sell Wilburn Oil any more fuel until Wilburn executed two personal guaranties for $250,000. After Brooks Oil sued Wilburn to enforce the guaranties, Wilburn moved for summary judgment, claiming a unilateral or mutual mistake concerning the guaranties. According to Wilburn, the parties never intended the guaranties to include Wilburn Oil’s past debt. The trial court agreed and granted summary judgment, dismissing Brooks Oil’s suit against Wilburn with prejudice. The Mississippi Supreme Court found Wilburn did not meet his summary-judgment burden, therefore, it reversed the trial court’s judgment and remanded the case for further proceedings. View "Tommy Brooks Oil Co. v. Wilburn Oil Company, Inc." on Justia Law

Plaintiff filed suit seeking enforcement of an English judgment against defendant for failure to tender payment under a freight-derivative contract and asserted admiralty jurisdiction under 28 U.S.C. 1333(1). The Second Circuit vacated the district court's holding that admiralty jurisdiction did not exist. The court held that, considering plaintiff's identity as a shipping business together with the substance of the agreement, the agreement's principal objective was to further plaintiff's shipping business. Therefore, the court held that the agreement was a maritime contract subject to federal‐court jurisdiction under section 1333(1). The court remanded for further proceedings. View "d'Amico Dry Ltd. v. Primera Maritime (Hellas) Ltd." on Justia Law