Justia Contracts Opinion Summaries

The Supreme Court reversed the judgment of the trial court awarding a sales commission to a real estate broker (Broker) despite the fact that a contemplated sale ultimately never took place. The trial court concluded (1) the Broker was a third-party beneficiary of the sale agreement, (2) the parties to the agreement waived its time-is-of-the-essence provision, and (3) the Seller improperly prevented the closing. The Supreme Court reversed, holding that the trial court erred as a matter of law by awarding the Broker a sales commission on the ground that the Seller improperly prevented the closing because the trial court misapplied the prevention doctrine. View "Rastek Construction & Development Corp. v. General Land Commercial Real Estate Co., LLC" on Justia Law

All Masonry & Landscape Supply (All Masonry) appealed a postjudgment order awarding attorney fees to Oldcastle, the prevailing party in a breach of contract action. Oldcastle manufactured masonry and concrete products, including its Belgard-branded concrete pavers and segmented retaining walls. All Masonry distributed landscape supplies and concrete products to customers. All Masonry claimed that in 2001, it entered into an agreement with Oldcastle to be Oldcastle's exclusive dealer of Belgard products in San Diego County. The 2001 dealer agreement was part written and part oral. In 2013, All Masonry sued Oldcastle for breaching the 2001 dealer agreement by distributing Belgard products through other dealers in San Diego County. Oldcastle prevailed on the breach of contract cause of action in 2015 when the court granted its motion for summary adjudication on that claim, rejecting All Masonry's contention that it had the exclusive right to sell Belgard at preferential pricing in San Diego County. Oldcastle filed a postjudgment motion to recover attorney fees in connection with All Masonry's breach of contract claim. The court awarded Oldcastle $180,120 in attorney fees for defending the breach of contract cause of action through summary adjudication and for litigating the postjudgment fees motion. The Court of Appeal reversed the award of attorney fees to Oldcastle, finding no clear and unequivocal evidence that the parties intended to incorporate the terms of a 2010 credit application into their 2001 dealer agreement, which was the basis of the fee award. Civil Code section 1642 does not allow the recovery of attorney fees in this case. View "R.W.L. Enterprises v. Oldcastle, Inc." on Justia Law

This was an insurance bad faith case arising out of a claim for underinsured motorist coverage. In May 2008, Peggy Cedillo was injured in a collision while riding as a passenger on the back of a motorcycle. About a year after the collision, she settled her claim against the motorcycle driver for $105,000, the total amount available under his insurance policy. Cedillo married the motorcycle driver about eight months after the collision, and he was her lawyer in this lawsuit and designated as one of her experts. Cedillo claimed the district court erred when it: (1) granted summary judgment in favor of Farmers on her bad faith claim; (2) denied discovery of the entirety of Farmers’ claims file and certain electronic information; and (3) denied a motion to amend her complaint to include a claim for punitive damages. The Idaho Supreme Court, after review of the terms of the insurance contract and the district court record, affirmed the grant of summary judgment on Farmers’ motion relating to the bad faith claim: “General conclusions about Farmer’s conduct do not provide the facts needed to overcome summary judgment on the ‘fairly debatable’ element. Thus, the district court did not err in granting Farmers’ motion for summary judgment.” View "Cedillo v. Farmers Ins. Co. of Idaho" on Justia Law

The Supreme Court affirmed the judgment of the district court granting judgment in favor of Bridger del Sol, Inc. (BDS) and awarding BDS attorney fees in this declaratory action filed by BDS against VincentView, LLC. In the complaint, BDS asked the district court to declare that it was not breaching a commercial lease agreement between the parties and claimed that VincentView anticipatory breached the lease, causing BDS damages. The district court found that VincentView anticipatorily breached the lease and the BDS did not breach the lease. The Supreme Court affirmed, holding that the district court’s findings were supported by substantial evidence in the record and were not clearly erroneous. View "Bridger Del Sol, Inc. v. Vincentview, LLC" on Justia Law

Hyatt and Shen Zhen entered into an agreement providing that Shen Zhen would renovate a Los Angeles hotel and operate it using Hyatt’s business methods and trademarks. Two years later Hyatt declared that Shen Zhen was in breach. An arbitrator concluded that Shen Zhen owes Hyatt $7.7 million in damages plus$1.3 million in attorneys’ fees and costs. The Seventh Circuit affirmed the district court’s order of enforcement, upholding the arbitrator’s refusal to issue a subpoena to Cadwalader, who represented Shen Zhen during the contract negotiations. The dispute arose two years after Cadwalader stopped working for Shen Zhen. The contract has an integration clause that forecloses resort to the negotiating history as an interpretive tool. The arbitrator also declined to disqualify Hyatt’s law firm, which Cadwalader joined about three years after the contract was signed, finding that the firm’s ethics screen ensured that no confidential information would reach Hyatt's lawyers. The court also rejected an argument that the award disregarded federal and state franchise law and should be set aside under 9 U.S.C. 10(a)(4), which covers situations in which “the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” View "Hyatt Franchising, L.L.C. v. Shen Zhen New World I, LLC" on Justia Law

This case turned on whether an attorney-in-fact made a “health care decision” by admitting her principal to a residential care facility for the elderly and, in the process, agreeing to an arbitration clause. The trial court found she acted outside the scope of her authority under the power of attorney, and the arbitration clause this appeal seeks to enforce was void. The issue this case presented for the Court of Appeal’s review centered on the scope of two statutes, the Power of Attorney Law (Prob. Code, sec. 4000 et seq. (PAL)), and the Health Care Decisions Law (Prob. Code, sec. 4600 et seq. (HCDL)), in light of the care a residential care facility for the elderly agreed to provide, and actually provided, in this instance (Health & Saf. Code, sec. 1569 et seq.). For resolution, the Court had to parse the authority of two of the principal’s relatives, one holding a power of attorney under the PAL and one holding a power of attorney under the HCDL. The Court concluded admission of decedent to the residential care facility for the elderly in this instance was a health care decision, and the attorney-in-fact who admitted her, acting under the PAL, was not authorized to make health care decisions on behalf of the principal. As a result of this conclusion, the Court affirmed the trial court’s denial of a motion by the residential care facility to compel arbitration. Because the attorney-in-fact acting under the PAL did not have authority to make health care decisions for her principal, her execution of the admission agreement and its arbitration clause are void. View "Hutcheson v. Eskaton Fountainwood Lodge" on Justia Law

Bio‐Systems produced biodegradation products that use bacteria to break down waste. Customers often required certificates of analysis, so Bio‐Systems counted the bacteria in a product before its sale. Betco purchased Bio‐Systems, after visiting Bio‐Systems’s sites, speaking with personnel, and examining financial information. Betco paid Peacock $5 million and placed $500,000 in escrow, to be released two years after closing if Belco had not identified any problems. Peacock continued to run the plant. Betco instructed him to focus on sales and profits. Betco knew before closing that the bacteria yields were inconsistent at the plant; it learned within a year of closing that some products were being shipped with below‐specification bacteria counts. Betco nonetheless released the escrow early in exchange for a discount. Betco subsequently discovered that certificates of analysis were being falsified. Betco sued Peacock. The court dismissed negligent misrepresentation and breach of contract claims as time‐barred by the Agreement, and found that Betco failed to prove violation of the duty of good faith and hadn’t shown any cognizable injury from the alleged violation. The Seventh Circuit affirmed rejection of all of Betco’s claims. When Betco purchased Bio‐Systems, it expected profitability and not to face claims for shipping products with intentionally falsified certificates; it received that. Betco did not expect that it was purchasing flawless processes. Under Wisconsin law, the inquiry is not whether Betco paid the appropriate price but whether Betco received the benefits that it expected. View "Betco Corp., Ltd. v. Peacock" on Justia Law

The Maintenance Group, Inc. petitioned the Alabama Supreme Court for a writ of mandamus to direct the Madison Circuit Court to enter an order dismissing the claims against it based on lack of personal jurisdiction. This case arises from the sale of an aircraft. The purchaser alleged tortious conduct related to the sale of the aircraft negotiated and consummated outside Alabama by nonresident parties, including Maintenance. The only contact with Alabama being post-purchase travel into and out of Alabama. The Supreme Court concluded that, based on the evidence before the trial court, the purchaser did not establish a sufficient nexus between Maintenance's purposeful activity within Alabama and the claims made in its action sufficient to subject Maintenance to personal jurisdiction in an Alabama court. Accordingly, Maintenance has shown a clear legal right to the dismissal of the complaint on the ground that the trial court lacked personal jurisdiction over it. View "Ex parte The Maintenance Group, Inc." on Justia Law

Kansas distinguishes between legal malpractice claims: some sound in contract, others sound in tort. Plaintiff Cory Sylvia sued his former attorneys, James Wisler and David Trevino, for legal malpractice allegedly sounding in tort and breach of contract arising from their representation of Sylvia in a suit for wrongful termination against Goodyear Tire & Rubber Co. (“Goodyear”), his former employer. Later, Sylvia amended his complaint to add as a defendant Xpressions, L.C. (“Xpressions”), a limited liability company formerly known as the Wisler Law Office, L.C. Sylvia’s initial complaint characterized his claims as sounding both in tort and in contract. Specifically, he faulted: (1) both individual defendants for failing to include in, or to later amend, his complaint to aver a workers’ compensation retaliation claim; and (2) solely Wisler for voluntarily dismissing Sylvia’s case on the erroneous belief that all claims could be refiled, causing one of his claims to become barred by the statute of limitations. For each of these claims, Sylvia advanced both tort and contract theories of liability. This case presented a difficult question of Kansas law for the Tenth Circuit's review: when do legal malpractice claims involving a failure to act sound in tort rather than contract? After review, the Tenth Circuit reversed in part and vacated in part the district court’s judgment dismissing Sylvia’s tort-based legal malpractice claims. However, regarding the district court’s grant of summary judgment for the defendants on the breach of contract claims, the Court affirmed. View "Sylvia v. Wisler" on Justia Law

The Supreme Court affirmed in part, reversed in part, and remanded the circuit court’s entry of summary judgment in favor of AutoTrac Inc. on Varner Beals’s tort claim of deceit and Beals’s contract claims of fraud and undue influence. The court held (1) AutoTrac was entitled to summary judgment on Beals’s fraud claim because Beals failed to assert specific facts supporting his conclusory allegation that AutoTrac failed to disclose a debt; (2) summary judgment was appropriate on Beals’s claim because Beals’s conclusory allegations were not supported by specific, factual assertions, and Beals’s own deposition testimony defeated his claim; and (3) the circuit court erred by granting summary judgment on Beals’s claim of undue influence because the factual assertions raised by Beals’s raised a genuine dispute of material fact as to whether Defendant took advantage of Beals’s “weakness of mind.” View "Beals v. Autotrac, Inc." on Justia Law