Justia Contracts Opinion Summaries

McMillin Management Services, L.P. and Imperial Valley Residential Valley Residential Builders, L.P. (collectively "McMillin") filed suit against numerous insurance companies, including respondents Lexington Insurance Company (Lexington) and Financial Pacific Insurance Company (Financial Pacific). McMillin alleged that it had acted as a developer and general contractor of a residential development project in Brawley and hired various subcontractors to help construct the Project. As relevant here, McMillin alleged that Lexington and Financial Pacific breached their respective duties to defend McMillin in a construction defect action (underlying action) brought by homeowners within the Project. McMillin alleged that Lexington and Financial Pacific each owed a duty to defend McMillin in the underlying action pursuant to various comprehensive general liability (CGL) insurance policies issued to the subcontractors that named McMillin as an additional insured. The trial court granted Lexington's motion for summary judgment, reasoning, that there was no possibility for coverage for McMillin as an additional insured under the policies "[b]ecause there were no homeowners in existence until after the subcontractors' work was complete[ ] . . . ." On appeal, McMillin contended that the fact that the homeowners did not own homes in the Project at the time the subcontractors completed their work did not establish that its liability did not arise out of the subcontractors' ongoing operations. The trial court granted Financial Pacific's motion for summary judgment, finding McMillin did not establish homeowners in the underlying action had sought potentially covered damages arising out of the subcontractors' drywall installation. The Court of Appeal reversed as to Lexington, and affirmed as to Financial Pacific. View "McMillin Management Services v. Financial Pacific Ins. Co." on Justia Law

Petitioners, former shareholders of Kay Company and Kay Co., LLC, appealed orders entered by the circuit court in which summary judgment was granted to Respondent, Petitioners’ former legal counsel, in connection with claims Petitioners filed against Respondent. Petitioners challenged the circuit court’s (1) ruling that a settlement reached by all but one of Petitioners with the IRS prevented them from establishing causation and damages on any of their claims, (2) finding that there were no factual issues in need of resolution, and (3) ruling that the lack of settlement with the IRS precluded Jennie Graham, executrix of the estate of James Graham, prevented her from asserting claims against Respondent. The Supreme Court held that the circuit court (1) erred in reasoning that the settlement with the IRS prohibited Petitioners from going forward on all of their claims; (2) erred in ruling that the lack of a settlement with the IRS precluded Graham from asserting any claims against Respondent; and (3) did not err in its rulings with regard to detrimental reliance and joint venture. The Supreme Court remanded this matter to the circuit court to permit Petitioners to proceed on their claims of legal malpractice, negligent misrepresentation, and fraud. View "Kay v. McGuireWoods, LLP" on Justia Law

An attorney represented a Native corporation in litigation nearly three decades ago. The corporation disputed the attorney’s claim for fees, and in 1995, after the attorney’s death, the superior court entered judgment on an arbitration award of nearly $800,000 to the attorney’s law firm, then represented by the attorney’s son. The corporation paid eight installments on the judgment, but eventually stopped paying, citing financial difficulties. The law firm sought a writ of execution for the unpaid balance, and the writ was granted. The corporation appealed but under threat of the writ paid $643,760 while the appeal was pending. In a 2013 opinion the Alaska Supreme Court held the writ invalid and required the firm to repay the $643,760. The corporation was never repaid. The original law firm moved its assets to a new firm and sought a stay of execution, averring that the original firm now lacked the funds necessary for repayment. The corporation sued the original firm, the successor firm, and the son for breach of contract, fraudulent conveyance, conspiracy to fraudulently convey assets, violations of the Unfair Trade Practices Act (UTPA), unjust enrichment, and punitive damages. The firm counterclaimed, seeking recovery in quantum meruit for attorney’s fees it claimed were still owing for its original representation. The superior court granted summary judgment for the corporation on the law firm’s quantum meruit claim and, following trial, found that the son and both law firms fraudulently conveyed assets and were liable for treble damages under the UTPA. The son and the law firms appealed, arguing the trial court erred by: (1) holding that the quantum meruit claim was barred by res judicata; (2) holding the defendants liable for fraudulent conveyance; (3) awarding damages under the UTPA; and (4) making mistakes in the form of judgment and award of costs. The Alaska Supreme Court found no reversible error with one exception. The Court remanded for reconsideration of whether all three defendants are liable for prejudgment interest from the same date. View "Merdes & Merdes, P.C. v. Leisnoi, Inc." on Justia Law

This case arose out of Richard Gomez’s breach of a real estate agreement for the sale and purchase of residential real estate from Todd Phillips in his capacity as Trustee of Trust “A” of the Elliott Family Trust. Phillips appeals a district court’s denial of Phillips’s request to recover actual damages. After a bench trial, the district court held that Phillips’s claim for breach of contract had been fully satisfied by Phillips’s retention of the non-refundable earnest money as liquidated damages as provided by the agreement. Finding no reversible error in that judgment, the Idaho Supreme Court affirmed. View "Phillips v. Gomez" on Justia Law

For almost 40 years, Honeywell (or its predecessors) operated a manufacturing plant in Fostoria, Ohio. Many union workers, including Watkins and Ulicny, spent most of their working years at the plant. They retired at a time when Honeywell promised in a collective-bargaining agreement that it would pay for their health insurance. When the final agreement expired in 2011, Honeywell did not renew it. It sold the plant and, later, stopped paying for its retirees’ healthcare. Those retirees filed suit. The district court found that Honeywell’s promise to pay for healthcare ended when the agreement expired and dismissed the suit. The Sixth Circuit affirmed. The agreement promises healthcare “for the duration of this Agreement,” and “this promise means exactly that: Honeywell’s obligation to pay for its Fostoria retirees’ healthcare ended when the agreement expired.” View "Watkins v. Honeywell International, Inc." on Justia Law

The Supreme Court reversed the judgment of the district court granted summary judgment for New West Health Services (New West) in this action brought by Plaintiff and the class she represented alleging breach of contract, violation of made-whole rights, and unfair claims settlement practices. At issue in this appeal was the district court’s grant to New West leave to amend its answer to include the affirmative defense of ERISA preemption. The district court subsequently allowed Plaintiff to amended her complaint to include ERISA claims. Ultimately, the district court concluded that ERISA preemption required dismissal of Plaintiff’s state law and ERISA claims and entered summary judgment for New West. The Supreme Court reversed, holding that, under the extraordinary circumstances of this case, the district court abused its discretion by granting New West leave to amend its answer to assert ERISA preemption. View "Rolan v. New West Health Services" on Justia Law

To seek redress for an opioid epidemic, characterized by the Court of Appeal as having placed a financial strain on state and local governments dealing with the epidemic’s health and safety consequences, two California counties sued (the California Action) various pharmaceutical manufacturers and distributors, including the appellants in this matter, Actavis, Inc., Actavis LLC, Actavis Pharma, Inc., Watson Pharmaceuticals, Inc., Watson Laboratories, Inc., and Watson Pharma, Inc. (collectively, “Watson”). The California Action alleged Watson engaged in a “common, sophisticated, and highly deceptive marketing campaign” designed to expand the market and increase sales of opioid products by promoting them for treating long-term chronic, nonacute, and noncancer pain - a purpose for which Watson allegedly knew its opioid products were not suited. The City of Chicago brought a lawsuit in Illinois (the Chicago Action) making essentially the same allegations. The issue presented by this appeal was whether there was insurance coverage for Watson based on the allegations made in the California Action and the Chicago Action. Specifically, the issue was whether the Travelers Property Casualty Company of America (Travelers Insurance) and St. Paul Fire and Marine Insurance Company (St. Paul) owe Watson a duty to defend those lawsuits pursuant to commercial general liability (CGL) insurance policies issued to Watson. Travelers denied Watson’s demand for a defense and brought this lawsuit to obtain a declaration that Travelers had no duty to defend or indemnify. The trial court, following a bench trial based on stipulated facts, found that Travelers had no duty to defend because the injuries alleged were not the result of an accident within the meaning of the insurance policies and the claims alleged fell within a policy exclusion for the insured’s products and for warranties and representations made about those products. The California Court of Appeal concluded Travelers had no duty to defend Watson under the policies and affirmed. View "The Traveler's Property Casualty Company of America v. Actavis, Inc." on Justia Law

Jami Johnston appealed a judgment entered in favor of Castles and Crowns, Inc. ("Castles"). Castles was a children's clothing company formed by Julie Vickers and Amy Bowers. Brandi Stuart, Johnston's sister, worked for Castles from 2006 until 2011. From 2009 to 2010, while she was working with Castles, Stuart had 7,149 pounds of Castles' clothing shipped either to Johnston or to consignment companies used by Johnston. In January 2011, Vickers terminated Stuart's employment based on issues with her performance. In April 2011, Castles sued Stuart and Johnston, alleging conversion; civil conspiracy; "willfulness, negligence, and wantonness"; trespass to chattel; and unjust-enrichment against Johnston and Stuart. It also asserted fraudulent-misrepresentation and suppression claims against Stuart. Johnston answered, also asserting a counterclaim against Castles and a third-party complaint against Vickers. In her counterclaim and third-party complaint, Johnston alleged claims of defamation; "negligence, wantonness, and willfulness"; conspiracy; and tortious interference with business and contractual relations. She also sought recovery against Castles under the theory of respondeat superior. In this case, the trial court instructed the jury to consider Castles' unjust-enrichment claim against Johnston if it did not find against Johnston on the conversion and conspiracy claims. The jury found against Johnston on both the conversion and conspiracy claims. However, it then considered the unjust-enrichment claim and found against Johnston on that claim as well. The Alabama Supreme Court concluded the jury's verdict was inconsistent with the trial court's instructions and "was obviously the result of confusion on the part of the jury." After it had discharged the jury, the trial court acknowledged the inconsistency in the jury's verdict. The trial court attempted to cure that inconsistency by setting aside the award in favor of Castles on the unjust-enrichment claim. However, the Supreme Court found the trial court's attempt to reconcile the inconsistency in the jury's verdict was based on mere speculation about the jury's intent. Additionally, the jury failed to follow the trial court's instructions, and Johnston moved for a new trial on that ground. The Supreme Court concluded Johnston was entitled to a new trial because the jury failed to follow the trial court's instructions. For these reasons, the trial court erred when it denied Johnston's motion for a new trial. View "Johnston v. Castles & Crowns, Inc." on Justia Law

An attorney-client relationship existed between Defendants and a non-party that contractually agreed to indemnify Defendants, but because Defendants failed to request that the trial court provide written findings of fact and did not present in a timely manner the documents at issue, the trial court did not err in determining that the attorney-client privilege did not extend to the communications at issue.Plaintiff sued Defendants for payment of back rent and other charges due under a lease. Defendants notified the non-party, which agreed to indemnify and defend Defendants in accordance with their agreement. During discovery, counsel for Plaintiff requested copies of documents exchanged between Defendants and the non-party. Defendants moved for a protective order, asserting the attorney-client privilege. The trial court denied Defendants’ motion for a protective order and granted Plaintiff’s motion to compel. The court of appeals affirmed, holding that the attorney-client privilege did not extend to the communications between Defendants and the non-party. The Supreme Court modified and affirmed, holding (1) the non-party’s contractual duty to defend and indemnify Defendants created a tripartite attorney-client relationship; but (2) the trial court did not err in determining that the documents between Defendants and the non-party were not privileged. View "Friday Investments, LLC v. Bally Total Fitness of the Mid-Atlantic, Inc." on Justia Law

The Supreme Court affirmed the decision of the trial court entering judgment for Defendants in this tort action filed by a pilot injured in an airplane crash.Patrick O’Brien, a pilot who was seriously injured when the plane he was flying crashed on approach to an airport, sued the aircraft’s designer and manufacturer and the designer and manufacturer or the aircraft’s pneumatic deicing system, asserting strict liability, negligence, and fraudulent misrepresentation claims. The jury returned a general verdict for Defendants. O’Brien appealed, assigning sixty-five claims. The Supreme Court affirmed, holding that there was no merit to any of O’Brien’s assigned errors. View "O'Brien v. Cessna Aircraft Co." on Justia Law