Justia Contracts Opinion Summaries

The plaintiff, an adult in custody at an Oregon correctional institution, sued the Oregon Department of Corrections and others for breach of contract and civil rights violations. He sought economic damages based on lost future wages and employment opportunities, alleging that the department had breached an oral promise of nonretaliation by using negative video footage of him in training videos, which led to his loss of job assignments and income-generating opportunities. The plaintiff claimed $11,640 in economic damages due to this negative portrayal.The Marion County Circuit Court dismissed the plaintiff's complaint, agreeing with the department's argument that Article I, section 41(3) of the Oregon Constitution, which states that inmates have no legally enforceable right to a job or compensation for work performed while incarcerated, rendered the plaintiff unable to plead economic damages. The Court of Appeals affirmed the trial court's decision, reasoning that the constitution precluded the plaintiff from establishing economic damages in the form of lost income.The Supreme Court of the State of Oregon reviewed the case and held that the trial court erred in granting the department's motion to dismiss. The court concluded that the lack of a right to employment does not establish, as a matter of law, that the plaintiff cannot prove economic damages in the form of future lost wages. The court emphasized that challenges to the sufficiency of proof are properly suited to a motion for summary judgment or trial, not a motion to dismiss. The decision of the Court of Appeals was affirmed in part and reversed in part, and the judgment of the circuit court was also affirmed in part and reversed in part. The case was remanded to the circuit court for further proceedings. View "Huskey v. Dept. of Corrections" on Justia Law

Plaintiff Jenny-Ashley Colon-Perez sued her former employer, Security Industry Specialists, Inc. (SIS), alleging multiple causes of action related to her employment. After SIS moved to compel arbitration, the parties agreed to arbitrate, and the trial court ordered the claims to arbitration and stayed the court action. SIS paid two arbitration fee invoices but failed to pay the third invoice within the 30-day period required by California Code of Civil Procedure section 1281.98. Colon-Perez elected to withdraw from arbitration and moved to vacate the arbitration and stay order. The trial court granted the motion, ruling that SIS had materially breached the arbitration agreement and Colon-Perez was entitled to proceed with her claims in court. SIS then moved to vacate the order under section 473(b), which the trial court denied.The trial court ruled that the Federal Arbitration Act (FAA) did not preempt section 1281.98 and that SIS had materially breached the arbitration agreement by failing to pay the fees on time. The court also found that section 1281.98 did not violate the contracts clause of the United States and California Constitutions. SIS appealed, arguing that the FAA preempted section 1281.98, that section 1281.98 violated the contracts clause, and that it was entitled to relief under section 473(b).The California Court of Appeal, First Appellate District, Division One, affirmed the trial court's orders. The court held that the FAA did not preempt section 1281.98, as the state law could be applied concurrently with federal law. The court also found that section 1281.98 did not violate the contracts clause because it served a significant and legitimate public purpose and was appropriately tailored to achieve that purpose. Additionally, the court ruled that section 473(b) relief was not available for SIS's failure to timely pay arbitration fees, as the statute's strict 30-day deadline was intended to be inflexible. View "Colon-Perez v. Security Industry Specialists" on Justia Law

Bonnie Campbell, a federal employee, and Michael Campbell, her ex-husband, entered into a divorce property settlement agreement in which Mr. Campbell waived his rights to Ms. Campbell's Thrift Savings Plan (TSP) account. Despite this agreement, Ms. Campbell did not remove Mr. Campbell as the beneficiary of her TSP account before her death. After her death, Mr. Campbell received the balance of the TSP account. The estate of Ms. Campbell (the Estate) sued Mr. Campbell for breach of contract to enforce the terms of the divorce settlement agreement.The Circuit Court for Montgomery County granted summary judgment in favor of the Estate on its breach of contract claim, awarding money damages. The court rejected Mr. Campbell's argument that the Federal Employees’ Retirement System Act of 1986 (FERSA) preempted the Estate's claim. The Appellate Court of Maryland reversed, holding that FERSA preempted the Estate's breach of contract claim.The Supreme Court of Maryland reviewed the case and held that FERSA does not preempt the Estate’s post-distribution breach of contract action. The court found that FERSA’s purposes, which include establishing a federal employee retirement plan and ensuring it is fully funded and financially sound, do not concern plan beneficiaries. The court also noted that FERSA’s provisions elevate the requirements of a qualifying state property settlement agreement over a deceased participant’s designated beneficiary, provided notice is given before payment. The court concluded that a post-distribution suit to enforce contractual obligations in a divorce property settlement agreement does not hinder any governmental interest in administrative convenience or avoiding double payment. The judgment of the Appellate Court was reversed, and the Circuit Court's judgment was affirmed. View "In re Isely" on Justia Law

Michael Jones purchased Series EE federal savings bonds during his marriage to Jeanine Jones, designating her as the pay-on-death beneficiary. Upon their divorce, their divorce settlement agreement (DSA) did not specifically address the savings bonds but included a provision that any marital asset not listed would belong to the party currently in possession. The DSA also required Michael to pay Jeanine $200,000 in installments. After Michael's death, Jeanine redeemed the savings bonds and filed a creditor’s claim against Michael’s Estate for the remaining $100,000 owed under the DSA. The Estate argued that the redemption of the savings bonds satisfied Michael’s financial obligations to Jeanine.The trial court agreed with the Estate, ruling that the savings bonds counted towards Michael’s $200,000 obligation under the DSA and dismissed Jeanine’s claim for reimbursement. Jeanine appealed, and the Appellate Division reversed the trial court’s decision. The appellate court held that the federal regulations governing U.S. savings bonds preempted state law, and Jeanine was the sole owner of the bonds at Michael’s death. Therefore, the value of the redeemed bonds should not be credited towards the Estate’s obligations under the DSA.The Supreme Court of New Jersey reviewed the case and held that preemption was not an issue because N.J.S.A. 3B:3-14 does not conflict with federal regulations governing U.S. savings bonds. The Court found that the DSA did not direct the disposition of the savings bonds, and thus, the bonds should not be credited against Michael’s $200,000 obligation. The Court affirmed the Appellate Division’s judgment as modified, ruling that the Estate must make the remaining payments to Jeanine as required by the DSA. View "In the Matter of the Estate of Jones" on Justia Law

Kevin Lavery, an ophthalmologist, invented a vision screening device and patented it. He entered into an agreement with Pursuant Health, a company developing vision screening kiosks, to transfer his patent in exchange for royalties on the sales of these kiosks. Lavery's patent expired in May 2021, and Pursuant Health ceased paying royalties. Lavery sued Pursuant Health, seeking a declaration that the royalty payments should continue indefinitely, damages for breach of the Contribution Agreement, and damages for unjust enrichment.The United States District Court for the Eastern District of Michigan granted summary judgment in favor of Pursuant Health, ruling that the expiration of Lavery's patent rendered the royalty agreement unenforceable. Lavery appealed the decision, challenging the grant of summary judgment on his breach of contract claim.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that the royalty provision in the Contribution Agreement was unenforceable after the expiration of Lavery's patent. The court found that the agreement did not specify any non-patent contributions that would justify continuing the royalty payments beyond the patent's expiration. The court also noted that the royalty was based on the sales of kiosks that incorporated Lavery's patent, and thus, the royalty provision improperly extended beyond the patent's 20-year term. Consequently, the Sixth Circuit affirmed the district court's decision to grant summary judgment in favor of Pursuant Health. View "Lavery v. Pursuant Health, Inc." on Justia Law

Northstar Center, LLC entered into a real estate contract with Lukenbill Family Partnership, LLLP to purchase a 120-acre parcel of land. The contract was later assigned to Northstar by Templeton Enterprises, LLC. The agreement included an option to purchase an additional 105-acre parcel, which was amended to a commitment to purchase. Northstar provided a promissory note for a tax increase payment due by January 1, 2014, but paid it late. Lukenbill sold the disputed property to Tundra Properties, LLC, leading Northstar to sue for breach of contract and intentional interference with contract.The District Court of Williams County granted summary judgment in favor of Northstar on its breach of contract claim against Lukenbill and its intentional interference with contract claim against Tundra. The court also granted summary judgment in favor of Lukenbill on its indemnification claim against Tundra and dismissed Tundra’s breach of warranty claim against Lukenbill. The court held a bench trial on Northstar’s damages due to Lukenbill’s breach.The North Dakota Supreme Court reviewed the case and found that the district court erred in granting summary judgment for Northstar on its breach of contract and intentional interference claims. The Supreme Court determined that genuine issues of material fact existed regarding whether Northstar breached the contract by failing to make the tax increase payment on time and whether Tundra had knowledge of the contract amendments. The court also found that the district court improperly resolved factual disputes regarding Tundra’s knowledge and intent, and whether Tundra acted without justification.The Supreme Court affirmed the dismissal of Tundra’s breach of warranty claim but reversed the summary judgments on Northstar’s breach of contract and intentional interference claims, as well as Lukenbill’s indemnification claim. The case was remanded for further proceedings consistent with the Supreme Court’s opinion. View "Northstar Center v. Lukenbill Family Partnership" on Justia Law

CEZ Prior, LLC ("CEZ") entered into a purchase agreement with 755 N Prior Ave., LLC ("Prior") to buy a property for $26 million. The agreement required Prior to cooperate in obtaining tenant estoppel certificates. Errors in square footage measurements led to rent discrepancies, prompting an amendment to reduce the purchase price to $15.1 million and the cash required at closing to $3.8 million. CEZ later requested to delay closing due to financial issues, but Prior did not agree. Prior sent estoppel certificates that did not address rate increases, and CEZ proposed edits that Prior rejected. CEZ demanded satisfactory certificates on the closing date, but Prior terminated the agreement, alleging CEZ failed to tender cash.CEZ sued Prior for breach of contract in Minnesota state court and sought to enjoin the termination. Prior removed the case to federal court and counterclaimed for breach of contract. The district court stayed the matter and later denied CEZ's motion for a preliminary injunction.The United States Court of Appeals for the Eighth Circuit reviewed the district court's denial of the preliminary injunction. The court found that CEZ was unlikely to succeed on the merits of its breach of contract claim, as Prior had reasonably cooperated in obtaining the estoppel certificates. The balance of harms favored Prior, given CEZ's insufficient evidence of its ability to pay. The public interest did not favor CEZ due to its low probability of success on the merits.The court also addressed CEZ's argument under Minnesota law, finding that the district court's stay order was not an injunction and did not extend statutory deadlines. Consequently, CEZ was not entitled to additional time to close under Minnesota statutes. The Eighth Circuit affirmed the district court's judgment. View "CEZ Prior, LLC v. 755 N Prior Ave. LLC" on Justia Law

Isaac Industries, a Florida corporation, contracted with Bariven, a Venezuelan oil company, for the sale of chemicals. After Isaac shipped the products, Bariven failed to pay. Later, Petroquímica de Venezuela (Pequiven) assumed Bariven’s debt and negotiated an extended payment period but only made the first payment. Isaac sued both companies for breach of contract.The United States District Court for the Southern District of Florida initially dealt with objections about service of process and sovereign immunity. A magistrate judge concluded that effective service occurred but recommended denying Isaac’s motion for default and ordering it to amend its complaint. The oil companies did not object and answered the amended complaint. When Isaac moved for summary judgment, the oil companies argued that no valid contracts existed and that sovereign immunity shielded Pequiven. The district court granted summary judgment for Isaac, ruling that Pequiven waived sovereign immunity by not raising it in its answer and that the commercial-activity exception applied. The court also found that the undisputed facts established that Pequiven and Bariven breached their contracts with Isaac.The United States Court of Appeals for the Eleventh Circuit reviewed the case. It held that the oil companies waived their challenge to personal jurisdiction by not objecting to the magistrate judge’s report and by omitting any reference to service of process in their answers. The court also held that Pequiven waived sovereign immunity by failing to raise it in its answer or motion to dismiss the amended complaint. The court affirmed the district court’s summary judgment, finding no genuine issue of fact that Pequiven and Bariven breached their contracts. The court also ruled that the district court did not abuse its discretion in denying the oil companies’ Rule 56(d) motion to defer ruling on the summary judgment. The judgments in favor of Isaac were affirmed. View "Isaac Industries, Inc. v. Bariven S.A." on Justia Law

Phillip and Sara Alig, along with Daniel and Roxanne Shea, filed a class action lawsuit against Quicken Loans, Inc. (now Rocket Mortgage, LLC) and Title Source, Inc. (now Amrock, Inc.). They alleged that during the refinancing of their home mortgage loans, they paid for appraisals that were not independent because the defendants had provided appraisers with the homeowners' estimates of their homes' value. They claimed this made the appraisals worthless and asserted statutory, breach of contract, and conspiracy claims.The United States District Court for the Northern District of West Virginia certified a class of West Virginia citizens who refinanced mortgage loans with Quicken and received appraisals that included an estimate of the property's value. The court granted summary judgment to the plaintiffs, awarding over $10.6 million in damages. The court found that the plaintiffs had established a conspiracy between the defendants.The United States Court of Appeals for the Fourth Circuit affirmed the class certification and summary judgment on the statutory and conspiracy claims but vacated and remanded the breach of contract claim. The Supreme Court vacated the Fourth Circuit's judgment and remanded the case for reconsideration in light of TransUnion LLC v. Ramirez, which emphasized that every class member must have Article III standing to recover damages.On remand, the district court reinstated its original judgment, stating that TransUnion did not affect the class's standing. However, the Fourth Circuit concluded that the plaintiffs failed to establish that class members suffered concrete harm from the defendants' actions. The court reversed the district court's judgment certifying the class and awarding damages, affirming the judgment on the named plaintiffs' statutory and conspiracy claims, and vacating the judgment on the breach of contract claim, remanding it for further proceedings. View "Alig v. Rocket Mortgage, LLC" on Justia Law

Freedom Vans LLC, a company that converts and customizes vans into mobile houses, hired Jeremy David and Mark Springer. David, a self-taught carpenter, was hired in 2019 and later promoted to foundations manager. Springer, an automotive and maritime mechanic, was hired in 2020 as an electrician. Both employees earned less than twice the minimum wage and signed a noncompete agreement prohibiting them from engaging in any business that competed with Freedom Vans. They claimed they declined additional work offers due to fear of termination and legal action. They stopped working for Freedom Vans in 2021.David and Springer filed a class action lawsuit in 2022, alleging the noncompete agreement violated chapter 49.62 RCW, which regulates noncompete clauses in employment contracts. They sought damages and injunctive and declaratory relief. The superior court granted summary judgment to Freedom Vans, reasoning that RCW 49.62 does not restrict an employer’s right to require employee loyalty and avoidance of conflicts of interest. The court denied Freedom Vans' request for attorney fees. Both parties appealed.The Washington Supreme Court reviewed the case. The court held that noncompete agreements for employees earning less than twice the minimum wage must be reasonable and narrowly construed in light of the legislature’s intent to protect low wage workers and promote workforce mobility. The court reversed the Court of Appeals' decision, concluding that prohibiting employees from providing any kind of assistance to competitors exceeds a narrow construction of the duty of loyalty. The case was remanded to the superior court to determine the reasonableness of the noncompete agreement and assess damages and attorney fees. View "Springer v. Freedom Vans LLC" on Justia Law