Justia Contracts Opinion Summaries

Allan Gumarang entered into a lease agreement with Braemer on Raymond, LLC (Lessor) to operate an ice cream parlor. The lease included provisions requiring the Lessor to maintain the property and for Gumarang to obtain liability insurance and indemnify the Lessor against claims arising from his use of the property. In October 2017, a fire destroyed the property, and Gumarang alleged that the Lessor and its management (Management) failed to ensure the property had adequate fire prevention systems.Gumarang filed a lawsuit against the Lessor and Management for breach of contract, negligence, and other claims. In response, the Lessor and Management demanded that Gumarang defend and indemnify them under the lease terms. When Gumarang refused, they filed a cross-complaint for indemnity and breach of contract. Gumarang filed an anti-SLAPP motion to strike the cross-complaint, arguing it arose from his protected activity of filing the lawsuit.The Superior Court of Los Angeles County granted Gumarang’s anti-SLAPP motion in part, striking the cross-claims for comparative indemnity and equitable indemnity but denied it for the contractual indemnity and breach of contract claims. The court found that the latter claims did not arise from protected activity and that the indemnity provision in the lease was enforceable. The court also denied Gumarang’s request for attorney fees, finding he did not achieve a practical benefit from the partial success of his anti-SLAPP motion.The California Court of Appeal, Second Appellate District, affirmed the lower court’s decisions. The appellate court agreed that the cross-claims for contractual indemnity and breach of contract did not arise from Gumarang’s protected activity of filing the lawsuit but from his alleged breach of the lease’s indemnity provision. The court also upheld the denial of attorney fees, concluding that Gumarang did not obtain a significant practical benefit from the partial success of his anti-SLAPP motion. View "Gumarang v. Braemer on Raymond, LLC" on Justia Law

A certified class of Ohio landowners alleged that a Colorado-based mining company, Antero Resources Corporation, underpaid them $10 million in natural gas royalties. The landowners claimed that Antero improperly deducted costs for processing and fractionation from their royalties. Antero counterclaimed, seeking authority to deduct additional costs related to gathering, dehydrating, compressing, and transporting the unrefined natural gas. The district court certified the class, denied Antero's motion for summary judgment, granted the landowners' motion, and entered a final judgment after the parties stipulated damages.The United States District Court for the Southern District of Ohio ruled in favor of the landowners, finding that Antero improperly deducted processing and fractionation costs from the royalties. The court determined that these costs were necessary to transform the gas into marketable form and thus could not be deducted under the lease agreement.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The court held that Antero could not deduct the costs of processing and fractionation from the landowners' royalties. The court found that the lease agreement's Market Enhancement Clause allowed deductions only for costs that enhanced the value of already marketable products, not for costs required to make the products marketable. The court concluded that the gas products first became marketable after processing and fractionation, and thus, these costs were not deductible. The court also noted that the Fourth Circuit had reached a similar conclusion in a related case involving the same defendant and lease terms. View "The Grissoms, LLC v. Antero Resources Corp." on Justia Law

Badlia Brothers, LLC, a check-cashing business, cashed 15 checks issued by the State of Maryland. These checks had already been paid by the State before Badlia presented them for payment. Some checks were deposited using a mobile app, creating "substitute checks," and then fraudulently or negligently presented to Badlia. Others were reported lost or stolen, leading the State to issue stop payment orders and replacement checks, which were then cashed by the original payees with Badlia. Badlia, unaware of the prior payments, presented the checks for payment, which the State refused.Badlia filed complaints in the District Court of Maryland, claiming the right to enforce the checks as a holder in due course. The court consolidated the cases, ruled that the State enjoyed qualified immunity, and dismissed the cases. The Circuit Court for Baltimore City reversed, holding that a check is a contract, and thus, the State had waived sovereign immunity. On remand, the District Court found that Badlia was a holder in due course entitled to enforce the checks. The Circuit Court affirmed, and the State petitioned for certiorari.The Supreme Court of Maryland held that the State has waived sovereign immunity for claims by a holder in due course seeking payment on an authorized State-issued check. The court affirmed the decision of the Circuit Court for Baltimore City, concluding that a check is a formal contract and that the State's waiver of sovereign immunity under § 12-201(a) of the State Government Article applies to such contracts. View "Comptroller of Md. v. Badlia Bros." on Justia Law

Three West Virginia residents, dissatisfied with their cable and internet service provided by Suddenlink, sued Cebridge Acquisition, LLC, Cequel III Communications I, LLC, Cequel III Communications II, LLC, and Altice USA, Inc. They alleged that Suddenlink failed to provide reliable services and sought damages for negligence, unjust enrichment, and breach of contract. Suddenlink moved to compel arbitration based on the arbitration agreement in its 2021 Residential Services Agreement (RSA). The district court denied the motions, concluding that a 2017 arbitration agreement controlled, was unconscionable, and could not be enforced.The United States District Court for the Southern District of West Virginia found the 2017 arbitration agreement procedurally and substantively unconscionable, citing the unequal bargaining power between the parties, the adhesive nature of the contract, and the complexity of the terms. The court also noted that the 2017 agreement lacked an opt-out provision and included terms that were overly harsh and lacked mutuality. Consequently, the district court denied Suddenlink’s motions to compel arbitration in all three cases.The United States Court of Appeals for the Fourth Circuit reviewed the case and determined that the 2021 arbitration agreement, not the 2017 version, governed the disputes. The court found that the 2021 agreement was valid and enforceable, as it satisfied all elements of contract formation, including mutual assent and valuable consideration. The court also concluded that the 2021 arbitration agreement was not procedurally or substantively unconscionable. The court reversed the district court’s judgments and remanded the cases with instructions to compel arbitration. View "Meadows v. Cebridge Acquisition, LLC" on Justia Law

The case involves a dispute between several plaintiffs, who are independent distributors for Nu Skin Enterprises Inc., and the defendants, which include Nu Skin and its affiliates. The plaintiffs allege that Nu Skin operates an unlawful pyramid scheme, making it difficult for distributors to profit from product sales alone, and instead requiring them to recruit new distributors to earn money. The plaintiffs filed a lawsuit in Spokane County Superior Court, asserting claims under various state and federal laws.In the lower courts, Nu Skin filed a motion to dismiss the case for improper venue based on a forum-selection clause in the parties' contract, which designated Utah as the exclusive forum for dispute resolution. The Spokane County Superior Court denied Nu Skin's motion, ruling that the case did not fall within the contractual definition of a "Dispute" and that Spokane County was a proper venue. Nu Skin sought reconsideration, which was also denied, and then moved for discretionary review.The Washington Supreme Court reviewed the case and addressed whether CR 12(b)(3) is the correct procedural mechanism to enforce a contractual forum-selection clause designating a non-Washington forum. The court held that CR 12(b)(3) is not the appropriate procedure for such enforcement. The court reasoned that the plain language of CR 12(b)(3) authorizes dismissal only when venue is "improper" according to Washington's venue statutes and court rules, which do not account for contractual forum-selection clauses. Therefore, a forum-selection clause cannot render a statutorily authorized venue "improper" under CR 12(b)(3). The court affirmed the denial of Nu Skin's motion to dismiss and remanded the case to the superior court for further proceedings consistent with its opinion. View "Raab v. Nu Skin Enters., Inc." on Justia Law

In 2023, Basin Authority, a Wyoming Child Support Agency, notified Rodolfo P. Munoz that he was in arrears on his child support obligation and began garnishing his social security. Mr. Munoz filed a complaint against the State of Wyoming, the Wyoming Department of Family Services (DFS), and some of its employees, as well as Basin Authority and several of its employees. He alleged breach of contract and violations of due process under 42 U.S.C. § 1983. The district court dismissed Mr. Munoz’s complaint after a hearing.The district court of Big Horn County granted the motions to dismiss filed by the State Defendants and the Basin Authority Defendants. The court found that Mr. Munoz had not made allegations against the State Defendants and that they were not subject to suit under § 1983 because they are not “persons” within the meaning of the statute. The court also found that a breach of contract claim is not actionable under § 1983 and that the alleged agreement was void and unenforceable. Mr. Munoz’s objection and response to the State Defendants’ proposed order on the motion to dismiss and his motion for reconsideration were denied.The Supreme Court of Wyoming reviewed the case and summarily affirmed the district court’s decision. The court noted that Mr. Munoz failed to comply with the Wyoming Rules of Appellate Procedure and did not present cogent arguments supported by pertinent authority. The court emphasized that even pro se litigants must adhere to procedural rules and present coherent arguments. The court concluded that summary affirmance was appropriate due to the deficiencies in Mr. Munoz’s brief and his failure to present relevant legal arguments. View "Munoz v. State of Wyoming" on Justia Law

Ellen Williams purchased a residential property in Houma, Louisiana, which was mortgaged by Flagstar Bank. Since Williams did not insure the home, Flagstar obtained a lender-placed hazard insurance policy from Integon National Insurance Company at Williams's expense. The policy named Flagstar as the "Insured" and Williams as the "Borrower." Williams paid all premiums and complied with all policy requirements. The policy included a provision stating that if the loss amount exceeded Flagstar's insurable interest, Integon would pay Williams any residual amount due for the loss, not exceeding the policy limit.In August 2021, Williams's home was damaged by Hurricane Ida. Although Integon inspected the property and exchanged repair estimates with Williams, it ultimately refused to pay for the full property repairs. Williams sued Integon in the 32nd Judicial District Court for the Parish of Terrebonne, asserting breach-of-contract and bad-faith claims under Louisiana law. Integon removed the case to the United States District Court for the Eastern District of Louisiana and filed a Rule 12(b)(6) motion to dismiss, arguing that Williams lacked standing to sue under the policy. The district court agreed with Integon, ruling that Williams was not a named insured, additional insured, or third-party beneficiary, and dismissed the case without allowing Williams to amend her complaint.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court found that the policy's loss payment provision clearly manifested an intent to benefit Williams, provided a certain benefit when the loss amount exceeded Flagstar's insurable interest, and that this benefit was not merely incidental. The court held that Williams might be able to plead plausible facts supporting her status as a third-party beneficiary. Consequently, the Fifth Circuit reversed the district court's decision and remanded the case with instructions to allow Williams to amend her complaint. View "Williams v. Integon National Insurance" on Justia Law

Judith Clinton filed a complaint in the Superior Court for Washington County against Chad Babcock, Lisa Nelson, Regina Foster Bartlett, and Caryn Sullivan, alleging defamation and other misconduct that caused her reputational damage, emotional distress, and monetary losses. Clinton later amended her complaint to include Maria DiMaggio and Toastmasters International, adding a breach of contract claim against the latter. The Superior Court allowed Clinton to file a second amended complaint but denied her third and fourth motions to amend.The Superior Court granted the defendants' motion to enforce a dismissal stipulation and vacated a scheduling order. Clinton, who had been representing herself after unsuccessful attempts to secure new counsel, signed a Stipulated Agreement of Dismissal with all defendants, which was filed on December 13, 2022. Subsequently, the defendants filed a Stipulation of Dismissal on December 27, 2022, without notifying Clinton, who then alleged fraudulent conduct. The trial justice initially vacated the Stipulated Agreement of Dismissal and scheduled a trial date but later reconsidered this decision.The Rhode Island Supreme Court reviewed the case and affirmed the Superior Court's order. The Supreme Court held that the trial justice properly reinstated the Stipulated Agreement of Dismissal, noting that the agreement was binding and could not be set aside without the consent of all parties, absent extraordinary circumstances such as fraud or mutual mistake. The court found no evidence of duress or other factors that would justify vacating the agreement. The Supreme Court also upheld the trial justice's decision to treat the defendants' motions as motions to reconsider, given the lack of proper notice to the defendants at the initial hearing. View "Clinton v. Babcock" on Justia Law

Francisco Rosario filed a class action lawsuit against Nationstar Mortgage, LLC (Mr. Cooper) and The Bank of New York Mellon (BNYM), alleging that they collected illegal and unlicensed third-party loan servicing fees on his mortgage. Rosario claimed that these fees were prohibited by the mortgage contract and Rhode Island law. He sought to represent all similarly situated individuals who were charged these fees.The Superior Court granted the defendants' motion to dismiss the complaint. The court found that Rosario's claims were based on a statute that did not provide a private right of action for borrowers to recoup fees collected by unlicensed loan servicers. Rosario appealed the decision, arguing that the defendants breached the mortgage contract by charging fees in violation of Rhode Island law and that the statute should be interpreted broadly to include loan servicing activities.The Rhode Island Supreme Court reviewed the case and affirmed the Superior Court's decision. The court held that the statute in question, G.L. 1956 § 19-14.11-1, did not provide a private right of action for borrowers to recover fees collected by unlicensed loan servicers. The court also found that the statute's exception for unlicensed transactions involving lending or loan brokering did not apply to loan servicing activities. Therefore, the court concluded that Rosario's breach of contract claim could not be sustained based on the alleged statutory violations. The order of the Superior Court was affirmed. View "Rosario v. Nationstar Mortgage, LLC" on Justia Law

Cedar Hills Investment Co., L.L.C. leased part of the ground under the Battlefield Mall in Springfield, Missouri, to Battlefield Mall LLC. Cedar Hills suspected that Battlefield was improperly deducting certain costs from revenue-sharing payments owed under the lease. Cedar Hills sued Battlefield, and the district court found that Battlefield had improperly deducted capital expenditures and some administrative costs from shared revenue. The court approved the deduction of security costs and other administrative costs but held that Battlefield failed to state charges to subtenants for deducted costs separately as required by the lease. Cedar Hills was awarded approximately $3.5 million in damages.The United States District Court for the Western District of Missouri held a bench trial and ruled in favor of Cedar Hills on several points, including the improper deduction of capital expenditures and the failure to separately state charges. However, the court also found that Battlefield's deduction of security costs was permissible.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's findings regarding the improper deduction of capital expenditures and the failure to separately state charges. However, the appellate court found that the district court misidentified which administrative costs were deductible and miscalculated Cedar Hills's damages. The Eighth Circuit held that Battlefield's deduction of capital expenditures breached the lease, and the failure to separately state charges also breached the lease. The court affirmed the district court's finding that security costs were common area maintenance costs. The case was remanded for further proceedings to correctly identify deductible administrative costs and recalculate damages. The appellate court granted the parties' joint motion to supplement the record. View "Cedar Hills Investment Co. v. Battlefield Mall, LLC" on Justia Law