Justia Contracts Opinion Summaries
Articles Posted in Contracts
SCHRADER CELLARS, LLC V. ROACH
A Texas attorney, Robert M. Roach, claimed to have an oral agreement with Fred Schrader, the former owner of Schrader Cellars, LLC, regarding the creation of another company, RBS LLC, which Roach asserted had an ownership interest in Schrader Cellars. After Fred Schrader sold Schrader Cellars to Constellation Brands, Roach sued Fred and Constellation in Texas state court, claiming the sale was improper. Schrader Cellars then filed the current action, seeking declaratory relief that Roach had no ownership interest in Schrader Cellars, and Roach counterclaimed.The United States District Court for the Northern District of California granted summary judgment in favor of Schrader Cellars on its claim for declaratory relief and dismissed Roach’s counterclaims. The court concluded that the oral agreement violated California Rule of Professional Responsibility 3-300 and that Roach did not rebut the presumption of undue influence. The case proceeded to trial on Schrader Cellars’s claim for breach of fiduciary duty, where the jury found that Roach’s breach caused harm but did not award damages due to the litigation privilege defense.The United States Court of Appeals for the Ninth Circuit reversed the district court’s summary judgment in favor of Schrader Cellars on its claim for declaratory relief and Roach’s counterclaims, finding triable issues of fact regarding whether Roach rebutted the presumption of undue influence. The appellate court also held that the district court erred in concluding and instructing the jury that Roach breached his fiduciary duties. However, the Ninth Circuit affirmed the district court’s judgment after trial, concluding that the erroneous jury instruction had no effect on the outcome because the jury found that the gravamen of the breach of fiduciary duty claim was based on Roach’s filing of the Texas lawsuit, which was barred by the California litigation privilege. View "SCHRADER CELLARS, LLC V. ROACH" on Justia Law
First Baptist Church v. Zurich American Insurance Co.
First Baptist Church, located in Fort Smith, Arkansas, had property insurance policies with Zurich American Insurance Company. The church experienced leaks over the years and hired roofing companies to repair portions of its roofing system in 2016, 2017, and 2018. In 2022, a roofing company representative determined the roofing system had hail damage, and First Baptist filed a claim with Zurich, alleging the damage occurred on April 28, 2017. Zurich denied the claim, citing no damage from the alleged hail event and evidence of excluded causes such as wear and tear. First Baptist sued Zurich for breach of contract and insurance bad faith.The United States District Court for the Western District of Arkansas granted summary judgment in favor of Zurich, concluding that First Baptist failed to comply with the prompt notice provision in the insurance policy. The court based its decision on evidence first discussed in Zurich’s reply brief, which indicated that First Baptist knew of past loss or damage to its property as early as 2016. The court held that no reasonable jury could find that First Baptist promptly notified Zurich of the loss or damage nearly six years later in January 2022. First Baptist filed a motion to reconsider, which the district court denied.The United States Court of Appeals for the Eighth Circuit reviewed the case and concluded that there were potential genuine disputes of material fact not properly litigated. The court noted that First Baptist did not have a fair opportunity to counter Zurich’s evidence and arguments about past leaks and repairs. The court reversed the district court’s grant of summary judgment and remanded the case for further consideration of the issues related to past loss or damage and the effect on First Baptist’s claims. The court also reversed and remanded the grant of summary judgment on First Baptist’s bad faith claim. View "First Baptist Church v. Zurich American Insurance Co." on Justia Law
Pitts v. Rivas
Rudolph Rivas, a home builder and real estate developer, engaged the accounting firm Pitts & Pitts, operated by Brandon and Linda Pitts, for various accounting services from 2007 to 2017. The services included preparing quarterly financial statement compilations and tax returns. In 2016, errors were discovered in the financial statements prepared by the Accountants, leading to financial difficulties for Rivas, including overpayment of taxes and loss of credit, which allegedly forced his business into bankruptcy. Rivas sued the Accountants in August 2020, claiming negligence, fraud, breach of fiduciary duty, and breach of contract.The district court granted summary judgment for the Accountants on all claims. The Court of Appeals for the Fifth District of Texas affirmed the summary judgment on the negligence and breach of contract claims but reversed it on the fraud and breach of fiduciary duty claims, holding that these claims were not barred by the anti-fracturing rule and had sufficient evidence to survive summary judgment.The Supreme Court of Texas reviewed the case and held that the anti-fracturing rule barred Rivas's fraud claim because the gravamen of the claim was professional negligence. The Court also held that no fiduciary duty existed as a matter of law under the undisputed facts, thus the breach of fiduciary duty claim failed. Consequently, the Supreme Court of Texas reversed the judgment of the court of appeals and rendered judgment for the defendants on all claims. View "Pitts v. Rivas" on Justia Law
Shehyn v. Ventura County Public Works Agency
The plaintiff, Steve Shehyn, owns a 20-acre avocado orchard in Moorpark, California. He alleged that sediment from the Ventura County Public Works Agency and Ventura County Waterworks District No. 1's (collectively, the District) water delivery system permanently damaged his irrigation pipes and orchard. The plaintiff claimed that the sediment was a direct result of the District's water supply facilities' plan, design, maintenance, and operation.The trial court sustained the District's demurrer to the plaintiff's first amended complaint, which included causes of action for breach of contract, negligence, and inverse condemnation. The court allowed the plaintiff to amend the breach of contract and negligence claims but sustained the demurrer without leave to amend for the inverse condemnation claim, citing that the plaintiff "invited" the District's water onto his property. The plaintiff filed a second amended complaint, maintaining the inverse condemnation claim unchanged and indicating his intent to seek a writ of mandamus. The trial court entered judgment for the District after the plaintiff voluntarily dismissed his contract and negligence claims without prejudice.The California Court of Appeal, Second Appellate District, Division Six, reviewed the case de novo. The court concluded that the plaintiff sufficiently pleaded his claim for inverse condemnation. The court found that the plaintiff's allegations that the District's water delivery system delivered a disproportionate amount of sediment to his property, causing damage, supported a claim for inverse condemnation. The court disagreed with the trial court's reliance on Williams v. Moulton Niguel Water Dist., stating that the issue of whether the plaintiff "invited" the water goes to the merits of the claim, not its viability at the pleading stage. The appellate court reversed the judgment and remanded the case with instructions to enter a new order overruling the demurrer. View "Shehyn v. Ventura County Public Works Agency" on Justia Law
CB1 v. Hove
Katelyn Hove was hospitalized in 2018 for pregnancy complications, and the Billings Clinic billed Blue Cross Blue Shield (BCBS) of Montana for her services. BCBS of Montana indicated that BCBS of Texas was her insurance provider. BCBS of Texas paid part of the bill, leaving a balance that Hove did not pay. The clinic assigned the unpaid debt to CB1, a debt-collection agency, which then sued the Hoves for breach of contract, breach of obligation, and unjust enrichment. The Hoves named BCBS of Montana as a third-party defendant. CB1 moved for summary judgment, supported by affidavits from the clinic. Hove responded with a written declaration disputing the charges, including an EOB from BCBS of Texas and an email from the Montana Commissioner of Securities and Insurance.The Thirteenth Judicial District Court, Yellowstone County, granted summary judgment in favor of CB1, reasoning that Hove's declaration and attached EOB were unverified and inadmissible. The court entered a final monetary judgment against the Hoves. The Hoves filed a motion to amend the judgment, attaching a sworn affidavit with the same information as the declaration. The District Court denied the motion, stating that the declaration and its attachments were inadmissible hearsay and that the declaration did not meet the statutory criteria under § 1-6-105, MCA.The Supreme Court of the State of Montana reviewed the case and found that a declaration under § 1-6-105, MCA, is equivalent to an affidavit. The court determined that Hove's declaration, which stated she never spent time in the ICU despite being billed for it, raised a genuine issue of material fact. The court reversed the District Court's summary judgment and remanded the case for trial on the merits. View "CB1 v. Hove" on Justia Law
American Bankers Insurance Co. of Florida v. Pickett
Francine Pickett sued American Bankers Insurance Company of Florida, American Modern Property and Casualty Insurance Company, Davison Insurance Agency, and various fictitiously named defendants. Pickett alleged that she sought to replace her existing mobile home insurance policy with American Bankers for a lower premium through Davison. She claimed that Davison advised her to purchase a policy from American Modern, which she did. However, American Bankers canceled her previous policy for nonpayment without her knowledge. When her mobile home was damaged by fire, American Modern refused to pay the claim, alleging fraud due to non-disclosure of the previous policy's cancellation. Pickett alleged bad faith, breach of contract, negligent procurement of insurance, civil conspiracy, and negligence against the defendants.The Wilcox Circuit Court denied American Bankers' motion to compel arbitration and stay litigation. American Bankers argued that Pickett had agreed to arbitration through a binder and previous insurance applications. The trial court found that Pickett never received a policy or arbitration agreement in 2022 and thus could not have accepted or rejected the arbitration clause. The court also found that previous policies or arbitration agreements were irrelevant to the current matter.The Supreme Court of Alabama reviewed the case and reversed the trial court's decision. The court held that the binder, which included an arbitration agreement, was a contract that Pickett relied upon for her claims. Therefore, she could not seek the benefits of the binder while avoiding its arbitration provision. The court concluded that Pickett's claims against American Bankers arose from and relied on the binder, making her bound by its terms, including the arbitration agreement. The case was remanded for further proceedings consistent with this opinion. View "American Bankers Insurance Co. of Florida v. Pickett" on Justia Law
Whittier v. Ocwen Loan Servicing
Charles and Yvette Whittier sued Ocwen Loan Servicing, Deutsche Bank National Trust Company, Merscorp, and Mortgage Electronic Registration System to prevent the foreclosure of their home mortgage loan. The parties reached a settlement and notified the district court, which issued an interim order of dismissal pending final documentation. The parties then filed a Joint Stipulation to Dismiss Action under Rule 41(a)(1)(A)(ii) and a proposed Order of Dismissal With Prejudice, which stated that the court would retain jurisdiction to enforce the settlement agreement. However, the court's dismissal order did not explicitly retain jurisdiction or incorporate the settlement terms.The Whittiers later filed a motion to enforce the settlement agreement and sought attorneys' fees. The defendants argued that the court lacked ancillary jurisdiction to enforce the agreement. A magistrate judge recommended enjoining foreclosure proceedings, and the district judge adopted this recommendation, issuing an injunction in April 2020. Over two years later, PHH and Deutsche Bank moved to reopen the case and dissolve the injunction, claiming the Whittiers were in default. A different magistrate judge found that the court lacked ancillary jurisdiction to enforce the settlement and recommended dissolving the injunction. The district judge agreed, dissolved the injunction, and dismissed the suit with prejudice in May 2024, explicitly declining jurisdiction over the settlement agreement.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo. The court held that the district court lacked ancillary jurisdiction to enforce the settlement agreement because the dismissal order did not expressly retain jurisdiction or incorporate the settlement terms. The court affirmed the district court's decision to dissolve the injunction and dismiss the case with prejudice. View "Whittier v. Ocwen Loan Servicing" on Justia Law
Discovery Global Opportunity Master Fund LTD & Discovery Global Beacon Partners LP v. Hertz Global Holdings Inc.
Plaintiffs, Discovery Global Opportunity Master Fund, Ltd. and Discovery Global Beacon Partners, LP, filed a breach of contract action against Hertz Global Holdings, Inc. The dispute centers around a warrant agreement, which plaintiffs allege was breached when Hertz engaged in transactions they claim constitute a "Reorganization Event" under the agreement. Plaintiffs sought declaratory relief, monetary damages, and specific performance for Hertz's failure to honor the agreement.The case was initially filed in the Chancery Court of the State of Delaware. Hertz responded by filing a motion to dismiss the complaint, arguing that the transactions in question did not constitute a Reorganization Event as defined in the warrant agreement. Plaintiffs opposed the motion, maintaining that the transactions did trigger the provisions of the agreement requiring redemption of the warrants.The Delaware Court of Chancery reviewed the case and granted Hertz's motion to dismiss. The court found that the transactions cited by the plaintiffs did not meet the definition of a Reorganization Event under the warrant agreement. Specifically, the court held that for a Reorganization Event to occur, the common stock must be converted into or exchanged for other property, which did not happen in this case. The court concluded that the plaintiffs' interpretation of the agreement was unreasonable and inconsistent with its plain language and commercial purpose. As a result, the court dismissed the complaint in its entirety. View "Discovery Global Opportunity Master Fund LTD & Discovery Global Beacon Partners LP v. Hertz Global Holdings Inc." on Justia Law
Posted in:
Contracts, Delaware Court of Chancery
Givaudan v. Conagen
Givaudan SA, a Swiss multinational manufacturer of flavors and fragrances, entered into a business relationship with Conagen Inc., a Massachusetts-based synthetic biology company. In 2016, the two companies executed a term sheet outlining several potential transactions, including Givaudan's purchase of a 5% equity stake in Conagen for $10 million and an exclusivity agreement for Conagen's intellectual property. Givaudan paid the $10 million and received the shares, but negotiations on the exclusivity agreement failed.Givaudan sued Conagen in the United States District Court for the Southern District of New York, claiming breach of contract, promissory estoppel, and unjust enrichment, seeking the return of its $10 million. After a bench trial, the district court found Conagen not liable on all claims and dismissed the case. Givaudan appealed the dismissal of its breach of contract claim.The United States Court of Appeals for the Second Circuit reviewed the case. The court affirmed the district court's decision, holding that Givaudan failed to prove damages, an essential element of a breach of contract claim under Delaware law. The court found that the $10 million payment for the 5% equity stake was a completed transaction and not contingent on the successful negotiation of the exclusivity agreement. The court also determined that the term sheet was a binding preliminary agreement that established a duty to negotiate in good faith, but Givaudan did not incur any costs or expenses that would qualify as reliance damages. Thus, the judgment of the district court was affirmed. View "Givaudan v. Conagen" on Justia Law
Gravity Oilfield Services v. Valence Natural Gas Solutions
In March 2020, Valence Natural Gas Solutions issued a request for proposal for the rental of natural gas generators. Gravity Oilfield Services submitted a price quotation in April 2020. After a pause in communication, discussions resumed in January 2021, and Gravity delivered the equipment to Valence in March 2021. From April 2021 to April 2022, Gravity sent monthly sales orders and invoices to Valence, which from September 2021 included a reference to terms and conditions on Gravity’s website. In April 2022, the equipment was damaged in a fire, and Gravity invoiced Valence for the replacement cost, which Valence did not pay.The District Court of McKenzie County initially denied Gravity’s first motion for summary judgment due to disputed material facts regarding contract formation and terms. However, upon Gravity’s renewed motion for summary judgment in March 2024, the district court granted the motion. The court concluded that the contract was formed in April 2022 and included Gravity’s terms and conditions by reference, making Valence liable for the damaged equipment and awarding attorney’s fees to Gravity.The Supreme Court of North Dakota reviewed the case and reversed the district court’s judgment. The Supreme Court found that genuine issues of material fact existed regarding when the contract was formed and whether Gravity’s terms and conditions were incorporated into the agreement. The court noted that the terms and conditions referenced in the April 2022 sales order and invoice were sent after the equipment was damaged, and there was a dispute over whether these terms were part of the original agreement. Consequently, the Supreme Court concluded that summary judgment was inappropriate and also reversed the award of attorney’s fees. View "Gravity Oilfield Services v. Valence Natural Gas Solutions" on Justia Law
Posted in:
Contracts, North Dakota Supreme Court