Justia Contracts Opinion Summaries

A broadly-worded agreement in one contract can require arbitration of disputes arising under related contracts. To determine whether an arbitration provision in one agreement should be applied to other agreements, in addition to the relationship between two or more agreements and their subject matter, courts consider whether the parties to the separate agreements are identical, whether the underlying agreements were executed closely in time, and the breadth of the language used in the arbitration clause. The question whether a particular dispute is arbitrable usually is for judicial determination unless the parties agree otherwise. Gary and Glory Kramlich appealed, and Robert and Susan Hale cross-appealed, an order dismissing the Kramlichs' lawsuit against the Hales and various entities, and directing the parties to submit their disputes to binding arbitration. The North Dakota Supreme Court concluded the district court correctly ordered arbitration of the Kramlichs' claims relating to the operating agreement for Somerset-Minot, LLC, but erred in ordering arbitration of claims relating to Somerset Court Partnership. View "Kramlich v. Hale" on Justia Law

In 1962, PWV leased to Norfolk Southern certain railroad properties, consisting of a 112-mile tract of main line railroad and approximately 20 miles of branch rail lines in Western Pennsylvania, Ohio, and West Virginia. After securing appropriate regulatory approvals, the Lease went into effect on October 16, 1964. The term of the Lease is 99 years, renewable in perpetuity at the option of Norfolk Southern absent a default. On May 17, 1990, Norfolk Southern entered into a sublease with Wheeling & Lake Erie Railway. Wheeling assumed the rights, interests, duties, obligations, liabilities, and commitments of Norfolk Southern as lessee, including the role as principal operator of the Rail Line. In 2011, disputes arose following the proposed sale of an unused branch of the railroad line, a restructuring by PWV and its demand for additional rent and attorney's fees. Norfolk Southern sought a declaration that it was not in default under the terms of the Lease. The Third Circuit affirmed the district court’s use of course-of-performance evidence, found that PWV had engaged in fraud to obtain Norfolk’s consent to a transaction otherwise prohibited by the Lease. View "Norfolk Southern Railway Co v. Pittsburgh & West Virginia Railroad" on Justia Law

In 2010, Mohr and Volvo entered into a heavy truck dealership agreement. In 2012, Volvo sought a declaratory judgment that it was entitled to terminate Mohr’s dealership because Mohr had misrepresented that it would build a new long‐term facility for the dealership. Mohr complained that Volvo had violated Indiana’s Franchise Disclosure and Deceptive Franchise Practices Acts by promising to award Mohr a Mack Truck dealership franchise, which would have justified Mohr’s investment in the new facility. Volvo gave the Mack franchise to another company. Mohr also accused Volvo of providing more favorable concessions on truck pricing to other franchise dealerships through its Retail Sales Assistance program. The district court granted summary judgment, holding that the integration clause in the dealer agreement barred the new‐facility claim and the Mack franchise claim. Following a trial on the unfair discrimination claim, a jury awarded Mohr $6.5 million. The Seventh Circuit reversed the award for the unfair discrimination claim and affirmed the summary judgment rulings. The court stated that these were sophisticated parties, bound by the integration clause and that Mohr did not establish unfair discrimination with respect to price concessions. View "Andy Mohr Truck Center, Inc. v. Volvo Trucks North America" on Justia Law

The Eighth Circuit affirmed the district court's grant of summary judgment in an action filed by LNV against OSM to recover its share of sales proceeds from a promissory note. The court held that the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), 12 U.S.C. 1821, barred the district court from exercising jurisdiction over OSM's counterclaim; post-receivership claims and claims arising after the claims-bar date were subject to exhaustion; OSM's alleged common-law defense for not paying LNV the net proceeds was ineffective because the contract addressed LNV's alleged prior material breach and OSM must comply with the contract; there was no right of setoff and thus BF-Negev breached the Bahia Agreement by withholding LNV's share of collections; and the court declined to exercise its discretion by reversing the district court's attorney fee award. View "LNV Corp. v. Outsource Services Management, LLC" on Justia Law

In 2001, plaintiffs Margaret and John Abajian hired architectural firm TruexCullins, Inc., to design additions to their home. Plaintiffs hired Thermal Efficiency Construction, Ltd. (TEC) to serve as the general contractor for the project. TEC contracted with Murphy’s Metals, Inc. to do the roofing work. The roof was installed during the winter of 2001-2002. Plaintiffs had experienced problems with ice damming on their old roof, which was shingled. Defendants recommended that plaintiffs install a metal roof to alleviate the problem. Plaintiffs accepted the suggestion, hoping that the metal roof would result in fewer ice dams. Mr. Abajian testified in his deposition that he “thought that the metal roof was going to eliminate” the ice damming. In 2014, after the roof turned out to be defective, plaintiffs sued the architecture and construction firms that designed and installed the roof for negligence and breach of contract. The trial court granted summary judgment to defendants on the ground that the action was barred by the statute of limitations. Finding no reversible error in the grant of summary judgment to defendants, the Vermont Supreme Court affirmed. View "Abajian v. TruexCullins, Inc." on Justia Law

The contract at issue in this appeal was an Independent Contractor Agreement (the Contract) between the Ute Indian Tribe and Lynn Becker, a former manager in the Tribe’s Energy and Minerals Department. Becker claimed the Tribe breached the Contract by failing to pay him 2% of net revenue distributed to Ute Energy Holdings, LLC from Ute Energy, LLC. After Becker filed suit in Utah state court, the Tribe filed this suit against him and Judge Barry Lawrence, the state judge presiding over Becker’s suit, seeking declarations that: (1) the state court lacks subject-matter jurisdiction over the dispute; (2) the Contract was void under federal and tribal law; and (3) there was no valid waiver of the Tribe’s sovereign immunity for the claims asserted in state court. The Tribe also sought a preliminary injunction ordering defendants to refrain from further action in the state court proceedings. The federal district court held that it lacked jurisdiction to consider the Tribe’s challenge to the jurisdiction of the state court. The Tenth Circuit disagreed with the district court, and reversed and remanded for further proceedings. The Court held that the Tribe’s claim that federal law precluded state-court jurisdiction over a claim against Indians arising on the reservation presented a federal question that sustained federal jurisdiction. View "Ute Indian Tribe of the Uintah v. Lawrence" on Justia Law

The Ute Indian Tribe of the Uintah and Ouray Reservation appealed a preliminary injunction ordering it not to proceed with litigation in tribal court against a nonmember former contractor, Lynn Becker. The district court ruled that although the parties’ dispute would ordinarily come within the tribal court’s jurisdiction, their Independent Contractor Agreement (the Contract) waived the Tribe’s right to litigate in that forum. The Tribe argued: (1) the tribal-exhaustion rule, which ordinarily requires a federal court to abstain from determining the jurisdiction of a tribal court until the tribal court has ruled on its own jurisdiction, deprived the district court of jurisdiction to determine the tribal court’s jurisdiction; and (2) even if exhaustion was not required, the preliminary injunction was improper because the Contract did not waive the Tribe’s right to litigate this dispute in tribal court. In addition, the Tribe challenged the district court’s dismissal of its claims under the federal civil-rights act, 42 U.S.C. 1983, seeking to halt state-court litigation between it and Becker. The Tenth Circuit did not agree the tribal-exhaustion rule was jurisdictional, but agreed the district court should have abstained on the issue. Although the Contract contained a waiver of the tribal-exhaustion rule, Becker could not show a likelihood of success based on the validity of the waiver; he failed to adequately counter the Tribe’s contention that the entire Contract, including the waiver, was void because it did not receive federal-government approval, as was required for contracts transferring property held in trust for the Tribe by the federal government. With respect to the Tribe’s claim under 42 U.S.C. 1983, the Tenth Circuit found the Tribe has not stated a claim because it is not a “person” entitled to relief under that statute when it is seeking, as here, to vindicate only a sovereign interest. To resolve the remaining issues raised in this case, the Court adopted its decision in the companion case of Ute Indian Tribe v. Lawrence, No. 16-4154 (August 25, 2017). View "Becker v. Ute Indian Tribe" on Justia Law

In 2003, a corporation was assigned a lease that permitted a restaurant to operate. Xiao-Yan Cao, the corporation’s president, personally guaranteed the corporation’s performance. In 2006, the lease was assigned to Hong Lin. As part of the assignment, the lease term was extended until 2013. Both Cao and Lin signed the lease extension as guarantors. In 2010, Lin stopped making timely rent payments. Lin and the property’s landlord agreed to a repayment schedule to permit Lin to catch up. In 2013, Lin defaulted on rent payments. The landlord sued both Lin and Cao for a sum representing the last month’s rent and a balance from the month prior. The district court concluded that the 2010 repayment materially modified the contract and discharged Cao’s guaranty. The court of appeals reversed, concluding that extending the period within which a tenant could pay its rent did not materially modify the contract. The Supreme Court affirmed, holding that the court of appeals correctly determined that the 2010 repayment agreement did not materially modify the contract and that Cao was not relieved of her responsibilities as guarantor. View "PC Riverview, LLC v. Cao" on Justia Law

When Plaintiff learned that a family occupying a residence nearby to a vacant property owned by Plaintiff was pursuing environmental claims against him, he notified his liability carrier, the Indiana Insurance Company. Indiana Insurance provided a defense and eventually settled the claims. Plaintiff later sued Indiana Insurance for bad faith arising from a breach of his insurance contract. The jury awarded Plaintiff $925,000 in emotional distress damages and $2,500,000 in punitive damages. The court of appeals affirmed. On appeal, Indiana Insurance argued that, having provided a defense and indemnification, Plaintiff had no viable bad faith claim. The Supreme Court affirmed, holding (1) Plaintiff presented sufficient evidence to support the jury’s determination that Indiana Insurance breached its contract with Plaintiff and that Indiana Insurance’s acts or omissions violated the Unfair Claims Settlement Practices Act; (2) the trial court did not err in denying Indiana Insurance’s motion for directed verdict or judgment notwithstanding the verdict on Plaintiff’s Kentucky Consumer Protection Act claim; (3) expert testimony is unnecessary to substantiate damages for emotional distress in a bad faith case; and (4) Indiana Insurance’s two remaining allegations of error were not properly before the court for review. View "Indiana Insurance Co. v. Demetre" on Justia Law

In this insurance coverage dispute, the Supreme Court affirmed the denial of summary judgment in favor of Insurer but reversed the denial of summary judgment in favor of General Contractor. Homeowners sued General Contractor and Subcontractor for damages to their home. General Contractor, which was insured under a commercial general liability policy (CGL), requested defense and indemnification from Insurer. Insurer defended General Contractor under a reservation of rights. Insurer then filed a declaratory judgment action seeking a judgment that the CGL policy did not provide coverage for General Contractor in the underlying case. General Contractor and Insurer filed cross-motions for summary judgment. The circuit court denied the motions on the ground that a genuine issue of material fact existed regarding the foreseeability of Homeowners’ damages. The Supreme Court reversed the judgment denying General Contractor’s motion and remanded for further proceedings, holding that the CGL policy required Insurer to defend General Contractor against Homeowners’ suit for damages and that factual questions regarding foreseeability were not relevant to the existence of coverage under the policy. View "Owners Insurance Co. v. Tibke Construction, Inc." on Justia Law