Justia Contracts Opinion Summaries

The Riverwalk at Arrowhead Country Club and Magnolia North Horizontal Property Regime developments were constructed between 1997 and 2000. After construction was complete and the units were sold, the purchasers became aware of significant construction problems, including building code violations, structural deficiencies, and significant water-intrusion problems. In 2003, the purchasers filed suit to recover damages for necessary repairs to their homes. Lawsuits were filed by the respective property owners' associations (POAs), which sought actual and punitive damages for the extensive construction defects under theories of negligent construction, breach of fiduciary duty, and breach of warranty. As to the Riverwalk development, individual homeowners also filed a class action to recover damages for the loss of use of their property during the repair period. The defendants in the underlying suits were the related corporate entities that developed and constructed the condominium complexes: Heritage Communities, Inc. (the parent development company), Heritage Magnolia North, Inc. and Heritage Riverwalk, Inc. (the project-specific subsidiary companies for each separate development), and Buildstar Corporation (the general contracting subsidiary that oversaw construction of all Heritage development projects), referred to collectively as "Heritage." The issues presented to the Supreme Court by these cases came from cross-appeals of declaratory judgment actions to determine coverage under Commercial General Liability (CGL) insurance policies issued by Harleysville Group Insurance. The cases arose from separate actions, but were addressed in a single opinion because they involved virtually identical issues regarding insurance coverage for damages. The Special Referee found coverage under the policies was triggered and calculated Harleysville's pro rata portion of the progressive damages based on its time on the risk. After review of the arguments on appeal, the Supreme Court affirmed the findings of the Special Referee in the Magnolia North matter, and affirmed as modified in the Riverwalk matter. View "Harleysville Group Ins. v. Heritage Communities, Inc." on Justia Law

Pure Wafer, a facility that cleans silicon wafers, filed suit against the City, challenging Ordinance No. 4856-1313. The Ordinance imposes limits on the pollutants that industrial users, like Pure Wafer, are permitted to discharge into the City’s sewer system. Pure Wafer claims that by enacting the Ordinance, the City impaired the obligation of its contract with Pure Wafer and committed at least two different breaches of contract. The district court entered judgment for Pure Wafer and awarded Pure Wafer a permanent injunction. The court concluded that the City has not impaired the obligation of its contract with Pure Wafer in violation of the Contracts Clause of the Constitution, because the Ordinance has not altered the ordinary state-law remedies to which Pure Wafer would otherwise be entitled if it successfully proves a breach of contract. The court explained that the City might very well have breached its contract but that does not necessarily mean it has violated the Contracts Clause. Therefore, the court reversed as to the Contracts Clause claim. The court agreed, however, with Pure Wafer's alternative claim that the City has breached the contractual obligations it undertook in the Development Agreement. In this case, the City agreed to accept such effluent as the parties knew Pure Wafer would need to discharge in order to maintain a viable business, and the City agreed to bear the financial risk that State-initiated regulatory changes would make complying with such promise more costly than it was when the parties entered into the Agreement. Therefore, the court concluded that the City may not force Pure Wafer to absorb the costs needed to bring the City into line with the terms of its Aquifer Protection Permit. The court explained that enforcing the Ordinance against Pure Wafer would eviscerate the benefit of Pure Wafer’s bargain; the City cannot do so without putting itself in breach of the Agreement. Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings. View "Pure Wafer Inc. v. City of Prescott" on Justia Law

Sheri Lee hired Morgan Pierce, PLLP to represent her in a bankruptcy proceeding. Morgan Pierce subsequently filed notice of an attorney’s lien against five pieces of Lee’s real property for legal services rendered. Joseph Mulroy and Lee then entered into an agreement for two of the pieces of property against which Morgan Pierce’s lien was recorded. Thereafter, Mulroy filed a petition for interpleader and declaratory relief asking the district court to determine the validity of Morgan Pierce’s attorney’s lien. The district court granted summary judgment in favor of Mulroy and awarded his costs and fees. The Supreme Court reversed, holding that the district court erred in holding that the agreement entered into between Morgan Pierce and Lee did not create a lien by consent. View "Mulroy v. Morgan Pierce, PLLP" on Justia Law

This appeal stems from a loan that Woodbridge Baric gave Jarrod Burrle. Woodbridge Baric and Burrle agreed that Burrle would not be required to repay the loan if his economic loss claims in connection with the Deepwater Horizon oil spill fail unless he had misrepresented his claim to Woodbridge Baric, in which case Burrle agreed to indemnify Woodbridge Baric and hold it harmless. The settlement program eventually paid over $50,000 on one of Burrle’s claims, and Burrle’s attorneys paid Woodbridge Baric $20,000 of those funds in partial repayment of the loan. Louis Freeh was then appointed as special master and subsequently determined that Burrle’s claim was fraudulent and moved the court to order Burrle and others, including Woodbridge Baric, to make restitution for the funds paid in connection with that claim. The district court granted the motion as to Woodbridge Baric. The court reversed, concluding that, because Woodbridge Baric’s claim for the repayment of the loan was not purely contingent upon the success of Burrle’s claims for compensation, the failure of this contingency did not extinguish Woodbridge Baric’s claim and does not prevent Woodbridge Baric from asserting its valid interest in defense of its right to retain the funds as a bona fide payee. View "In Re: Deepwater Horizon" on Justia Law

ACI was the company that manufactured and supplied roofing materials used in the construction of the high school building at issue here. The District filed suit against ACI, alleging that the building’s roof was not watertight and that ACI had failed to repair or replace the roof. The district court granted ACI's motion to dismiss. The court concluded that the district court properly dismissed the false representation claims where the District did not plead any false representation. The court rejected the District's claim that it's allegations related to ACI's assurances that it would repair or replace the roof, because such assurances relate to a future event. Under Arkansas law, generally, a misrepresentation must relate to a past event or a present circumstance. The court also concluded that the district court properly dismissed the fraud and constructive fraud claims for failure to plead actual reliance by the District on ACI's alleged misrepresentations. The district court did not err in granting summary judgment for ACI on the remaining breach of warranty, breach of contract, and negligence claims because Arkansas's statute of repose bars the District's claims. Finally, the court rejected the District's argument that the statute of repose was tolled while ACI tried to repair the roof where there is no evidence that ACI fraudulently concealed the roof’s deficiencies. Accordingly, the court affirmed the judgment. View "Star City School District v. ACI Building Systems, LLC" on Justia Law

This appeal stemmed from a dispute over the construction of a backyard patio at Defendant’s property. Defendants, the property owners, hired a general contractor, who contracted with Plaintiff for masonry work. Plaintiff filed suit, asserting that Defendants owed it money beyond that paid to it by the general contractor. At issue during the bench trial was whether Plaintiff was paid to construct Defendants’ backyard patio. The trial justice ultimately entered judgment for Defendants. Plaintiff appealed, arguing that the trial justice erred in his factual determinations and credibility assessments. The Supreme Court affirmed, holding that the trial justice neither overlooked nor misconceived material evidence. View "A. Salvati Masonry Inc. v. Andreozzi" on Justia Law

LeGrand Belnap, M.D., was a surgeon at the Salt Lake Regional Medical Center (“SLRMC”). Dr. Belnap and SLRMC entered into a Management Services Agreement under which he would provide consulting services to help SLRMC develop a new surgical center. The Agreement contained an arbitration provision, including an agreement to arbitrate questions of arbitrability. SLRMC subsequently disciplined Dr. Belnap for alleged misconduct and then reversed course and vacated the discipline. As a result, Dr. Belnap brought various claims against SLRMC, its alleged parent company, and several of its individual employees. These Defendants moved to compel arbitration on the basis of the arbitration provision in the Agreement. The district court determined that most of the claims fell outside the scope of the Agreement, and granted in part and denied in part the motion. Defendants appealed the portions of the district court’s order denying their motion to stay litigation and to compel arbitration, arguing: (1) because the parties agreed to arbitrate arbitrability, the district court erred when it failed to submit all questions of arbitrability to an arbitrator; and (2) even if the parties did not agree to arbitrate arbitrability, the district court erred when it found that any of Dr. Belnap’s claims fell outside the scope of the Agreement, despite also finding that the Agreement’s dispute-resolution provision was broad. The Tenth Circuit found that by incorporating the JAMS Rules into the Agreement, Dr. Belnap and SLRMC evidenced a clear and unmistakable intent to delegate questions of arbitrability to an arbitrator. Nevertheless, the Tenth Circuit concluded the district court reached the right outcome regarding Dr. Belnap’s first claim against SLRMC (compelling that claim to arbitration) and upheld that portion of its order. The Court felt “constrained,” however, to reverse the order as to the remainder of the SLRMC claims. The Court remanded, instructing the court to compel all of Dr. Belnap’s claims against SLRMC to arbitration. With respect to Defendants wh did not sign the Agreement, the Court held they were not entitled to enforce the arbitration provision of the Agreement. Thus, the Court affirmed the district court’s order in this respect. View "Belnap v. Iasis Healthcare" on Justia Law

Kennedy Tank & Manufacturing Company contracted with Emmert Industrial Corporation to transport an enormous process tower vessel to Indiana to Tennessee. Despite several troubles resulting in unforeseen costs, Emmert successfully delivered the vehicle. When Kennedy refused to pay any additional charges, Emmert sued, alleging breach of contract and, in the alternative, unjust enrichment. Kennedy moved to dismiss Emmert’s complaint, arguing that the federal statute of limitations preempts Indiana’s longer limitations period. The trial court denied the motion to dismiss, finding no preemption. The Supreme Court affirmed, holding that Indiana’s statute of limitations is not preempted by the federal statute of limitations. View "Kennedy Tank & Manufacturing Co. v. Emmert Industrial Corp." on Justia Law

Frye was seriously injured in an accident while driving for his job. Frye accepted $100,000, the per-person limit, from the other driver’s insurer, assigning it to his lawyer and to his employer’s insurer, Auto-Owners, from which Frye had received $692,895.79 in workers’-compensation benefits. Frye’s injuries were also covered by commercial automobile and commercial umbrella policies, issued by Auto-Owners to Frye’s employer. The automobile policy required Auto-Owners to pay any compensatory damages Frye was legally entitled to recover for bodily injuries caused by an underinsured motorist. The umbrella policy afforded follow-on coverage. Auto-Owners agreed to pay Frye $1,282,314.21: $900,000 under the automobile policy ($1 million in total coverage, less $100,000 from the other insurer); and $382,314.21 under the umbrella policy ($1 million in UIM coverage, less $617,685.79 in net workers’-compensation payments). Frye argued that Indiana law required Auto-Owners to provide through its umbrella policy UIM coverage in an amount equal to the policy’s general liability limit ($5 million) and that the setoff for workers’-compensation payments was impermissible under the contract and Indiana public policy. The district court awarded AutoOwners summary judgment. The Seventh Circuit reversed. While Indiana law allowed Auto-Owners to abstain from providing UIM coverage in the umbrella policy, once it provided such coverage it was required under Section 27-7-5-2(a) to provide that coverage in limits equal to the policy’s general liability limit: $5 million. It cannot decrease that cap based on workers’ compensation payments. View "Frye v. Auto-Owners Insurance Co." on Justia Law

Defendant Gary Proctor set up an account of electric services for a new business. After Defendant contacted Plaintiff, Connecticut Light and Power Company, Plaintiff provided electric service to the business under an account in Defendant’s name until it disconnected service for non-payment. Plaintiff then brought an action against Defendant for breach of an implied contract and unjust enrichment seeking $14,620 in outstanding bills. The trial court rendered judgment for Plaintiff on the breach of an implied contract count, finding that Defendant manifested assent to enter into an implied in fact contract with Plaintiff under which Defendant would be responsible for payment for the provision of electric services to the company. The Appellate Court affirmed. The Supreme Court affirmed, holding that there was sufficient evidence to support the trial court’s finding that Defendant entered into an implied in fact contract with Plaintiff. View "Connecticut Light & Power Co. v. Proctor" on Justia Law