Justia Contracts Opinion Summaries

Capson filed suit against MMIC seeking a declaration that MMIC was the primary professional liability insurer for Karl J. Hasik, M.D., and that Capson was the excess insurer. MMIC counterclaimed and filed a third-party complaint against Dr. Hasik and others, seeking rescission of its insurance policy or, in the alternative, a declaration that MMIC had no obligation to defend or indemnify Dr. Hasik for two medical negligence cases that had been filed against him. The district court granted MMIC’s motion for summary judgment. The court concluded that Dr. Hasik’s and the hospital’s nondisclosure of the Wilson lawsuit (a medical malpractice suit filed by a patient against Dr. Hasik) was the equivalent of a false assertion. Therefore, the court held that the elements of equitable rescission were satisfied in this case. Dr. Hasik’s and the hospital’s nondisclosure of the Wilson lawsuit was the equivalent of a material representation that was false. MMIC was entitled to rescind the prior-acts coverage it had agreed to provide. The court further held that Iowa law does not preclude a judgment of rescission in this case. Accordingly, the court affirmed the judgment and dismissed the cross-appeal as moot. View "Capson Physicians Ins. Co. v. MMIC Ins. Inc." on Justia Law

In June 2012, a hailstorm damaged Plaintiff KCOM’s motel. Soon a dispute arose between KCOM and its insurer, defendant Employers Mutual Casualty (EMC), over the extent of the damage. In October 2012, following receipt of an inspection report, KCOM submitted a proof of loss of $631,726.87. EMC admitted coverage but not the amount of loss. Dissatisfied, KCOM invoked the insurance contract’s appraisal provision. KCOM claimed there were issues with the appraisal process, prompting it to ultimately file suit against EMC, alleging breach of contract, unreasonable delay and denial of benefits, and bad faith breach of the insurance contract. The threshold question presented for the Tenth Circuit's review in this state law diversity action was whether the Court had appellate jurisdiction over the district court’s non-final order denying confirmation of a property loss appraisal. The Court concluded it did not, and dismissed the appeal. View "KCOM, Inc. v. Employers Mutual Casualty Co." on Justia Law

After TEC, a subcontractor, submitted a written bid to Flintco, a general contractor, to perform glazing work on a project, Flintco used TEC's bid price in compiling its own bid to the owner of the project. Flintco was awarded the contract and sent TEC a letter of intent to enter into a subcontract and a standard-form subcontract, both of which documents differed materially from TEC’s bid. TEC refused to enter into a subcontract. Flintco secured another subcontractor for that scope of work and sued TEC on a theory of promissory estoppel seeking the difference between TEC’s bid and the amount Flintco was required to pay the replacement subcontractor. The trial court entered judgment for TEC. The court concluded that Flintco failed to demonstrate that there was no substantial evidence to support the trial court’s finding that Flintco did not reasonably rely on TEC’s bid price without considering the material conditions stated in TEC’s bid, the proposed subcontract Flintco sent TEC constituted a counteroffer because it contained material variations from the conditions in TEC’s bid, and the counteroffer gave TEC the right to withdraw its bid. Accordingly, the court affirmed the judgment. View "Flintco Pacific v. TEC Mgmt. Consultants" on Justia Law

Patricia Cornwell, a well-known crime novelist, and her spouse filed suit against their former business managers Anchin Block & Anchin and the company’s principal, Evan Snapper, alleging New York state law claims of negligent performance of professional services, breach of contract, and breach of fiduciary duty. The jury returned a verdict in favor of Plaintiffs on all three claims and awarded Plaintiffs $51 million in damages. Thereafter, the district court vacated the jury’s decision, ruling that it had incorrectly instructed the jury and that Defendants’ statements to the Department of Justice (DOJ) were protected by a qualified privilege and therefore should not have been considered by the jury. The First Circuit reversed in part, holding (1) the district court correctly found that it incorrectly instructed the jury on New York’s statute of limitations for a breach of fiduciary duty claim; and (2) the district court erred in entering judgment as a matter of law for Defendants on the DOJ issue. Remanded for a new trial. View "Cornwell Ent., Inc. v. Anchin, Block & Anchin, LLP" on Justia Law

Multi-employer funds established by a collective bargaining agreement (CBA) between the Sheet Metal and Air Conditioning Contractor National Association and the Sheet Metal Worker’s Union sought confirmation of arbitration awards granted against five employers. None of the employers had participated in the arbitration, which concerned contributions to the funds. The district court declined to confirm the award, concluding that there was an open question as to whether the employers were party to the CBA, and, therefore, bound to its arbitration procedures. After initially ruling that state law applied to the question of whether the employers were bound to arbitrate under the CBA, the court certified a question for appeal pursuant to 28 U.S.C. 1292(b): whether state or federal law will apply at trial to the question of whether the employers “are bound/signatory to” the CBA? The Sixth Circuit reversed. While state contract law may provide helpful guideposts to federal courts, it is well-established that in the field of labor relations, the technical rules of contract law do not determine the existence of a CBA. The law to be applied to the question of whether a party has assented to the terms of a CBA, including an arbitration provision, is ultimately federal. View "Sheet Metal Employers Indus. Promotion Fund v. Absolut Balancing Co., Inc." on Justia Law

In 2009, Hoffman executed a $1.5 million tax‐increment finance (TIF) note for a development project by Fyre Lake Ventures, backed by a TIF bond, a mechanism for local governments to finance real estate development. Hoffman was not personally liable on the loan. In 2010, Fyre signed a $9 million loan, with the same lender; Hoffman acted as a co‐guarantor for $900,000. Separately, Hoffman borrowed $157,300 from the lender with his wife; the note was secured by mortgages on three lots in a Milan, Illinois housing development. By October 2011, all of the loans were in default. After negotiations, the FDIC (as receiver for the lender) and the Hoffmans signed a settlement agreement. In exchange for titles to the Milan lots, the Hoffmans were released of their obligations. Less than three months later, the FDIC sued Hoffman and other guarantors of the Fyre loan, $900,000 of which he personally guaranteed. The district judge found the settlement agreement ambiguous and concluded that parole evidence supported the bank’s interpretation of the settlement: Hoffman was only released from his obligation on the $157,300 loan. The Seventh Circuit affirmed, interpreting the agreement's general language in light of the specific language referring to the smaller loan. View "Fed. Deposit Ins. Corp. v. Hoffman" on Justia Law

In 2007, plaintiff Innovation Ventures, LLC engaged defendants Andrew Krause and K & L Development of Michigan (K & L Development) to design, manufacture, and install manufacturing and packaging equipment for the production of "5-Hour ENERGY" at Liquid Manufacturing’s bottling plant. The issue this case presented for the Michigan Supreme Court's review centered on whether agreements between sophisticated businesses were void for failure of consideration and whether the noncompete provisions in these agreements were reasonable. Innovation Ventures alleged a variety of tort and breach of contract claims against Liquid Manufacturing, LLC, K & L Development of Michigan, LLC, Eternal Energy, LLC, LXR Biotech, LLC, Peter Paisley, and Andrew Krause based on the defendants’ production of Eternal Energy and other energy drinks. Contrary to the determination of the Court of Appeals, the Supreme Court concluded that the parties’ Equipment Manufacturing and Installation Agreement (EMI) and Nondisclosure Agreement were not void for failure of consideration. The Court nevertheless affirmed the trial court’s grant of summary judgment to defendants for the claims against Krause, because there was no genuine issue of material fact on the question whether Krause breached the EMI or the Nondisclosure Agreement. Likewise, there was no issue on the question whether K & L Development breached the EMI. The Court concluded the Court of Appeals erred in failing to evaluate the noncompete provision in the parties’ Termination Agreement for reasonableness. The Court therefore reversed in part, affirmed in part, and remanded for consideration of those questions of fact remaining regarding whether K & L Development breached the Nondisclosure Agreement and whether Liquid Manufacturing breached the Termination Agreement with respect to its production of products other than Eternal Energy. View "Innovation Ventures, LLC v. Liquid Manufacturing, LLC" on Justia Law

Plaintiff filed a negligence action against Nucor after sustaining injuries while working at Nucor's steel mill. The district court granted summary judgment to Nucor, finding that the third-party waiver's (TPW) language and the circumstances of its execution met the standard for enforcement of exculpatory contracts under Arkansas law and that the agreement was not unconscionable. The court agreed with the district court that the TPW was enforceable where the parties stipulated that plaintiff had the opportunity to read the TPW, that he did not ask the trainer any questions concerning the meaning of the TPW, and that he had the ability to read and understand the contract. The court also concluded that the contract provision at issue is not unconscionable where there is no evidence rebutting Nucor's affidavit showing the availability of other work in the region at that time, plaintiff had the opportunity to read and understand the TPW, and there is no evidence of fraud, duress, misrepresentation, or any other inequitable conduct on the part of Vesuvius or Nucor. Accordingly, the court affirmed the judgment. View "Stewart, Jr. v. Nucor Corp." on Justia Law

In 2003, the government awarded Laguna a contract for Worldwide Environmental Remediation and Construction (WERC). Under the contract, Laguna received 16 cost-reimbursable task orders to perform work in Iraq, and awarded subcontracts to several subcontractors. The physical work under the contract was completed by 2010. Laguna sought reimbursement of past costs, a portion of which the government refused to pay after an audit by the Defense Contract Audit Agency. Before the Armed Services Board of Contract Appeals, the government alleged that it was not liable because Laguna had committed a prior material breach by accepting subcontractor kickbacks (18 U.S.C. 371, 41 U.S.C. 53), excusing the government’s nonperformance. Three of Laguna’s officers were ultimately indicted for kickbacks. The Board granted the government summary judgment on that ground, The Federal Circuit affirmed. Laguna committed the first material breach by violating the contract’s Allowable Cost and Payment clause because its vouchers were improperly inflated to include the payment, Federal Acquisition Regulation 52.216-7. View "Laguna Constr. Co. v. Carter" on Justia Law

The United States Court of Appeals for the Ninth Circuit certified a question of Washington law to the Washington Supreme Court: "Does a title company owe a duty of care to third parties in the recording of legal instruments?" This certified question arose out of a civil action for money damages. Plaintiffs Centurion Properties Ill LLC (CP Ill) and SMI Group XIV LLC (collectively Plaintiffs) asserted that defendant Chicago Title Insurance Company negligently breached its duty of care and caused damages when it recorded unauthorized liens on CP Ill's property. The Washington Supreme Court answered the Ninth Circuit's question "no," holding that title companies did not owe a duty of care to third parties in the recording of legal instruments. "Such a duty is contrary to Washington's policy and precedent, and other duty of care considerations." View "Centurion Props. III, LLC v. Chi. Title Ins. Co." on Justia Law