Justia Contracts Opinion Summaries

Arborjet, Inc. (Plaintiff), which manufactures and sells an emamectin benzoate solution used to protect trees from pests called TREE-age, granted Rainbow Treecare Scientific Advancements, Inc. (Defendant) an exclusive right to distribute TREE-age pursuant to a sales agency contract. After termination of this agreement, Defendant began marketing and distributing ArborMectin, another emamectin benzoate combination meant to compete directly with TREE-age. Plaintiff sued Defendant seeking to enjoin Defendant’s sales of ArborMectin and alleging several claims. The district court granted Plaintiff a preliminary injunction to run during the litigation that was meant to enforce the contractual agreement and prohibit a trademark violation. The First Circuit affirmed in part and reversed in part the order comprising the preliminary injunction, holding (1) it was not clear error to find a likely showing that Defendant contributed to the creation of ArborMectin; (2) the district court did not err in entering the portion of the preliminary injunction based on Arborjet’s contract claim; but (3) ordering proper attribution of “Arborjet” and “TREE-age” was improper given the district court’s rulings on the Lanham Act claims. View "Arborjet, Inc. v. Rainbow Treecare Scientific Advancements, Inc." on Justia Law

The Cleveland Indians hired National to produce Kids Day events at baseball games, with attractions, including an inflatable bouncy castle and inflatable slide. The contract required National to secure a five-million-dollar comprehensive liability policy. National submitted an Application to Doodson Insurance Brokerage, stating on the application that the Kids Day events would include inflatable attractions. Doodson arranged for National to obtain a policy, but it excluded from coverage injuries caused by inflatable slides. Johnson admiring a display at a 2010 Indians game, was crushed by an inflatable slide that collapsed onto him. He died of his injuries. Johnson’s estate won a $3.5 million state court default judgment against National. The Sixth Circuit held that the insurance policy did not cover Johnson’s injuries. National and the Indians sued Doodson and obtained settlements. Johnson’s estate, which has not collected on the default judgment against National, sued Doodson, alleging negligence and breach of contract. The Sixth Circuit affirmed dismissal. Under Michigan law, the broker’s contractual duty to its client to protect the client from negligence suits, without more, does not create a tort duty to an injured party who brings such suits and Johnson was neither a party to nor an intended third-party beneficiary of the contract between the broker and National. View "Johnson v. Doodson Ins. Brokerage" on Justia Law

Employees of Instant, an information-technology staffing firm sign agreements in which they promise not to solicit business from Instant’s clients, not to recruit Instant’s employees to other jobs, and not to disclose the firm’s sensitive information to outsiders. DeFazio was Instant’s Vice President until 2012, when she was fired. She was already cofounding Connect, a new tech-staffing firm, and began working there immediately, along with several coworkers she persuaded to leave Instant. Connect won business from several of Instant’s recent clients. Instant sued DeFazio and others for breaching the restrictive covenants and under the Computer Fraud and Abuse Act, 18 U.S.C. 1030. DeFazio counterclaimed, alleging that Instant shortchanged her on a bonus. The court concluded that no one is liable to anyone else. The Seventh Circuit affirmed, agreeing that defendants did not leak or otherwise misuse Instant’s proprietary data. Defendants admitted breaching the covenants not to solicit and not to recruit, but in Illinois a restrictive covenant in an employment agreement is valid only if it serves a “legitimate business interest.” The district court concluded that neither covenant did. Tech-staffing firms do not build relationships with clients that would justify restricting their employees from setting out on their own. View "Instant Tech. LLC v. DeFazio" on Justia Law

John and Jane Couto entered into a contract with Joseph General Contracting, Inc. for the purchase and construction of a home and carriage house. The trial court found that the contract existed also between the Coutos and Anthony Silvestri, the owner and president of Joseph General. After disputes arose regarding the construction of the dwellings, Joseph General sued the Coutos for, inter alia, breach of contract. The Coutos counterclaimed against Joseph General, Silvestri and Landel Realty, LLC. The trial court held Joseph General, Landel and Silvestri each jointly and severally liable for breach of contract and implied warranty, trespass and violation of the Connecticut Unfair Trade Practices Act (CUTPA). Silvestri appealed the propriety of these adverse rulings with respect to his personal liability. The Appellate Court affirmed the judgment pertaining to Silvestri in an individual capacity. The Supreme Court reversed the judgment of the Appellate Court as to the claims of breach and contract and implied warranty against Silvestri in his individual capacity and affirmed in all other respects, holding that the Appellate Court (1) erred in determining that Silvestri had incurred contractual obligations to the Coutos in his individual capacity; and (2) properly determined that Silvestri could be held individually liable for alleged violations of CUTPA. View "Joseph Gen. Contracting, Inc. v. Couto" on Justia Law

AVR, an Israeli corporation, and Interton, a Minnesota corporation, produce hearing aid technology, and entered into an Agreement, giving Interton a 20 percent interest in AVR. During negotiations, they discussed integrating AVR's DFC technology into Interton's products, and Interton's purchase of AVR's W.C. components. The Agreement incorporated terms indicating that the Agreement would be governed by the laws of the State of Israel and that “Any dispute between the parties relating to (or arising out of) the provisions of this Agreement … will be referred exclusively to the decision of a single arbitrator … bound by Israeli substantive law.” AVR commenced arbitration in Israel. Interton participated, but believed that disputes concerning DFC and W.C. were separate and not subject to arbitration. The Israeli Supreme Court rejected Interton's objection to the scope of arbitration, citing the "relating to (or arising out of)" language. An Israeli arbitrator awarded AVR $2,675,000 on its DFC and W.C. claims, plus fees and expenses. After the award became final in Israel, in accordance with the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. 201, AVR successfully petitioned the district court for recognition and enforcement in the US. The Eighth Circuit affirmed. The Convention does not allow Interton to relitigate the scope of arbitration in an American court. View "AVR Commc'ns, Ltd. v. Am. Hearing Sys., Inc." on Justia Law

Roy Caputo, Wade Faerber, and Matthew Neel leased commercial space from DKN Holdings LLC and were each jointly and severally liable on this contract. Caputo later sued DKN for, inter alia, breach of contract. DKN cross-complained for monies due. The court rejected Caputo’s claims and awarded $2.8 million in DKN’s cross-complaint. Before the statement of decision in the Caputo action was filed, DKN sued Faerber and Neel for breach of the lease. Faerber demurred, arguing that suit against him was barred by the rule against splitting a cause of action because DKN’s rights under the lease had been adjudicated in the Caputo action. The trial court sustained the demurrer and entered judgment for Faerber. The Court of Appeal affirmed, concluding that a second suit is barred after entry of judgment against one of the contracting parties. The Supreme Court reversed, holding (1) joint and several liability does not implicate the “primary rights” doctrine wherein a cause of action arises from the invasion of a primary right and gives rise to only one cause of action; (2) the facts of this case do not support preclusion; and (3) Plaintiff has separate breach of contract claims against each defendant alleged to be jointly and severally liable. View "DKN Holdings LLC v. Faerber" on Justia Law

VDF has trademark and patent rights in “CoffeeBerry” extract and licensed J&J to make and sell CoffeeBerry-based skin-care products. VDF was entitled to “running royalties,” based on the number of sales by the licensee, or by sublicensees. The license permitted J&J to sublicense its rights and required J&J to pay a minimum quarterly royalty if running royalties fell below a specified level. The license could not be assigned without written permission, but it did not forbid a change of control of J&J. J&J sublicensed Stiefel, a manufacturer of dermatological products. Four years later, J&J’s owners sold their interests to Stiefel for $8.5 million. J&J became a Stiefel subsidiary. After buying J&J’s stock, Stiefel engineered amended the sublicence, reducing the alternative minimum royalties that Stiefel owed J&J and diverting part of the license-revenue stream from VDF and J&J to Stiefel. VDF filed suit, alleging de facto assignment and breach of contract. The Seventh Circuit affirmed summary judgment in favor of the defendants with respect to claims that they engineered an unauthorized assignment of the license and that the $8.5 million paid for J&J was really a purchase of J&J’s anticipated sales revenue, so that part of that revenue should have gone to VDF as advance royalties. View "VDF Futureceuticals, Inc. v. Stiefel Labs, Inc." on Justia Law

This case involved a lease agreement between Greyhound Lines, Inc., the lessee, and Utah Transit Authority (UTA), the lessor, for a section of UTA’s intermodal transportation facility (intermodal hub). The insurance procurement provision of the lease agreement required Greyhound to purchase commercial general liability insurance covering UTA. At issue was whether the provision required that this insurance cover UTA’s negligent acts. This litigation resulted from a Greyhound passenger’s fall from a concrete pedestrian ramp during a layover at the intermodal hub. UTA admitted negligence in not installing a handrail on the pedestrian ramp. UTA settled the injured passenger’s claim and requested that Greyhound reimburse it for the cost of the claim under the lease agreement. Greyhound refused. The district court entered judgment against Greyhound. The Supreme Court affirmed, holding (1) under Utah law, an agreement to procure insurance for the benefit of another is not subject to strict construction; (2) the district court did not err when it concluded that the injured passenger’s claim triggered Greyhound’s duty to procure insurance that covered UTA’s negligent acts; and (3) the district court did not abuse its discretion in awarding UTA’s attorney fees. View "Utah Transit Auth. v. Greyhound Lines, Inc." on Justia Law

Procaccio purchased its workers' compensation insurance from West Bend. This litigation concerns three policy years: 2006, 2007, and 2010. Procaccio contends that West Bend’s offset procedure effectively nullified its Illinois Contracting Classification Premium Adjustment Program (ICC) credit for these policy years, resulting in substantial overcharges. The district court agreed and awarded a large sum in damages. The court concluded that the insurance policy contained no agreement to adjust the Schedule Modification credit after the ICC credit became due; West Bend needs parol evidence to prove its version of the parties’ agreement, but the insurance contract was fully integrated so any evidence of an oral understanding with Procaccio’s president is inadmissible; and while West Bend had the unilateral right to issue endorsements, that authority is cabined by contractual and statutory restrictions on its ability to alter its rates. The court further concluded that, even if the Schedule Modification credit was artificially inflated for these policy years, West Bend was not permitted to reduce it based on Procaccio’s ICC credit. Accordingly, the court affirmed the district court's judgment. View "West Bend Mut. Ins. Co. v. Procaccio Painting & Drywall" on Justia Law

Appellants Branch Banking & Trust Company ("BB&T"), Rusty Winfree, and Todd Fullington appealed a circuit court judgment entered in favor of Rex Nichols ("Sonny") and Claudene Nichols on the Nicholses' claims against appellants and on BB&T's counterclaim against the Nicholses. In late 2005, Sonny began talking to Winfree about obtaining financing from Colonial Bank ("Colonial"), Winfree's employer, for the purchase of approximately 500 acres of real property in Stapleton, Alabama. The Nicholses intended to develop the Stapleton property into a subdivision. In February 2006, the Nicholses executed a loan agreement with Colonial, in which Colonial agreed to lend the Nicholses close to $2.8 million to purchase the property. Sonny testified that in late 2007, as the maturity date on the note approached, he began contacting Colonial regarding renewing the loan; he further testified that, around the same time, Winfree became slow to communicate with him. Sonny also testified that before the February 27, 2008, maturity date on the promissory note, he spoke to Fullington about renewing the loan, with Colonial carrying the interest going forward. A few weeks later, the Nicholses were notified that Colonial would not carry the interest on the loan or provide additional funds for development of the property. Colonial ultimately renewed the terms of the note until Colonial failed in August 2009. The FDIC assumed control of its assets and liabilities. The FDIC sold many of Colonial's assets and liabilities to BB&T, including the Nicholses' loan. Fullington was hired by BB&T; Winfree was not. In early November 2009, BB&T informed the Nicholses that it would not lend them additional funds to develop the property. The Nicholses stopped making interest payments on the loan in November 2009. On March 10, 2010, the Nicholses sued the appellants and fictitiously named defendants, alleging fraud, reformation, negligence, wantonness, and breach of fiduciary duty against all appellants. Against BB&T, the Nicholses also alleged a claim of unjust enrichment and sought damages on a theory of promissory estoppel. The appellants separately moved the circuit court to dismiss the complaint pursuant to Rule 12(b)(6), Ala. R. Civ. P. BB&T also filed a counterclaim, alleging that the Nicholses had defaulted on their obligations under a June 2009 promissory note and seeking damages related to that default. The circuit court denied the motions to dismiss the complaint but granted a motion to strike the request for a jury trial. Upon review, the Supreme Court held that the circuit court erred in entering a judgment in favor of the Nicholses on their claims against the appellants and on BB&T's counterclaim against them. The judgment was reversed and the case remanded with instructions to the circuit court to enter a judgment in favor of the appellants on the Nicholses' claims against them and in favor of BB&T on its counterclaim against the Nicholses and to determine the damages to be awarded on the counterclaim. View "Branch Banking & Trust Company v. Nichols" on Justia Law