Justia Contracts Opinion Summaries

Jose Santoyo appealed a judgment that awarded damages to Darwin Savre for overpayments under the parties' lease and purchase option agreement and dismissed Santoyo's counterclaim for damages to the leased property. Savre owned and operated Savre's Heavy Truck & Auto Repair in Fargo. Santoyo owned the two parcels of real property and building that are the subject of the leases and option agreement in this case. The original lease term was from June 15, 2008, to June 15, 2010, with Savre paying rent of $2,300 per month until June 15, 2009, at which time the rent would increase to $2,708.33. About the time of the rent increase, Savre and Santoyo entered into a "Lease to Purchase Option Agreement." Although the lease and option agreement required Savre to pay his monthly rent payments on the first of each month, Savre was frequently late in his payments from the beginning of the lease. Santoyo accepted the payments and did not give Savre written notice of any intent to terminate the lease based on Savre's late payment. Savre made monthly payments in varying amounts under the option agreement, and the district court found he paid at least a total of $4,000 each month. In the fall of 2012, Savre and another individual formed JDDS, LLC, intending to use the entity to finance the purchase of Santoyo's property. The district court found, however, that Savre did not attempt to assign, convey, delegate or transfer his purchase option to JDDS. In late 2012, Savre made his first attempt to exercise his option to purchase the property with a handwritten notice to Santoyo. In early 2013, Savre made a second attempt to exercise the option with another handwritten notice to Santoyo. Santoyo did not respond to Savre. By the time of the second attempt to exercise the option, Savre had paid at least $180,000 in monthly payments, satisfying an option agreement requirement. After Santoyo did not sell him the property, Savre stopped making monthly payments. Santoyo initiated eviction proceedings against Savre in the district court. The court granted the eviction and entered judgment against Savre for unpaid rent and Santoyo's costs and disbursements. Savre vacated Santoyo's property at the end of June 2013 and began leasing a different space in Fargo. Savre subsequently commenced this action, alleging that Santoyo breached the option agreement when he failed to sell the property leased to Savre after he exercised his option and that Santoyo had been unjustly enriched. Santoyo denied the allegations and counterclaimed, alleging Savre violated his contractual and statutory duties by damaging the property upon being evicted from the premises. Santoyo argued the district court erred as a matter of law when the court concluded Santoyo had a contractual duty to sell his property to a third party that did not exist at the time of the agreement and had no rights under the agreement. The Supreme Court concluded the district court did not clearly err in finding that Santoyo had breached the agreement and that Santoyo had waived strict compliance with the option agreement's terms when he accepted Savre's late lease payments. Furthermore, the Court concluded the court failed to make sufficient findings of fact to explain dismissal of Santoyo's counterclaim for damages. The Court accordingly affirmed in part, reversed in part, and remanded for further proceedings. View "Savre v. Santoyo" on Justia Law

The Butte Local Development Corporation (BLDC) filed a complaint against Masters Group International alleging that Masters had failed to pay its obligations under a loan agreement, as modified. Masters filed a third-party complaint against Comerica Bank, alleging, among other claims, that Comerica breached a Forbearance Agreement. A jury found Masters liable to BLDC for $275,251 and found Comerica liable to Masters for a total of $52,037,593, which included punitive damages. The Supreme Court reversed the judgment against Comerica, holding (1) the district court did not abuse its discretion by implicitly denying Comerica’s severance motion; (2) the district court erred in applying Montana law despite the existence of a contractual Michigan choice-of-law provision, and had the district court properly applied Michigan law, Masters’ tort claims would not have been permitted to go to the jury as stand-alone tort claims, and the jury’s award of $10.5 million in punitive damages must be vacated; (3) the law of both Montana and Michigan supports the district court’s decision to submit the companion questions of contract formation and waiver to the jury; and (4) the district court abused its discretion by allowing Troubled Asset Relief Program (TARP) evidence to be presented to the jury. Remanded for a new trial on the contract claims applying Michigan law. View "Masters Group Int’l v. Comerica Bank" on Justia Law

After a bench trial, the district court found Defendant guilty of harassment. Defendant attended his sentencing hearing without his lawyer. After a brief colloquy with Defendant, the district court found that Defendant had validly waived his right to counsel. The court then sentenced Defendant to the maximum five-day jail term allowed for a term of probation for the harassment offense. The Intermediate Court of Appeals (ICA) upheld Defendant’s sentence, concluding that Defendant waived his right to counsel. The Supreme Court vacated Defendant’s sentence and remanded the case for a new sentencing hearing, holding that the record did not support a finding that Defendant’s waiver of counsel was knowingly and intelligently made. View "State v. Phua" on Justia Law

Montana Health Network, Inc. (MHN), which maintains the Montana Health Network Health Insurance Plan & Trust (the Plan), and Great Falls Orthopedic Associates (GFOA) executed a document (the Adoption Agreement) under which GFOA would adopt the Plan to obtain coverage for its employees. GFOA later stated that it wished to withdraw from the Plan. At the time, the Plan covered approximately thirty eligible GFOA employees. MHN denied GFOA’s attempt to withdraw from the Plan on the basis that GFOA failed to give timely notice to avoid automatic renewal of the Adoption Agreement. Thereafter, GFOA submitted waivers of coverage for twenty-seven of its covered employees and ceased submitting premium payments for those employees. MHN denied the waivers, but GFOA did not remit payment for the premiums of the twenty-seven employees who submitted waivers. MHN filed a breach of contract action against CFOA. The district court granted summary judgment to GFOA. The Supreme Court affirmed, holding that the district court (1) did not err in finding the contract ambiguous and in granting summary judgment to GFOA; and (2) GOFA was entitled to reasonable attorney’s fees accrued while defending this appeal. View "Mont. Health Network, Inc. v. Great Falls Orthopedic Assocs." on Justia Law

Bottrell Family Investments Limited Partnership and Defendants entered into a contract providing that Defendants would buy Bottrell’s interest in an LLC. Defendants failed to close and forfeited their share to Bottrell according to the terms of the contract. Bottrell later sold some of the LLC’s physical assets and transferred employees to other subsidiaries. Bottrell brought this action seeking damages under the contract as well as a declaratory judgment that the contract was still effective and that Defendants breached the contract. The district court awarded summary judgment to Defendants, concluding that Bottrell elected to pursue the remedy of forfeiture and rescinded the contract and that the doctrine of laches would bar Bottrell’s suit. The Supreme Court reversed, holding (1) the contract did not limit Bottrell to the remedies provided in the contract; and (2) Defendants did not show extraordinary circumstances or prejudice sufficient to justify the application of laches. Remanded for the district court to enter judgment in Bottrell’s favor and to calculate damages. View "Bottrell Family Invs. Ltd. P’ship v. Diversified Fin., Inc." on Justia Law

Plaintiffs own mineral interests in Chalybeat Springs and granted 21 oil and gas leases based on those interests. EnerQuest and BP America are the lessees. The property interests in Chalybeat, including the leases at issue, are subject to a Unit Agreement that establishes how the oil and gas extracted from certain formations will be divided and provides for a unit operator with the exclusive right to develop the oil and gas resources described in the Unit Agreement. In the late 1990s, PetroQuest became the operator of the Chalybeat Unit. Unhappy with the level of extraction, lessors filed suit against EnerQuest and BP, seeking partial cancellation of the oil and gas leases on the ground that EnerQuest and BP breached implied covenants in the leases to develop the oil and gas minerals. The district court granted the companies’ motion for summary judgment, reasoning that the lessors had not provided EnerQuest and BP with required notice and opportunity to cure a breach. The Eighth Circuit affirmed, rejecting an argument that the plaintiffs’ earlier effort to dissolve the Chalybeat Unit constituted notice. View "Lewis v. Enerquest Oil & Gas, LLC" on Justia Law

In 2011, Wanchetta Reese, individually and as owner and beneficiary of the life-insurance policy issued on the life of her husband Lee Reese, filed a complaint in the Etowah Circuit Court against the defendants, Alfa Life Insurance Corporation, Josh Griffith and Judy Russell, two licensed Alfa insurance agents. Reese advised Defendants that she sought to obtain life insurance on her husband so that she would have funds available to bury him in the event of his death. Mr. Reese suffered from several chronic conditions, including kidney disease and diabetes. Reese contended that after being advised of Lee Reese's medical condition, Griffith stated to Reese that he needed to ask Russell for advice in completing the insurance application. In the presence of Reese, Griffith advised Russell Lee Reese's medical issues, and Russell advised Griffith, in the presence of Reese, to not put that information in the application. Lee Reese passed away unexpectedly on May 23, 2010. Mrs. Reese turned to defendants to make a claim for benefits, and Alfa denied it in a letter dated August 16, 2010. In her complaint, Mrs. Reese raised several claims including breach of contract, bad faith, fraud and the tort of outrage. Defendants moved to dismiss, and the trial court granted the motion with respect to the outrage claim, and denied as to Reese's other claims. The Supreme Court, after review, reversed the trial court's denial of defendants' motion as to the remaining claims: the undisputed evidence showed: (1) that Reese improperly relied on the agents' oral representations regarding the validity of the application without making any attempt to read the life-insurance policy application; (2) that Reese made no attempt to inquire into or to investigate any inconsistencies between the agents' oral representations and the language of the application; and (3) that no exception to the duty to read applied here. View "Alfa Life Insurance Corp. v. Reese" on Justia Law

Lawson sold computer maintenance and support services for StorageTek. He was paid a base salary and commissions on his sales under the company’s annual incentive plan. Sun Microsystems acquired StorageTek in 2005. At the time Lawson was working on a large sale to JPMorgan Chase, but the deal did not close until 2006. If StorageTek’s 2005 incentive plan applied, Lawson would earn a commission, as high as $1.8 million. If the sale fell under Sun’s 2006 incentive plan, his commission would be about $54,000. Sun determined that the 2006 plan applied. Lawson sued for breach of contract and violation of Indiana’s Wage Claim Statute. The district court rejected the statutory wage claim but submitted the contract claim to a jury, which awarded Lawson $1.5 million in damages. The Seventh Circuit reversed. The sale did not qualify for a commission under the terms of the 2005 plan. Although the original plan documents said the plan would remain in effect until superseded by a new one, a September 2005 amendment set a definite termination date for the plan year: December 25, 2005. To earn a commission under the 2005 plan, sales had to be final and invoiced by that date. View "Lawson v. Sun Microsystems, Inc." on Justia Law

Tilstra (an Ontario business) sued a Wisconsin manufacturer of dairy equipment, BouMatic. Tilstra had been a BouMatic dealer for about 20 years. Tilstra’s territory included “arguably the richest dairy county in Canada,” on which 55,000 dairy cows grazed. His dealership was making a profit of $400,000 a year. The dealership contract reserved to BouMatic “the right to change, at its sole discretion, the assigned territory,” but provided that “BouMatic shall not terminate this Agreement or effect a substantial change in the competitive circumstances of this Agreement without good cause and only upon at least ninety (90) days’ advance written notice …. The term ‘good cause’ means Dealer’s failure to comply substantially with essential and reasonable requirements imposed upon Dealer by BouMatic.” Tilstra claimed that by devious means, BouMatic forced him to sell his dealership to a neighboring BouMatic dealer at a below-market price. The jury awarded Tilstra $471,124 in damages. The Seventh Circuit affirmed, stating that BouMatic never gave Tilstra written notice of any alleged failure to comply. View "Tilstra v. BouMatic LLC" on Justia Law

Plaintiffs filed suit against the United States seeking enforcement of a settlement agreement. At issue was whether the actions taken by the district court in 1985 - verbally expressing approval of the settlement terms, dismissing the case on the merits in a brief order, and subsequently signing and so‐ordering the parties’ settlement agreement - sufficed to retain jurisdiction over the enforcement of the agreement. The court concluded that the district court did not have jurisdiction over the enforcement of the settlement agreement because the district court’s order of dismissal failed expressly to retain jurisdiction or to incorporate the terms of the agreement, and because the district court’s so‐ordering of the settlement agreement took place after the court had already relinquished jurisdiction over the case and was thus ineffective to retain it. Accordingly, the court vacated and remanded. View "Hendrickson v. United States" on Justia Law