Justia Contracts Opinion Summaries

A pathologist who was an officer, director, shareholder, and employee of a closely held professional corporation was subject to annual employment agreements and the corporation’s bylaws, which required shareholders to be employed by the corporation. The employment agreement allowed for termination “for any reason or no reason,” and the bylaws provided that a shareholder who ceased to be an employee would have their shares redeemed at book value. After several incidents involving the pathologist’s performance, the board voted not to renew his employment agreement. As a result, his employment ended, and the corporation sought to redeem his shares at book value, as specified in the bylaws.The pathologist filed suit in the District Court for Lancaster County, alleging breach of fiduciary duty, shareholder oppression justifying judicial dissolution, and seeking declaratory relief regarding the value of his shares and the enforceability of a noncompetition provision. The corporation moved for summary judgment. The district court granted summary judgment in part, dismissing claims related to termination of employment and the noncompetition provision, but allowed discovery and further proceedings on the valuation and redemption of shares. After additional discovery, the corporation again moved for summary judgment. The district court granted summary judgment on the remaining claims, finding no genuine issue of material fact and that the corporation had acted in accordance with the agreements. The court also denied the pathologist’s motions to compel further discovery and to continue the summary judgment hearing.On appeal, the Nebraska Supreme Court reviewed the grant of summary judgment de novo and the discovery rulings for abuse of discretion. The court held that the pathologist had no reasonable expectation of continued employment given the clear terms of the agreements he signed, and that the corporation’s actions in redeeming his shares at book value did not constitute a breach of fiduciary duty or shareholder oppression. The court affirmed the district court’s judgment in all respects. View "Noel v. Pathology Med. Servs." on Justia Law

A lessor and two lessees entered into a lease with an option to purchase a residential property in Calhoun County, Alabama. The agreement required the lessees to make monthly rent payments, annual payments, and an initial deposit, with certain payments to be credited toward the purchase price if the option was exercised. Disputes arose near the end of the lease term regarding the timeliness of the lessees’ payments and whether the lessees had complied with all contractual requirements, including providing written notice of their intent to purchase.The Calhoun Circuit Court conducted a bench trial and found that a valid lease-to-purchase contract existed, that the lessees had complied with its terms, and that the lessor still owed a mortgage on the property. The court ordered that all funds held by the parties be paid to the lessor to reduce the mortgage principal, required the lessor to satisfy the mortgage and convey clear title to the lessees by a specified date, and assigned responsibility for property taxes to the lessees. The lessor’s postjudgment motion, which challenged the findings regarding compliance and payment timeliness, was denied.On appeal, the Supreme Court of Alabama reviewed the trial court’s factual findings under the ore tenus standard, deferring to the trial court’s credibility determinations unless clearly erroneous. The Supreme Court affirmed the trial court’s finding that the lessees had not breached the lease, concluding that the lessor’s actions had contributed to any payment delays. However, the Supreme Court reversed the trial court’s judgment to the extent it credited monthly rent payments toward the purchase price, holding that only the initial deposit and annual payments should be applied, as the contract unambiguously required. The case was remanded for further proceedings consistent with this holding. View "McCain v. Sneed" on Justia Law

The case involved two related companies and three individuals who operated a business targeting immigrants detained by U.S. Immigration and Customs Enforcement (ICE) and eligible for release on immigration bonds. The companies marketed their services as an affordable way to secure release, but in reality, they charged high fees for services that were often misrepresented or not provided. The agreements were complex, mostly in English, and required significant upfront and recurring payments. Most consumers did not understand the terms and relied on the companies’ oral representations, which were deceptive. The business was not licensed as a bail bond agent or surety, and the defendants’ practices violated federal and state consumer protection laws.After the plaintiffs—the Consumer Financial Protection Bureau, Massachusetts, New York, and Virginia—filed suit in the United States District Court for the Western District of Virginia, the defendants repeatedly failed to comply with discovery obligations and court orders. They did not produce required documents, ignored deadlines, and failed to appear at hearings. The district court, after multiple warnings and opportunities to comply, imposed default judgment as a sanction for this misconduct. The court also excluded the defendants’ late-disclosed witnesses and exhibits from the remedies hearing, finding the nondisclosures unjustified and prejudicial.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court’s decisions. The Fourth Circuit held that the default judgment was an appropriate sanction for the defendants’ repeated and willful noncompliance. The exclusion of evidence and witnesses was also upheld, as was the issuance of a permanent injunction and the calculation of monetary relief, including restitution and civil penalties totaling approximately $366.5 million. The court found no abuse of discretion or legal error in the district court’s rulings and affirmed the final judgment in all respects. View "Consumer Financial Protection Bureau v. Nexus Services, Inc." on Justia Law

A black man was hired as the first black city manager of a Texas city and led several major development initiatives. His tenure became contentious, especially after two new city council members, who opposed his policies, were elected. The conflict allegedly took on a racial character, and the city manager reported race-based discrimination. Eventually, the city council voted to part ways with him “without cause,” entering into a separation agreement that included a severance payment and a non-disparagement clause. After his departure, some council members publicly criticized him and later persuaded the council to rescind the separation agreement, citing a legal opinion that it was invalid. The city demanded the return of the severance payment, prompting the former city manager to sue, alleging racial discrimination under 42 U.S.C. § 1981 and breach of contract under Texas law.The United States District Court for the Western District of Texas granted summary judgment to the plaintiff on the validity of the separation agreement and denied the city’s motions for judgment as a matter of law. The case proceeded to trial, where a jury found for the plaintiff on both claims, awarding substantial damages. The district court entered judgment accordingly, later suggesting remittitur due to statutory limits on damages for breach of contract, which the plaintiff accepted.The United States Court of Appeals for the Fifth Circuit reviewed the case. It held that the plaintiff failed to establish municipal liability for racial discrimination under § 1981 and § 1983 because he could not show that a majority of the city council acted with discriminatory intent, nor could he use the “cat’s paw” theory to impute animus under Monell. However, the court affirmed the district court’s judgment that the separation agreement was valid and enforceable, and that the city breached the contract by attempting to rescind it. The court reversed the judgment on the civil rights claim, affirmed the breach of contract ruling, and remanded for consideration of attorney’s fees. View "Jones v. City of Hutto" on Justia Law

A fuel distribution company sought to acquire a competitor in Western Alaska, prompting the State to sue for anticompetitive conduct under Alaska’s consumer protection laws. To resolve the dispute, the State and the company negotiated a consent decree requiring the company to divest a portion of its fuel storage capacity in Bethel to another distributor, Delta Western, before completing the acquisition. The consent decree specified that it would expire in 30 years or could be dissolved by court order for good cause. Delta Western was not a party to the consent decree, but entered into a separate fuel storage contract with the acquiring company as required by the decree. The contract’s term extended beyond the initial five years at Delta Western’s option.Years later, the Superior Court for the State of Alaska, Second Judicial District, Nome, dissolved the consent decree at the acquiring company’s request. The company then notified Delta Western that it considered the fuel storage contract terminated as a result. Delta Western filed a breach of contract action in Anchorage Superior Court, seeking to enforce the contract and arguing that its terms were independent of the consent decree. The contract case was transferred to Nome Superior Court, which issued a preliminary ruling that the contract remained valid despite the dissolution of the consent decree. The court also vacated its initial order dissolving the consent decree to allow Delta Western to intervene and present its position.The Supreme Court of the State of Alaska reviewed whether dissolution of the consent decree automatically terminated the fuel storage contract and whether the superior court abused its discretion by permitting Delta Western to intervene. The court held that dissolution of the consent decree did not automatically void the contract between the parties, and that the superior court did not abuse its discretion in allowing Delta Western to intervene. The Supreme Court affirmed the superior court’s decisions and lifted the stay on the contract case. View "Crowley Marine Services, Inc. v. State of Alaska" on Justia Law

Noah Gilbert purchased a motor vehicle insurance policy from Progressive Northwestern Insurance Company, initially declining underinsured motorist (UIM) coverage but later adding a UIM endorsement with $25,000 per person and $50,000 per accident limits. The policy included an offset provision, reducing any UIM payout by amounts received from another party’s insurance. Gilbert paid premiums for this coverage but never filed a UIM claim or experienced an accident triggering such coverage. He later filed a putative class action, alleging that Progressive’s UIM coverage was illusory under Idaho law and asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, fraud, and constructive fraud.The District Court of the Fourth Judicial District, Ada County, reviewed cross-motions for summary judgment. The court raised the issue of standing and ultimately held that Gilbert lacked standing because he had not filed a claim or been denied coverage, and thus had not suffered an injury-in-fact. Alternatively, the court found that Gilbert’s claims failed on the merits: there was no breach of contract or bad faith without a denied claim, no damages to support fraud or constructive fraud, and unjust enrichment was unavailable due to the existence of a valid contract. The court granted summary judgment for Progressive and denied Gilbert’s motion for class certification as moot.On appeal, the Supreme Court of the State of Idaho held that Gilbert did have standing, as payment of premiums for allegedly illusory coverage constituted a concrete injury. However, the Court affirmed the district court’s judgment, finding that Gilbert’s claims failed on the merits because he never filed a claim, was never denied coverage, and did not incur damages. The Court also affirmed the dismissal of the unjust enrichment claim, as an enforceable contract provided an adequate legal remedy. The judgment in favor of Progressive was affirmed. View "Gilbert v. Progressive Northwestern Insurance Co." on Justia Law

Two parties, both experienced in the grocery business, negotiated the sale of a grocery store’s inventory, stock, and equipment for $175,000. The agreement was reached orally and memorialized with a handshake, but no written contract was signed. Following the oral agreement, the buyers took control of the store, closed it for remodeling, met with employees, and were publicly identified as the new owners. However, within two weeks, the buyers withdrew from the deal, citing issues with a third-party wholesaler. The sellers, having already closed the store and lost perishable goods, were unable to find another buyer and subsequently filed suit.The sellers brought ten claims in the Lee County Circuit Court, including breach of contract, estoppel, and negligent misrepresentation. The buyers moved to dismiss, arguing that the Statute of Frauds barred enforcement of the oral agreement because the sale involved goods valued over $500 and no signed writing existed. The circuit court agreed, dismissing the contract and estoppel-based claims, as well as the negligent misrepresentation claim, but allowed other claims to proceed. The sellers appealed the dismissal of the contract and estoppel claims.The Supreme Court of Mississippi reviewed the case de novo. It held that the sellers’ complaint plausibly invoked two exceptions to the Statute of Frauds under Mississippi law: the merchants’ exception and the part-performance exception. The Court found that, at the motion to dismiss stage, it could not determine as a matter of law that no valid contract existed under these exceptions. Therefore, the Supreme Court of Mississippi reversed the circuit court’s dismissal of claims (1) through (7) and remanded the case for further proceedings. View "Palmer's Grocery Inc. v. Chandler's JKE, Inc." on Justia Law

Jay Gould served as CEO of Interface, Inc., a carpet manufacturer. After an incident at an annual sales meeting in which Gould allegedly became intoxicated and verbally abused an employee, Interface’s board of directors terminated his employment for cause. This followed a prior warning and an investigation by King & Spalding LLP, which corroborated the allegations. Under Gould’s employment agreement, termination for cause resulted in significantly reduced compensation compared to termination without cause.Gould filed suit in the United States District Court for the Northern District of Georgia, alleging breach of contract and arguing that Interface’s determination of cause was made in bad faith. Interface moved for summary judgment, asserting that the contract gave it absolute discretion to determine cause, or, alternatively, that it had acted in good faith. Gould’s arguments in the district court focused on the company’s alleged lack of good faith, contending that the investigation was a sham. The magistrate judge recommended granting summary judgment to Interface, finding both that the company had absolute discretion and, alternatively, that Gould had not shown bad faith. The district court adopted this recommendation and denied Gould’s subsequent motion for reconsideration, ruling that Gould had waived a new argument that Interface had no discretion to determine cause.On appeal to the United States Court of Appeals for the Eleventh Circuit, Gould advanced the new theory that Interface had no discretion to determine cause under the contract. The Eleventh Circuit held that this theory was a new issue, not a subsidiary argument, and that Gould had forfeited it by failing to raise it in the district court. The court affirmed the district court’s judgment, concluding that Gould’s remaining claims did not warrant reversal. View "Gould v. Interface, Inc." on Justia Law

A group of broadband internet providers in Georgia entered into contracts with the Georgia Department of Transportation to install and maintain their equipment along public rights of way. These contracts set annual permit fees and included a clause stating that the contracts would remain in effect until the parties entered into a new agreement. In 2021, the Department amended its rules, increasing permit fees and requiring providers to sign new contracts. The providers refused, and the Department notified them that, absent new agreements, they would be subject to the new rules. The providers then filed suit, seeking a declaratory judgment that their contracts were enforceable, not terminable at will, and that the Department’s actions impaired their contractual rights in violation of the United States and Georgia Constitutions.The Superior Court denied the State’s motion to dismiss, finding that sovereign immunity was waived under Article I, Section II, Paragraph V(b) of the Georgia Constitution because the providers sought declaratory relief from alleged unconstitutional acts. The court granted summary judgment to the providers, holding that the contracts were enforceable and not terminable at will by the Department.On appeal, the Supreme Court of Georgia reviewed the case. The Court agreed with the lower court that sovereign immunity was waived for this declaratory judgment action, as the providers sought relief from acts allegedly violating constitutional provisions. However, the Supreme Court of Georgia disagreed with the trial court’s interpretation of the contracts. It held that the contracts were of indefinite duration and, under longstanding Georgia law, were terminable at will by either party with notice. The Court affirmed the waiver of sovereign immunity but vacated the judgment granting declaratory and injunctive relief, remanding the case for further proceedings consistent with its opinion. View "State v. Dovetel Communication, LLC" on Justia Law

Ultra Group of Companies and Prince and Prince, LLC entered into a contract regarding the placement and operation of Ultra’s coin-operated amusement machines on Prince’s premises. A dispute arose between the parties, leading to arbitration before a Georgia Lottery Corporation (GLC) hearing officer. On July 30, 2021, the hearing officer issued an “Interim Award” that resolved most substantive contract issues in favor of Prince but left claims for fees and costs unresolved. On September 17, 2021, the hearing officer issued a “Final Award” that incorporated the Interim Award, split arbitration costs, and awarded attorney fees to Ultra. The parties received the Final Award on October 4, 2021.Ultra filed a “Request for Reconsideration and Motion for Review” with the GLC’s chief executive officer (CEO) on October 14, 2021, which was denied by operation of GLC rules after 30 days without a ruling. On December 10, 2021, Ultra filed a timely petition for certiorari to the Superior Court of Fulton County. Prince moved to dismiss, arguing Ultra failed to preserve its appeal rights by not seeking review of the Interim Award within 10 days. The Superior Court of Fulton County agreed and dismissed Ultra’s petition. Ultra appealed to the Court of Appeals of Georgia, which affirmed the dismissal without opinion. Ultra’s motion for reconsideration was denied, and Ultra petitioned the Supreme Court of Georgia for certiorari.The Supreme Court of Georgia held that only the Final Award constituted an appealable order under the GLC’s rules, as it resolved all issues presented in the arbitration. Ultra’s appeal from the Final Award was timely, and the lower courts erred in dismissing the appeal. The Supreme Court reversed the judgment of the Court of Appeals. View "Ultra Group of Companies, Inc. v. Prince and Prince, LLC" on Justia Law