Justia Contracts Opinion Summaries

Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V. (Fraunhofer) is a non-profit research organization that developed and patented multicarrier modulation (MCM) technology used in satellite radio. In 1998, Fraunhofer granted WorldSpace International Network, Inc. (WorldSpace) an exclusive license to its MCM technology patents. Fraunhofer also collaborated with XM Satellite Radio (XM) to develop a satellite radio system, requiring XM to obtain a sublicense from WorldSpace. XM later merged with Sirius Satellite Radio to form Sirius XM Radio Inc. (SXM), which continued using the XM system. In 2010, WorldSpace filed for bankruptcy, and Fraunhofer claimed the Master Agreement was terminated, reverting patent rights to Fraunhofer. In 2015, Fraunhofer notified SXM of alleged patent infringement and filed a lawsuit in 2017.The United States District Court for the District of Delaware initially dismissed the case, ruling SXM had a valid license. The Federal Circuit vacated this decision and remanded the case. On remand, the district court granted summary judgment for SXM, concluding Fraunhofer's claims were barred by equitable estoppel due to Fraunhofer's delay in asserting its rights and SXM's reliance on this delay to its detriment.The United States Court of Appeals for the Federal Circuit reviewed the case and reversed the district court's summary judgment. The Federal Circuit agreed that Fraunhofer's delay constituted misleading conduct but found that SXM did not indisputably rely on this conduct in deciding to migrate to the high-band system. The court noted that SXM's decision was based on business pragmatics rather than reliance on Fraunhofer's silence. The case was remanded for further proceedings to determine if SXM relied on Fraunhofer's conduct and if it was prejudiced by this reliance. View "Fraunhofer-Gesellschaft v. Sirius XM Radio Inc." on Justia Law

The plaintiff, a cryptocurrency entrepreneur, initially filed a lawsuit in Puerto Rico against the defendants, alleging breach of fiduciary duty, fraud, breach of contract, promissory estoppel, and unjust enrichment. The Puerto Rico court dismissed the case, citing a forum selection clause in the agreement between the parties that mandated litigation in Delaware.Following the dismissal, the plaintiff filed a new lawsuit in Delaware. The defendants counterclaimed, alleging breach of the forum selection clause and seeking damages for the expenses incurred in the Puerto Rico litigation. The plaintiff moved to dismiss this counterclaim, arguing that the defendants could not recover these expenses.The Court of Chancery of the State of Delaware reviewed the case. The court held that the defendants could indeed seek damages for breach of the forum selection clause, measured by the expenses incurred in the Puerto Rico litigation. The court referenced the Delaware Supreme Court's decision in El Paso, which allowed for the recovery of such damages. The court also clarified that the American Rule, which generally requires parties to bear their own litigation costs, does not preclude the recovery of damages measured by litigation expenses when those expenses are the direct result of a breach of contract.The court further noted that the forum selection clause created a contractual right for the defendants to be free from litigation in any forum other than Delaware. The court rejected the plaintiff's argument that the defendants should have sought these expenses in the Puerto Rico court, affirming that the defendants were entitled to enforce their contractual rights in Delaware.Ultimately, the Court of Chancery denied the plaintiff's motion to dismiss the counterclaim, allowing the defendants to pursue their claim for damages resulting from the breach of the forum selection clause. View "Namdar v. Fried" on Justia Law

Coyote Aviation Corporation (Coyote) entered into a 20-year lease with the City of Redlands (City) on April 4, 2000, for property at the Redlands Municipal Airport. The lease included two 15-year options to extend. An amended lease was signed on September 5, 2000, with the same termination date of April 4, 2020. Coyote believed the lease should terminate on September 5, 2020, but no written amendment was made. In June 2020, Coyote attempted to exercise the extension option, but the City rejected it, stating the lease had already terminated. The City issued a 30-day notice to quit, and Coyote filed a lawsuit for breach of contract and other claims.The Superior Court of San Bernardino County sustained the City’s demurrer to Coyote’s first amended complaint (FAC) and entered judgment against Coyote. The court found that Coyote failed to provide timely written notice to exercise the extension option as required by the lease. The court also rejected Coyote’s claims of breach of the implied covenant of good faith and fair dealing, declaratory relief, and promissory estoppel, finding no clear promise by the City to amend the lease termination date.The City filed an unlawful detainer action when Coyote did not vacate the property. The trial court granted summary judgment in favor of the City, ordering Coyote to vacate. The court found no triable issues of fact regarding the timeliness of Coyote’s notice to exercise the extension option and rejected Coyote’s arguments of estoppel and waiver.The California Court of Appeal, Fourth Appellate District, Division Two, affirmed the trial court’s decisions. The court held that the lease’s terms were clear and unambiguous, requiring written notice to exercise the extension option. The court also found that City officials did not have the authority to amend the lease orally or accept late notice. The court upheld the trial court’s rulings on the demurrer and summary judgment, denying Coyote’s claims and requests for leave to amend. View "Coyote Aviation Corp. v. City of Redlands" on Justia Law

The case involves a criminal matter where the defendant was charged with four Measure 11 offenses, including first-degree unlawful sexual penetration and three counts of first-degree sexual abuse against a child under twelve. The parties reached a plea agreement where the defendant pleaded guilty to a lesser-included offense of attempted first-degree unlawful sexual penetration and one count of first-degree sexual abuse, with the remaining charges to be dismissed. The plea agreement included a stipulation that the court "may impose" consecutive sentences on the two charges.At sentencing, the defendant argued that Oregon law required the trial court to make specific findings under ORS 137.123(5) before imposing consecutive sentences, as the offenses arose from a continuous and uninterrupted course of conduct. The state contended that the stipulation in the plea agreement allowed the court to impose consecutive sentences without making those findings. After a discussion, the defendant withdrew his legal argument and affirmed that the court could impose consecutive sentences without the statutory findings. The trial court then imposed consecutive sentences totaling 180 months.The Court of Appeals reversed, concluding that the plea agreement did not prevent the defendant from arguing that consecutive sentences were legally impermissible without the required findings, and that the trial court erred in concluding that there was no plea agreement. The state petitioned for review.The Oregon Supreme Court reviewed the case and determined that the plea agreement's stipulation that the court "may impose" consecutive sentences was ambiguous. The court concluded that the trial court did not err in addressing the ambiguity by seeking clarification and proceeding to sentence the defendant after he withdrew his legal argument. The Supreme Court reversed the Court of Appeals' decision and affirmed the trial court's judgment, holding that the trial court acted appropriately under the circumstances. View "State v. Walsh" on Justia Law

The Department of Veterans Affairs (VA) issued a request for quotes for leasing a cranial surgical navigation system. Beacon Point Associates LLC submitted a quote, which included a payment schedule and terms stating the government must exercise all renewal options if it obtained sufficient funds. The VA awarded the contract to Beacon Point, which included the same payment schedule but did not explicitly incorporate the terms of Beacon Point’s quote.The Civilian Board of Contract Appeals dismissed Beacon Point’s appeal for failure to state a claim, determining that the contract did not incorporate the terms of Beacon Point’s quote. Beacon Point then appealed to the United States Court of Appeals for the Federal Circuit.The United States Court of Appeals for the Federal Circuit reviewed the case and affirmed the Board’s decision. The court held that the contract did not incorporate Beacon Point’s quote by reference. The court noted that the contract’s reference to the quote in block 29 did not clearly communicate an intent to incorporate the quote’s terms into the contract. The court emphasized that incorporation by reference requires clear and express language, which was absent in this case. Consequently, the VA retained complete discretion to exercise the option years as per the incorporated Federal Acquisition Regulation (FAR) clauses, and Beacon Point could not rely on the terms of its quote as binding obligations on the VA. The court affirmed the Board’s dismissal of Beacon Point’s appeal. View "Beacon Point Associates LLC v. Department of Veterans Affairs" on Justia Law

Matthew Bare sued his former employer, Rainforest Alliance, Inc., in the Superior Court of the District of Columbia, alleging that the company failed to pay him a redundancy settlement after his position was made redundant due to a reorganization. Bare claimed that he had agreed to resign in exchange for the settlement, which was contingent upon his execution of a release-of-claims agreement. However, after Bare made critical comments about the company, Rainforest Alliance terminated him and refused to pay the settlement, leading to claims of breach of contract and violation of the District of Columbia Wage Payment and Collection Law.The Superior Court dismissed Bare's complaint with prejudice, agreeing with Rainforest Alliance that Bare had failed to allege the occurrence of a condition precedent—specifically, the execution of a release agreement. The court found that without alleging this, Bare could not claim he had earned the redundancy payment under the contract or the wage law. Bare had argued that the issue of the condition precedent was a factual matter for summary judgment or trial and that Rainforest Alliance had waived the condition by not providing a release agreement. He also requested leave to amend his complaint if the motion to dismiss was granted.The District of Columbia Court of Appeals reviewed the case and held that the trial court should have granted Bare's request to amend his complaint. The appellate court found that Bare's request to amend was his first, the case had been pending for a short time, there was no evidence of bad faith or dilatory motives, and there was no prejudice to Rainforest Alliance. The court also determined that Bare's proposed amendment, which would include allegations that Rainforest Alliance waived the condition precedent by not providing a release agreement, was not futile. Consequently, the appellate court reversed the dismissal and remanded the case for further proceedings. View "Bare v. Rainforest Alliance, Inc." on Justia Law

R & J Sheet Metal, Inc. (R&J) appealed an order directing it to pay contribution to W.E. O’Neil Construction Co. of California (WEO), Continental Casualty Company (Continental), and Western Surety Company (Western) (collectively, the WEO defendants). R&J and the WEO defendants were co-debtors on a joint and several judgment in favor of Joseph Karscig, Inc., doing business as Architectural Systems, Inc. (ASI). R&J appealed the judgment, while the WEO defendants satisfied it and sought contribution from R&J. The trial court initially took the motion off calendar due to R&J’s pending appeal. After the appeal was resolved, the WEO defendants filed a second contribution motion, including postjudgment interest, which the trial court granted, ordering R&J to pay one-half of the judgment.The Superior Court of Los Angeles County granted the WEO defendants' motion for contribution, deeming them a single entity for liability purposes and ordering R&J to pay one-half of the judgment. R&J argued the motion was untimely and that the trial court should not have allocated liability pro rata without taking evidence on the judgment debtors’ proportionate liability. R&J also contended that Western should not have been included as a single entity with WEO and Continental.The California Court of Appeal, Second Appellate District, Division One, affirmed the trial court’s order. The appellate court held that the original contribution motion was valid despite being filed during the pendency of R&J’s appeal, as taking the motion off calendar did not affect the appeal’s status quo. The court also found that the second motion was a permissible update of the original motion to include postjudgment interest. The court rejected R&J’s argument that the trial court should have determined the judgment debtors’ proportionate liability through an evidentiary hearing, holding that pro rata contribution was proper in the absence of a judgment or underlying instrument allocating liability. The court also found that R&J had forfeited its argument regarding Western’s inclusion in a single entity with WEO and Continental by failing to raise it below. View "R & J Sheet Metal v. W.E. O'Neil Construction" on Justia Law

Epic Systems Corporation sued Tata Consultancy Services Limited and Tata America International Corporation for unauthorized use of confidential information. A jury awarded Epic $240 million in compensatory damages and $700 million in punitive damages. The district court reduced these amounts to $140 million and $280 million, respectively, and entered judgment in 2017. The Seventh Circuit affirmed the compensatory damages but limited the punitive damages to $140 million, leading to a new judgment in 2022. Tata agreed to pay postjudgment interest on the compensatory damages from 2017 but argued that interest on the punitive damages should start from 2022. The district court sided with Tata, and Epic appealed.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court noted that both the 2017 and 2022 judgments included $140 million in compensatory damages and at least $140 million in punitive damages. The court referenced the Supreme Court's decision in Kaiser Aluminum & Chemical Corp. v. Bonjorno, which held that postjudgment interest should be based on the date when damages became ascertainable. The Seventh Circuit concluded that the $140 million punitive damages were ascertainable from the 2017 judgment, as neither the district court nor the appellate court had ever deemed this amount excessive.The Seventh Circuit reversed the district court's decision and remanded the case with instructions to award postjudgment interest on the $140 million punitive damages starting from October 3, 2017. View "Epic Systems Corporation v Tata Consultancy Services Limited" on Justia Law

EdgeRock Development, LLC developed a planned unit development in Westfield, Indiana, comprising retail and residential projects. EdgeRock contracted with C.H. Garmong & Son, Inc. and Fox Contractors Corp. to develop the lots. When EdgeRock fell behind on payments, Garmong and Fox recorded construction liens on all five lots, including those sold to ZPS Westfield, LLC and a nonparty. The contractors sued EdgeRock for breach of contract and sought to foreclose the liens.The Hamilton Superior Court awarded the contractors most of the relief they sought, including foreclosure of the construction liens. The Indiana Court of Appeals reversed the foreclosure, concluding the liens were overstated as they were not limited to debts for improvements directly benefiting the properties to which the liens attached.The Indiana Supreme Court reviewed the case to address the validity and scope of the construction liens and the priority between the construction liens and First Bank Richmond’s mortgage lien. The court held that a construction lien secures only the debt for improvements directly benefiting the property to which the lien attaches. Therefore, the contractors can foreclose the liens on each property to recover only those amounts. The court also concluded that First Bank’s mortgage lien is senior to the construction liens for the amount loaned to satisfy Garmong’s prior construction lien but junior for the remaining amounts.The court affirmed the trial court’s judgment in part, reversed in part, and remanded for the trial court to amend the judgment consistent with its opinion. The court also noted that its holdings do not disturb the in personam judgments against EdgeRock on Garmong’s and Fox’s breach-of-contract claims. View "Edgerock Development, LLC v. C.H. Garmong & Son Inc" on Justia Law

In 2018, Marriott announced a data breach affecting the guest reservation database of Starwood Hotels & Resorts Worldwide, which Marriott had acquired in 2016. The breach exposed personal information of approximately 133.7 million guests, including some payment card information. Plaintiffs filed class action lawsuits against Marriott and Accenture, a third-party IT service provider for Starwood and Marriott during the breach. The cases were consolidated for pretrial proceedings in the District of Maryland.The district court initially certified multiple state-specific damages classes against Marriott and issue classes against both Marriott and Accenture. However, the court did not address the effect of a class-action waiver in the Starwood Preferred Guest Program (SPG) contract, which Marriott argued precluded class certification. The Fourth Circuit vacated the class certification, instructing the district court to consider the class-action waiver's impact.On remand, the district court again certified the classes, holding that Marriott had waived its right to enforce the class-action waiver by participating in multidistrict litigation (MDL) and by agreeing to pretrial proceedings in Maryland, contrary to the SPG contract's venue and choice-of-law provisions. The court also suggested that the class-action waiver might be unenforceable under Rule 23 of the Federal Rules of Civil Procedure.The United States Court of Appeals for the Fourth Circuit reviewed the case and reversed the district court's decision. The Fourth Circuit held that Marriott did not waive its right to enforce the class-action waiver and that the waiver was valid and enforceable. The court found that the waiver applied to the plaintiffs' claims, including consumer protection and negligence claims, as they were related to the SPG Program. Consequently, the court reversed the certification of all classes against Marriott and the issue classes against Accenture, as the latter were justified only in combination with the Marriott damages classes. View "Maldini v. Marriott International, Incorporated" on Justia Law