Justia Contracts Opinion Summaries

In November 2004, Dr. Ashard Yousuf sued Dr. George Cohlmia and Cardiovascular Surgical Specialists Corporation (CVSS) in Oklahoma state court for defamation, tortious interference with business relations/contract, intentional infliction of emotional distress/outrage, negligence, and breach of contract. Dr. Yousuf alleged that Dr. Cohlmia made a series of false statements to local media disparaging Dr. Yousuf's professional reputation. Dr. Cohlmia denied that the statements he made were false. CVSS held a professional liability policy with Physicians Liability Insurance Company (PLICO) and two identical general commercial liability policies with American National Property and Casualty Company (ANPAC, one for each business location), each of which covered Dr. Cohlmia as an additional insured. Dr. Cohlmia demanded that both insurers provide for his defense, pursuant to their respective policies. PLICO agreed to defend the lawsuit under a reservation of rights and requested ANPAC to share in the defense. ANPAC refused, contending its policy did not cover the alleged wrongdoing and that it owed no duty to defend. ANPAC further claimed that even if it erred in refusing to defend Dr. Cohlmia, PLICO had no right to indemnification or contribution for the defense costs it incurred. ANPAC appealed the district court's grant of summary judgment in favor of PLICO in a dispute regarding ANPAC's breach of its duty to defend a co-insured. PLICO cross-appealed the district court's denial of its motion for prejudgment interest. Finding no reversible error, the Tenth Circuit affirmed the district court's decision. View "Yousuf v. Cohlmia" on Justia Law

Plaintiffs, a class of cardholders who paid credit card penalty fees, challenged those fees on constitutional grounds. Plaintiffs argued that the fees are analogous to punitive damages imposed in the tort context and are subject to substantive due process limits described in BMW of North America, Inc. v. Gore. The court concluded that the due process analysis developed in the context of jury-awarded punitive damages was not applicable to contractual penalty clauses. Further, there was no derivative liability under the Unfair Competition Law. Accordingly, the district court did not err in dismissing the complaint where constitutional due process jurisprudence did not prevent enforcement of excessive penalty clauses in private contracts and the fees were permissible under the National Bank Act, 12 U.S.C. 85-86, and the Depository Institutions Deregulation and Monetary Control Act (DIDMCA), 12 U.S.C. 1831d(a). View "In re: Late Fee & Over-Limit Fee Litigation" on Justia Law

Ewing Construction Company entered into a contract with a school district to serve as general contractor on a project. The school district later filed suit against Ewing for faulty construction. Ewing tendered defense of the underlying suit to Amerisure Insurance Company, Ewing's insurer under a commercial package policy that included commercial general liability coverage. Amerisure denied coverage, and Ewing filed suit in federal district court seeking a declaration that Amerisure breached its duty to defend and indemnify Ewing for damages awarded in the underlying suit. The district court granted summary judgment for Amerisure, concluding that the policy’s contractual liability exclusion applied to exclude coverage because Ewing assumed liability for its own construction work pursuant to the contract such that it would be liable for damages arising out of its defective work. On appeal, the court of appeals certified questions to the Texas Supreme Court, which answered that “a general contractor that enters into a contract in which it agrees to perform its construction work in a good and workmanlike manner, without more specific provisions enlarging this obligation, does not ‘assume liability’ for damages arising out of the contractor’s defective work so as to trigger the contractual liability exclusion.” View "Ewing Constr. Co., Inc. v. Amerisure Ins. Co." on Justia Law

From 1998 through 2009, Keith Jensen owned a cattle feedlot in South Dakota. Jensen did not personally operate the feedlot but used it for his cattle-brokering business. Jensen leased the feedlot to Arden Sieh under a five-year written lease agreement. The written lease expired in 2003, but Sieh continued to operate the feedlot under an oral lease agreement with Jensen. While operating the feedlot, Sieh purchased cattle feed from Forbes Equity Exchange, Inc. ("FEE"), a North Dakota cooperative grain elevator. In 2010, FEE filed a complaint against Sieh and Jensen for $166,015.18 worth of corn purchased by Sieh on an open account that was allegedly never paid. FEE alleged Jensen's cattle consumed the feed. In March 2011, FEE withdrew its claim against Sieh for the unpaid feed. In exchange, Sieh assigned to FEE all potential claims he had against Jensen for cattle feed and care services that exceeded Sieh's rent payments. FEE amended its complaint, and raised Sieh's claims for cattle-care costs in addition to its original suit against Jensen for unpaid cattle feed. Jensen filed a third-party complaint against Sieh for the collection of past debts, including bounced checks, missed rent payments, unpaid loans and interest, missing cattle, damaged feedlot property, and other financial obligations arising from Sieh's operation of Jensen's feedlot. Jensen ultimately lost on his contract claims, and he appealed. The Supreme Court affirmed, concluding the district court did not err in denying Jensen's claim for an offset or in admitting evidence. The Court also concluded that the court did not err in finding in favor of Forbes Equity Exchange on its assigned claim against Jensen. View "Forbes Equity Exchange, Inc. v. Jensen" on Justia Law

Laura Jean Entzel appealed a district court opinion that awarded her a partial refund of her prepaid rental fee, and an order denying her request for attorney fees. Entzel entered into a Boat Space Rental Agreement with Moritz Sport & Marine. Entzel pre-paid Moritz for use of a marina boat slip from May 2011 until October 2011. Entzel chose not to use the slip at the start of the agreement period. Due to the threat of an impending flood along the Missouri River shoreline, the city of Mandan contacted Moritz at the end of May, and informed Moritz that the City wanted Moritz to take precautionary action. Moritz notified Entzel that, because of potential flooding, all boats needed to be removed from the marina. Moritz never informed Entzel that her boat could be returned to the marina once the threat was gone, and as a result, Entzel did not use the slip during the contract period. However, other customers of Moritz began to use their slips in the marina beginning mid-June 2011 until freeze in. Entzel sued Moritz in small claims court alleging breach of contract and seeking to recover the slip rental fee. Moritz removed the action to district court, arguing a force majeure clause in the contract relieved Moritz from liability, and Entzel moved for attorney fees. Upon review, the Supreme Court reversed the district court judgment's award of a refund to Entzel, because it held the force majeure clause of the parties' contract relieved Moritz of liability for nonperformance and allocated the risk of loss to Entzel. The Court affirmed the district court judgment's denial of Entzel's request for attorney fees. View "Entzel v. Moritz Sport & Marine" on Justia Law

Defendant, a contractor, and Plaintiff, a subcontractor, entered into a two subcontracts for part of a road work project. Plaintiff invoiced Defendant for the work under both contracts, but when Defendant failed to pay the full amount, Plaintiff filed suit for breach of contract damages and storage fees for Defendant’s equipment and materials. Defendant counterclaimed, alleging that Plaintiff had been overpaid on the contracts and had converted Defendant’s equipment. Defendant moved to have the matter removed to federal court and filed its counterclaim in that court. The case was subsequently remanded to state court, where Defendant filed its counterclaim. Plaintiff moved for summary judgment, claiming Defendant’s counterclaim was untimely. The district court granted the motion and dismissed the counterclaim. After a bench trial, judgment was entered in favor of Plaintiff. The Supreme Court affirmed, holding (1) Defendant failed to demonstrate any basis to reverse the district court’s dismissal of its counterclaim on summary judgment; (2) alternatively, Defendant’s proposed counterclaim was moot; and (3) Plaintiff was entitled to attorney fees and costs. View "Motzko Co. USA, LLC v. A & D Oilfield Dozers, Inc." on Justia Law

Appellants decided to sell 850 acres of farmland but wanted to retain the mineral rights. Summit Title Services prepared the deeds for the sale, but he deeds did not reserve the minerals. Appellants were made aware of the omission at closing, insisted that the deeds be corrected, and were assured by Summit’s employee that the problem had been rectified. Six years later, Appellants learned that the minerals had been transferred with the land. Appellants filed suit against Summit, its general counsel Olen Snider, and Kuzma Success Realty, a brokerage firm involved in the transaction. The district court granted summary judgment for Appellees on all claims, concluding that Appellants failed to exercise due diligence to discover the error so as to extend the statute of limitation as a matter of law. The Supreme Court reversed the grant of summary judgment to Summit and Snider, concluding that there were genuine issues of material fact as to whether Appellants exercised due diligence to discover errors allegedly made by Summit and that Snider failed to present a prima facie case that he was entitled to summary judgment. View "Moats v. Prof'l Assistance, LLC " on Justia Law

Contractors Cargo, engaged in heavy-haul operations, commissioned Empire Bucket to fabricate a steel deck to be used with Cargo’s specialized rail freight car for transporting oversized loads. A third party designed the deck, specifying that the deck be fabricated from T-1 high-strength steel and that welding be performed to American Welding Society specifications. The deck was designed to transport up to 800,000 pounds. Empire fabricated the deck, which passed inspection by an outside agency and all nondestructive tests, and delivered it. Cargo connected the deck to its railcar and loaded it to 820,000 pounds. The next morning, an employee observed that the deck had dropped about three inches. Cargo attempted to raise it with a hydraulic jacking system, but the deck fractured. Cargo hired a metallurgical engineer, who determined that a portion of the weld was composed of material with properties different from the properties of the material in the rest of the weld where the crack originated. Cargo refused to pay the full purchase price. Empire sued and Cargo filed counterclaims. The district court granted Empire’s motion in limine to exclude testimony concerning one test performed on the deck after it failed. The jury returned a verdict for Empire. The Seventh Circuit affirmed, stating that, given testimony admitted at trial, the excluded evidence would have added little to the implied warranty claims. View "Empire Bucket, Inc. v. Contractors Cargo Co." on Justia Law

Union-affiliated benefit funds sued Haluch to collect benefits contributions required to be paid under federal law, plus attorney’s fees and costs, which were obligations under a federal statute and the parties’ collective bargaining agreement. The district court issued an order on June 17, on the merits of the contribution claim, and a separate ruling on July 25, on the motion for fees and costs. The Funds appealed on August 15. Haluch argued that the June 17 order was a final decision under 28 U.S.C. 1291, so that notice of appeal was not filed within the 30-day deadline. The First Circuit acknowledged that an unresolved fee issue generally does not prevent judgment on the merits from being final, but held that no final decision was rendered until July 25 because entitlement to fees and costs under the CBA was an element of damages and thus part of the merits. The Supreme Court reversed, finding the appeal of the June 17 decision untimely. The Funds’ claim that contractual attorney’s fees provisions are always a measure of damages failed. There is no justification for different jurisdictional effect based solely on whether an asserted right to fees is based on contract or statute. View "Ray Haluch Gravel Co. v. Cent. Pension Fund of Operating Eng'rs & Participating Emp'rs" on Justia Law

White Oak Manor, Inc. owns and operates a nursing home in York. After sustaining injuries from the improper replacement of a feeding tube, a White Oak resident filed a lawsuit against the nursing home. White Oak ultimately settled the lawsuit without the involvement of its insurer, Lexington Insurance Company. White Oak subsequently filed a declaratory judgment action against Lexington to determine coverage for the malpractice claim. The issue this case presented to the Supreme Court concerned the validity of a service-of-suit clause in an insurance policy in light of Section 15-9-270 of the South Carolina Code (2005) which provides for service of process on an insurer through the Director of the Department of Insurance. The circuit court upheld the service-of-suit clause and refused to relieve the insurer from default judgment. The court of appeals reversed, holding section 15-9-270 provided the exclusive method for serving an insurance company. In its review, the Supreme Court disagreed that section 15-9-270 provided the exclusive means of service on an insurer and held that insurance policy provisions creating alternative methods of service are valid and binding on insurers. Accordingly, the court of appeals' decision was reversed. View "White Oak Manor v. Lexington Insurance Company" on Justia Law