Justia Contracts Opinion Summaries

Fred and Nancy Eagerton petitioned the Supreme Court for a writ of mandamus to direct the Circuit Court to enter a judgment as a matter of law in their favor and against SE Property Holdings, LLC, consistent with the Court's mandate in "Eagerton v. Vision Bank," (99 So. 3d 299 (Ala. 2012)). SE Property Holdings, LLC, is the successor by merger to Vision Bank. The underlying suit arose from a loan that the Eagertons personally guaranteed, secured by a mortgage on property within the Rock Creek Tennis Club in Fairhope. The bank declared the original and second loans in default and accelerated balances due under both. The bank sued the primary obligor, and the Eagertons as person guarantors on one of the original loans. The primary obligor declared Chapter 11 bankruptcy. The reorganization plan consolidated the two loans. The obligor eventually defaulted on the terms of the reorganization plan. The bankruptcy was dismissed, the property foreclosed, and the money obtained in the foreclosure sale was applied to the consolidated loan. The Eagertons argued that the Chapter 11 reorganization of the debts of primary obligor (the consolidation of the original loan with the second loan), created a new indebtedness not encompassed by their guaranty contracts. The Eagertons therefore argued that the creation of this new indebtedness, without their knowledge or consent, operated to discharge them from any further obligations under their guaranty contracts. The bank, on the other hand, argued, among other things, that the consolidated loan was a replacement note contemplated by the guaranty contracts and that the Eagertons had waived the material-modification defense. The Supreme Court in "Eagerton v. Vision Bank" concluded that the Eagertons' guaranty contracts were unambiguous; that based on the language in the guaranty contracts the Eagertons did not intend to guarantee any indebtedness other than that indebtedness arising out of the original loan and any extensions, renewals, or replacements thereof; and that, once the Eagertons' original loan was modified pursuant to the Chapter 11 reorganization of Dotson 10s, the Eagertons were at that point discharged from any further obligations under their guaranty contracts. Because the circuit court did not follow the mandate in the Court's prior decision in "Vision Bank," the Supreme Court granted the Eagertons' petition and issued the writ. View "SE Property Holdings, LLC v. Eagerton" on Justia Law

Plaintiffs entered into a contract with DJ Construction (DJ) to build a home on their property. Construction was halted two years later after Plaintiffs discovered significant water damage in the home. Plaintiffs sued DJ, seeking to recover for the damage to their home and DJ's failure to complete the house. Auto-Owners Insurance Company, DJ's insurer, denied DJ's requests for defense and indemnity against Plaintiffs' claims, determining coverage was not provided for under the terms of the policy. Plaintiffs subsequently entered into a stipulated judgment and settlement agreement with DJ in which DJ confessed judgment and assigned its rights and claims against Owners to Plaintiffs. Plaintiffs then filed suit against Owners based on Owners' failure to defend and indemnify DJ. The circuit court granted summary judgment in favor of Owners, determining there was no coverage under the policy because multiple policy exclusions applied. The Supreme Court affirmed, holding that the circuit court did not err in granting summary judgment in favor of Owners on Plaintiffs' breach of contract and bad faith claims based upon its determination that multiple policy exclusions applied. View "Swenson v. Owners Ins. Co." on Justia Law

This dispute arose out of a written option contract under which Respondent had the right to purchase real property from Appellants for $8 million. The property was subject to a deed of trust securing approximately $1.3 million in debt. At issue was whether the Respondent or Appellants were required to pay off the $1.3 million debt. The district court granted summary judgment for Respondent, concluding that the option contract required Appellants to deliver clear title, meaning Appellants were required to remove the $1.3 encumbrance for a net $6.7 option price. Appellants appealed, arguing that the option contract contemplated that Respondent take title subject to preexisting encumbrances, so that Appellants received the full $8 million option price. The Supreme Court affirmed, holding that the district court properly interpreted the option contract and that the contract placed responsibility for the $1.3 million debt on Appellants' side of the ledger. View " Galardi v. Naples Polaris, LLC" on Justia Law

The case before the Supreme Court was a fifteen-year old contract dispute regarding the construction of Kevin Clark's house. During the litigation, the contractor and counter-plaintiff William Knesal, died. His defense attorney, provided to him by his insurance company upon commencement of the suit, filed a suggestion of death in the deceased's name. When no substitution motion was filed within the prescribed ninety-day period, Knesal's attorney moved to dismiss. Knesal filed the appropriate motion for substitution well after the mandatory ninety-day period, asserting that Knesal's attorney had no standing to submit a suggestion of death and that, additionally, he never received proper notice of the filing until the motion to dismiss was served. The trial court dismissed the action, and Clark appealed. The issue before the Court centered on determining who may file a suggestion of death with the trial court and what circumstances surrounding a failure to file an appropriate substitution motion within the statutory period constitute "excusable neglect." The Court found that the plain language of Mississippi Rule of Civil Procedure 25 permitted Knesal's attorney to file to suggestion of death without naming Knesal's successors or representatives. Similarly, there was no requirement under the rule that a motion to dismiss be filed at all prior to dismissal, so the fact that a motion to dismiss was filed by Knesal's attorneys did not provide grounds to overturn the trial court's decision. Furthermore, the Court found that the trial court did not abuse its discretion when it did not find Clark's delay in responding to the suggestion of death resulted from excusable neglect. Therefore, the decision of the trial court was affirmed. View "Clark v. Knesal" on Justia Law

This dispute centered on a contract for the construction of a residence. The contract between the general contractor (Contractor) and the owners (Owners) was contingent upon Owners obtaining financing. After construction was completed, Contractor asserted a materialman's lien on the house, arguing that Owners had refused to fully compensate Contractor. After Owners filed suit to protest the lien, the parties agreed to discharge the lien. Contractor later sued Owners based on Owners' failure to disclose that they had obtained inadequate financing. The circuit court dismissed the complaint on the grounds that Contractor's claims were statutorily barred for failure to strictly comply with requirements for the notice of its lien. The order was silent as to the other two grounds Owners had asserted for dismissal and with respect to any of the arguments raised in defense of Owners' motion to dismiss. Contractor appealed, arguing reversal based on other arguments raised below but not ruled on. The Supreme Court affirmed, as (1) the circuit court did not provide a ruling on Contractor's first three arguments, and they were therefore not preserved for appellate review; and (2) Contractor's fourth argument had no merit given the Court's summary affirmance on the first three points. View "TEMCO Constr., LLC v. Gann" on Justia Law

Vincennes Indiana Girls, Inc. (VIG) deeded Camp Wildwood to the predecessor of Girl Scouts of Southern Illinois, Inc. (GSSI) on the condition that the property be used for scouting purposes for forty-nine years. The deed provided that ownership of the campground would revert to VIG if the scouting-use condition was breached during that time. After forty-four years, GSSI stopped using the camp as a Girl Scout facility and decided to sell. VIG sued to quiet title to Camp Wildwood and enjoin GSSI from selling the camp until the forty-nine-year period had expired. The trial court granted summary judgment quieting title in VIG. At issue on appeal was whether the forty-nine-year land use limitation was enforceable despite a subsequently enacted statute, Ind. Code 32-17-10-2, which purported to limit reversionary clauses in land transactions to a maximum of thirty years. The Supreme Court affirmed, holding that section 32-17-10-2 was unconstitutional as applied retroactively to the land-use restriction in VIG's deed to GSSI. View "Girl Scouts of S. Ill. v. Vincennes Ind. Girls, Inc." on Justia Law

In 1971, Plaintiff began subleasing a half-acre parcel of land that was part of an undivided 1040-acre parcel of property (master parcel). Plaintiff and the master parcel's owner, Princeville Development Corporation, subsequently entered into a license agreement effective until 2003 that included an option to purchase and a right of first refusal. The agreement also contained a provision stating that any holding over after the expiration of the term of the agreement should be on the terms and conditions specified in the agreement. In 2005, the Corporation sold the master parcel to Princeville Prince Golf Course (PPGC). Plaintiff filed a complaint against the Corporation in 2005, praying for specific performance of the option to purchase clause. PPGC was substituted as Defendant. The circuit court dismissed Plaintiff's claim for specific performance, holding that the sale of the master parcel did not constitute a "decision to sell" the premises which would trigger Defendant's right of first refusal. The intermediate court of appeals (ICA) affirmed. The Supreme Court reversed, holding (1) Plaintiff's right of first refusal continued into the holdover period; and (2) the right of first refusal was triggered by the Corporation's decision to sell the master parcel in 2005. Remanded. View "Kutkowski v. Princeville Prince Golf Course, LLC" on Justia Law

Northern Oil & Gas, Inc. appealed a judgment ordering reformation of an oil and gas lease and quieting title to the oil and gas leasehold estate in Murex Petroleum Corporation, John H. Holt, LBK Sales & Service, Inc., Racer Oil & Gas, LC, and Double L, LLC. In 2007, a landman working for Morris Creighton signed an oil and gas lease with the original mineral holder. The lease was recorded, but a month later, a typographical error was discovered in the lease’s property description. Six months later, Creighton assigned his interest in the lease, with an exception of an overriding royalty interest, to Antares Exploration Fund, L.P. Antares then assigned its interest in the Creighton lease to Northern. Northern brought an action to quiet title against Creighton and Murex to determine rights of the parties to the oil and gas leasehold estate. Murex filed a third-party complaint against the original mineral rights holders, a cross-claim against Creighton, and a counterclaim against Northern. Upon review, the Supreme Court concluded that the district court erred in concluding, as a matter of law, that Creighton was not a good faith purchaser and the Court held that there was a question of fact whether Creighton had constructive notice when he acquired rights under the lease. The Court reversed the judgment and remanded the case for further proceedings. View "Northern Oil & Gas, Inc. v. Creighton" on Justia Law

Plaintiffs were five limited partnerships that owned multifamily housing rental projects in Maine. Plaintiffs entered into housing assistance payments (HAP) contracts with the Maine State Housing Authority (MaineHousing) in order to participate in the Section 8 program. The program is administered by the U.S. Department of Housing and Urban Development (HUD) in conjunction with state and local public housing agencies. Landlords participating in the program receive partial rent from their tenants and the remainder of the rent from the relevant public housing agency, who is, in turn, reimbursed by HUD. Payments from state and local agencies to the Section 8 landlords are adjusted periodically according to guidelines promulgated by HUD. In 2009, Plaintiffs sued MaineHousing in federal district court for breach of contract, alleging that MaineHousing had wrongfully refused to grant them certain annual increases in their Section 8 payments. MaineHousing impleaded HUD. The district court granted summary judgment for MaineHousing and HUD. The First Circuit Court of Appeal affirmed, holding that each of the housing assistance payments contracts at issue allowed MaineHousing to withhold automatic annual adjustments on contract rents where MaineHousing determines that further adjustments would result in material differences between contract rents and market rates. View "One & Ken Valley Housing Group v. Me. State Housing Auth." on Justia Law

Defendant-Appellant Lloyds of London Syndicate 2003 ("Lloyds") appealed the district court's denial of its summary judgment motion and subsequent grant of summary judgment in favor of Plaintiff-Appellee Brecek & Young Advisors, Inc. ("BYA") in an action arising out of a professional liability insurance contract. The district court concluded Lloyds failed to pay sufficient indemnity to BYA for claims brought against BYA in an arbitration before the National Association of Securities Dealers. The underlying suit alleged BYA agents mismanaged and unlawfully "churned" the investment accounts of its clients. The court concluded the claims brought in the arbitration did not relate back to earlier claims brought outside the policy period and, therefore, rejected Lloyds' argument coverage was precluded altogether. Additionally, the court rejected BYA's argument that Lloyds was equitably estopped from denying coverage due to its course of conduct in receiving and defending the claims. Upon review, the Tenth Circuit concluded that the district court erred in its interpretation of the law of the case, and therefore abused its discretion in making its judgments in this case. Accordingly, the district court's decisions were reversed and the case remanded for further proceedings. View "Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003" on Justia Law