Justia Contracts Opinion Summaries

Appellant Foti Fuels, Inc. (Foti), a fuel distributor, appealed a Civil Division’s judgment in favor of Evans Group, Inc. (Evans), also a fuel distributor. Evans cancelled its agreement to sell fuel to Foti for resale and delivery to a retail gasoline station, and sued for payment of an outstanding balance of $68,864. Foti claimed the unilateral termination of the agreement violated the federal Petroleum Marketing Practices Act (PMPA) which regulates fuel franchise agreements. The trial court determined that Foti was not a "franchisee" within the meaning of the PMPA and, therefore, not entitled to its contract termination protections. Upon review of the matter, the Supreme Court affirmed. View "Evans Group, Inc. v. Foti" on Justia Law

When AFC filed for bankruptcy in 2009, the FDIC was appointed receiver for AFC’s subsidiary, AmTrust and sought payment from AFC under 11 U.S.C. 365(o), which requires that a party seeking Chapter-11 bankruptcy fulfill “any commitment . . . to maintain the capital of an insured depository institution.” The FDIC argued that AFC made such a commitment by agreeing to entry of a cease-and-desist order requiring AFC’s board to “ensure that [the Bank] complies” with the Bank’s own obligation to “have and maintain” capital ratios of 7 percent (Tier 1) and 12 percent (total). The district court found that the order was not a capital-maintenance commitment under section 365(o). The Sixth Circuit affirmed. The cease-and-desist order is ambiguous and could reasonably be read as establishing either an oversight role or a capital-maintenance commitment and the bulk of the extrinsic evidence favored the “oversight” reading. View "Fed. Deposit Ins. Corp. v. Amtrust Fin. Corp." on Justia Law

GTI went bankrupt after it purchased OAI, a subsidiary of Onkyo for $13 million in cash and $12 million in three-year promissory notes. Onkyo filed a proof of claim for $12 million. GTI responded by suing Onkyo under the theory that the OAI purchase was a fraudulent, voidable transaction. The bankruptcy court agreed, finding that OAI was worth $6.9 million at the time of the transaction, not $25 million. The court voided GTI’s obligation to pay the remainder of the purchase price and ordered Onkyo to repay GTI $6.1 million. The district court and Sixth Circuit affirmed. The bankruptcy court’s determination that the indirect benefits were insubstantial was valid without the necessity of providing calculations; its adoption of GTI’s expert’s value based on the comparable transactions method was not clearly erroneous. Once the bankruptcy court determined that the sale of OAI had been a fraudulent transfer and Onkyo was a good-faith transferee, awarding GTI relief was a simple matter of subtraction. View "Onkyo Europe Elec., GMBH v. Global Technovations Inc." on Justia Law

Chesapeake Exploration entered into an agreement to purchase deep rights held by Peak Energy in certain oil and gas leases in the Haynesville Shale formation at a certain price. Peak Energy filed a complaint against Chesapeake Exploration after Chesapeake Exploration refused to honor its commitment when the price of natural gas plummeted several months after the agreement. Chesapeake Exploration argued that the agreement was unenforceable under the Texas statute of frauds, fatally indefinite, and that Peak Energy had failed to tender performance. The court held that the district court did not err in its instructions to its expert, or in holding that the agreement was enforceable under the statute of frauds; in finding that Peak Energy was willing and able to tender performance of the agreement; and in calculating damages. Accordingly, the court affirmed the judgment. View "Coe, et al v. Chesapeake Exploration, L.L.C., et al" on Justia Law

Plaintiff, a resident of Massachusetts, challenged the district court's grant of summary judgment dismissing claims she brought in November 2009 against the Cadle Company and its corporate sibling CadleRock Joint Venture II for unlawful debt collection under Massachusetts law. In November 2005 Plaintiff entered into a settlement with Defendants and furnished a release. Because the release was valid, at issue was whether, given the release of past claims, anything that occurred in or after November 2005 restored or gave rise to a claim by Plaintiff. The First Circuit Court of Appeals affirmed, concluding that because Plaintiff was essentially attacking Defendants' pre-release conduct in the present lawsuit, Plaintiff's claims, which ultimately depended on the wrongfulness of the original debt collection efforts, were without merit. View "Pilalas v. The Cadle Co." on Justia Law

Defendant entered into a collective bargaining agreement (CBA) with a Union under which Defendant remitted contributions to an array of Union-affiliated benefit funds (the Funds). After the Funds commissioned audits of Defendant's books, the Funds demanded additional remittances for previously unreported work allegedly covered by the CBA. Defendant demurred, and the Funds sued Defendant. The district court awarded Plaintiffs $26,897 referable to covered work performed by a specific employee but denied recovery for other work. In a separate judgment, the court awarded Plaintiffs $34,688 in attorneys' fees. The First Circuit Court of Appeals vacated the judgment of the First Circuit, holding (1) the appeal was timely as to all issues, and the judgment on the benefits-remittance claim and the judgment awarding attorneys' fees were open to appellate review; (2) Defendant's failure to keep appropriate records concerning work covered by the benefit-remittance provisions of the CBA triggered a burden-shifting paradigm under which Defendant had to show which hours represented covered work and which did not, and here Defendant did not rebut the presumption; and (3) because the district court's fee calculation rested appreciably on the plaintiffs' lack of success in recovering remittances referable to unidentified employees, the fee award required recalculation. View "Int'l Union v. Ray Haluch Gravel Co." on Justia Law

In a 2009 opinion, the Sixth Circuit held that, in a 1998 collective bargaining agreement, CNH agreed to provide health-care benefits to retirees and their spouses for life, but rejected the suggestion that the scope of this commitment in the context of healthcare benefits, as opposed to pension benefits, meant that CNH could make no changes to the healthcare benefits provided to retirees. The court remanded for a determination of reasonableness with respect to CNH’s proposed changes to its retiree healthcare benefits, under which retirees, previously able to choose any doctor without suffering a financial penalty, would be put into a managed-care plan. The court listed three considerations: Does the modified plan provide benefits “reasonably commensurate” with the old plan? Are the proposed changes “reasonable in light of changes in health care”? And are the benefits “roughly consistent with the kinds of benefits provided to current employees”? On remand, the district court granted CNH summary judgment without reaching the reasonableness question or creating a factual record from which the determination could be made on appeal. The Sixth Circuit again remanded.View "Reese v. CNH America LLC" on Justia Law

Innotext represents automotive manufacturers. Stafford is its vice president. Petra is a sales, service, and support company that represents three offshore companies. In the 1990s, automakers outsourced work overseas to reduce labor costs. Stafford began looking for offshore companies that had the ability to manufacture automotive textile products. Stafford later testified that, based on a handshake agreement, he sought to generate business for Petra. After three sales to Johnson Controls, Innotext claimed that its efforts created an opportunity for Petra and sought commissions. The district court granted judgment as a matter of law on all counts. The Sixth Circuit reversed in part, finding that there was sufficient evidence that reasonable minds could differ, but affirmed dismissal of an implied contract claim. View "Innotext Inc. v. Petra'Lex USA Inc." on Justia Law

GenCorp owned a vinyl-manufacturing facility, including hazardous waste management units (RCRA units), which reclaimed solvent waste. Under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6901, GenCorp was obligated to obtain permits for the units. GenCorp had not received all of the required permits when it agreed to sell the facility. The agreement specified GenCorp’s retained liabilities, and contained a provision requiring each party to indemnify and defend against their retained liabilities. Textileather became the owner in 1990 and decided to discontinue use of the RCRA units. Textileather began the closure process required by Ohio Administrative Code 3745-66; the Ohio Environmental Protection Agency (OEPA) issued several Notices of Deficiency. Textileather challenged the OEPA’s 2001 closure plan and asserted that GenCorp was obligated to indemnify and defend. The district court ruled in favor of GenCorp, holding that, under the agreement, OEPA did not constitute a “third party” and Textileather’s RCRA closure proceedings did not constitute a “claim or action.” The Sixth Circuit reversed in part and directed the district court to enter judgment for Textileather on the legal question of whether the retained liabilities section of the agreement applies. The court affirmed that GenCorp retained only CERCLA claims covered by certain sections. View "Textileather Corp. v. GenCorp Inc." on Justia Law

TMTA obtained a policy, known as the CrimeShield Policy to transfer the risk of employee theft from the TMTA to Hartford. Almost immediately after the parties signed the Policy a TMTA employee began diverting funds into his own accounts from the TMTA Insurance Agency, a limited liability corporation controlled by the TMTA and from which the TMTA receives a significant portion of its income. The Agency is not a named insured under the policy. Hartford took the position that the Agency, not the TMTA, suffered the loss. The Sixth Circuit affirmed the district court, holding that the Agency a party is not directly covered by the policy, and that the policy does not otherwise provide for the TMTA to recover funds that were diverted from the Agency.View "Tooling, Mfg.& Tech. Ass'n v. Hartford Fire Ins. Co." on Justia Law