Justia Contracts Opinion Summaries

Yorktown Systems Group Inc. and Threat Tec LLC, both defense contractors, entered into a mentor-protégé relationship under the Small Business Administration’s program to jointly pursue government contracts. They formed a joint venture (JV) and were awarded a $165 million contract with the U.S. Army. The JV agreement allocated specific work shares to each company. However, the relationship soured, and Threat Tec attempted to terminate Yorktown’s subcontract, effectively cutting Yorktown out of its share of the contract.The United States District Court for the Northern District of Alabama granted Yorktown a preliminary injunction, preventing Threat Tec from terminating the subcontract and depriving Yorktown of its rights under the JV agreement. The court found that Yorktown had shown a substantial likelihood of success on its breach of contract and breach of fiduciary duty claims and faced irreparable harm. The court noted that Threat Tec’s CEO had made false statements and lacked candor, leading to the belief that Threat Tec’s motives were unethical.The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the district court’s decision. The appellate court found no clear error in the district court’s factfindings and concluded that the district court acted within its discretion. The court held that Threat Tec, as the managing member of the JV, owed fiduciary duties of loyalty and care to Yorktown and likely breached those duties by attempting to cut Yorktown out of its contractually specified workshare. The court also agreed that Yorktown faced irreparable harm, including potential damage to its business reputation and the loss of highly skilled employees, which could not be remedied by monetary damages alone. View "Yorktown Systems Group Inc. v. Threat TEC LLC" on Justia Law

Shawn Slezak, a mechanic for Lancaster County, Nebraska, filed a grievance after his performance evaluation for 2021 was completed late and by higher-level supervisors rather than his direct supervisor. The evaluation, which was below the threshold for a merit increase, was delayed due to discrepancies between numerical ratings and written comments. Slezak argued that the late evaluation violated the collective bargaining agreement (CBA) and sought a merit increase.The Lancaster County Personnel Policy Board found that the late evaluation constituted a breach of contract and awarded Slezak a retroactive merit increase. The County challenged this decision, arguing that the remedy was improper since Slezak's evaluation score did not warrant a merit increase. The District Court for Lancaster County agreed with the County, reversing the Board's decision on the grounds that the remedy made Slezak "more than whole" and was inconsistent with the objective of a damages award in a breach of contract case.The Nebraska Supreme Court reviewed the case and affirmed the District Court's decision. The Court held that the Board's remedy was inappropriate because it exceeded the scope of a damages award in a breach of contract case. The Court emphasized that the objective of such an award is to make the injured party whole, not to provide a benefit they would not have received if the contract had been performed. The Court also noted that Slezak's score on the late evaluation was below the threshold required for a merit increase, and thus, the delay in the evaluation did not cause his injury. The Court concluded that the District Court did not err in reversing the Board's decision and affirmed the order. View "Lancaster County v. Slezak" on Justia Law

In 2006, David and Jill Landrum, along with Michael and Marna Sharpe, purchased land in Madison County to develop a mixed-use project called the Town of Livingston. The project stalled due to the 2008 financial crisis and legal issues. In 2010, Jill and Marna formed Livingston Holdings, LLC, which owned the development properties. Marna contributed more financially than Jill, leading to a disparity in ownership interests. In 2014, Marna sold her interest to B&S Mississippi Holdings, LLC, managed by Michael Bollenbacher. Jill stopped making her required monthly contributions in December 2018.The Madison County Chancery Court disqualified Jill as a derivative plaintiff, realigned Livingston Holdings as a defendant, and dismissed several claims. The court found that Jill did not fairly and adequately represent the interests of the company due to personal interests and economic antagonisms. The court also granted summary judgment in favor of several defendants and denied the Landrums' remaining claims after a bench trial.The Supreme Court of Mississippi reviewed the case and affirmed the lower court's decision to disqualify Jill as a derivative plaintiff and exclude the Landrums' expert witness. The court found that Jill's personal interests and actions, such as failing to make required contributions and attempting to gain control of the company, justified her disqualification. The court also affirmed the dismissal of claims for negligent omission, misstatement of material facts, civil conspiracy, fraud, and fraudulent concealment due to the Landrums' failure to cite legal authority.However, the Supreme Court reversed and remanded the case on the issues of remedies and attorneys' fees under the Second Memorandum of Understanding (MOU) and the alleged breach of fiduciary duty between B&S and Jill. The court found that the chancellor erred in interpreting the Second MOU as providing an exclusive remedy and remanded for further proceedings to determine if Livingston is entitled to additional remedies and attorneys' fees. The court also remanded for factual findings on whether B&S breached its fiduciary duty to Jill regarding property distribution and tax loss allocation. View "Landrum v. Livingston Holdings, LLC" on Justia Law

In this case, a law firm (HFM) appealed a trial court's judgment denying its third-party claim to $585,000 held in its client trust account. The funds were received from HFM's client, Mann, under a flat fee agreement for future legal services. Mann's judgment creditor, Dickson, served HFM with a notice of levy, asserting that the funds belonged to Mann. HFM contended that the funds belonged to it under the flat fee agreement.The Superior Court of San Diego County denied HFM's third-party claim, concluding that the funds belonged to Mann because HFM had not yet earned the fee by providing legal services. The court also denied HFM's motion for reconsideration, which sought to retain $53,457.95 of the funds based on a prior agreement with Mann. The court found that HFM failed to present this evidence initially and did not act with reasonable diligence.The Court of Appeal, Fourth Appellate District, Division One, State of California, affirmed the trial court's judgment. The appellate court held that under the Rules of Professional Conduct, a flat fee is not earned until legal services are provided, and HFM presented no evidence that it had performed any services under the agreement. The court also found that the location of the funds in the client trust account was not dispositive of ownership. Additionally, the appellate court upheld the trial court's denial of the motion for reconsideration, noting that HFM failed to provide a satisfactory explanation for not presenting the evidence earlier.The main holding is that a flat fee paid in advance for legal services is not earned until the services are provided, and funds in a client trust account are presumed to belong to the client unless the law firm can prove otherwise. The judgment denying HFM's third-party claim was affirmed. View "Dickson v. Mann" on Justia Law

The case involves a 2009 loan transaction between TNE Limited Partnership (TNE) and the Muir Second Family Limited Partnership (the Muir Partnership) at a time when the Muir Partnership was dissolved. The plaintiffs, including the Muir Partnership, Dorothy Jeanne Muir, and Wittingham, LLC, sought to void the transaction. After a seven-day bench trial, the district court ruled in favor of the plaintiffs, declaring the transaction void and denying their request for attorney fees.TNE appealed, arguing that the transaction was voidable, not void, and the plaintiffs cross-appealed the denial of attorney fees. The Utah Supreme Court, in Wittingham III, agreed with TNE that the transaction was voidable and remanded the case to the district court to determine whether the transaction bound the dissolved Muir Partnership and whether TNE was entitled to legal or equitable remedies. The court also instructed the district court to reconsider the attorney fees issue if plaintiffs renewed it on remand.On remand, the district court concluded that Nick Muir, who executed the transaction on behalf of the Muir Partnership, lacked both actual and apparent authority to bind the Partnership. The court also found that the plaintiffs were injured by the transaction and could void it. However, the court again denied the plaintiffs' request for attorney fees, interpreting the trust deed's fee provision as not applicable to the plaintiffs' action to invalidate the transaction. TNE's subsequent rule 60(b) motion, arguing that new authority from the Utah Supreme Court changed the controlling law on apparent authority, was denied.The Utah Supreme Court affirmed the district court's rulings. It held that TNE failed to show any manifestation of the Muir Partnership’s consent to Nick’s authority, either direct or indirect. The court also found that the district court did not err in allowing the Muir Partnership to void the transaction and that the plaintiffs were not entitled to attorney fees under the trust deed. View "Wittingham v. TNE Limited Partnership" on Justia Law

The case involves the restructuring of Puerto Rico's public debts under Title VI of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). The dispute centers on whether the final transaction documents or the preliminary documents control the terms of the debt restructuring. The preliminary documents included a Valid Claim Requirement, which stipulated that new bonds would only be issued if valid claims were made. However, the final transaction documents did not include this requirement.The U.S. District Court for the District of Puerto Rico initially approved the restructuring plan, which included the terms set forth in the preliminary documents. However, the court also noted that the final terms would be subject to the execution and delivery of definitive documents. When the final documents were executed, they did not include the Valid Claim Requirement. The district court later ruled that the final documents, not the preliminary ones, governed the transaction, and overruled objections based on the omission of the Valid Claim Requirement.The United States Court of Appeals for the First Circuit reviewed the case. The court affirmed the district court's decision, holding that the final transaction documents control the terms of the debt restructuring. The court emphasized that the preliminary documents were explicitly provisional and subject to final documentation. The final documents, which did not include the Valid Claim Requirement, were deemed to be the definitive terms of the restructuring. The court also noted that the Requisite Bondholders had approval rights over the final documents and did not object to the absence of the Valid Claim Requirement.Thus, the First Circuit affirmed the district court's ruling, concluding that the final transaction documents govern the debt restructuring, and the Valid Claim Requirement from the preliminary documents does not apply. View "FOMB v. AmeriNational Community Services, LLC" on Justia Law

Marek Matthews, a seaman and captain, filed a lawsuit against Tidewater, Inc. and Tidewater Crewing, Ltd., alleging that he was exposed to toxic chemicals during his employment, resulting in severe health issues including end-stage renal failure and stage IV cancer. Matthews, a Florida resident, claimed that the exposure occurred while working on offshore supply vessels in the Red Sea. His employment contract included a forum-selection clause mandating that any disputes be litigated in the High Court of Justice in London, England.Initially, Matthews and other plaintiffs filed the suit in Louisiana state court, asserting claims under the Jones Act and general maritime law. Tidewater removed the case to the United States District Court for the Eastern District of Louisiana and moved to dismiss it based on the forum-selection clause and, alternatively, for failure to state a claim. The district court granted the motion to dismiss on forum non conveniens grounds, finding the forum-selection clause valid and enforceable. Matthews's subsequent motion to reconsider the dismissal was denied.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the district court's decision, holding that the forum-selection clause was enforceable. The court applied a de novo review to the enforceability of the clause and an abuse of discretion standard to the forum non conveniens analysis. It concluded that Matthews did not meet the heavy burden of proving the clause was unreasonable under the circumstances, despite his health conditions and Louisiana's public policy against such clauses. The court emphasized the federal policy favoring the enforcement of forum-selection clauses in maritime contracts, which outweighed the conflicting state policy. View "Matthews v. Tidewater" on Justia Law

A group of retired firefighters from the City of Columbia claimed that the City had promised them free lifetime health insurance. This promise was allegedly made through verbal statements, newsletters, and retirement letters. The dispute arose when the City Council required all active and retired employees under 65 to contribute to their health insurance premiums, and later extended this requirement to Medicare supplemental coverage for retirees over 65. The firefighters argued that the City should be held to its promise under the doctrine of promissory estoppel.Initially, the Circuit Court granted summary judgment in favor of the City, but the Court of Appeals reversed this decision, allowing the promissory estoppel claim to proceed. After a nonjury trial, Judge Sprouse ruled in favor of the City, and the Court of Appeals affirmed this decision, stating that the firefighters had not proven an unambiguous promise or reasonable reliance on such a promise.The Supreme Court of South Carolina reviewed the case and affirmed the Court of Appeals' decision but modified the reasoning. The Supreme Court found that the firefighters did not prove the City made a clear promise of free lifetime health insurance. Additionally, the Court emphasized that the City Council, not individual employees, had the authority to make such promises. The Court also clarified that promissory estoppel claims need only be proven by the greater weight of the evidence, not by clear and convincing evidence, except in cases involving specific performance of land transfers. The Court concluded that the firefighters had no right to rely on statements made by City employees who lacked the authority to bind the City. View "Cruz v. City of Columbia" on Justia Law

The case involves the estate of Bud Conyers seeking a relator’s share of the proceeds from a settlement between the United States and military contractor Kellogg Brown & Root (KBR) under the False Claims Act (FCA). Conyers, a former KBR truck driver, had filed a qui tam suit alleging various fraudulent activities by KBR, including the use of mortuary trailers for supplies, kickbacks for defective trucks, and billing for prostitutes. The government later intervened in Conyers’s suit but pursued different claims involving KBR employees Mazon, Seamans, and Martin, who were involved in separate kickback schemes.The United States District Court for the Southern District of Texas awarded Conyers’s estate approximately $1.1 million, finding a “factual overlap” between Conyers’s allegations and the settled claims, particularly with Martin’s kickback scheme involving trucks. The court reasoned that Conyers’s allegations had put the government on notice of fraud in trucking contracts, which arguably led to the investigation of Martin. The district court also ordered the government to pay Conyers’s attorney’s fees.The United States Court of Appeals for the Fifth Circuit reviewed the case and reversed the district court’s decision. The appellate court held that under the FCA, a relator is entitled to a share only of the settlement of the claim he brought, not additional claims added by the government. The court found no relevant factual overlap between Conyers’s claims and the settled claims involving Mazon, Seamans, and Martin. The court also rejected the district court’s reasoning that Conyers’s allegations spurred the investigation into Martin’s misconduct, noting that the FCA does not entitle a relator to recover from new claims discovered by the government. Consequently, the Fifth Circuit concluded that Conyers’s estate was not entitled to any share of the settlement proceeds and reversed the award of attorney’s fees. View "USA v. Conyers" on Justia Law

Jill and Grant Wiese were married for nearly 30 years before their marriage was dissolved in 2016. They had a premarital agreement (PMA) that kept their assets and earnings separate, with Grant responsible for reasonable support. Jill worked as an independent agent for Grant’s real estate brokerage, receiving 100% of her commissions after deductions for business expenses and estimated taxes. Grant deducted amounts for taxes and personal expenses he believed exceeded his support obligations, but the tax deductions did not match the actual taxes paid, and he did not refund the excess to Jill.The Superior Court of Orange County found the PMA valid and enforceable. Jill then brought claims against Grant for breach of fiduciary duty, arguing that his deductions from her commissions were excessive and impaired her separate property. Grant countered that Jill’s claims were time-barred and meritless. The trial court ruled in Jill’s favor on the tax-withholding claims, awarding her over $1.3 million, but rejected her other claims. Both parties appealed.The California Court of Appeal, Fourth Appellate District, reviewed the case. It held that Jill’s fiduciary duty claims were subject to a four-year statute of limitations and that most were time-barred. For the surviving claims, the court found Grant breached his fiduciary duty by withholding excessive amounts for taxes but erred in awarding Jill the entire amount withheld rather than the excess. The court also found that Grant’s deductions for personal expenses required reconsideration. It affirmed that Grant was solely liable for the mortgage debt on their jointly owned property but reversed the order requiring Jill to reimburse Grant for housing during their separation. The court remanded for further proceedings, including recalculating damages and reconsidering attorney fees. View "Marriage of Wiese" on Justia Law