Justia Contracts Opinion Summaries

Appellant was injured in a car accident. The other car in the accident was owned by Amanda Salgado, a superintendent of a church (the Church), and driven by Michael Meyer, a member of the Church. The accident occurred while Meyer and other Church members were taking a lunch break from cleaning and repairing Church property. Appellant sued the Church, Salgado, and Meyer in state court. The Church's insurer (Insurer) then sought a declaratory judgment in federal court resolving whether its insurance policy covered Appellant's accident. The district court held that Insurer had no duty to defend the Church and Salgado. The Fifth Circuit Court of Appeals vacated the district court's judgment, holding that the district court (1) erroneously held that Insurer had no duty to defend the Church and Salgado, (2) improperly adjudicated the scope of Insurer's duty to indemnify, and (3) improperly asserted jurisdiction over Appellant's state-law claims. Additionally, the Court held (1) Insurer had a duty to defend the Church and Salgado in Appellant's underlying state lawsuit, and (2) the scope of Insurer's duty to indemnify could not be adjudicated until after Appellant's claims are decided in state court.

This matter arose out of a controversy over a phrase in a trust. The language at issue established the calculation of the price of trust property offered for sale to certain trust beneficiaries. One of the trust beneficiaries filed a complaint for declaratory judgment, seeking judicial interpretation of the disputed provision. The trial court concluded that the disputed phrase was unambiguous and that the option price was the fair market value as determined by the appraisal. The court of appeals reversed after reviewing the trust document de novo, finding that the option language was susceptible to more than one interpretation and that the option price was the federal and/or Ohio qualified-use value. At issue on appeal was what standard of review an appellate court should employ in reviewing legal issues in a declaratory-judgment action. The Supreme Court affirmed, holding that the de novo standard of review is the proper standard for appellate review of purely legal issues that must be resolved after the trial court has decided that a complaint for declaratory judgment presents a justiciable question.

GRT and Marathon are engaged in attempting to convert methane gas into fuel. They entered into interrelated agreements, including a Securities Purchase Agreement (Marathon purchased $25 million of GRT’s stock), mutual licensing agreements, and a Cooperative Development Agreement, governing collaboration to develop gas-to-fuels technology. Marathon built a multi-million dollar “Demonstration Facility” to test the technology on a large scale and a smaller research facility (Pilot Unit). Under the Development Agreement, GRT obtained access the Demonstration Facility and the ability to modify the Facility, to expire on December 31, 2012. The Facility began operations in 2008. Marathon executed a run campaign and shared data with GRT. In November 2009, Marathon decided to permanently close the Facility because of operational difficulties. Marathon followed procedures prescribed by the Agreement, gave notice, and extended GRT the right to acquire the Facility. GRT did not exercise that right. Although the Facility is currently closed, the Pilot Unit is operational, and both parties continue to test there. GRT claimed breach of contract. The chancellor found that the Development Agreement is not ambiguous and does not impose an affirmative duty on Marathon to operate the Facility through December, 2012, but provides GRT protection in other ways that would be internally inconsistent with such an affirmative duty.

NuVasive alleges that Lanx improperly persuaded NuVasive employees and a NuVasive consultant to leave NuVasive and work for Lanx instead, in breach of agreements that the employees had with NuVasive, to misappropriate NuVasive’s trade secrets and other proprietary information. Both are medical corporations. NuVasive claimed unfair competition, tortious interference with contractual relations, tortious interference with prospective contractual relations, aiding and abetting breach of fiduciary duty, civil conspiracy, and misappropriation of trade secrets. Lanx argued that the former NuVasive employees were necessary and indispensable parties to the action because NuVasive’s claims are predicated upon their acts. The chancellor declined to dismiss. While the former employees’ interests are not adequately protected by Lanx, the chancellor reasoned that a remedy could be crafted to avoid prejudice to their interests. The former employees were not indispensable to the misappropriation claim.

This case involved a wire transfer from Plaintiff's bank account to Defendant's wife. Plaintiff claimed that Defendant, a former employee of Plaintiff, initiated the transfer unlawfully. Defendant moved for summary judgment, offering evidence of another explanation for the transfer. Plaintiff did not offer any evidence in response, and the district court entered summary judgment for Defendant. At issue on appeal was whether Defendant made the initial showing required by Fed. R. Civ. P. 56 that there was no genuine issue of material fact and that he was entitled to judgment as a matter of law, thereby shifting the burden to Plaintiff to present affirmative evidence showing that a genuine issue of material fact existed. The Eighth Circuit Court of Appeals affirmed, holding that Defendant made the required showing.

Gove worked for TDC, which had a contract with Loring. TDC employees were informed that CSD had been awarded the Loring contract and would be providing services previously furnished by TDC. Gove applied online for a CSD position, similar to the one that she held with TDC. The application included a provision that any dispute with respect to any issue prior to employment, arising out of the employment process, would resolved in accord with the Dispute Resolution Policy and Arbitration Agreement adopted by CSD for its employees. When Gove was interviewed by CSD, she was visibly pregnant and was asked whether she had other children. Gove was not hired, although CSD continued to have a need for the position and continued to advertise the position. Gove filed a complaint with the Maine Human Rights Commission, which found reasonable grounds, but was unable to persuade the parties to reach agreement. She sued under Title VII of the Civil Rights Act, 42 U.S.C. 2000e, and the Maine Human Rights Act. CSD moved to compel arbitration. The district court found that the arbitration clause was ambiguous as to whether it covered an applicant who was never hired and should be construed against CSD. The First Circuit affirmed.

Pentonville Developers, Ltd. and Marblearch Trading, Ltd., two Cyprus oil brokerage companies, sued the Republic of Iraq for unilaterally terminating two contracts for the purchase and sale of Iraqi oil. The district court concluded it had subject matter jurisdiction notwithstanding Iraq's assertion of sovereign immunity under the Foreign Sovereign Immunities Act because the lawsuit fell within the "commercial exception" to that immunity. The Ninth Circuit Court of Appeals reversed, holding that because the lawsuit was not based upon commercial activity by Iraq in the United States, nor upon an act in connection with such commercial activity having a direct effect in the United States, the district court erred in denying Iraq's motion to dismiss for lack of subject matter jurisdiction.

This declaratory judgment action concerned a controversy over the limits of an insurance policy issued by Insurer to Insured. A livestock company (Company) brought suit in Minnesota state court against Insured after Company's cattle in Insured's care died in unusually high numbers. Insured submitted the complaint in the underlying action to Insurer. Insurer refused to defend or indemnify Insured in the case brought by Company, basing its denial of coverage on an exclusion in the liability insurance policy for damage to property in the "care, custody, or control" of the insured. The Minnesota district court entered judgment against Insured. Insurer then commenced this action against Company and Insured in federal district court, seeking a declaratory judgment that the claims alleged in the underlying action were not covered under Insured's policy with Insurer and that Insurer therefore had no obligation to defend or indemnify Insured. The district court concluded that the claims were covered by the policy and granted Company and Insured's motion for summary judgment. The Eighth Circuit Court of Appeals reversed, holding that because Company's cattle were under Insured's care, custody, and control when they were damaged, the policy did not provide coverage for Company's claimed loss. Remanded.

The Douglas County Health Center Security Union (Union) filed a petition before the Commission of Industrial Relations (CIR) alleging that its employer, Douglas County (County), had engaged in certain prohibited practices. The CIR found the County had engaged in a prohibited practice when it failed to negotiate its intention to contract out bargaining unit work to a private security company. The CIR ordered the parties to recommence negotiation and awarded the Union attorney fees and costs. The Supreme Court reversed and remanded the decision of the CIR with directions to vacate its order and dismiss the Union's petition, holding that the issue of the subcontracting of bargaining unit jobs resulting in the elimination of bargaining unit jobs was covered by the collective bargaining agreement between the County and Union and presented an issue of contract interpretation over which the CIR lacked jurisdiction.

In this breach of contract case, the Supreme Court considered whether the district court erred in denying Defendant's motion for a new trial based on several rulings by the district court that Defendant claimed materially affected his rights and denied him a fair trial. The district court refused Defendant's request to exclude exhibits disclosed by Plaintiff the day before trial in violation of the district court's pretrial scheduling order. Additionally, the district court refused the request to declare a mistrial when Plaintiff testified to certain matters in violation of the district court's stipulated ruling on a motion in limine and denied Defendant's motion for a directed verdict. The court of appeals reversed and remanded for a new trial because it concluded the district court abused its discretion in admitting the exhibits into evidence. The Supreme Court vacated the court of appeals and affirmed the district court, holding that Defendant had not shown the district court committed any error in its decisions during the trial that substantially prejudiced Defendant's rights to a fair trial. Thus, Defendant was not entitled to a new trial.