Justia Contracts Opinion Summaries

The Environmental Protection Agency (EPA) awarded $16 billion in grants to five nonprofit organizations to support the reduction of greenhouse gas emissions, as part of a larger $27 billion congressional appropriation under the Inflation Reduction Act. The grants were structured through agreements between the nonprofits and EPA, with Citibank acting as a financial agent to hold and disburse the funds. After concerns arose regarding conflicts of interest, lack of oversight, and last-minute amendments to the grant agreements, EPA terminated the grants in early 2025. Citibank, following an FBI recommendation, froze the accounts associated with the grants. The nonprofits sued, seeking to prevent the termination and to restore access to the funds.The United States District Court for the District of Columbia granted a preliminary injunction, ordering EPA and Citibank to continue funding the grants. The district court found it had jurisdiction, concluding the plaintiffs’ claims were not essentially contractual and thus did not need to be brought in the Court of Federal Claims. The court determined the plaintiffs were likely to succeed on their constitutional, regulatory, and arbitrary and capricious claims, and that the balance of harms and public interest favored the injunction.On appeal, the United States Court of Appeals for the District of Columbia Circuit held that the district court abused its discretion in issuing the injunction. The appellate court found that the plaintiffs’ regulatory and arbitrary and capricious claims were essentially contractual, meaning jurisdiction lay exclusively in the Court of Federal Claims, not the district court. The court also held that the constitutional claim was meritless. The equities and public interest, the appellate court concluded, favored the government’s need for oversight and management of public funds. Accordingly, the D.C. Circuit vacated the preliminary injunction and remanded the case for further proceedings. View "Climate United Fund v. Citibank, N.A." on Justia Law

A Nebraska software company entered into a lease agreement with a financial technology firm for the use of proprietary software designed to facilitate electronic transactions. The agreement required the tech firm to pay substantial annual fees upon acceptance of the software, with installation dependent on the tech firm’s cooperation. The parties also entered a separate agreement for preinstallation services, which were paid in full. After initial delays and a temporary suspension due to the COVID-19 pandemic, the tech firm ultimately terminated the project, citing incompatibility of the software with its infrastructure.The software company filed suit in Nebraska state court, alleging breach of contract and breach of the implied covenant of good faith and fair dealing, seeking damages equal to the unpaid lease fees. The case was removed to the United States District Court for the District of Nebraska. The district court granted summary judgment for the tech firm, holding that a limitation-of-liability clause in the lease agreement barred the software company from recovering the damages sought. The court found that the clause limited recovery to fees actually paid, not fees owed, and that the clause was neither unconscionable nor rendered the contract meaningless. The court also determined that the Uniform Commercial Code did not apply, and even if it did, the contract did not fail of its essential purpose.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the district court’s decision. The appellate court held that, under Delaware law, the limitation-of-liability clause was enforceable as written, limiting damages to fees paid and barring recovery of unpaid fees. The court also found the clause was not unconscionable and that the contract did not fail of its essential purpose. The judgment in favor of the tech firm was affirmed. View "Baldwin Hacket and Meeks, Inc. v. Early Warning Services, LLC" on Justia Law

Karl and Tonya Williams contracted with Whitson Builders, LLC to purchase a custom modular home manufactured by Franklin Structures, LLC. The sales contract specified that Franklin would provide all warranties for the home, and Whitson would assemble it on the Williamses’ property. After moving in, the Williamses experienced significant issues with the home’s construction and alleged that Franklin and Whitson failed to properly repair these defects despite multiple requests. The Williamses subsequently filed suit in Baldwin Circuit Court against Franklin, Whitson, and other parties, asserting claims including breach of contract, fraud, negligence, and breach of express and implied warranties.In Baldwin Circuit Court, Franklin moved to compel arbitration based on a provision in its homeowner’s manual, which required disputes to be submitted first to nonbinding mediation and, if unresolved, to binding arbitration. Franklin argued that the Williamses were bound by this provision because they had accepted warranty services and asserted express-warranty claims. The Williamses opposed, contending they never received or signed the manual containing the arbitration clause and did not assent to its terms. The trial court denied Franklin’s motion to compel arbitration in part.The Supreme Court of Alabama reviewed the trial court’s denial de novo. The Court held that the Williamses were contractually bound by the arbitration provision in Franklin’s warranty because they accepted warranty services and asserted express-warranty claims, following precedent from Southern Energy Homes, Inc. v. Ard. The Court found that the trial court erred by not compelling mediation and, if necessary, arbitration as required by the warranty’s terms. The Supreme Court of Alabama reversed the trial court’s order and remanded the case for entry of an order consistent with the arbitration provision. View "Franklin Structures, LLC v. Williams" on Justia Law

Jessica De'Andrea, a patrol officer with the Montgomery Police Department, was involved in a motor vehicle collision while on duty. The driver of the other vehicle, Clint Walters, later sued De'Andrea individually for negligence, resulting in a $550,000 judgment against her after a jury trial. De'Andrea alleged that the City of Montgomery, which had procured liability insurance and acted as a self-insurer for its employees, failed to properly defend her, did not communicate settlement or appeal options, and refused to satisfy the judgment. She claimed these failures led to her bankruptcy and brought multiple claims against the City, including breach of contract, bad faith, fraudulent misrepresentation, and violations of the Alabama Legal Services Liability Act.The Montgomery Circuit Court denied the City's motions to dismiss, finding it was not apparent beyond doubt that De'Andrea could prove no set of circumstances entitling her to relief. The City then petitioned the Supreme Court of Alabama for a writ of mandamus, seeking dismissal of all claims on the basis of statutory immunity and other defenses.The Supreme Court of Alabama reviewed only the City's immunity defense as to the fraudulent misrepresentation claim, because the City had not preserved immunity arguments for the other claims in the lower court. The Court held that municipal immunity under § 11-47-190, Ala. Code 1975, does not automatically bar all fraudulent misrepresentation claims, as such claims can be based on innocent or mistaken misrepresentations, not just intentional torts. The Court denied the City's petition for a writ of mandamus, allowing De'Andrea's claims to proceed. The City may raise its other defenses on appeal if necessary. View "De'Andrea v. City of Montgomery" on Justia Law

A family leased a home within military housing at the Naval Amphibious Base Coronado in California. Shortly after moving in, they experienced persistent water intrusion and mold contamination, which they alleged damaged their property and affected their health. The family reported these issues to the property manager and the public-private entity responsible for the housing, but claimed that remediation efforts were inadequate and that their concerns were dismissed. After further testing confirmed hazardous mold, the family vacated the property and brought state law claims, including negligence and breach of contract, against the property manager, the public-private housing entity, and a mold remediation company.The defendants removed the case from California state court to the United States District Court for the Southern District of California, asserting federal enclave, federal officer, and federal agency jurisdiction. The district court denied the defendants’ motion to dismiss based on derivative sovereign immunity and, after further proceedings, found that it lacked subject matter jurisdiction on all asserted grounds. Specifically, the court determined there was no evidence that the United States had accepted exclusive jurisdiction over the property, that the defendants failed to show a causal nexus between their actions and federal direction, and that the public-private entity was not a federal agency. The district court remanded the case to state court.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed the remand order under an exception allowing appellate review when federal officer removal is asserted. The Ninth Circuit held that the district court correctly found no federal enclave jurisdiction because there was no evidence of federal acceptance of exclusive jurisdiction over the property. The court also held that the defendants did not meet the requirements for federal officer or agency jurisdiction. The Ninth Circuit affirmed the district court’s remand to state court. View "CHILDS V. SAN DIEGO FAMILY HOUSING, LLC" on Justia Law

The dispute arose when a homeowner contracted with a tree nursery company to purchase and install six trees on her property in Washington, D.C. The homeowner sought to restore privacy lost when a neighbor removed existing trees, and she wanted the new trees to provide “evergreen screening.” After installation, she was dissatisfied with the results, noting that the trees did not achieve the desired screening effect and that two of the trees died within a year. She refused to pay the remaining contract balance, prompting the nursery to sue for breach of contract. The homeowner counterclaimed, alleging breach of contract, breach of the duty of good faith and fair dealing, breach of the implied warranty of merchantability, and violations of the D.C. Consumer Protection Procedures Act (CPPA).The Superior Court of the District of Columbia held a bench trial. The court found that the contract required the nursery only to select, install, and monitor six trees for six weeks, not to guarantee any particular screening effect. The court ruled in favor of the nursery on its contract claim and on most of the homeowner’s counterclaims, except for a finding that the nursery breached the implied warranty of merchantability as to one tree (the dogwood) that died soon after installation. The court rejected the homeowner’s claims regarding the CPPA and the duty of good faith and fair dealing, and denied her motion for reconsideration.On appeal, the District of Columbia Court of Appeals affirmed the trial court’s judgment on all grounds. The appellate court held that the contract did not obligate the nursery to provide evergreen screening, that the nursery fulfilled its contractual duties, and that the homeowner breached the contract by withholding payment. The court also affirmed the trial court’s application of the clear-and-convincing-evidence standard to the intentional CPPA claims and agreed that the implied warranty of merchantability was breached only as to the one tree that died. View "Galvin v. Ruppert Nurseries, Inc." on Justia Law

Two business compliance companies entered into a partnership to develop a software product, with one company providing “white-label” services to the other. The partnership was formalized in a written agreement, but disputes arose over performance, payment for out-of-scope work, and the functionality of the software integration. As the relationship deteriorated, the company that had sought the services began developing its own infrastructure, ultimately terminating the partnership and launching a competing product. The service provider alleged that its trade secrets and proprietary information were misappropriated in the process.The United States District Court for the Eastern District of Pennsylvania presided over a jury trial in which the service provider brought claims for breach of contract, trade secret misappropriation under both state and federal law, and unfair competition. The jury found in favor of the service provider, awarding compensatory and punitive damages across the claims. The jury specifically found that six of eight alleged trade secrets were misappropriated. The defendant company filed post-trial motions for judgment as a matter of law, a new trial, and remittitur, arguing insufficient evidence, improper expert testimony, and duplicative damages. The District Court denied these motions.On appeal, the United States Court of Appeals for the Third Circuit reviewed the District Court’s rulings. The Third Circuit held that the defendant had forfeited its argument regarding the protectability of the trade secrets by not raising it with sufficient specificity at trial, and thus assumed protectability for purposes of appeal. The court found sufficient evidence supported the jury’s finding of misappropriation by use, and that the verdict was not against the weight of the evidence. The court also found no reversible error in the admission of expert testimony. However, the Third Circuit determined that the damages awarded for trade secret misappropriation and unfair competition were duplicative, and conditionally remanded for remittitur of $11,068,044, allowing the plaintiff to accept the reduced award or seek a new trial on damages. View "Harbor Business Compliance Corp v. Firstbase IO Inc" on Justia Law

A tenant entered into a lease for the lower level of a residential property in Los Angeles in 2015. In 2016, the property was purchased by a new landlord, who made some improvements at the tenant’s request. In 2018, the landlord sought to reclaim the unit for personal use and offered the tenant compensation to vacate, but the tenant refused, alleging harassment and claiming entitlement to substantial back rent. Subsequently, city agencies issued and later rescinded orders regarding the legality of the unit, with the landlord providing documentation to resolve the issues. Despite this, the tenant stopped paying rent, citing the unit’s alleged illegality, and remained in possession for over a year without payment. The landlord attempted to evict the tenant, provided relocation payments, and ultimately the tenant vacated after cashing a relocation check.The tenant filed suit in the Superior Court of Los Angeles County, asserting multiple claims including violation of statutory and municipal code provisions, unjust enrichment, and breach of contract. The landlord filed a cross-complaint for unpaid rent and related claims. After pretrial motions were resolved, the case proceeded to a jury trial, where the tenant’s claim focused on the alleged illegality of the unit and the landlord’s claim centered on breach of contract for unpaid rent. The jury found in favor of the landlord on both the tenant’s claim and the landlord’s cross-claim, awarding the landlord $14,700 in unpaid rent. The trial court denied the tenant’s motions for judgment notwithstanding the verdict and for a new trial.The California Court of Appeal, Second Appellate District, Division Two, reviewed the case. The court held that it was proper for the jury to determine the legality of the unit as a factual issue, and that the landlord was not precluded from contesting the unit’s legality or from introducing evidence from city agencies. The appellate court affirmed the judgment in favor of the landlord. View "Emmons v. Jesso" on Justia Law

A Wyoming limited liability company leased commercial property in northern Idaho to a Delaware corporation, which was formerly known as a North Carolina corporation. The lease required the tenant to pay $1,000,000 annually in rent, increasing by 3% each year, on a triple net basis. During the lease, the tenant made some payments directly to the lender on the property’s mortgage, but these were less than the required rent. Additionally, a related entity paid over $8 million to a contractor for construction of a new residence on the property. The tenant argued that these construction payments should be credited as rent, and that it was not required to pay rent after the first month because the landlord failed to deliver a corporate retreat as allegedly contemplated.The District Court of the First Judicial District of the State of Idaho, Bonner County, granted summary judgment to the landlord for breach of lease, awarding damages and attorney fees. The court found that the tenant failed to pay the full rent required under the lease and rejected the tenant’s argument that construction payments should be credited as rent, finding no evidence of an agreement to that effect. The court also dismissed the tenant’s counterclaim for unjust enrichment, concluding that the lease governed the parties’ obligations and that any improvements became the landlord’s property. The court denied the tenant’s motion for reconsideration, finding no evidence that the tenant funded the construction payments or that such payments were intended as rent.The Supreme Court of the State of Idaho affirmed the district court’s judgment. It held that the district court properly granted summary judgment because there was no genuine issue of material fact regarding the tenant’s failure to pay rent, and no evidence supported the tenant’s claims or affirmative defenses. The Supreme Court also affirmed the award of attorney fees to the landlord and awarded attorney fees on appeal under the lease. View "Erie Properties, LLC v. Global Growth Holdings, Inc." on Justia Law

Joanne Sudakow entered into a contract with CleanChoice Energy, Inc. to purchase electricity. The initial agreement, which she accepted in October 2021, did not include an arbitration clause and specified that New York would be the exclusive venue for any lawsuits. About three weeks after the contract was executed, CleanChoice sent Sudakow a “Welcome Package” containing new terms, including an arbitration provision, but Sudakow did not sign or otherwise expressly assent to these new terms. She continued to pay for her electricity service until she terminated it in August 2022.Sudakow later filed a putative class action in the United States District Court for the Southern District of New York, alleging breach of contract and deceptive business practices by CleanChoice. CleanChoice moved to compel arbitration based on the arbitration provision in the subsequently mailed terms. The district court denied the motion, finding that Sudakow did not have sufficient notice of the arbitration provision and had not assented to it.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s denial of the motion to compel arbitration de novo. The Second Circuit held that Sudakow was not bound by the arbitration provision because CleanChoice failed to provide clear and conspicuous notice of the new terms, and a reasonable person would not have understood that making payments constituted assent to those terms. The court also found that the language of the subsequent terms indicated that a signature was required for assent, which Sudakow never provided. Accordingly, the Second Circuit affirmed the district court’s judgment denying CleanChoice’s motion to compel arbitration. View "Sudakow v. CleanChoice Energy, Inc." on Justia Law