Justia Contracts Opinion Summaries

Plaintiff Arnold Oil Properties, LLC hired Defendant Schlumberger Technology Corp. to perform a specialized cement job on its deep-zone gas well. After Schlumberger poured too much cement into the well, Arnold sued for breach of contract and negligence. The district court concluded as a matter of law that an alleged exculpatory provision in the parties' contract was an indemnification provision and therefore did not bar Arnold's recovery. After a jury found the parties were in unequal bargaining positions, the district court denied Schlumberger's request to enforce the contractual limitation-of-liability provision. Schlumberger appealed the district court's denial of summary judgment and its denial of judgment as a matter of law. Finding that the evidence supported the jury's finding, the Tenth Circuit affirmed the district court's grant of summary judgment in favor of Arnold.

In April and June of 2008, Best of the Best Auto Sales, Inc. purchased seven vehicles from Dealers Auto Auction of Idaho and Brasher's Idaho Auto Auction with checks that were returned for insufficient funds. As a result, Dealers and Brasher refused to provide Best of the Best with the titles to the vehicles. Best of the Best then sold the vehicles to Idaho consumers without providing them with titles. Dealers and Brasher filed claims with CNA Surety d/b/a Western Surety Company which acted as a surety for a "$20,000 Vehicle/Vessel Dealer Bond." Best of the Best was the principal. Upon Best of the Best's failure to provide evidence or defenses for Dealers' and Brasher's claims, Western Surety alleged that it lawfully settled those claims in good faith upon the condition that the consumers received their titles, even though they were not based on final judgments. Plaintiff Nick Hestead submitted his claim, which was based on a final judgment. Plaintiff's claim involved fraud and fraudulent representation concerning a separate vehicle that he purchased from Best of the Best that was previously branded a lemon in California. Western Surety responded by asserting that the Dealer Bond was exhausted. Plaintiff contended that the plain meaning of I.C. 49-1610(4) provides that his claim should be given priority because it was submitted thirty days after a final judgment was entered, unlike Dealers' and Brasher's claims. Western Surety asserted that the plain meaning of I.C. 41-1839(3) permits sureties to settle Dealer Bond claims in good faith. Upon review, the Supreme Court found that the payments on the surety bond were lawfully made in good faith pursuant to I.C. 49-1610(1) and I.C. 41-1839(3) because Dealers' and Brasher's claims were undisputed and supported by competent evidence.

In 2003, Appellant Bridge Tower Dental hired Respondent Meridian Computer Center to provide its dental practice with a computer hardware system subject to a warranty contract. In June of 2005, Bridge began experiencing problems with its server. Bridge Tower Dental entrusted its computer server, including both of its hard drives, to Meridian in order to repair or restore the failing hard drive. While attempting to restore the failing hard drive, Respondent mistakenly confused the source and destination locations on the motherboard and inadvertently erased all of Bridge's data, including the practice's patient records, from the working hard drive. Bridge filed suit against Meridian for breach of contract and negligence under the law of bailment. At trial, the district court denied Bridge's request to submit different jury instructions for the separate claims, and instead combined the contract claim with the negligent bailment claim in the final jury instructions. The jury entered a general verdict in favor of Meridian. Bridge filed a Motion for Judgment Notwithstanding the Verdict, or alternatively, a Motion for New Trial, both of which were denied by the district court. The court entered an order awarding attorney's fees and costs to Meridian. Bridge appealed to the Supreme Court, arguing that the district court erred in denying its Motion for Judgment Notwithstanding the Verdict because Meridian failed to prove that it was not negligent in erasing the data contained on the working hard drive, that the court erred in denying the Motion for New Trial because the jury instructions were improper, and that the district court erred in awarding attorney's fees and costs. Upon review, the Supreme Court reversed the district court's denial of Bridge's post-trial motion and vacated the lower court's award of attorney's fees because Meridian was no longer the prevailing party.

Regions appealed the denial of their renewed motion to compel plaintiffs to arbitrate their complaint against Regions. Plaintiffs sued regions for allegedly violating federal and state law by collecting overdraft charges under its deposit agreement, and Regions moved to compel arbitration based on an arbitration clause in that agreement. The district court denied the motion to compel on the ground that the arbitration clause was substantively unconscionable because it contained a class action waiver, but the court vacated that ruling and remanded for further consideration in light of AT&T Mobility LLC v. Concepcion. On remand, Regions renewed its motion to compel, which the district court denied on the ground that the arbitration clause was substantively unconscionable under Georgia law because a provision granting Regions the unilateral right to recover its expenses for arbitration allocated disproportionately to plaintiffs the risks of error and loss inherent in dispute resolution. Because the reimbursement provision was neither procedurally nor substantively unconscionable under Georgia law, the court reversed the order denying the renewed motion to compel Regions and remanded with instructions to compel arbitration.

Continental sold its food and beverage metal can and can-end technology to Crown via a stock purchase agreement (SPA) in March 1990. The parties disputed the extent of each other's resultant liabilities, as defined by the indemnity provision in the SPA in concurrent binding arbitration and judicial proceedings. Continental subsequently appealed the grant of summary judgment and the district court's denial of its motion to reconsider or alter or amend its judgment. The court found that Continental failed to meet its burden of proving it was not afforded a full and fair opportunity to litigate the meaning of the indemnity provision. Therefore, the district court correctly determined that Continental was precluded from further litigating the provision's meaning, properly granted summary judgment in favor of Crown, and did not abuse its discretion in denying Continental's motion to reconsider.

This declaratory judgment action was brought by Secura, an insurer for Horizon, a subcontractor on a troubled construction project. Horizon's two other insurers, State Auto and Federated later joined. Their dispute with Weitz arose out of a construction project in which Weitz was the general contractor for Metropolitan. After Weitz and Metropolitan brought breach of contract claims against each other, both filed third party complaints against Horizon for defective plumbing. Horizon's insurers defended and settled all claims against it and reimbursed Weitz for its defense of claims against Horizon. Weitz then contended that since it was an "additional insured" on Horizon's policies, the insurers should pay for attorney fees and costs it incurred in defending against Metropolitan's entire counterclaim. The insurers filed this action seeking a final judgment that they not be required to pay the attorney fees and costs. Applying Missouri law, the court rejected Weitz's argument that Metropolitan's counterclaim asserted potentially covered losses under the policies. Therefore, the court affirmed summary judgment in favor of the insurers because Metropolitan's counterclaim did not state an "occurrence" giving rise to a possibility of coverage under the policies.

Norfolk Redevelopment and Housing Authority (NRHA) filed a complaint against the St. Joe Company and Advantis Real Estate Services Company alleging unjust enrichment and seeking imposition of a constructive trust and recovery of funds supplied by NRHA to its agent, Advantis, for the payment of contractors who had performed services for NRHA. St. Joe held a perfected secured interest in Advantis's operating account and exercised its rights as a secured creditor over that account to have funds from Advantis's account, including those entrusted to Advantis as NRHA's agent, transferred to a St. Joe account. The circuit court entered summary judgment in favor of NRHA. The Supreme Court affirmed, holding that the imposition of a constructive was was proper and necessary to prevent a failure of justice and unjust enrichment.

Rappahannock Goodwill Industries (RGI) enterd into an agreement with Specialty Hospitals of Washington. When Specialty Hospitals failed to perform under the agreement, RGI filed a complaint against Specialty Hospitals, asserting claims for breach of contract, conversion, and quantum meruit. No responsive pleadings were filed on behalf of Specialty Hospitals, and the circuit court entered default judgment in favor of RGI. Specialty Hospitals then filed a motion to set aside the default judgment, alleging that service of process was defective, that RGI's claims were against a different entity, and that RGI had erroneously sued Specialty Hospitals. The circuit court denied the motion. The Supreme Court affirmed, holding that the circuit court did not err by (1) failing to find actual notice to Specialty Hospitals, and (2) failing to consider all the factors set forth in Va. Sup. Ct. R. 3:19(d)(1).

First American Title Insurance Company (FATIC) provided title insurance for a mortgage refinancing to SunTrust Mortgage through FATIC's title agent, First Alliance. First Alliance subsequently obtained a $100,000 surety bond pursuant to the Virginia Consumer Real Estate Settlement Protection Act (CRESPA) from Western Surety (Western). After the property owner defaulted under the original mortgages, SunTrust lost $734,296. FATIC paid the full amount of this loss then made a formal demand upon Western for $100,000. Western refused to pay FATIC the amount of the surety bond. FATIC sued Western and First Alliance for breach of contract. The district court entered judgment in FATIC's favor for $100,000. The Supreme Court held (1) CRESPA does not recognize a private cause of action that may be asserted against a surety and the surety bond issued pursuant to former Va. Code Ann. 6.1-2.21(D)(3); (2) Virginia law nonetheless permits a cause of action against a surety and the surety bond executed pursuant to CRESPA by the assertion of a common law claim; and (3) a title insurance company may have standing, not in its own right, but as a subrogee of its insured, to maintain a cause of action against a surety and the surety bond.

During the course of his employment as a police officer for the Town of Abingdon, Kevin Christy suffered injuries from an automobile accident. Christy was insured under an automobile liability insurance policy issued by Mercury Casualty Company (Mercury). Christy submitted a claim to Mercury for payment of the portion of his medical expenses not paid by the Town's workers' compensation carrier. Mercury denied the claim, asserting that an exclusion in the policy barred Christy from receiving any payment for medical expenses because a portion of those expenses had been paid by workers' compensation benefits. Christy filed a warrant in debt against Mercury seeking contract damages. The district court entered judgment in favor of Christy. The circuit court reversed, concluding that, based on the unambiguous language of the exclusion, payment of workers' compensation triggered the exclusion and precluded payment by Mercury. The Supreme Court affirmed, holding that the language of the exclusion was clear and that the exclusion permitted Mercury to deny coverage for any expenses that would have been subject to workers' compensation coverage without regard to whether all of those expenses were actually paid by the workers' compensation carrier.