Justia Contracts Opinion Summaries

The Supreme Court vacated the judgment of the court of appeals in this case involving the question of deed construction within the oil and gas context as to whether a royalty interest was fixed or floating, holding that further proceedings were required to evaluate this case in light of the framework articulated in Van Dyke v. Navigator Group, 668 S.W.3d 353 (Tex. 2023).The 1956 deed at issue expressly reserved an undivided 3/32's interest "(same being three-fourths (3/4's) of the usual one-eighth (1/8th) royalty)" in the oil, gas, and other minerals. The question before the Supreme Court was whether the reservation was a floating 3/4 interest of the royalty rather than a fixed 3/32 interest. The court of appeals concluded that the reservation was a floating 3/4 interest. Because the court of appeals' decision preceded Van Dyke, the Court's most recent double-fraction case, the Supreme Court granting the petition for review and vacated the lower court's decision, holding that this case must be remanded this case for further proceedings in light of Van Dyke. View "Thomson v. Hoffman" on Justia Law

On appeal from the trial court's denial of a motion to compel arbitration in this wrongful death lawsuit brought against Defendant, a nursing home, the Supreme Court held that Defendant did not meet the requirements for limited statutory immunity from civil liability under either Tennessee's Durable Power of Attorney for Health Care Act, Tenn. Code Ann. 34-6-201 to -218, or the Health Care Decisions Act, Tenn. Code Ann. 68-11-1801 to -1815.After a resident of the nursing home died his estate brought the underlying wrongful death suit. Defendant moved to compel arbitration based on an arbitration agreement executed by Plaintiff on the decedent's behalf pursuant to a durable power of attorney for health care (POA) form. Plaintiff objected, arguing that the decedent did not have the mental capacity to appoint an agent when he executed the POA. The trial court concluded that the POA was invalid. The court of appeals reversed, concluding that the trial court erred in looking beyond the face of the POA to determine whether Defendant had the mental capacity to execute it. The Supreme Court reversed and affirmed the trial court, holding that the trial court did not err in considering evidence on whether the principal had the requisite mental capacity to execute the POA. View "Welch v. Oaktree Health & Rehabilitation Center LLC" on Justia Law

Plaintiff sued The Savannah College of Art and Design, Inc. (“SCAD”) for race discrimination and retaliation after he was fired from his job as Head Fishing Coach. As part of his employment onboarding, however, Plaintiff signed a document agreeing to arbitrate—not litigate—all legal disputes that arose between him and SCAD. Accordingly, SCAD moved to dismiss and compel arbitration. The district court, approving and adopting the magistrate judge’s Report and Recommendation (“R & R”), granted SCAD’s motion. On appeal, Plaintiff argued that the district court erred by ignoring that his agreement with SCAD was unconscionable and that SCAD waived its right to arbitrate. He also argued that the district court abused its discretion in rejecting his early discovery request.   The Eleventh Circuit affirmed the district court’s order granting SCAD’s motion to dismiss and compel arbitration. The court concluded that the Plaintiff’s arbitration agreement is neither substantively nor procedurally unconscionable. Further, the court found that SCAD did not waive its right to enforce arbitration and that the district court did not abuse its discretion in overruling Plaintiff’s request for early discovery. In short, the court concluded that Plaintiff is bound by his agreement to arbitrate his legal claims against SCAD. View "Isaac Payne v. Savannah College of Art and Design, Inc." on Justia Law

The Supreme Court affirmed in part and reversed in part the decision of the appellate court reversing the judgment of the circuit court granting Defendants' motion to dismiss this case for failure to state a claim upon which relief may be granted, holding that the appellate court erred in finding that Plaintiff's complaint alleged sufficient facts to state a cause of each for counts two and three.Plaintiff, a minority stockholder in a family-owned corporation, brought this action alleging one count of stockholder oppression seeking equitable relief short of dissolution (count one) and compensatory damages for claims of breach of fiduciary duty (count two) and unjust enrichment (count three). The circuit court granted Defendants' motion to dismiss, thereby denying Plaintiff's request for leave to amend the complaint. The appellate court reversed the judgment in its entirety. The Supreme Court affirmed as to count one and reversed as to the remaining counts, holding that Plaintiff's proposed amended complaint set forth sufficient facts to state a claim for stockholder oppression but did not allege sufficient facts to support Plaintiff's direct causes of action for breach of fiduciary duty and unjust enrichment. View "Eastland Food Corp. v. Mekhaya" on Justia Law

PHH Mortgage Corporation (PHH) is the successor-in-interest to Ocwen Loan Servicing, LLC (Ocwen). PHH filed suit against Old Republic in district court, alleging a single cause of action for breach of contract. Old Republic filed a motion for summary judgment, arguing that PHH’s breach of contract claim failed as a matter of law because there was no defect in title to the Entire Southern Tract. The district court denied the parties’ cross-motions for summary judgment without reaching the merits of either motion. Rather, the district court construed the parties’ claims as a request for a declaration of title in the Entire Southern Tract. On this basis, the district court determined that any person claiming an interest in the Entire Southern Tract is a required party under Rule 19 and dismissed the case under Federal Rule of Civil Procedure 12(b)(7).   The Fifth Circuit vacated and dismissed. The court explained that the district court’s Rule 19(a) analysis is rooted in a misunderstanding of Texas law. Contrary to the district court’s conclusion below, Texas law draws a sharp distinction between a breach of contract action against a title insurance company and a trespass-to-try-title action. Further, the court explained that by deciding to dismiss this case based solely on its conclusions under Rule 19(a), the district court failed to do what “Rule 19 clearly requires a court to do: undertake an examination of the practical and equitable Rule 19(b) factors actually raised by the absence of a particular party in the case before it.” View "PHH Mortgage v. Old Republic National" on Justia Law

The Supreme Court held that Maryland law allows spouse to allocate martial assets in a postnuptial agreement based on whether a spouse engaged in adultery, thereby causing the breakdown of the marriage, thus affirming the judgment of the lower courts.Plaintiff filed a complaint for absolute divorce on the grounds of adultery, requesting that the circuit court incorporate the parties' postnuptial agreement into the decree. The agreement included a $7 million lump sum provision that triggered if Defendant engaged in adultery. The circuit court determined that the lump sum provision was an enforceable penalty and issued a judgment of divorce that incorporated, but did not merge, the agreement. The appellate court affirmed. The Supreme Court affirmed, holding (1) the public policy in Maryland supports intefspousal distributions of marital assets based on adultery in postnuptial agreements; and (2) Plaintiff was entitled to no more than Defendant's "50% share of the Column B Assets." View "Lloyd v. Niceta" on Justia Law

Plaintiff Phil Hagey appealed a judgment of dismissal entered following the sustaining of a demurrer to his second amended complaint without leave to amend. Plaintiff owned a home with a solar energy system (the system). At the time he purchased the home, the prior homeowner was party to a contract with a company, Kilowatt Systems, LLC (Kilowatt), which owned the system (the solar agreement). Among other terms, the solar agreement required the prior homeowner to purchase the energy produced by the system through monthly payments to Kilowatt. In the event of a sale of the house, the solar agreement afforded the prior homeowner three options. The prior homeowner and plaintiff agreed to an option which allowed prepayment of all remaining monthly payments and a transfer of all solar agreement rights and obligations to plaintiff, except for the monthly payment responsibility. In conjunction with the sale of the house, prepayment occurred and the parties entered into the requisite transfer agreement. At some later point in time, defendant Solar Service Experts, LLC began sending plaintiff monthly bills on Kilowatt’s behalf, demanding payments pursuant to the solar agreement. After receiving a bill, plaintiff spoke to a representative of defendant who told him he should not have received the bill and the issue would be resolved. Plaintiff received additional bills and at least one late payment notice which identified defendant as a debt collector. Plaintiff communicated with defendant’s representatives about the errors by phone and email, all to no avail. Plaintiff thereafter filed a class action lawsuit against defendant. The trial court concluded plaintiff did not, and could not, allege facts sufficient to constitute a consumer credit transaction, as statutorily defined. Plaintiff argued the court erroneously focused on the undisputed fact he did not owe the debt which defendant sought to collect and, in doing so, failed to recognize the Rosenthal Act applied to debt alleged to be due or owing by reason of a consumer credit transaction. To this the Court of Appeal agreed and reversed the judgment. View "Hagey v. Solar Service Experts" on Justia Law

In early 2020, following the outbreak of COVID-19, Los Angeles County passed the “Resolution of the Board of Supervisors of the County of Los Angeles Further Amending and Restating the Executive Order for an Eviction Moratorium During Existence of a Local Health Emergency Regarding Novel Coronavirus (COVID-19)” (the “Moratorium”). The Moratorium imposed temporary restrictions on certain residential and commercial tenant evictions. It provided tenants with new affirmative defenses to eviction based on nonpayment of rent, prohibited landlords from charging late fees and interest, and imposed civil and criminal penalties to landlords who violate the Moratorium. Id. Section V (July 14, 2021). Plaintiff, a commercial landlord, sued the County, arguing that the Moratorium impaired his lease, in violation of the Contracts Clause of the U.S. Constitution. The district court found that Plaintiff had not alleged an injury in fact and dismissed his complaint for lack of standing.   The Ninth Circuit reversed the district court’s dismissal. The panel held that Plaintiff had standing to bring his Contracts Clause claim. Plaintiff’s injury for Article III purposes did not depend on whether Plaintiff’s tenant provided notice or was otherwise excused from doing so. Those questions went to the merits of the claim rather than Plaintiff’s standing to bring suit. Plaintiff alleged that the moratorium impaired his contract with his tenant because it altered the remedies the parties had agreed to at the time they entered into the lease. The panel held that these allegations were sufficient to plead an injury in fact and to state a claim under the Contracts Clause, and remanded to the district court. View "HOWARD ITEN V. COUNTY OF LOS ANGELES" on Justia Law

After suffering a stroke, Mary, a member of the Brentwood Hutterite Brethren, received care at a Select Specialty Hospital. During her time at Select, she was covered by Brentwood’s insurance. But after Mary applied for and received Medicaid, it retroactively covered her time at Select. Select accepted $300,000 from Medicaid for Mary’s care—far less than it was expecting from Mary’s Brentwood insurance. Select sought payment from Brentwood, the Hutterite Brethren General Fund (the Fund), and South Dakota Medical Holdings Company (Dakotacare) for breach of contract. It also sought damages from Brentwood and the Fund for fraud and deceit. The district court granted summary judgment to Brentwood, the Fund, and Dakotacare. On appeal, Select argues that Brentwood and the Fund breached their contractual obligations by refusing to pay for Mary’s treatment.   The Eighth Circuit affirmed. The court explained that Select has already accepted money from Medicaid “as payment in full” for Mary’s care. Under 42 C.F.R. Section 447.15, “the Medicaid agency must limit participation in the Medicaid program to providers who accept, as payment in full, the amounts paid by the agency.” The court wrote that as a Medicaid program participant, Select must follow this regulation. The central issue here is whether Section 447.15’s “payment in full” provision bars Select from pursuing third parties like Brentwood and the Fund after accepting payment from Medicaid. The court wrote that in its view, Section  447.15’s “payment in full” language is plain and unambiguous: Once Select accepted payment from Medicaid, it was paid in full for Mary’s care. View "Select Specialty Hospital v. Brentwood Hutterian, Brethren" on Justia Law

The First Circuit certified to the Massachusetts Supreme Judicial Court (SJC) the unresolved question of what is meant, in the context of a franchise agreement, by "performing any service," as that phrase is used in the Massachusetts Independent Contractor Law (ICL), Mass. Gen. Laws ch. 149, 148B(a).Plaintiffs, owners and operators of 7-Eleven franchises in Massachusetts, filed a putative class action against 7-Eleven, Inc. for alleged violations of the Massachusetts ICL, the Massachusetts Wage Act, and the Massachusetts Minimum Wage Law, challenging 7-Eleven's decision to classify them as independent contractors rather than employees. The district court ruled in favor of 7-Eleven and then, after remand, ruled for 7-Eleven again. At issue was whether Plaintiffs performed "any service" for 7-Eleven under the Massachusetts ICL. The First Circuit certified to the Massachusetts SJC the following question: Do Plaintiffs perform "any service" for 7-Eleven within the meaning of the Massachusetts ICL where they perform various contractural obligations under their franchise agreement and 7-Eleven receives a percentage of the franchise's gross profits. View "Patel v. 7-Eleven, Inc." on Justia Law