Justia Contracts Opinion Summaries

Susie Stohm, the one-time CFO of ClearOne Communications, was charged with eight federal criminal counts relating to an investigation into certain accounting practices at ClearOne. Strohm was eventually acquitted of all but one count. Strohm and her counsel (Counsel) filed this action against ClearOne, alleging that ClearOne was required to indemnify Strohm for her criminal defense costs. The district court (1) ordered ClearOne to indemnify Strohm for her defense costs subject to certain restrictions, and (2) found that a contract between the parties entitled Counsel to charge ClearOne eighteen percent interests on the amounts that were billed to ClearOne but not timely paid and to collect the costs it expended in enforcing ClearOne's contractual obligation to indemnify Strohm. A unanimous court affirmed the district court affirmed the district court's indemnification decisions in large part, its rulings relating to contract termination rights, its reasonableness determination for fees in the criminal case, and its decision to enforce the eighteen percent interest rate. A majority of the court, however, reversed the district court's decision to allow Counsel to recoup its fees in the collection matter. Remanded. View "Strohm v. ClearOne Commc'ns, Inc." on Justia Law

In this appeal, the issue before the court concerned whether monetary damages are available to a prisoner for violations of the terms of a judicial decree approving the "Cleary Final Settlement Agreement." In 2004 appellee Corrections Corporation of America contracted with the State to house Alaska inmates at Corrections Corporation's Red Rock Correctional Center in Arizona. Byran Perotti was an Alaska inmate at Red Rock. He filed a complaint against Corrections Corporation alleging that Corrections Corporation violated provisions of its contract with the State, as well as various State Department of Corrections policies. He asserted standing as a third-party beneficiary to the contract between the State and Corrections Corporation. He based his argument on his status as a Cleary class member and the provisions of the Cleary Final Settlement Agreement, which settled the class action involving various inmate claims against the State of Alaska, Department of Corrections (DOC). Perotti's complaint sought liquidated damages under the DOC-Corrections Corporation contract, as well as compensatory damages, nominal damages, and punitive damages. Upon review, the Supreme Court concluded that the Cleary Final Settlement Agreement did not contemplate the award of monetary damages to enforce its provisions. Therefore the Court affirmed the superior court's decision granting Corrections Corporation's motion for summary judgment and dismissed all of Perotti's claims. View "Perotti v. Corrections Corporation of America" on Justia Law

Watkins, an African-American, worked for the school district, overseeing security systems. Fultz supervised Watkins and, relying on Watkins’s advice, Fultz awarded Vision a $182,000 annual contract for service of security cameras. Vision’s president, Newsome, testified that Watkins called her and talked about a “finder’s fee.. Newsome went to Cleveland for a customer visit. She e-mailed Watkins and he replied: “Absolutely$.” Newsome believed that Watkins expected her to pay him at their meeting. Newsome notified Fultz. At the meeting, Watkins requested “an envelope.” After Fultz contacted police, the FBI recorded meetings at which Newsome gave Watkins $5,000 and $2,000. A white jury convicted on two counts of attempted extortion “under color of official right” (Hobbs Act, 18 U.S.C. 1951), and one count of bribery in a federally funded program, 18 U.S.C. 666(a)(1)(B). The court determined a total offense level of 22, applying a two-level enhancement for obstruction of justice, another two-level enhancement for bribes exceeding $5,000, and a four-level enhancement for high level of authority, plus an upward variance of 21 months under 18 U.S.C. 3553(a), and sentenced Watkins to six years’ incarceration. The Sixth Circuit affirmed, rejecting challenges to jury instructions, sufficiency of the evidence, the jury’s racial composition, and the reasonableness of the sentence.View "United States v. Watkins" on Justia Law

Plaintiff owned a rental center and retained defendants, who provide investment banking services to the equipment rental industry, to help him obtain an investor or buyer. Defendants’ advice culminated in sale of a majority of plaintiff’s stock for about $30 million. Defendants billed plaintiff $758,675. Plaintiff paid without complaint but later sued for return of the entire fee on the ground that defendants lacked a brokerage license required by Wis. Stats. 452.01(2)(a), 452.03. The district court dismissed, finding the parties equally at fault. The Seventh Circuit affirmed, declining to definitively answer whether a license was required under the circumstances that a negotiated sale of assets fell through in favor of a sale of stock. Plaintiff is not entitled to relief even if there was a violation. Referring to the classic Highwayman’s Case, the court rejected claims of in pari delicto and unclean hands; plaintiff was not equally at fault. To bar relief, however, is not punishing a victim. Plaintiff did not incur damages and is not entitled to restitution. Plaintiff sought compensation for spotting a violation and incurring expenses to punish the violator, a bounty-hunter or private attorney general theory, not recognized under Wisconsin law. The voluntary-payment doctrine is inapplicable.

Andrews was designated as contractor for improvements to the sewage system, in a no-bid process involving kickbacks and bribery, having made numerous false statements in the bond application package. After the contract was terminated, he submitted a claim of $748,304, based on false statements and duplicate charges. Evidence indicated that Andrews was not capable of the project work and that the entire scheme was fraudulent. He was convicted of one count of conspiracy, 18 U.S.C. 371, four counts of wire fraud, 18 U.S.C. 1343, 1346, and 2, one count of program fraud, 18 U.S.C. 666(a)(1)(B) and 2, one count of making a false claim upon the Government of the Virgin Islands, 14 V.I.C. 843(4), and one count of inducing a conflict of interest, 3 V.I.C. 1102, 1103, and 1107. The Third Circuit affirmed the conviction, but remanded for resentencing. Errors in the indictment and jury instructions concerning honest services fraud did not affect substantial rights. Although the 151-month term of imprisonment was within the statutory maximum for Counts Two through Five, it exceeded the statutory maximum for Counts One and Six; it was not possible to determine whether the sentence was legal as to each count

This appeal concerned the 2003 fire that occurred at the Station nightclub, wherein one hundred people died. The nightclub was co-owned by Plaintiffs, Michael and Jeffrey Derderian. A grand jury returned separate criminal indictments against Plaintiffs on charges of involuntary manslaughter. Prior to the fire, Essex Insurance Company had issued an insurance policy to Michael. Plaintiffs demanded, pursuant to R.I. Gen. Laws 12-28-5 and the policy, that Essex afford them a defense against the criminal prosecutions. When Essex refused, Plaintiffs filed a complaint against Essex, seeking a declaratory judgment that the grand jury indictments against them constituted a suit as defined in the Essex policy and that, accordingly, Essex had a duty to provide them with a defense in the related criminal proceedings. The superior court granted summary judgment in favor of Essex. The Supreme Court affirmed, holding that the language of the policy clearly showed that the parties' intention when entering into the contract was that Essex would provide Plaintiffs with a defense only in civil proceedings in which bodily injury or property damage were alleged, and therefore, Essex had no duty to defend Plaintiffs in their criminal prosecutions.

Defendant appealed the sentence imposed after he pled guilty to being a deported alien found in the United States. Defendant contended that the government breached the plea agreement, notwithstanding the government's later admission that it made a mistake in its initial sentencing recommendation and its substitution of the recommendation to which defendant and the government had agreed in the plea agreement. The court vacated and remanded for resentencing, holding that the government breached the plea agreement and the sentence must be vacated to give defendant the benefit of his bargain, specific performance on the plea agreement.

After Leon Coleman failed to perform eight construction contracts for detached homes, he was convicted of eight counts of theft by deception and eight counts of failure to escrow under Deposits on New Homes Subtitle (Act). The court of special appeals reversed, holding that the Act did not apply and that there was insufficient evidence of intent to support the theft convictions. The Court of Appeals affirmed, holding (1) the evidence was insufficient to conclude that Coleman intentionally deprived buyers of their property, as required under the theft statute; and (2) the plain meaning of the Act indicated that it did not apply to Coleman.

After Kenneth Middleton was convicted of first-degree murder but before a judgment was entered against him in a wrongful-death suit, Kenneth conveyed property he owned in Arkansas to his brother. The sale was found to be fraudulent and was set aside by decree. Appellees, several individuals, filed a petition for writ of scire facias more than ten years later to allow more time to sell the property in an effort to satisfy the Missouri judgment. Appellants, the Middleton brothers, filed a motion for summary judgment, which the circuit court dismissed. Appellants subsequently filed a motion for clarification as well as a notice of appeal. Appellants' motion was subsequently deemed denied. Appellees then filed a motion to dismiss the appeal, arguing that a second notice of appeal was required after the denial of the consolidated motion for clarification. The Supreme Court denied Appellees' motion, holding that the notice of appeal in this case was effective.

When Rita Fix's son and daughter-in-law, Jeff and Marie, secured a loan from the First State Bank of Roscoe by obtaining a warranty deed for the property, the Bank assured Fix she could retain possession of the house. After Jeff and Marie conveyed the house and property to the Bank, the Bank sold the property and sought to remove Fix from the house. Fix sued the Bank for, inter alia, intentional infliction of emotional distress (IIED). Meanwhile, Fix, Jeff, and Marie were indicted on multiple criminal counts. The State attorney who brought the charges and who represented the Bank civilly offered to dismiss the criminal charges against Fix if she would deed the house back to the Bank. Fix then amended her complaint to include a claim of abuse of process against the Bank. The trial court granted summary judgment against Fix on her IIED claim. A jury then returned a verdict finding the Bank liable for abuse of process but awarded no damages to Fix. The Supreme Court reversed on the abuse of process claim, holding that the trial court provided the jury with the incorrect legal standard for the recovery of emotional damages. Remanded for a new trial.