Justia Contracts Opinion Summaries

Chenari, a third-year George Washington University medical student, took a test published by the National Board of Medical Examiners. Before the exam, the proctor read aloud the instructions from NBME’s official manual, including that students must complete the exam in two and a half hours and that “[n]o additional time [would] be allowed for transferring answers” to the answer sheet. Chenari also received a copy of “Exam Guidelines,” containing a similar warning. When the proctor called time, Chenari discovered that he had failed to transfer 20-30 answers to his answer sheet, “panicked,” and continued to transfer answers. The proctor requested that he stop; he continued. When the proctor tried to take the exam, Chenari put his hand over it and continued entering answers, taking an additional 90-120 seconds. The proctor and another student reported Chenari. Pursuant to University procedures, an Honor Code Council subcommittee investigated and recommended dismissal for academic dishonesty. The Medical Student Evaluation Committee unanimously recommended Chenari’s dismissal. The Medical School Dean met with Chenari and upheld that recommendation. Chenari unsuccessfully appealed to the Provost, arguing that his conduct lacked “an element of deceit” like “cheat[ing]” or “l[ying].” The D.C. Circuit affirmed dismissal of Chenari’s suit, which alleged breach of contract and discrimination based on his disability, Attention Deficit Hyperactivity Disorder (ADHD), 29 U.S.C. 794(a), and 42 U.S.C. 12132. The court noted that Chenari never sought accommodation of his claimed disability under the school’s established procedures. View "Chenari v. George Washington University" on Justia Law

Wilson was an admissions representative, recruiting students to CEC’s culinary arts college. Wilson earned a bonus for each student that he recruited above a threshold who either completed a full course or a year of study. If a representative was terminated, he was entitled only to bonuses already earned, not including students “in the pipeline.” CEC reserved the right to “terminate or amend” the contract at any time, for any reason, in its sole discretion. The Education Department released regulations, to become effective in July 2011, prohibiting institutions participating in Title IV student financial aid programs from providing bonuses based on securing enrollment. CEC decided to pay bonuses that were earned as of February 28, 2011, depriving Wilson of bonuses that were in the pipeline. CEC raised the base salary by at least the total of 3% plus 75% of each representative’s previous two years’ bonuses. Wilson sued. The Seventh Circuit remanded, holding that Wilson must prove that CEC exercised its discretion in a manner contrary to the parties' reasonable expectations. On remand, the district court rejected an argument that cost savings, not compliance with the regulations, drove CEC’s decision. There were no cost savings to CEC. The Seventh Circuit affirmed. Even accepting Wilson’s characterization, the evidence is insufficient to allow a jury to reasonably conclude that CEC breached the implied covenant of good faith and fair dealing. View "Wilson v. Career Education Corp." on Justia Law

Byrne & Jones Enterprises, Inc. filed an action against Monroe City R-1 School District alleging that it was denied a fair and equal opportunity to compete in the bidding process for a public works contract to build an athletics stadium. The trial court dismissed the petition, concluding that Byrne & Jones, as an unsuccessful bidder, lacked standing to challenge the school district’s award of the contract to another bidder because it did not bring the action in the interest of the public or as a taxpayer. The Supreme Court affirmed, holding (1) Byrne & Jones had standing to challenge the award of the contract to another bidder; but (2) the trial court did not err in dismissing the petition because Byrne & Jones was not entitled to the relief requested in the petition. View "Byrne & Jones Enters., Inc. v. Monroe City R-1 Sch. Dist." on Justia Law

The College Network, Inc. (TCN) appealed an order denying its motion to compel arbitration of a consumer fraud and breach of contract action brought by Plaintiffs Bernadette Magno, Rosanna Garcia, and Sheree Rudio. TCN argued the arbitration provision in Plaintiffs' purchase agreements was valid and enforceable and contended the trial court erred when it ruled the provision unconscionable. Alternatively, TCN argued that if the forum selection clause was unconscionable, the court abused its discretion in voiding the arbitration provision altogether rather than severing the objectionable provisions and enforcing the remainder. After review of the provision at issue, the Court of Appeal concluded the trial court correctly determined the arbitration provision to be procedurally and substantively unconscionable and did not abuse its discretion in voiding it in its entirety. View "Magno v. The College Network, Inc." on Justia Law

In May 2013, plaintiffs Annemarie Morgan and Tiffany Dever filed suit against defendants Sanford Brown Institute, its parent company, Career Education Corporation, and Sanford Brown's chief executive officer, admission and financial aid officers, and clinical director. Sanford Brown was a private, for-profit educational institution with a campus in Trevose, Pennsylvania, that offered medical-related training programs. In the complaint, plaintiffs claimed that defendants misrepresented the value of the school's ultrasound technician program and the quality of its instructors, instructed students on outdated equipment and with inadequate teaching materials, provided insufficient career-service counseling, and conveyed inaccurate information about Sanford Brown's accreditation status. The complaint further alleged that Sanford Brown employed high-pressure and deceptive business tactics that resulted in plaintiffs financing their education with high-interest loans, passing up the study of ultrasound at a reputable college, and losing career advancement opportunities. The Sanford Brown enrollment agreement included payment terms for tuition and fees, disclaimers, and an arbitration provision. Without answering the complaint, defendants filed a motion to compel arbitration and to dismiss plaintiffs' claims. The Appellate Division found the parties clearly and unmistakably agreed an arbitrator would determine issues of arbitrability and that plaintiffs failed to specifically attack the delegation clause. The panel therefore determined that arbitrability [was] for the arbitrator to decide. The Supreme Court reversed, finding that the Appellate Division and trial court did not have the benefit of "Atalese v. U.S. Legal Servs. Grp.," (219 N.J. 430, 436 (2014), cert. denied, __ U.S. __, 135 S. Ct. 2804, 192 L. Ed.2d 847 (2015)) at the time they rendered their decisions. The New Jersey Court held in "Atalese" that an arbitration provision in a consumer contract that fails to explain in some minimal way that arbitration is a substitute for a consumer s right to pursue relief in a court of law was unenforceable. This case was therefore remanded for further proceedings in light of Atalese. View "Morgan v. Sanford Brown Institute" on Justia Law

Kara Alexander sued Vianna Stibal for fraud, breach of contract, and punitive damages. A jury awarded Alexander $111,000 on her contract claim, $17,000 on the fraud claim, and $500,000 in punitive damages. Stibal is the owner and operator of Nature Path, Inc. and the ThetaHealing Institute of Knowledge (THInK). In the beginning of 2008, THInK announced that it would offer a newly-created doctoral degree in ThetaHealing. students of ThetaHealing, including Alexander, began to question the validity of her doctoral degrees. In November of 2011, Alexander filed a complaint against Stibal, alleging breach of contract and fraud. During the trial, the district court denied Stibal’s motion for a directed verdict on the fraud and breach of contract claims. Following trial, Stibal moved for a new trial and for judgment notwithstanding the verdict (JNOV). The district court denied these post-trial motions, but reduced the punitive damages award to $384,000. On appeal, Stibal challenges the district court’s rulings on the contract, fraud, and punitive damages issues. After review, the Supreme Court reversed the district court’s order denying Stibal’s motion for JNOV on the contract claim. The Court vacated the district court’s judgment and remanded with directions for the district court to enter a new judgment reflecting our ruling on the contract claim and the reduction in punitive damages to $100,000. The Court affirmed in all other respects. View "Alexander v. Stibal" on Justia Law

In 1992, Plaintiff was convicted of a felony drug offense. In 2006, Plaintiff applied to the Fairfax County School Board for a teaching position and disclosed her prior conviction on her application. The Board subsequently hired Plaintiff as a special education teacher. In 2012, the school system’s Assistant Superintendent for Human Resources determined that, pursuant to Va. Code 22.1-296.1(A), Plaintiff’s 2006 hiring had been in error because her conviction made her ineligible for employment by the Board. The Board subsequently filed a complaint seeking a declaratory judgment that section 22.1-296.1(A) made Plaintiff ineligible for hire. The circuit court entered an order declaring that the Board lacked authority to hire Plaintiff under section 22.1-296.1(A). The Supreme Court affirmed, holding that the Board lacked authority to make the contract, and therefore, the contract was void ab initio. View "Butler v. Fairfax County School Board" on Justia Law

Bible defaulted on a loan under the Federal Family Education Loan Program, but entered into a rehabilitation agreement. She remains current on her reduced payments, but a guaranty agency assessed $4,500 in collection costs. Bible’s loan terms were governed by a Stafford Loan Master Promissory Note (MPN), approved by the Department of Education, incorporating the Higher Education Act, and providing for “reasonable collection fees and costs” in default, as defined by regulations promulgated under the Act. Bible sued, alleging breach of contract and violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961, arguing that federal regulations prohibit assessment of collection costs and that the guaranty agency committed mail fraud and wire fraud in assessing collection costs despite its representations that her “current collection cost balance” and “current other charges” were zero. The court dismissed, finding both claims “preempted” by the Higher Education Act, which permits collection costs and that Bible had not shown “a scheme to defraud; commission of an act with intent to defraud; or the use of mails or interstate wires in furtherance of a fraudulent scheme.” The Seventh Circuit reversed. The contract claim does not conflict with federal law. The Secretary of Education interprets the regulations to provide that a guaranty agency may not impose collection costs on a borrower who is in default for the first time and has complied with an alternative repayment agreement. Bible’s RICO claim is not preempted. View "Bible v. United Student Aid Funds, Inc." on Justia Law

The DeSoto County School District entered into a contract with a private entity called the Mississippi High School Activities Association (“MHSAA”). The terms of the contract allowed MHSAA to decide whether School District students were eligible to play high school sports. In making its decisions, MHSAA applied its own rules and regulations, and neither the School District nor its school board had input into the process. In 2012, R.T. was a star quarterback for Wynne Public School in Wynne, Arkansas. His parents, the Trails, decided that a change of school districts would be in R.T.’s best interests, so in January 2013 they bought a house in Olive Branch and enrolled R.T. in Olive Branch High School. Their daughter was to remain in Wynne until the school year ended. MHSAA determined that R.T. was eligible to compete in spring sports and allowed R.T. to play baseball. MHSAA conditioned R.T.’s continuing eligibility on the Trails’ daughter also enrolling in the School District at the start of the 2013-2014 school year. But, because the Trails’ daughter did not want to leave her friends behind in Arkansas, the family decided that one parent would stay in Arkansas with their daughter, as they had done during the spring semester, and the other parent would move to Mississippi and remain with R.T. On the eve of the 2013 football season, MHSAA notified the school and R.T. that, under its interpretation of its rules and regulations, R.T. was ineligible to play because it had determined that his family had not made a bona fide move to the School District. Neither the School District nor Olive Branch High School appealed through MHSAA’s internal procedure, so the Trails immediately filed a petition for a temporary restraining order (TRO) and preliminary injunction in the DeSoto County Chancery Court. The chancellor signed an ex-parte order granting the TRO and revoking MHSAA’s adverse eligibility determination. "While it generally is true that high school students have no legally protected right to participate in high school athletics,25 once a school decides to create a sports program and establish eligibility rules, the school—or as in this case, MHSAA—has a duty to follow those rules; and it may be held accountable when it does not do so. . . . And where, as here, the school delegates its authority to control student eligibility through a contract with a private entity, we hold that students directly affected by the contract are third-party beneficiaries of that contract. For us to say otherwise would run contrary to the very reason for extracurricular activities, which is to enrich the educational experience of the students." R.T. had standing to challenge MHSAA's eligibility decision that prevented him from playing high school sports. The Court affirmed the chancery court in this case, and remanded the case for further proceedings. View "Mississippi High School Activities Association, Inc. v. R.T." on Justia Law

The Professional Massage Training Center (PMTC) filed suit against the Accreditation Alliance of Career Schools and Colleges (ACCSC) after ACCSC denied PMTC’s application for re-accreditation. The district court entered judgment in favor of PMTC, finding that ACCSC had violated the school’s due process rights. The court awarded the school more than $400,000 in damages and ordered ACCSC to fully reinstate its accreditation. The Supreme Court reversed in part and affirmed in part, holding (1) the district court erred in conducting a de novo approach to the accreditation process; (2) judged by the correct standard of review, the accreditation decision was well supported and not arbitrary or capricious; and (3) the district court correctly dismissed PMTC’s state law claims for breach of contract, negligence, and tortious interference. Remanded. View "Prof’l Massage Training v. Accreditation Alliance of Career Schs." on Justia Law