Justia Contracts Opinion Summaries

A Union Pacific Railroad train t-boned an SRM dump truck as the truck crossed the tracks in the path of the train. The collision killed the truck driver and derailed the train causing extensive damage to the train’s engines, its cars, and three of its workers. The three injured train workers sued Union Pacific, SRM, and SRM’s primary auto liability insurer, Bituminous Insurance Company, in state court. Union Pacific cross-claimed against SRM and SRM counter cross-claimed. As SRM’s excess liability insurer, Great American Insurance Company, received notice of the claims and monitored the case for potential exposure under its umbrella policy. Under Oklahoma law, a primary insurer owes its insured a duty to initiate settlement negotiations with a third-party claimant if the insured’s liability to the claimant is clear and the insured likely will be held liable for more than its insurance will cover. Here, SRM sought to extend this obligation Great American. Specifically, SRM claimed that Great American breached its insurance policy and duty of good faith and fair dealing by not proactively investigating claims against SRM and by refusing to tender its policy limits to spur settlement negotiations. The district court granted Great American’s motion for summary judgment on SRM’s claims and denied SRM’s request to reconsider. The Tenth Circuit found no reversible error in the district court judgment and affirmed. View "SRM v. Great American Insurance" on Justia Law

Child Craft manufactured furniture. Bienias owns Summit. The parties had a long-standing business relationship. Child Craft contracted with Summit to supply raw wood for a planned line of high-end baby furniture, the “Vogue Line.” Summit sourced the goods from an Indonesian manufacturer, Cita. At Bienias’s request, Child Craft did not have direct contact with Cita. In 2008-2009 Child Craft issued purchase orders to Summit, worth about $90,000. Each included detailed specifications, including that the moisture content of the wood needed to be between 6% and 8%. The goods never conformed to its specifications, in spite of Bienias’s assurances that they would. Child Craft identified the goods as defective upon receipt and refused to pay for shipments. It spent considerable time trying to re-work the products. Child Craft was never able to sell the Vogue Line and ceased operations in 2009. Summit sued for breach of contract and conversion based on refusal to pay. Child Craft counterclaimed for breach of contract and negligent misrepresentation, seeking to $5 million in compensatory damages plus punitive damages of $5 million. Only Child Craft’s counterclaim for negligent misrepresentation against Bienias personally was tried. A judge awarded $2.7 million, against Bienias and Summit. The Seventh Circuit reversed the award. Under Indiana law, a buyer who has received non-conforming goods cannot sue a seller for negligent misrepresentation to avoid the economic loss doctrine, which limits the buyer to contract remedies for purely economic loss. There is no basis for transforming the breach of contract claim into a tort claim to hold the seller’s president personally liable. View "JMB Mfg., Inc. v. Harrison Mfg., LLC." on Justia Law

Client advanced Attorney funds to cover attorney’s fees in litigation. After Client terminated the representation, Attorney refused to return the unearned attorney’s fees. Attorney demurred on the ground that the lawsuit was barred by Cal. Civ. Proc. Code 340.6(a), which sets forth a one-year limitations period for actions against an attorney for a “wrongful act or omission” arising in the performance of “professional services.” The trial court sustained the demurrer, concluding that section 340.6(a) applied to Client’s claims and that she filed her complaint more than one year after Attorney informed her that he would not return her money. The Court of Appeals reversed the trial court’s order sustaining Attorney’s demurrer. The Supreme Court affirmed, holding (1) section 340.6(a) applies to a claim when the merits of the claim will necessarily depend on proof that an attorney violated a professional obligation in the course of providing professional services; and (2) in this case, Client’s complaint could be construed to allege a claim for conversion whose ultimate proof at trial may not depend on the assertion that Attorney violated a professional obligation. View "Lee v. Hanley" on Justia Law

Siouxland, a group practice of obstetrician-gynecologists, terminated Hagen, its President and an equity owner, invoking the for-cause termination provision in Hagen’s 1993, Employment Agreement, after an incident during which Hagen yelled at Dr. Eastman (another Siouxland doctor) and hospital staff, accusing them of neglecting a patient, resulting in a stillbirth. Hagen also reported the incident to hospital administration and told the Siouxland partners that he was considering reporting to the Iowa state medical board. Hagen advised the patient to sue for malpractice. Hagen filed suit, alleging wrongful retaliatory discharge in violation of Iowa public policy. The other doctors testified about Hagen’s history of workplace conflicts and outbursts and about concern that his suspension by the hospital would hurt the reputation of the practice. A jury awarded Hagen $1,051,814 in compensatory damages. The Eighth Circuit reversed, holding that Hagen failed to prove he was an at-will employee who may assert a tort claim for wrongful discharge in violation of public policy. The exclusive remedy of a medical professional practicing under Hagen’s Employment Agreement would be a breach of contract claim, which would permit inquiry into the professional conduct the district court found separately protected by the tort of wrongful termination in violation of public policy. View "Hagen v. Siouxland Obstetrics & Gynecology, PC" on Justia Law

Plaintiff filed suit against defendant, a travel company with which she booked a vacation tour, alleging negligence after one of defendant's employees sexually assaulted her during the trip. At issue was whether a hyperlink to a document containing a forum selection clause may be used to reasonably communicate that clause to a consumer. The court concluded that the forum selection clause in this case was enforceable. Therefore, the court agreed with the district court's holding that the United States was an improper forum because defendant had reasonably communicated the terms and conditions applicable to the tour, which included an enforceable forum selection clause that required plaintiff to litigate her claim in Canada. Accordingly, the court affirmed the judgment. View "Starkey v. G Adventures, Inc." on Justia Law

This dispute arose from promises Defendant Daniel Ochsner allegedly made during Plaintiffs’ several-year tenure living and working on Defendants’ ranch. The district court denied all of Plaintiffs’ claims and Defendants’ counterclaims. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) did not err in denying Plaintiffs’ claims to a number of cattle; (2) erred in denying Plaintiffs’ claims to a cattle brand; (3) did not err in denying Plaintiffs’ Wyo. R. Civ. P. 15(b) motion to amend their complaint to conform to the evidence and to add promissory estoppel claims; and (4) did not err in denying Plaintiff’s motion to confirm an alleged settlement agreement between the parties. View "Gould v. Ochsner" on Justia Law

At dispute in this case was compensation paid to Attorney by Law Firm for work Attorney performed on several class-action contingency fee cases involving the weight-loss pill Fen-Phen. Attorney was paid approximately fifteen percent of the fees generated by the Fen-Phen cases. Attorney filed suit claiming (1) the parties agreed that the general compensation agreement, which entitled Attorney to eighty percent of the fees he generated from hourly work, would apply to the fees generated by the Fen-Phen litigation; (2) under quantum meruit, Law Firm and additional defendants were unjustly enriched by his work; and (3) a second law firm that worked on the Fen-Phen litigation and received a portion of the fees was liable to him under Utah’s Fraudulent Transfer Act (FTA). The district court dismissed Attorney’s contract claim and concluded that Attorney failed to establish that he provided services more than the amount he received from the Fen-Phen fees. The Supreme Court (1) affirmed the dismissal of Attorney’s contract claim; (2) reversed the denial of Attorney’s jury demand and, sending the claim back to the jury, clarified the correct measure of damages on the quantum meruit claim; and (3) upheld the dismissal of the individual defendants from both the quantum meruit claim and the FTA claim. View "Jones v. Mackey Price Thompson & Ostler" on Justia Law

The Cleveland Indians hired National to produce Kids Day events at baseball games, with attractions, including an inflatable bouncy castle and inflatable slide. The contract required National to secure a five-million-dollar comprehensive liability policy. National submitted an Application to Doodson Insurance Brokerage, stating on the application that the Kids Day events would include inflatable attractions. Doodson arranged for National to obtain a policy, but it excluded from coverage injuries caused by inflatable slides. Johnson admiring a display at a 2010 Indians game, was crushed by an inflatable slide that collapsed onto him. He died of his injuries. Johnson’s estate won a $3.5 million state court default judgment against National. The Sixth Circuit held that the insurance policy did not cover Johnson’s injuries. National and the Indians sued Doodson and obtained settlements. Johnson’s estate, which has not collected on the default judgment against National, sued Doodson, alleging negligence and breach of contract. The Sixth Circuit affirmed dismissal. Under Michigan law, the broker’s contractual duty to its client to protect the client from negligence suits, without more, does not create a tort duty to an injured party who brings such suits and Johnson was neither a party to nor an intended third-party beneficiary of the contract between the broker and National. View "Johnson v. Doodson Ins. Brokerage" on Justia Law

This case involved a lease agreement between Greyhound Lines, Inc., the lessee, and Utah Transit Authority (UTA), the lessor, for a section of UTA’s intermodal transportation facility (intermodal hub). The insurance procurement provision of the lease agreement required Greyhound to purchase commercial general liability insurance covering UTA. At issue was whether the provision required that this insurance cover UTA’s negligent acts. This litigation resulted from a Greyhound passenger’s fall from a concrete pedestrian ramp during a layover at the intermodal hub. UTA admitted negligence in not installing a handrail on the pedestrian ramp. UTA settled the injured passenger’s claim and requested that Greyhound reimburse it for the cost of the claim under the lease agreement. Greyhound refused. The district court entered judgment against Greyhound. The Supreme Court affirmed, holding (1) under Utah law, an agreement to procure insurance for the benefit of another is not subject to strict construction; (2) the district court did not err when it concluded that the injured passenger’s claim triggered Greyhound’s duty to procure insurance that covered UTA’s negligent acts; and (3) the district court did not abuse its discretion in awarding UTA’s attorney fees. View "Utah Transit Auth. v. Greyhound Lines, Inc." on Justia Law

The Butte Local Development Corporation (BLDC) filed a complaint against Masters Group International alleging that Masters had failed to pay its obligations under a loan agreement, as modified. Masters filed a third-party complaint against Comerica Bank, alleging, among other claims, that Comerica breached a Forbearance Agreement. A jury found Masters liable to BLDC for $275,251 and found Comerica liable to Masters for a total of $52,037,593, which included punitive damages. The Supreme Court reversed the judgment against Comerica, holding (1) the district court did not abuse its discretion by implicitly denying Comerica’s severance motion; (2) the district court erred in applying Montana law despite the existence of a contractual Michigan choice-of-law provision, and had the district court properly applied Michigan law, Masters’ tort claims would not have been permitted to go to the jury as stand-alone tort claims, and the jury’s award of $10.5 million in punitive damages must be vacated; (3) the law of both Montana and Michigan supports the district court’s decision to submit the companion questions of contract formation and waiver to the jury; and (4) the district court abused its discretion by allowing Troubled Asset Relief Program (TARP) evidence to be presented to the jury. Remanded for a new trial on the contract claims applying Michigan law. View "Masters Group Int’l v. Comerica Bank" on Justia Law