Justia Contracts Opinion Summaries

Plaintiffs were catastrophically injured in automobile accidents. All sustained traumatic brain injuries and are now mentally impaired. State Farm initially paid no-fault insurance benefits for the cost of attendant care services rendered at home, but reduced the rates on the basis of market surveys of the cost of the services. State Farm refused to raise the rates because it could not verify whether plaintiffs had received the type of care that would justify paying higher rates. Plaintiffs refused to submit documentation regarding the nature and extent of the care they were receiving. Plaintiffs sued. The district court awarded plaintiffs monetary sanctions, instead of default judgment, in response to State Farm’s violation of discovery orders. A jury rendered a verdict in State Farm’s Favor. The Sixth Circuit dismissed appeal regarding the discovery sanctions, for lack of jurisdiction, but otherwise affirmed.

In two civil actions, Plaintiffs in the underlying action alleged that Cheaters, Inc. and Cheaters Holding Corporation negligently and/or recklessly served alcoholic beverages to William Powers, who afterwards drove a vehicle off the premises and collided with other vehicles, resulting in one death and injuries to others. Before the accident, United National Insurance Corporation had issued an insurance policy to Cheaters and the Holding Corporation. Based on the policy's on-premises endorsement and liquor liability exclusion, United National disclaimed any responsibility for the defense and/or indemnification of the Holding Corporation. Plaintiff corporations then filed a complaint seeking a declaratory judgment as to their rights under the terms of the policy. The superior court hearing justice granted United National's motion for summary judgment on the grounds that the on-premises endorsement, which limited coverage to on-premises losses only, applied. The Supreme Court affirmed, holding that coverage was barred by the on-premises endorsement.

Plaintiff appealed from the district court's order dismissing his complaint against Target and Virginia Winn. Plaintiff, a Hispanic male, alleged that Winn, a white Target cashier, refused to serve him based on his race and publicly humiliated him when she turned him away from her register. Plaintiff brought suit against Winn for intentional infliction of emotional distress (IIED); against Target for vicarious liability and for negligent training, supervision, and retention; and against both defendants for violating his right to make contracts under 42 U.S.C. 1981. The district court dismissed the case, explaining that plaintiff could not maintain a section 1981 claim because he was ultimately able to complete his purchase, and that Winn's alleged actions did not rise to the level of outrageousness required to state an IIED claim under controlling Florida law. After thorough review and having had the benefit of oral argument, the court agreed and affirmed the judgment of the district court.

This case presented a "novel" question of whether a member of a limited liability company could be held personally liable for torts committed while acting in furtherance of the company's business. Carl R. Aten, Jr., and his wife are the only members of R. Design Construction Co., LLC. In this particular case, R. Design selected a lot in Beaufort, South Carolina, on which it planned to build a four-unit condominium project. When Aten could not secure the necessary financing, he approached Dennis Green about entering into a contract for R. Design to construct the building. Green ultimately formed 16 Jade Street, LLC for this purpose, and R. Design entered into an agreement with Jade Street for the construction of the condominium. One of the subcontractors selected by R. Design was Catterson & Sons Construction. Michael Catterson is the sole shareholder of Catterson & Sons, and he is a specialty subcontractor with a special license for framing in addition to holding his general contractor's license. As the general contractor, it was Aten's job to supervise the project. A couple months into construction, problems arose concerning the AAC block construction and the framing. Following a progress payment dispute, Catterson & Sons left the job site and did not return. In the ensuing months, Aten's relationship with Green deteriorated as Aten tarried in fixing the defects, and the construction eventually ground to a halt. R. Design subsequently left the project, never replacing Catterson & Sons nor adequately addressing the defects. The day after R. Design left the project, Kern-Coleman conducted another inspection of the property. This time, it identified thirty-four defects in addition to the original four, which had not yet been remedied, for a total of thirty-eight. Anchor Construction was retained as the new general contractor, and its own inspection revealed sixty defects in the original construction. After Anchor began working on the project, more defects surfaced. Jade Street subsequently sued R. Design, Aten, Catterson & Sons, and Catterson for negligence and breach of implied warranties. As to Aten personally, the circuit court concluded that despite the fact he was a member of an LLC, he was personally liable because he held a residential home builder's license. In particular, the court concluded the statutes pertaining to the license create civil liability for the licensee. The court imposed no liability against Catterson himself. The court ultimately awarded Jade Street damages for its claims. Upon review, the Supreme Court concluded that the General Assembly did not intend the LLC act to shield a member from liability for his own torts. Accordingly, the Court affirmed the circuit court's holding that Aten was personally liable for his negligence, and that Catterson was not personally liable for the acts of Catterson & Sons.

After sustaining injuries in an auto accident, Tavis McArthur filed this suit in federal district court to recover underinsured motorist (UIM) benefits under his State Farm automobile insurance policy. The district court granted summary judgment in favor of State Farm, concluding that McArthur had failed to exhaust the liability limits of the tortfeasor's insurance, a precondition of his UIM benefits policy. On appeal, the Tenth Circuit Court of Appeals certified two questions to the Utah Supreme Court. The Supreme Court held (1) exhaustion clauses that require the liability insurer to pay out its full policy limits before permitting payment of UIM benefits are generally enforceable in the State of Utah; and (2) because UIM exhaustion provisions are conditions precedent and not covenants capable of being breached, no showing of prejudice is required to sustain their invocation.

The issue presented to the Supreme Court in this case was whether under the Unfair Trade Practices and Consumer Protection Act a misrepresentation by a seller of a used motor home is subject to a defense that the misrepresentation was made in good faith. Plaintiff Robert Borgen bought a used Travelaire motor home from A&M Motors, Inc. in 2004. The motor home had previously been owned by Thom and Linda Janidlo; the Janidlos traded in the vehicle to A&M Motors about two weeks before Borgen bought it. When the Janidlos traded in the motor home, they indicated that it was a 2002 model. At some point, someone changed the model year to 2003 on the documents at A&M Motors. The title from the State of Alaska showed that the motor home was a 2003 model, but the vehicle identification number (VIN) indicated that the motor home was a 2002 model. Both trial experts testified that the tenth digit of a VIN of a chassis indicates the model year of the chassis, but their testimony as to whether the same holds true for the VIN of a coach was unclear. The VIN on the chassis is the VIN on the vehicle’s title, but a motor home’s model year is determined by the model year of the coach. A&M Motors sold the Travelaire to Borgen as a 2003 model. In August 2005 Borgen discovered documents in the motor home indicating the motor home was actually a 2002 model. He contacted A&M Motors to complain; the only compensation they offered him was a $1,000 service contract. Borgen sued A&M Motors, pleading three causes of action: (1) misrepresentation, (2) violation of the Unfair Trade Practices and Consumer Protection Act (UTPA), and (3) breach of contract. Borgen moved for summary judgment on his UTPA claim in February 2008. The trial court denied that motion, and a jury ultimately decided that A&M Motors had not engaged in an unfair or deceptive act in its dealings with Borgen. Finding that the trial court did not err by finding the UTPA implied an unknowing affirmative misrepresentation of material fact would not give rise to liability, the Supreme Court affirmed the trial court's judgment with respect to Borgen's UTPA claims, but remanded for further proceedings on treble damages.

James Bennett, the father of Brooke Bennett and the administrator of her estate, appealed a trial court's declaration of no coverage for the claims made in the lawsuit filed against homeowner Denise Woodward for negligent supervision and damages arising out of the abduction, assault, and death of his daughter, Brooke. Woodward was formerly married to Brooke’s uncle, Michael Jacques, who was alleged to have kidnapped, sexually assaulted, and murdered Brooke. Woodward's insurer brought a declaratory judgment action asking the trial court to hold that its policy does not cover these claims. The trial court decided the case on summary judgment, holding that the insurance policy excluded coverage and Bennett appealed. The trial court granted summary judgment for the insurer, concluding that insurer owed no duty of defense or indemnification in the underlying suit in part because the policy barred coverage for intentional acts by "an insured" that are not "occurrences." The court rejected Bennett's argument that the separate insureds, or severability clause provided coverage for homeowner because the complaint alleged that the uncle committed intentional acts. On appeal, father reiterated his argument that Jacques' alleged intentional acts did not preclude coverage for homeowner because the policy contained a severability clause. Upon review, the Supreme Court found that the plain meaning of the terms in the insurance policy at issue did not include intentional tortious acts nor allowed for severability under the facts of this case.

This case began as a dispute over construction costs between Appellee TriBuilt Construction Group, LLC and Appellants NISHA, LLC and Centennial Bank. After Appellee filed suit against Appellants, the circuit court ordered arbitration with regard to Appellee's claims. Appellee subsequently decided to represent itself in the arbitration and circuit court proceedings. Appellants filed a petition for a permanent injunction requesting the circuit court to enjoin the corporation's officers, director, or employees from representing Tribuilt in the circuit court or arbitration proceedings. The circuit court denied Appellants' petition so far as it pertained to arbitration proceedings, holding (1) nonlawyer representation in an arbitration proceeding does not constitute the practice of law; and (2) an arbitrator, rather than the court, should determine issues regarding legal representation during arbitration proceedings. The Supreme Court reversed, holding (1) a corporate officer, director, or employee who is not a licensed attorney, engages in the unauthorized practice of law by representing the corporation in arbitration proceedings; and (2) issues regarding legal representation during arbitration proceedings fall squarely within the ambit of the court's constitutional powers and may not be decided by an arbitration body.

At issue in this case was a claim for damages relating to a drilling contract Petitioner Elcon Construction and Respondent Eastern Washington University. Elcon alleged tort and contract claims. The contract claims were resolved by arbitration. In dismissing the tort claims, the trial court applied the independent duty rule formerly known as the "economic loss rule," which the Court of Appeals similarly applied in affirming. Upon review, the Supreme Court concluded the trial court and Court of Appeals misapplied the independent duty doctrine to bar Elcon's tort claims in this case. The Court found Elcon's claims failed factually. Viewing the facts and reasonable inferences in the light most favorable to Elcon, no genuine issues of material fact existed with respect to Elcon's fraud in the inducement or tortious interference claims. The Court affirmed on different grounds reached by the trial and appeals courts.

In a consolidated appeal, plaintiffs contended that the district court erred in denying their motions to remand and in dismissing their workplace safety claims as time-barred. Plaintiffs claimed, inter alia, that Dresser failed to properly monitor and mitigate exposure to loud noise at Dresser's industrial facility and that these failures led to long-term hearing loss. The court concluded that Dresser owed plaintiffs duties under the collective bargaining agreement (CBA) and simultaneously owed non-negotiable, independent duties under Louisiana tort law. These duties formed the bases for two distinct types of claims - contract and tort - either of which plaintiffs could have brought before the district court. Plaintiffs chose to sue in tort, without reference to the CBA, and their claims could be adjudicated by sole resort to Louisiana tort law. Applying the Supreme Court's construction of section 301 of the Labor Management Relations Act, 29 U.S.C. 185(a), the district court was without jurisdiction and therefore erred in denying the motions to remand and in granting the motions to dismiss. Accordingly, the judgment was reversed and remanded.