Justia Contracts Opinion Summaries

Players on a local youth soccer team sought to recover under the state youth soccer governing association's business auto-insurance policy for injuries sustained when the van in which they were riding was involved in an accident. The trial court granted summary judgment in favor of the association's insurance carrier. The court of appeals affirmed, holding that under the relevant insurance policy language, the rented van was not being used in the business of the association at the time of the accident. The Supreme Court granted transfer and affirmed the trial court, holding that because Castro was not using the automobile "in the business" of the association, a condition for coverage under the insurance policy at issue, the policy provided no coverage to the injured players.

SSW Holding filed a complaint against BDO Seidman and other defendants, asserting several causes of action and seeking damages arising from a tax-advantaged investment strategy involving investments in distressed debt that SSW entered into and utilized on its federal tax returns for the 2001-2005 tax years. BDO filed an amended motion to compel arbitration and stay the motion, asserting that it and SSW entered into two consulting agreements that provided for arbitration before the American Arbitration Association. The circuit court denied the motion. The Supreme Court reversed, holding (1) SSW's claims fell within the scope of the arbitration provisions; and (2) the circuit court erred in finding that the arbitration provisions were unenforceable and invalid due to fraud and procedural and substantive unconscionability. Remanded.

Plaintiff Minor Miracle Productions, LLC (MMP) was a film company for whom Third-Party Respondent David Richards worked. MMP provided a film location and funding for a film written and directed by Defendant Randy Starkey. After the film was completed, Starkey refused to turn over possession of the film and various pieces of equipment from the film. MMP brought suit against Starkey alleging breach of the duty of loyalty, breach of contract, and conversion. After initially appearing via counsel in the case, Starkey proceeded pro se. When Starkey failed to appear at motion hearings and disregarded the district court’s orders regarding discovery, the court sanctioned Starkey, striking his defenses and precluding him from using any evidence not previously disclosed. MMP then moved for judgment on the pleadings, and the district court granted the motion. The court ordered Starkey to pay Richards over one million dollars in damages and interest for the costs of the film’s production, to return the film and to release the copyrights to the film and its website to Richards, and enjoined Starkey from selling the film and from using any of the equipment related to the film. Starkey timely appealed. Upon review, the Supreme Court affirmed the district court's grant of judgment on the pleadings.

A fire destroyed a cotton-picking machine owned by Arcadia Farms Partnership. Though insurance coverage initially was denied, Audubon Insurance Company eventually paid Arcadia for the loss. Arcadia then filed suit against Audubon, asserting that Audubon's failure to submit prompt payment constituted a "bad faith breach of the policy terms." Audubon filed a motion for summary judgment. Audubon asserted that, since Arcadia had been paid on its claim prior to filing suit, Arcadia's only potential form of compensatory damages would be prejudgment interest. Yet according to Audubon, Section 75-17-7 of the Mississippi Code prohibited Arcadia from recovering prejudgment interest prior to the filing of the complaint. The trial court granted summary judgment for Audubon and denied Arcadia's motion for reconsideration or in the alternative, motion to amend its complaint to plead specifically for prejudgment interest. The Court of Appeals reversed, holding that Arcadia could seek prejudgment interest from the date of breach, prior to the filing of the complaint, and that the trial court had abused its discretion in denying Arcadia's motion to amend. Upon review, the Supreme Court agreed with the Court of Appeals, but granted certiorari to address some uncertainty in the law surrounding Section 75-17-7. The Supreme Court clarified that in contract cases, Section 75-17-7 does not restrict prejudgment interest to the post-complaint period; prevailing parties in a breach-of-contract suit may seek interest from the date of breach.

Plaintiff, a former police officer, filed an action against Defendants, the Town of Portsmouth, its then chief of police, and a now retired lieutenant, alleging several causes of action arising from an investigation into Plaintiff's conduct during an officer training exercise. The superior court entered judgment in favor of Defendants. The Supreme Court affirmed in part and vacated in part, holding (1) the trial justice properly granted judgment as a matter of law in favor of Defendants on the claims of malicious prosecution and tortious interference with contractual relations; but (2) the trial justice erred by granting Plaintiff's R.I. R. Civ. P. 12(b)(6) motion to dismiss the chief of police and lieutenant's counterclaim for defamation arising from an inflammatory letter that Plaintiff submitted to the town council to notify the council of his forthcoming suit in accordance with R.I. Gen. Laws 45-15-5 where (i) absolute privilege did not apply in this instance because the notice required by section 45-15-5 was not part of a judicial or quasi-judicial proceeding, and (ii) baseless claims and allegations made by parties who must provide notice under section 45-15-5 are not protected by absolute immunity under McDonald v. Smith. Remanded.

In 2000, a fire destroyed a business location of Stone Flood and Fire Restoration Inc., spurring years of litigation with its insurer, Safeco Insurance Company of America. After Stone Flood and its two shareholders, James and Patrice Stone, sued Safeco in 2007, the district court dismissed all claims against Safeco. The court concluded (1) Stone Flood's claims on the insurance policy were filed three days beyond the applicable statute of limitations and were therefore barred; (2) the Stones were not insureds and lacked standing to bring individual claims under the policy; and (3) the Stones lacked standing to bring a claim of intentional infliction of emotional distress (IIED) because their alleged injuries were merely derivative of the corporation's. The Supreme Court reversed in part and affirmed in part, holding (1) the district court's calculation of the tolling of the limitations period was incorrect and a correct calculation saved Stone Flood's claims under the insurance policy; and (2) the district court properly concluded the Stones were not insureds and lacked standing to sue under the policy, and their claim of IIED failed for lack of a distinct, non-derivative injury. Remanded.

Homeowners sued Contractor for, inter alia, breach of contract, negligence, fraud, and fraudulent concealment, claiming that Contractor negligently failed to perform contractually required work. The district court granted summary judgment in Contractor's favor on all claims. As to the negligence allegations of interest in this appeal, the district court held (1) the economic loss doctrine prevented Homeowners from bringing a tort action under circumstances governed by contract, and (2) the economic loss doctrine supplied an additional bar to Homeonwers' fraud claims. The court of appeals affirmed. The Supreme Court accepted the appeal to decide whether the economic loss doctrine barred any negligence claims. The Court reversed, holding that the doctrine should not apply in this case where (1) existing caselaw establishes that homeowners' claims against residential contractors may be asserted in tort, contract, or both, depending on the nature of the duty giving rise to each claim; and (2) rationales upholding the economic loss doctrine do not support its adoption for disputes between homeowners and their contractors. Remanded.

The parties in this case signed an arbitration agreement providing that arbitration would occur in accordance with the National Arbitration Forum (NAF) Code of Procedure, but the NAF became unavailable to administer its Code and the arbitration. Defendants moved the circuit court to appoint a substitute arbitrator under Section 5 of the Federal Arbitration Act (FAA). The circuit court concluded that a substitute arbitrator could not be appointed under Section 5 because the NAF Code of Procedure was integral to the parties' agreement to arbitrate and the NAF was unavailable to administer its Code. The Supreme Court reversed after considering the language of the arbitration agreement, the language of the NAF Code, and the federal policy expressed in the FAA, holding that Section 5 applied, and that absent some other defense, Section 5 required the appointment of a substitute arbitrator.

Edwin Mitchell, a lobster fisherman, was sued by Victor Ames, who alleged that a group of lobster fishermen had conspired to prevent him from fishing for lobster in the area. The Ames complaint alleged that Mitchell had, among other things, converted Ames's personal property. Mitchell held a homeowners policy with Allstate Insurance Company. By the policy's terms, Allstate agreed to provide a defense if the policyholder was sued for such damages. Allstate, however, declined to provide coverage to Mitchell on the Ames litigation, after which Mitchell sued Allstate for breach of contract. The superior court granted summary judgment in favor of Allstate, concluding that Allstate had no contractual duty to defend Mitchell because a policy exclusion for certain intentional acts applied. The Supreme Court vacated the superior court's judgment, holding that Allstate did have a duty to defend because the liability alleged in the Ames complaint had the potential to result in covered liability.

In November 1998, Respondent David Moeller’s 1996 Honda Civic CRX was damaged in a collision. Respondent had an insurance policy through Farmers Insurance Company of Washington (Farmers). Farmers chose to repair Respondent's damaged car, and he authorized the repairs. In May 1999, Respondent brought suit on behalf of himself and other similarly situated Farmers policy holders in Washington State asserting a breach of contract claim on the grounds that Farmers failed to restore his vehicle to its "preloss condition through payment of the difference in the value between the vehicle's pre-loss value and its value after it was damaged, properly repaired and returned." The issue on appeal before the Supreme Court was whether the contract between Farmers and Respondent provided for the diminished value of the post-accident, repaired car. Upon review, the Court affirmed the appellate court which held that the policy language at issue here allowed for recovery for the diminution in value.