Justia Contracts Opinion Summaries

Plaintiff Mark Strawn filed a class action suit against Defendants Farmers Insurance Company of Oregon, Mid-Century Insurance Company, and Truck Insurance Exchange (collectively, Farmers). Plaintiff alleged that Farmers had breached contractual duties and committed fraud by instituting a claims handling process that arbitrarily reduced payments for reasonable medical benefits owed under its automobile insurance policies. A jury returned a verdict in favor of Plaintiff, and awarded damages totaling approximately $8.9 million. Farmers appealed, and the appellate court concluded that the punitive damages awarded by the trial court exceeded constitutional limits, but otherwise affirmed the judgment. Both parties sought the Supreme Courtâs review. Farmers challenged the damages award, arguing that it should be lower. Plaintiff argued that the original award should be reinstated. The Supreme Court rejected Farmersâ arguments, and concluded that the appellate court should not have reached Farmersâ constitutional challenge to the amount of the punitive damages award. Consequently, the Court affirmed part, and reversed part of the appellate decision, and affirmed the judgment of the trial court.

Plaintiffs Terry and Susan Brown purchased land adjacent to Defendant James Hanson. The neighbors signed a well-and-road easement agreement, which was recorded with the County Register of Deeds. Believing that the Browns had violated the terms of the agreement, Mr. Hanson filed a letter "rescinding" the agreement with the Register of Deeds. The Browns sued Mr. Hanson, and the trial court ruled that a rescission was not the appropriate remedy for a breach of the easement. Mr. Hanson appealed that decision, and the appellate and Supreme Courts affirmed it. The case was remanded back to the trial court for other issues, one of which was that the Browns alleged Mr. Hanson slandered their title by filing his "rescission" letter with the Register of Deeds. Furthermore, that letter created a cloud on the Browns' title, which the Browns claimed interfered with their contract to sell the property to a third party. The trial court entered a judgment in the Browns' favor. Mr. Hanson again appealed. The Supreme Court found that the trial court did not err in finding Mr. Hanson slandered the Browns' title and tortiously interfered with their sales contract. The Court remanded the case for the redetermination of attorney's fees.

Appellant Walnut Street Associates (WSA) provides insurance brokerage services and helps employers obtain health insurance for their employees. Appellee Brokerage Concepts, Inc. (BCI) is a third party administrator of employee benefit plans. Procacci retained BCI as administrator of its insurance plans, and BCI paid commissions to WSA based on premiums paid by Procacci. In 2005, Procacci requested BCI reduce its costs, but BCI would not meet Procacciâs proposal. Procacci then notified BCI that it would take its business elsewhere. BCI asked Procacci to reconsider, and in the process, disclosed to Procacci how much it paid to WSA as its broker. The amount was higher than Procacci believed WSA had been earning, but there was no dispute that BCIâs statements about WSAâs compensation were true. As a result of BCIâs letter, Procacci terminated its contract with WSA. WSA sued BCI alleging that BCI tortiously interfered with the WSA/Procacci contract by disclosing the amount of WSAâs compensation. BCI argued that it could not be liable for tortious interference because what it said was true, or otherwise justified and privileged. At trial, the jury found that BCI did interfere in the WSA/Procacci contract. BCI appealed, and the appellate court reversed the trial courtâs judgment. The appellate court adopted a section of the Restatement of Torts, which said that truth is a defense to a claim of tortious interference. WSA maintained that the Restatement was not applicable according to Pennsylvania law. The Supreme Court reviewed the case and adopted the Restatement defense that truth is a defense to claims of tortious interference with contractual relations. The Court affirmed the decision of the appellate court.

Respondent Lincoln General Insurance Companyâs insured drove a rental car under the influence of methamphetamines, and led police on a high-sped car chase that ended when he struck a vehicle containing Petitioner Julie Bailey and her son. Her son was killed. The insured pled guilty to five felonies, including second-degree murder. The insured assigned his rights to Petitioner to collect on a $1 million excess-insurance policy issued by Lincoln General. Lincoln General denied coverage for damages caused by the insured, relying on an exclusion in the rental agreement that voided coverage if the car was used to commit a crime that could be charged as a felony. The trial court and the court of appeals held that the criminal-acts exclusion of the policy was enforceable. The Supreme Court affirmed the lower courtsâ decisions to uphold the criminal-acts exclusion of the insurance policy, finding that Lincoln Generalâs use of the exclusion was a proper exercise of its freedom to contract and provide coverage or damages caused by fortuitous events instead of for damages caused by intentionally criminal acts.

Appellant Kim Crockett appealed the circuit courtâs order in favor of Appellee C.A.G. Investments, Inc. (CAG). CAG was created as an investment vehicle to provide funds to Omni Holding and Development Corporation (Omni). Omni operated a crop-dusting and farm-equipment export business. CAG purchased equipment and land for Omniâs operations and a house for Omniâs manager. Ms. Crockett became Omniâs sole stockholder, president and chairman of the board in 2005. CAG made a series of loans to Omni. The loans were secured by the property Omni used in the businessâ operation, and by the house in which Ms. Crockett lived. In late summer 2003, Omni suffered numerous financial difficulties, resulting in the deterioration of the business relationship between the management of CAG and Omni. While Omni contemplated filing for bankruptcy protection, CAG sought to recover the collateral pledged for the loans it had made to Omni. CAG asked Omni to remove all personal property Omni owned from the premises, and demanded to take possession of the real property. Omni refused to comply, and CAG sued for possession, believing the property to be unlawfully detained. The circuit court entered an order against Omni for unlawful detainer, and found that CAG was entitled to a writ of possession. Omni did not vacate the premises, and appealed the circuit courtâs order. The appellate court dismissed Omniâs appeal. Upon review, the Supreme Court affirmed the decisions of the circuit and appellate courts.

The Supreme Court reviewed the appellate courtâs decision against Plaintiffs Jack and Danette Steele. In their claim, Plaintiffs alleged that attorney Katherine Allen gave them incorrect information about a statute of limitations, which led to missing a filing deadline in a negligence suit. The trial court dismissed both their claims of negligent misrepresentation and professional negligence. Plaintiffs only appealed the dismissal of their negligent misrepresentation claim. The appellate court held that Plaintiffs had a claim against the attorney. However, the Supreme Court disagreed, finding that Plaintiffsâ evidence was not sufficient to support their claim. The Court reversed the decision of the appellate court and remanded the case for further proceedings.

Phoenix Insurance Company ("Phoenix") filed a complaint in circuit court rejecting the arbitration award given to appellee when she requested coverage under the underinsured-motorist provisions of her policy with Phoenix after she was injured in a car accident and the other driver's vehicle was underinsured. At issue was whether a provision allowing either party to an insurance contract to demand a trial de novo following arbitration was unenforceable when it appeared in an underinsured-motorist policy. The court held that the provision in appellee's underinsured-motorist policy allowing either party to reject an award over the statutory minimum for liability coverage did not violate public policy and was not unconscionable.

On appeal, the Supreme Court reviewed whether the circuit court erred in its interpretation of a management agreement between Condominium Services, Inc. (CSI) and First Owners' Association of Forty Six Hundred Condominium, Inc. (FOA). FOA filed a complaint alleging CSI breached the terms of the management agreement and had wrongfully converted FOA's funds. CSI filed a counterclaim and amended counterclaim for breach of contract. The circuit court sustained FOA's demurrers to the counterclaim and amended counterclaim. FOA's claims proceeded to a jury trial; the jury returned a verdict in favor of FOA on both its claims . CSI sought to strike the jury verdict and for judgment notwithstanding the verdict. The court denied the motion and CSI appealed. On review, the Supreme Court agreed with the lower court's holding and affirmed the judgment in favor of FOA.

The defendants (Connelly firm) represented plaintiff in his divorce until July 2005. In July 2006 plaintiff consulted attorney, Downey, who notified the Connelly firm of a malpractice claim in October. In March 2007 plaintiff signed an agreement to file suit, but Downey did not file. In February 2008 Downey notified the plaintiff that he was terminating representation and stated that the limitations period on the malpractice claim ran out before Downey began representation. In 2009 plaintiff filed a malpractice suit against the Connelly firm, under a contract theory, and against Downey. The district court entered summary judgment in favor of all defendants. The Third Circuit reversed and remanded claims against Downey, applying the "discovery rule" rather than the occurrence rule to negligence by the Connelly firm. Although plaintiff knew that certain witnesses were not called during a 2004 hearing, he claims that he relied on the firm's assurances and did not have constructive notice of negligence until a July 2005 hearing. The question of when the limitations period began to run was for a jury.