Justia Contracts Opinion Summaries

Articles Posted in Iowa Supreme Court
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The Supreme Court reversed the judgment of the district court ruling that Plaintiffs' claim seeking contract damages was barred by the limitations period set forth in Iowa Code 614.17A, holding that the district court erred in granting summary judgment. John and Dessie Rottinghaus filed a claim in the Estate of Sandra Franken, alleging that the Estate sold certain real estate in violation of their right of first refusal to purchase the real estate. The executor disallowed the claim and moved for summary judgment, claiming that section 614.17A barred the Rottinghauses' claim. The district court granted the motion for summary judgment, concluding that the statute of limitations precluded the Rottinghauses' claim for damages. The Supreme Court reversed, holding (1) section 614.17A applies only to actions seeking to recover or establish an interest in or claim to real estate filed against the holder of the record title; and (2) neither the merger doctrine, the statute of frauds, the indirect effect of section 614.17A, nor the statute of limitations in section 614.1(5) barred the Rottinghauses' damages action. View "In re Estate of Franken" on Justia Law

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The Supreme Court reversed the order of the district court denying Defendant's motion to dismiss four additional arson charges as breach of his plea agreement with the State as to second-degree arson, holding that the State remained bound by its plea agreement under the circumstances of this case. The plea agreement provided that Defendant would plead guilty to second-degree arson, that Defendant would cooperate in an interview regarding other suspicious fires, and that the State would not bring charges regarding the other fires. Defendant pled guilty. Thereafter, the State decided not to hold the interview and advised Defendant that he would be charged with other arsons. The State gave Defendant an opportunity to withdraw from the plea agreement, but Defendant declined to withdraw. The State brought four additional arson charges, and Defendant moved to dismiss them as breach of the plea agreement. The district court denied the motion. The Supreme Court reversed, holding (1) the State could not unilaterally withdraw from the plea agreement by declining to conduct the interview; and (2) Defendant did not ratify the State's modification of the plea agreement by refusing the State's offer of rescission. View "State v. Beres" on Justia Law

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In this dispute between a secured lender (Bank) and a grain elevator (Elevator) the Supreme Court reversed in part the district court's judgment in favor of the Bank, holding that the district court erred by applying the discovery rule but otherwise did not err. The Bank filed this civil action alleging damages for drying and storage charges withheld in a three-year period. The Bank asserted that the Elevator had a junior interest to the Bank's prior perfected security interests. The Elevator asserted affirmative defenses of, among other things, failure to state a claim and unjust enrichment. The district court granted the Bank's motion for summary judgment and denied the Elevator's motion for summary judgment. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) correctly applied the two-year limitation period in Iowa Code 614.1(10), which barred the Bank's claims filed more than two years from the date of sale of goods subject to its perfected security interest; (2) erred by applying the discovery rule allowing the Bank to recover on transactions that occurred more than two years before it filed its civil action; and (3) correctly ruled that the Bank's prior perfected security interest trumped the Elevator's claim for storage and drying costs. View "MidWestOne Bank v. Heartland Co-op" on Justia Law

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In this appeal from the district court's denial of a motion to dismiss and compel arbitration the Supreme Court held that the court-appointed liquidator of a now-insolvent health insurer pursuing common law tort claims against a third-party contractor is bound by an arbitration provision in a preinsolvency agreement between the health insurer and the third-party contractor. Prior to its insolvency, the health insurance provider entered into an agreement with a third-party contractor for consulting services. The provider was later declared insolvent and placed into liquidation. Plaintiff, the provider's court-appointed liquidator, brought an action against the contractor, asserting common law tort damages. The contractor filed a motion to dismiss and compel arbitration on the grounds that the parties' agreement contained an arbitration clause. The district court denied the motion, concluding that the arbitration provision did not apply. The Supreme Court reversed, holding (1) the liquidator was bound by the arbitration provision because the liquidator stood in the shoes of the provider; (2) the liquidator could not use Iowa Code 507C.21(k) to disavow a preinsolvency agreement that the contractor already performed; and (3) the McCarran-Ferguson Act does not permit reverse preemption of the Federal Arbitration Act when the liquidator asserts common law tort damages against a third-party contractor. View "Ommen v. MilliMan, Inc." on Justia Law

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In this action brought by a law firm seeking to enforce its payment due under a contingency fee contract the Supreme Court affirmed the judgment of the district court ordering judgment against the family that retained the law firm for one-third of their recovery plus interest, holding that the one-third contingency fee contract was reasonable at the time of its inception. After a car accident left a motorist in critical condition, the motorist's family (Appellants) retained a law firm to represent the motorist's interests. A contingency fee contract required Appellants to pay one-third of the recovery to the law firm for attorney fees. Appellants accepted a $7.5 million offer to settle the case. When Appellants failed to pay the contingency fee the law firm brought this action to enforce its payment. Appellants argued that the one-third contingency fee contract violated Iowa Rule of Professional Conduct 32:1.5(a) because it was an unreasonable fee. Judgment was ordered against Appellants for one-third of the recovery plus interest. The Supreme Court affirmed, holding (1) the one-third contingency fee agreement was reasonable at the time of its inception; and (2) this Court will not use the noncontingency fee factors under Rule 32:1.5(a) to reevaluate the contingency fee contract from a position of hindsight. View "Munger, Reinschmidt & Denne, LLP v. Plante" on Justia Law

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The Supreme Court affirmed the decision of the district court granting summary judgment in favor of an insurer on the grounds that the plaintiff's contractual assignment was unenforceable, holding that a residential contractor acting as an unlicensed public adjuster cannot enforce its post-loss contractual assignment of insurance benefits against the homeowner's insurer. The contractor in this case represented homeowners as an assignee of their insurance claim for storm damage to their home. The district court concluded that the contractor's contractual assignment was invalid because the contractor acted as an unlicensed public adjuster. The Supreme Court affirmed, holding that the district court did not err in ruling that the contractor acted as an unlicensed public adjuster and that the assignment contract was void and unenforceable under Iowa Code 103A.71(5). View "33 Carpenters Construction, Inc. v. IMT Insurance Co." on Justia Law

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The Supreme Court affirmed the district court's grant of summary judgment for an insurer on the grounds that the plaintiff's contractual assignment was unenforceable, holding that a residential contractor acting as an unlicensed public adjuster cannot enforce its postloss contractual assignment of insurance benefits against the homeowner's insurer. Iowa Code 103A.71(5) declares void contracts entered into by residential contractors who perform public adjuster services without the license required under Iowa Code 522C.4. The contractor in this case represented homeowners as an assignee of their insurance claim for hail damage to their home. The district court concluded that the contractor's contractual assignment was invalid under section 103A.71(5) because the contractor acted as an unlicensed public adjuster. The Supreme Court affirmed, holding that the district court did not err in ruling that the contractor acted as an unlicensed public adjuster and that the assignment contract was unenforceable and void under Iowa law. View "33 Carpenters Construction, Inc. v. State Farm Fire & Casualty Co." on Justia Law

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The Supreme Court affirmed the decision of the court of appeals affirming the district court's grant of summary judgment in favor of Cincinnati Insurance Company in this insurance dispute, holding that, for the reasons set forth in 33 Carpenters Construction, Inc. v. State Farm Life & Casualty Co., __ N.W.2d __ (Iowa 2020), an assignment contract entered into by a residential contractor acting as an unlicensed public adjuster is void under Iowa Code 103A.71(5). After a hailstorm and windstorm damaged Gregg Whigham's residence, Whigham and 33 Carpenters Construction, Inc. entered into an agreement under which 33 Carpenters would repair the damage in exchange for Wigham's insurance proceeds. A 33 Carpenters representative and Whigham then signed an assignment of claim and benefits. Later, 33 Carpenters sued Whigham's insurer, Cincinnati, claiming that Cincinnati breached the insurance policy by failing to by 33 Carpenters all benefits due and owing under the policy that had been assigned to it. The district court granted summary judgment to Cincinnati, concluding that the purported assignment of Whigham's insurance claim was invalid. The Supreme Court affirmed, holding that because 33 Carpenters was operating as an unlicensed public adjuster, the assignment contract was unenforceable. View "33 Carpenters Construction, Inc. v. Cincinnati Insurance Co." on Justia Law

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In this breach of contract action involving the repurchase of all of a limited liability company's (LLC) member's membership interests, the Supreme Court reversed in part the district court's determination that the LLC was entitled to specific performance under the parties' agreement and granting the LLC's request for attorney fees, holding that the award of attorney fees was in error. The LLC member and the LLC executed an agreement whereby the LLC would buy back all of the member's membership interests. Five days later, the member attempted to revoke his offer to sell his interests. The LLC filed a breach of contract claim seeking specific performance as well as attorney fees under the contract. The district court held that the member had breached the agreement, ordered specific performance under the agreement, and granted the LLC's request for attorney fees. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) correctly determined that the contract was a valid and binding agreement and that the LLC was entitled to specific performance as the remedy for the member's breach of the agreement; but (2) erred in awarding attorney fees. View "Homeland Energy Solutions, LLC v. Retterath" on Justia Law

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The Supreme Court affirmed the order of the district court dismissing this action presenting the question of what must be shown to avoid the effects of a contractual forum-selection clause, holding that fraud in general is not sufficient and must relate specifically to the forum-selection clause itself. This case involved an alleged scheme to inflate the purchase price of a general aviation jet aircraft. Plaintiffs argued that Defendants fraudulently misrepresented the acquisition price of the aircraft and failed to disclose the true acquisition price. Defendants filed a motion to dismiss, asserting, in part, improper venue based on the forum-selection clause in the purchase agreement. The district court dismissed the case without prejudice based on improper venue. The Supreme Court affirmed, holding that because Plaintiffs did not allege fraud with respect to the forum-selection clause in the written contract, Plaintiffs' general allegations of fraud in the inducement were insufficient to avoid enforcement of the forum-selection clause of the purchase agreement. View "Karon v. Elliott Aviation" on Justia Law