Justia Contracts Opinion Summaries

In early 2020, following the outbreak of COVID-19, Los Angeles County passed the “Resolution of the Board of Supervisors of the County of Los Angeles Further Amending and Restating the Executive Order for an Eviction Moratorium During Existence of a Local Health Emergency Regarding Novel Coronavirus (COVID-19)” (the “Moratorium”). The Moratorium imposed temporary restrictions on certain residential and commercial tenant evictions. It provided tenants with new affirmative defenses to eviction based on nonpayment of rent, prohibited landlords from charging late fees and interest, and imposed civil and criminal penalties to landlords who violate the Moratorium. Id. Section V (July 14, 2021). Plaintiff, a commercial landlord, sued the County, arguing that the Moratorium impaired his lease, in violation of the Contracts Clause of the U.S. Constitution. The district court found that Plaintiff had not alleged an injury in fact and dismissed his complaint for lack of standing.   The Ninth Circuit reversed the district court’s dismissal. The panel held that Plaintiff had standing to bring his Contracts Clause claim. Plaintiff’s injury for Article III purposes did not depend on whether Plaintiff’s tenant provided notice or was otherwise excused from doing so. Those questions went to the merits of the claim rather than Plaintiff’s standing to bring suit. Plaintiff alleged that the moratorium impaired his contract with his tenant because it altered the remedies the parties had agreed to at the time they entered into the lease. The panel held that these allegations were sufficient to plead an injury in fact and to state a claim under the Contracts Clause, and remanded to the district court. View "HOWARD ITEN V. COUNTY OF LOS ANGELES" on Justia Law

This consolidated appeal arose from a dispute regarding a purchase option within a lease agreement. Bronco Elite Arts & Athletics, LLC, and its manager and registered agent, Brandon Paine (collectively “Bronco Elite”), operated a gymnastics facility in Garden City, Idaho. The gymnastics facility was located on property that Bronco Elite leased from 106 Garden City, LLC (“106 Garden City”), and Tricon Properties, LLC (“Tricon”). The lease agreement provided Bronco Elite the option to purchase the Property five years into the initial ten-year lease term. However, when Bronco Elite attempted to exercise its option, 106 Garden City and Tricon refused to honor the option. Bronco Elite sued 106 Garden City and Tricon, seeking specific performance. 106 Garden City and Tricon argued that Bronco Elite was precluded from exercising its purchase option because Bronco Elite had breached the lease agreement by consistently failing to pay rent on time and the lease terms only permitted Bronco Elite to exercise the purchase option if it was not in breach. The district court granted summary judgment in favor of Bronco Elite and ordered 106 Garden City and Tricon to convey the Property to Bronco Elite. The specific performance ordered by the district court was stayed pending appeal. After review, the Idaho Supreme Court concluded the district court did not err in granting summary judgment to Bronco Elite, however, the Court found the trial court erred in setting the purchase price of the Property in the way that it did. The case was remanded for further proceedings. View "Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC" on Justia Law

Through an Asset Purchase Agreement, seller Huntcole, LLC (Huntcole), transferred to buyer 4-Way Electric Services, LLC (4-Way), all property necessary to conduct the refurbishment business. The Asset Purchase Agreement did not include the building where the refurbishment business was located. Instead, Huntcole leased that building to 4-Way through a separate Lease. Three years after buying the business, 4-Way announced it was moving to a new building in a different city. It began removing large pieces of commercial equipment it believed it had purchased from Huntcole to conduct the refurbishment business. Huntcole protested and argued that because the equipment was affixed to the building, it was not transferred to 4-Way through the Asset Purchase Agreement. The trial court ruled in favor of Huntcole, finding the affixed equipment had been excluded from the Asset Purchase Agreement. After its review, the Mississippi Supreme Court affirmed in part and reversed in part the trial court's judgment. The Supreme Court found that based on the plain language of the Asset Purchase Agreement, 4-Way, by purchasing all assets necessary to conduct the refurbishment business, did in fact purchase the very equipment needed to conduct the business. The Asset Purchase Agreement also clearly designated the equipment as personal property and not as building improvements or fixtures. The Supreme Court concurred with the trial court that 4-Way did not have the right to cause damage to the building in a way that breached the Lease. The case was remanded to the trial court to determine the appropriate amount of damages to repair the building in accordance with the Lease, and to recalculate Huntcole's attorney fees' awards. View "4-Way Electric Services, LLC v. Huntcole, LLC, et al." on Justia Law

The three plaintiffs in this case had each rented rooms at an extended-stay motel for some time. They fell behind on their rent and were threatened with immediate eviction. They sued to stop that from happening, claiming that they were in a landlord-tenant relationship with the motel and could not be evicted without dispossessory proceedings in court. The motel argued that it had signed agreements with the plaintiffs that foreclosed their claims because, among other things, the agreement stated that their relationship was one of “Innkeeper and Guest,” and “not . . . Landlord and Tenant.” The trial court agreed with plaintiffs, and the Court of Appeals affirmed. After its review, the Georgia Supreme Court vacated the appellate court's opinion and remanded with direction for the trial court to determine the parties' relationship under the proper legal framework. View "Efficiency Lodge, Inc. v. Neason, et al." on Justia Law

The Supreme Judicial Court reversed the decision of the district court granting a partial summary judgment construing a long-term written lease between Owner and Tenant and, after a trial, entering a judgment regarding the parties dispute over minimum rent, holding that a factual issue existed precluding summary judgment.Owner sued Tenant for breach of contract after the parties could not agree when renegotiating minimum rent, alleging express breach of contract, declaratory judgment, and breach of the implied duty of good faith and fair dealing. The district court entered partial summary judgment in favor of Owner construing the lease but held that there were material facts in dispute as to whether Owner violated the implied duty of good faith and fair dealing when renegotiating. After a trial, the court entered judgment for Owner. The Supreme Court reversed, holding that the provision in the lease regarding minimum rent is ambiguous, and therefore, the court's entry of partial summary judgment on the issue must be reversed. The Court remanded the case for further proceedings. View "Brush & Co. v. W. O. Zangger & Son, Inc." on Justia Law

Elia Companies, LLC, filed suit against the University of Michigan Regents, alleging breach of contract; violations of Michigan’s anti-lockout statute; breach of covenant for quiet possession; constructive eviction; conversion; and unjust enrichment. In 2013, plaintiff entered into a 10-year lease with defendant to obtain space at the Michigan Union for establishing a coffee shop. In March 2017, defendant disclosed its plans to renovate the Union. Plaintiff’s complaint alleged that the parties’ lease required that they negotiate a relocation of the leased premises. However, defendant terminated the lease on April 20, 2018, based on plaintiff’s alleged default and ordered plaintiff to vacate the premises. Plaintiff filed this action in August 2018, and defendant, over plaintiff’s objection, filed a notice of transfer removing the case to the Court of Claims pursuant to MCL 600.6404(3) and MCL 600.6419(1) of the Court of Claims Act (the COCA). Defendant moved for summary disposition, arguing that plaintiff’s action had to be dismissed because plaintiff failed to comply with the notice and verification requirements of MCL 600.6431 of the COCA. The Court of Claims agreed and dismissed plaintiff’s case. Plaintiff appealed, and the Court of Appeals affirmed in part and reversed in part. The panel affirmed the dismissal of plaintiff’s ancillary claims on governmental-tort-immunity grounds but reversed the dismissal of plaintiff’s contract claim. The Michigan Supreme Court determined the Court of Appeals erred when it excused plaintiff’s failure to timely comply with MCL 600.6431. “All parties with claims against the state, except those exempted in MCL 600.6431 itself, must comply with the requirements of MCL 600.6431.” Judgment was reversed and the matter remanded to the Court of Claims for reinstatement of summary judgment granted in defendant’s favor. View "Elia Companies, LLC v. University Of Michigan Regents" on Justia Law

In 2014 the Los Angeles City Council passed a resolution directing various City departments and officials to prepare and execute the necessary approvals and agreements to convey the property to Childhelp in exchange for Childhelp’s agreement to continue using the property to provide services for victims of child abuse. Ultimately, however, the City decided not to transfer the property to Childhelp. Childhelp filed this action against the City for, among other things, declaratory relief, writ of mandate, and promissory estoppel, and the City filed an unlawful detainer action against Childhelp. After the trial court consolidated the two actions, the court granted the City’s motion for summary adjudication on Childhelp’s cause of action for promissory estoppel, sustained without leave to amend the City’s demurrer to Childhelp’s causes of action for declaratory relief and writ of mandate, and granted the City’s motion for summary judgment on its unlawful detainer complaint. Childhelp appealed the ensuing judgment.   The Second Appellate District affirmed. The court explained that Childhelp had occupied the property for almost 30 years and had an expectation it would eventually own the property. The 2014 resolution certainly suggested the City was seriously considering selling the property to Childhelp. But it was undisputed the parties never completed the transaction in accordance with the City Charter. While Childhelp cites cases reciting general principles of promissory estoppel, it does not cite any cases where the plaintiff successfully invoked promissory estoppel against a municipality in these circumstances. The trial court did not err in granting the City’s motion for summary adjudication on Childhelp’s promissory estoppel cause of action. View "Childhelp, Inc. v. City of L.A." on Justia Law

The landlord is a four-member LLC with a single asset--a building in downtown Napa. The tenant, Stone Brewing, a large beer brewing and retail corporation, operates a brewpub in the building. Stone Brewing did not pay rent for several months during the pandemic. The landlord sued for unlawful detainer. Stone argued it was excused from paying rent because COVID-19 regulations and business interruptions triggered a force majeure provision in its lease.The trial court granted the landlord summary judgment, finding that the force majeure provision only excused performance if the claiming party was unable to meet its obligations due to factors outside its control; the tenant admitted during discovery it had the financial resources to pay rent during the period of the COVID-19 regulations but simply refused to do so. The court of appeal affirmed. The force majeure provision does not apply where the tenant had the ability to meet its contractual obligations but chooses not to perform due to financial constraints. The plain meaning of the force majeure provision does not support an interpretation that ties a party’s obligation to pay rent to its profitability or revenue stream instead of a delay or interruption caused by the force majeure event itself. View "West Pueblo Partners, LLC v. Stone Brewing Co., LLC" on Justia Law

The Supreme Court affirmed the decision of the court of appeals affirming the order of the circuit court failing to rule on Plaintiffs' contract claim, holding that the court of appeals correctly found that Plaintiffs waived their breach of contract claim.Plaintiffs, who leased property owned by Defendants, brought this action alleging wrongful eviction, breach of contract, and defamation. The trial court granted summary judgment to Defendants on the wrongful eviction claim and then dismissed Plaintiffs' defamation claims. The court of appeals affirmed and ruled that Plaintiffs waived their breach of contract claim. The Supreme Court affirmed, holding that the court of appeals correctly held that Plaintiffs waived their contract claim. View "Wieland v. Freeman" on Justia Law

The Supreme Court affirmed the opinion of the court of appeals reversing the judgment of the district court refusing to send the underlying rent dispute to arbitration and resolving the claim itself, holding that the dispute should be sent to arbitration.Landlord entered into a lease with Tenant providing that if Tenant defaulted Landlord shall submit such dispute to binding arbitration. When a dispute arose over water damage and withheld rent, litigation and arbitration resulted, with an arbitrator awarding judgment for Tenant. Thereafter, the trustee for several entities that held mortgages on the building brought a foreclosure action against Owner and appointed Receiver. When Tenant continued to refuse to pay rent, Receiver brought suit, and Tenant sought to send the dispute to arbitration. At issue was whether Receiver was bound by the lease's arbitration clause. The district court refused to send the dispute to arbitration and ruled that Tenant must make rent payments to Receiver. The court of appeals reversed. The Supreme Court affirmed, holding that the court of appeals properly concluded that Receiver was subject to the arbitration agreement in the lease. View "Wilmington Trust, Nat'l Ass'n v. 700 Hennepin Holdings, LLC" on Justia Law