Justia Contracts Opinion Summaries

Plaintiffs Chris Robles and the California Voting Rights Initiative filed a lawsuit against the City of Ontario, alleging violations of the Voting Rights Act and the California Voting Rights Act by conducting at-large elections for city council members, which they claimed diluted the electoral influence of Latino voters. The parties eventually settled, agreeing to transition to district-based elections by 2024 and included a provision for attorney fees incurred up to that point.The Superior Court of San Bernardino County initially sustained the defendants' demurrer with leave to amend, but the parties settled and submitted a stipulated judgment. The stipulated judgment included a provision for $300,000 in attorney fees and outlined the process for transitioning to district elections. Plaintiffs later filed a motion to enforce the stipulated judgment, alleging the city violated several statutory requirements related to the districting process. The trial court found the city had not complied with the stipulated judgment but denied plaintiffs' request for additional attorney fees, stating the settlement did not provide for fees beyond those already paid.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case and concluded that the plaintiffs were entitled to seek additional attorney fees under the plain language of the stipulated judgment, which allowed for fees incurred in enforcing its terms. The court reversed the trial court's order denying attorney fees and remanded the case to determine whether plaintiffs were prevailing parties and, if so, the appropriate amount of attorney fees to be awarded. The appellate court clarified that the trial court's assessment of the prevailing party should focus on whether the plaintiffs achieved their litigation objectives. View "Robles v. City of Ontario" on Justia Law

The Comedy Store, a stand-up comedy venue in Los Angeles, was forced to close for over a year due to COVID-19 restrictions. In July 2021, the Store hired Moss Adams LLP, an accounting firm, to help apply for a Shuttered Venue Operator Grant from the U.S. Small Business Administration. The parties signed an agreement that included a Washington choice of law provision and a forum selection clause mandating disputes be resolved in Washington state courts. The Store alleges Moss Adams failed to inform it of the grant program's impending expiration, causing the Store to miss the application deadline and lose an $8.5 million grant.The Store initially filed a complaint in the United States District Court in Los Angeles, but the case was dismissed for lack of subject matter jurisdiction. The Store then refiled in the Los Angeles Superior Court, asserting claims including gross negligence and breach of fiduciary duty. Moss Adams moved to dismiss or stay the action based on the forum selection clause. The trial court granted the motion, contingent on Moss Adams stipulating that the Store could exercise its right to a jury trial in Washington state. Moss Adams provided such a stipulation, and the trial court signed an order to that effect.The California Court of Appeal, Second Appellate District, Division Four, reviewed the case. The court found that the trial court erred in failing to properly allocate the burden of proof to Moss Adams to show that litigating in Washington would not diminish the Store’s unwaivable right to a jury trial. The appellate court concluded that Moss Adams did not meet this burden, as it did not demonstrate that Washington law would provide the same or greater rights to a jury trial or that a Washington court would apply California law. The appellate court reversed the trial court’s decision and remanded with instructions to deny Moss Adams’s motion to dismiss or stay the action. View "The Comedy Store v. Moss Adams LLP" on Justia Law

Minority partners in various cellular telephone partnerships hired attorney Michael A. Pullara to pursue breach of fiduciary duty claims against the majority partner, AT&T. The client agreements allowed Pullara to hire joint venture counsel, and he retained Ajamie LLP. Both firms agreed to a 50% discount on their hourly rates in exchange for a contingency fee if they prevailed. After lengthy litigation, the minority partners reached a favorable settlement with AT&T. However, a dispute arose between Pullara and Ajamie over the fee division, leading Ajamie to file for a charging lien to secure its fee.The Court of Chancery of the State of Delaware granted a charging lien to preserve Ajamie’s claim against the settlement proceeds. Ajamie then sought to enforce the lien. The court held that the fee-sharing agreement between Pullara and Ajamie was unenforceable under the Texas Disciplinary Rules of Professional Conduct because the clients had not consented to the specific terms of the fee-sharing arrangement. However, the court ruled that Ajamie was still entitled to reasonable compensation under the principle of quantum meruit.The court calculated Ajamie’s lodestar at $13,178,616.78, based on market rates adjusted annually. Considering the Mahani factors, the court found that an upward adjustment was warranted due to the complexity and duration of the litigation, the significant results obtained, and the partially contingent nature of the fee arrangement. The court awarded Ajamie a total fee of $15,814,340.14, including a 20% increase for the contingency risk. After deducting amounts already paid, Ajamie was awarded $13,014,721.87 plus pre- and post-judgment interest. The court ordered the escrow agent to release this amount to Ajamie. View "Cellular Telephone Company Litigation cases" on Justia Law

Niv Goomai and Bar Hajbi purchased a property in Cincinnati and contracted with H&E Enterprise, L.L.C., Ohad Investment Group, and Avi Ohad for renovations. The renovations were not completed, leading Goomai to sell the property. Goomai then sued the defendants for breach of contract, violation of the Deceptive Trade Practices Act, and fraudulent misrepresentation, seeking actual damages but not injunctive relief.A jury trial was held before a magistrate, where the jury found that H&E had breached its contract and awarded Goomai $30,604.09 in damages. The jury also found that H&E and Ohad had engaged in deceptive trade practices but awarded $0 in damages for this violation. The jury ruled in favor of the defendants on the fraudulent misrepresentation claim. Goomai subsequently filed a motion for attorney’s fees and costs, which the magistrate denied, reasoning that Goomai did not qualify as a prevailing party under the Deceptive Trade Practices Act since they did not obtain any relief on the merits of their claim. The trial court adopted the magistrate’s decision, and Goomai appealed.The First District Court of Appeals reversed the trial court’s decision, holding that a prevailing party under the Deceptive Trade Practices Act is one who obtains a judgment in their favor, regardless of whether they received a remedy. The court remanded the case to the trial court to determine the amount of attorney’s fees to which Goomai was entitled.The Supreme Court of Ohio reviewed the case and concluded that to be a prevailing party under the Deceptive Trade Practices Act, a plaintiff must obtain actual damages or injunctive relief. Since Goomai did not receive any monetary damages or injunctive relief, they were not considered prevailing parties. The Supreme Court of Ohio reversed the judgment of the First District Court of Appeals and reinstated the trial court’s judgment denying attorney’s fees. View "Goomai v. H&E Enterprise, L.L.C." on Justia Law

Hurricane Katrina destroyed Paul and Sylvia Minor’s home in 2005. The Minors had a homeowner’s insurance policy with United Services Automobile Association (USAA) that covered wind damage but excluded storm surge or flood damage. USAA issued payments for wind damage but not for storm surge or flood damage, leading to a dispute. The Minors claimed a total loss due to wind and demanded policy limits. In 2013, a jury awarded the Minors $1,547,293.37 in compensatory damages.The Minor Estate appealed a pretrial order granting partial summary judgment to USAA on the Minors’ bad faith claim. The Mississippi Court of Appeals reversed the trial court’s decision, finding a genuine issue of material fact regarding USAA’s denial and delay of payment. The case was remanded for further proceedings on the bad faith claim. On remand, a jury awarded the Minors $10,000,000 in punitive damages and $457,858.89 in extra-contractual damages (attorneys’ fees). USAA appealed, and the Minor Estate cross-appealed the denial of its post-trial motion for additional attorneys’ fees.The Supreme Court of Mississippi reviewed the case and found no reversible error, affirming the jury’s award of $10,457,858.89 in damages. The court also reversed and rendered attorneys’ fees on behalf of the Estate in the amount of $4,500,000, plus post-judgment interest. The court held that the trial judge did not err in submitting the issue of punitive damages to the jury and that the $10 million punitive damages award was not unconstitutionally disproportionate. The court also found no error in the jury’s award of extra-contractual damages and no errors warranting a new trial. View "United Services Automobile Association v. Estate of Minor" on Justia Law

Nolan D. Palmer appealed a circuit court order enforcing sureties' liability related to a fee dispute among attorneys Barry Wade Gilmer, Seth Little, and Chuck McRae. McRae had initially sued Barry in Hinds County Chancery Court, and Barry subsequently filed a complaint in Madison County Circuit Court against Little, McRae, and McRae's attorneys, Michele Biegel and Bettie Ruth Johnson. The Madison County Circuit Court transferred the entire suit to Hinds County Chancery Court, but the Mississippi Supreme Court reversed this transfer for the claims against Biegel and Johnson, remanding the case back to Madison County Circuit Court. On remand, the circuit court dismissed Barry's complaint against Biegel and Johnson as frivolous and ordered Barry to pay their costs.Barry appealed and filed an appeal bond with supersedeas, signed by Barry, Matthew Gilmer, and Palmer. The bond was not signed by the circuit clerk. The Mississippi Supreme Court affirmed the circuit court's orders, and Biegel and Johnson moved to enforce the sureties' liability, claiming Barry had not satisfied the judgments. The circuit court found the bond enforceable as a contract, holding Barry and Palmer liable.Palmer appealed, arguing he was denied due process, the bond was invalid, and the circuit court erred in enforcing the bond as a contract. The Mississippi Supreme Court reviewed the case de novo and found that Palmer waived his arguments by failing to appear or defend the motion in the circuit court. The court held that Palmer was provided due process as required under Rule 8(d) and affirmed the circuit court's order enforcing sureties' liability. View "Palmer v. McRae" on Justia Law

John A. Daugherty, an attorney, filed a breach-of-contract claim against his former client, Molly Chew Baker, in the Jefferson Circuit Court. Daugherty and Molly had an agreement where Daugherty would help Molly collect alimony arrears from her ex-husband, Christopher, on a contingency-fee basis. Daugherty later agreed to represent Molly in additional matters related to her divorce, including a petition to modify alimony payments filed by Christopher. Molly eventually terminated Daugherty's services, and Daugherty sought to recover his fees through the court.The Jefferson Circuit Court dismissed Daugherty's complaint, concluding that the contingency-fee arrangement in the contract was against public policy under Rule 1.5(d)(1) of the Alabama Rules of Professional Conduct, which prohibits contingency fees in domestic relations matters involving alimony or support. The court also noted that the contract did not provide for compensation in the event of a settlement, which occurred when Molly and Christopher jointly dismissed their respective petitions.Daugherty appealed to the Supreme Court of Alabama, arguing that the contingency-fee arrangement was permissible under an exception for collecting alimony arrears after a completed divorce. However, the Supreme Court affirmed the lower court's decision, noting that Daugherty's representation extended beyond collecting arrears to include ongoing alimony matters, which did not fall under the exception. Additionally, Daugherty's claim for quantum meruit was not properly pleaded in the lower court and was inconsistent with his breach-of-contract claim. The Supreme Court concluded that the circuit court's judgment was correct and affirmed the dismissal of Daugherty's complaint. View "Daugherty v. Baker" on Justia Law

Holsum de Puerto Rico, Inc. ("Holsum") contracted with Peerless Food Equipment ("Peerless") to manufacture a machine for sandwiching cookies and with Compass Industrial Group, LLC ("Compass") for a tray-loader machine. The machines malfunctioned, leading Holsum to sue both companies for breach of contract and negligence. The jury found in favor of Holsum against Compass but ruled in favor of Peerless. Peerless then sought attorney fees from Holsum, citing a fee-shifting provision in their contract and a Puerto Rico court rule.The United States District Court for the District of Puerto Rico denied Peerless's motion for attorney fees. The court found that the fee-shifting provision was not clearly incorporated into the contract through a hyperlink and that Holsum did not act obstinately or frivolously in bringing its claims against Peerless. Peerless appealed this decision.The United States Court of Appeals for the First Circuit affirmed the district court's decision. The appellate court agreed that the contract did not clearly communicate the incorporation of the fee-shifting provision via the hyperlink. Additionally, the court found no abuse of discretion in the district court's determination that Holsum's claims were not frivolous and that Holsum did not act obstinately in refusing to settle before trial. The appellate court emphasized that exercising the right to a jury trial in good faith does not constitute obstinacy. View "Holsum de Puerto Rico, Inc. v. ITW Food Equipment Group LLC" on Justia Law

Plaintiffs, two law firms, provided legal services to defendants regarding the estate of Daniel P. O’Brien Sr. and Mary D. O’Brien. The attorney-client agreement stipulated a contingency fee structure, but defendants terminated the agreement without cause after 19 months. Plaintiffs sought compensation for their services based on quantum meruit, claiming their efforts significantly contributed to a favorable settlement for defendants.The Cook County Circuit Court found that plaintiffs had proven the elements of a quantum meruit claim, including the benefit conferred upon defendants. The court determined the reasonable value of plaintiffs’ services using the contingency fee structure from the attorney-client agreement, awarding plaintiffs $1,692,390.60 after deducting fees paid to subsequent attorneys.The Appellate Court affirmed the entitlement to quantum meruit recovery but reversed the amount awarded, ruling that the attorney-client agreement was void due to a violation of Rule 1.5(e) of the Illinois Rules of Professional Conduct, which requires a written fee-splitting agreement and client consent. The appellate court remanded the case for a new determination of the reasonable value of services.The Illinois Supreme Court reviewed the case and agreed that plaintiffs were entitled to quantum meruit recovery. However, it found that the appellate court erred in reversing the circuit court’s judgment on the reasonable value of services. The Supreme Court held that the attorney-client agreement was not void ab initio and that the circuit court did not commit reversible error in using the contingency fee structure as evidence of value. Consequently, the Supreme Court affirmed the circuit court’s judgment, awarding plaintiffs $1,692,390.60. View "Andrew W. Levenfeld & Associates, Ltd. v. O'Brien" on Justia Law

The plaintiff, a developer and manufacturer of resinous flooring systems, sued several individual and corporate defendants for misappropriation of trade secrets, among other claims. The key individual defendant, S, was a former employee who developed a product called Poly-Crete for the plaintiff. After resigning, S started his own business and developed similar products, allegedly using the plaintiff’s trade secrets. The plaintiff claimed that S and other defendants, including companies that tested and used S’s products, misappropriated its trade secrets.The trial court conducted a bench trial in three phases. In the first phase, the court found that the plaintiff’s formulas for Poly-Crete and other products were trade secrets but ruled that the noncompete agreement S signed was unenforceable due to lack of consideration. The court also found that the plaintiff’s common-law confidentiality claim was preempted by the Connecticut Uniform Trade Secrets Act (CUTSA).In the second phase, the court found that S and some defendants misappropriated the plaintiff’s trade secrets to create products like ProKrete and ProSpartic. However, it ruled that other defendants, including Indue, Krone, ECI, and Merrifield, did not misappropriate the trade secrets as they did not know or have reason to know about the misappropriation. The court also granted attorney’s fees to Krone and ECI, finding the plaintiff’s claims against them were made in bad faith.In the third phase, the court ordered the defendants who misappropriated the trade secrets to disgorge profits and enjoined them from using the trade secrets. The court also sanctioned the plaintiff for attempted spoliation of evidence by its president, F, who tried to remove incriminating photos from the company’s Facebook page during the trial.The Connecticut Supreme Court affirmed the trial court’s rulings on most issues but reversed the judgment regarding the enforceability of the noncompete agreement and the standard for determining misappropriation. The case was remanded for further proceedings on these issues. View "Dur-A-Flex, Inc. v. Dy" on Justia Law