Justia Contracts Opinion Summaries

Craig Reichel, a businessperson from Rochester, Minnesota, and his companies, including Reichel Foods, Inc., filed a legal malpractice lawsuit against the law firm Wendland Utz, LTD, and its former lawyer, Jerrie Hayes. Reichel alleged that despite an ultimately favorable outcome in prior litigation, the law firm’s negligence caused him to incur substantial attorney fees and costs. The underlying litigation involved a lawsuit filed by Craig’s brother, Bryan Reichel, claiming an equity interest in one of Craig’s companies. The district court issued several adverse rulings against Craig and his companies, leading to significant legal expenses. Eventually, the bankruptcy court confirmed Craig’s sole ownership of the companies, and the district court granted summary judgment in Craig’s favor.The Olmsted County District Court granted partial summary judgment in favor of Wendland Utz, dismissing Reichel Foods’ professional negligence claim on the grounds that Reichel Foods could not demonstrate that, but for the law firm’s conduct, it would have been successful in the underlying litigation. The district court did not address Reichel Foods’ other claims for breach of contract and breach of fiduciary duty, nor did it resolve the claims brought by Craig Reichel and his other companies.The Minnesota Supreme Court reviewed the case and concluded that the court of appeals lacked jurisdiction to decide claims still pending in the district court. The Supreme Court vacated the court of appeals’ rulings on those claims. Regarding the professional negligence claim of Reichel Foods, the Supreme Court held that a successful outcome in the underlying litigation does not categorically bar a legal malpractice claim. The court reversed the decision of the court of appeals affirming summary judgment on Reichel Foods’ professional negligence claim and remanded the case for further proceedings. View "Reichel vs. Wendland Utz, LTD" on Justia Law

A business dispute arose between M&M Creative Laminants, Inc. (M&M), a Pennsylvania company, and Cambria Company, LLC (Cambria), a Minnesota company. Cambria manufactures and sells quartz surface products, while M&M sells custom countertops and cabinetry. In 2009, the two companies entered into a business relationship where M&M would purchase finished quartz products from Cambria. In 2017, Cambria terminated the relationship, claiming M&M owed over $180,000 for delivered products. Cambria sued for the unpaid amount, and M&M counterclaimed under the Minnesota Franchise Act, alleging unfair termination practices.The district court granted summary judgment for Cambria on M&M’s counterclaim, ruling that M&M did not pay a franchise fee, a requirement under the Act to qualify as a franchise. The court noted that payments for goods at a bona fide wholesale price are excluded from the definition of a franchise fee. The court of appeals affirmed, agreeing that M&M did not pay a franchise fee and additionally concluded that M&M, being an out-of-state company, was precluded from bringing a claim under the Act.The Minnesota Supreme Court reviewed the case and concluded that the Minnesota Franchise Act does not categorically preclude an out-of-state company from enforcing a claim for unfair practices. However, the court agreed with the lower courts that M&M did not pay a franchise fee. The court found that M&M’s payments to Cambria for finished quartz products were at a bona fide wholesale price and did not include a hidden franchise fee. Therefore, the relationship between M&M and Cambria did not constitute a franchise under the Act. The Supreme Court affirmed the grant of summary judgment for Cambria. View "Cambria Company, LLC vs. M&M Creative Laminants, Inc." on Justia Law

Fitness International, LLC ("Fitness") entered into a lease agreement with City Center Ventures, LLC ("City Center") for a property in Hopkins, Minnesota, where Fitness operated a health club. Due to executive orders during the COVID-19 pandemic, Fitness was mandated to close its business for approximately 3.5 months in 2020. Fitness sought to recover the rent paid during these closure periods, arguing that the doctrine of frustration of purpose excused its obligation to pay rent during the mandatory closure.The Hennepin County District Court granted summary judgment in favor of City Center, concluding that Fitness's obligation to pay rent was not excused. The Minnesota Court of Appeals affirmed, noting that Fitness cited no binding authority allowing the doctrine of frustration of purpose to establish a breach-of-contract claim. The court of appeals also determined that the mandatory COVID-19 closures did not prohibit all permitted uses of the property, thus not substantially frustrating the lease's purpose.The Minnesota Supreme Court reviewed the case to consider the doctrine of frustration of purpose. The court recognized that the Restatement (Second) of Contracts §§ 265 and 269 provide appropriate frameworks for analyzing claims of permanent and temporary frustration of purpose, respectively. However, the court did not decide whether the doctrine could be used affirmatively for a breach-of-contract claim. Instead, it concluded that even if Fitness could pursue such a claim, the obligation to pay rent was only suspended, not discharged, during the temporary frustration. Since Fitness did not establish that paying rent after the closure would be materially more burdensome, the court affirmed the lower courts' decisions, denying Fitness's claim for rent recovery.The Minnesota Supreme Court affirmed the decision of the court of appeals, holding that Fitness's obligation to pay rent was merely suspended during the temporary frustration and not discharged. View "Fitness International, LLC v. City Center Ventures, LLC" on Justia Law

David Hepfl and Jodine Meadowcroft had a complex romantic history, including two marriages and divorces. After their second divorce, they reconciled in 2016 and decided to build a cabin on Meadowcroft's property, which she had retained as nonmarital property. Hepfl paid for the construction and furnishing of the cabin, as well as additional structures like a dock and outhouse. Their relationship ended again in October 2020, and Meadowcroft obtained an Order for Protection (OFP) against Hepfl. Hepfl then filed a civil action alleging unjust enrichment to recover the cabin and its associated fixtures and furnishings or reasonable payment.The district court ruled in favor of Hepfl, concluding that Meadowcroft would be unjustly enriched if she retained the cabin and its associated items without compensating Hepfl. The court found that Hepfl had no intention of gifting the cabin to Meadowcroft and that his contributions were made with the expectation of shared use. Meadowcroft's motion for amended findings was denied, and she was ordered to pay Hepfl for the construction costs and return or compensate for the additional items.The Minnesota Court of Appeals affirmed the district court's decision, agreeing that Meadowcroft's retention of the cabin would result in unjust enrichment. The court noted that Hepfl's contributions were made with the expectation of shared use and that Meadowcroft's actions induced him to make these expenditures.The Minnesota Supreme Court reviewed the case and affirmed the lower courts' decisions. The court held that Hepfl did not need to show that Meadowcroft engaged in morally wrongful conduct to succeed in his unjust enrichment claim. Instead, it was sufficient that Meadowcroft's retention of the cabin and its associated items would be inequitable under the circumstances. The court emphasized that unjust enrichment claims between former partners in a cohabitating, marriage-like relationship should focus on the equities of the situation rather than the conduct of the parties. View "Hepfl v. Meadowcroft" on Justia Law

The case revolves around a dispute over a family farm in Minnesota. Richard and Paulette Dunn entered into a contract for deed with their son, Rory, for the sale of their family farm. The contract stipulated that Rory could not sell, assign, or otherwise transfer his interest in the farm without the Dunns' written consent. However, Rory died two years later without a will, and his interest in the farm was transferred to his young son by intestate succession. Jeffrey Kuhn, the personal representative of Rory’s estate, intended to divide the property and sell a portion of the farm on the open market. The Dunns responded by cancelling the contract for deed, arguing that the intestate transfer of Rory’s interest to his son without their consent was a breach of the contract.The district court ruled in favor of the Dunns, stating that the intestate transfer of Rory’s interest in the farm violated the consent-to-transfer provision and materially breached the contract for deed. However, the court of appeals reversed this decision, concluding that the intestate transfer of Rory’s estate as a result of Rory’s inaction did not violate the consent-to-transfer provision.The Minnesota Supreme Court was asked to decide whether an intestate transfer of an interest in a family farm breaches a consent-to-transfer provision in a contract for deed. The court held that the intestate transfer of Rory’s interest in the farm violated the consent-to-transfer provision and that this violation was a material breach of the contract for deed. Therefore, the court reversed the decision of the court of appeals. View "Kuhn vs. Dunn" on Justia Law

The Minnesota Supreme Court reversed a decision by the Court of Appeals, ruling that the district court did not abuse its discretion in certifying an order as a final partial judgment under Minnesota Rule of Civil Procedure 54.02. The case arose from a dispute between the City of Elk River and Bolton & Menk, Inc. over a large construction contract for a wastewater treatment plant improvement project. The City sued Bolton for alleged breach of contract and professional negligence. Bolton responded by filing a third-party complaint against three other parties involved in the contract. The district court dismissed Bolton's third-party complaint and Bolton sought to have the dismissal order certified as a final judgment for immediate appeal. The district court granted this certification, but the Court of Appeals dismissed Bolton's appeal, determining that the district court had abused its discretion in certifying the order as a final judgment. The Minnesota Supreme Court disagreed, finding that the district court had offered valid reasons for its certification, including that the third-party claims presented distinct issues from the principal claims and that the case was in its early stages at the time of certification. The Supreme Court therefore reversed the decision of the Court of Appeals and remanded the case for further proceedings. View "City of Elk River vs. Bolton & Menk, Inc." on Justia Law

The Supreme Court reversed the judgment of the district court and court of appeals finding that a repurchase rate in a litigation financing agreement violated Minnesota's usury statute, Minn. Stat. 334.01, holding that such an agreement is not subject to the usury law when repayment of the purchase price is contingent upon a recovery in the underlying litigation.Appellants sought enforcement of a litigation financing agreement they entered into with Respondent. The lower courts deemed the agreement unenforceable as violating the common-law prohibition on champerty. Following reversal, Respondent challenged the enforceability of the agreement on several different grounds. The district court and court of appeals held that the repurchase rate violated section 334.01 and that the rate, reduced to eight percent, began to accrue after the date of the Court's decision in Maslowski I. The Supreme Court reversed and remanded the case, holding (1) the agreement was not subject to section 334.01; (2) remand was required to address Respondent's challenge to the repurchase rate under the common-law doctrine of unconscionability; and (3) the repurchase rate began to accrue after the litigation financing agreement was signed, not after this Court's abolition of the former prohibition on champerty. View "Maslowski v. Prospect Funding Partners LLC" on Justia Law

The Supreme Court reversed the decision of the court of appeals reversing Appellant's unjust enrichment award, holding that the district court did not clearly err in its award to Appellant.Over the course of the parties' romantic relationship Appellant made $282,736.02 in net cash payments to Respondent to renovate Respondent's home. Respondent sold her home for $1.2 million after the couple ended their relationship, and Appellant sued to recover his contribution. The district court awarded Appellant $282,736.02 for his contributions, concluding that Respondent had been unjustly enriched by Appellant's financial contributions. The court of appeals reversed because Appellant did not prove before the district court the increase in value to Respondent's home attributable to his financial contributions. The Supreme Court reversed, holding (1) the net amount of money that Appellant contributed directly to and on behalf of Respondent was an appropriate measure of relief for unjust enrichment; and (2) the district court did not clearly err in its award to Appellant. View "Herlache v. Rucks" on Justia Law

The Supreme Court reversed the decision of the court of appeals reversing the judgment of the district court that Insured was not entitled to preaward interest from Insurer on an appraisal award based on Minn. Stat. 549.09, holding that the policy language limited interest on a loss to amounts accruing after an appraisal award is issued.After a fire damaged his home, Insured disagreed with Insurer's valuation and demanded an appraisal. The claim was submitted to appraisal, but Insurer did not pay Insured any additional amounts. Insured then demanded preaward interest on the appraisal award, arguing that interest accrued from the date of written notice of his fire claim and until the appraisal award was issued. When Insurer refused to pay, Insured brought this action. The district court concluded that Insured was not entitled to preaward interest. The court of appeals reversed, concluding that the policy language must "explicitly preclude" reward interest to avoid the obligation to pay preaward interest under section 549.09. The Supreme Court reversed, holding that a fire insurance policy provision stating that "no interest accrues on the loss until after the loss becomes payable" precludes preaward interest under section 549.09. View "Wesser v. State Farm Fire & Casualty Co." on Justia Law

The Supreme Court affirmed the decision of the court of appeals concluding that the interpretation of a restrictive covenant was a question of fact for a jury, holding that because the evidence did not conclusively establish one covenanting party's intent in drafting the document at issue, the interpretation of the covenant was a question of fact for a jury.Specifically, the Supreme Court held (1) the interpretation of an ambiguous restrictive land use covenant is a question for a jury unless extrinsic evidence proffered by the parties is conclusive as to the covenanting parties' intent; (2) a jury should strictly construe an ambiguity in a restrictive covenant against the land use restriction only if the jury is unable to resolve by a preponderance of the evidence the ambiguity from the extrinsic evidence; and (3) the court of appeals did not err in concluding that the extrinsic evidence in this case did not conclusively resolve the ambiguity in the restrictive covenant. View "Windcliff Ass'n v. Breyfogle" on Justia Law