Justia Contracts Opinion Summaries

Younglove Construction entered into a contract with PSD Development for the construction of a feed-manufacturing plant. When PSD withheld payment, Younglove brought this diversity suit against PSD and three other defendants. In its answer, PSD alleged it had sustained damages as a result of defects in a steel grain bin constructed by Custom Agri Systems, Inc. as a subcontractor. Younglove filed a third-party complaint against Custom Agri Systems, Inc. for contribution and indemnity. Custom turned to its insurer, Westfield Insurance Company, to defend and indemnify it in the litigation. Westfield intervened to pursue a judgment declaring it had no such duty under the terms of its commercial general liability (CGL) policy with Custom. At issue was whether the claims against Custom sought compensation for "property damage" caused by an "occurrence" under the policy. The district court granted summary judgment for Westfield. On appeal, the federal court of appeals certified questions of state law to the Supreme Court. The Court answered by holding that claims of defective construction or workmanship brought by a property owner are not claims for "property damage" caused by an "occurrence" under a CGL. View "Westfield Ins. Co. v. Custom Agri Sys., Inc." on Justia Law

This matter was before the Supreme Court on a motion for reconsideration filed by Appellant, Acordia of Ohio, LLC (the LLC). The Supreme Court granted the motion. In Acordia I, the Court affirmed the judgment of the court of appeals, concluding that while the noncompete agreements of employees (Appellees), who were originally employed by a contracting employer, transferred by operation of law following merger with the LLC, the language found in those agreements precluded the LLC from enforcing them as if it had stepped into the shoes of the original contracting employer. Upon reconsideration, the Supreme Court reversed the court of appeals, holding (1) the language in Acordia I stating that the LLC could not enforce the employees noncompete agreements as if it had stepped into the original contracting company's shoes was erroneous; and (2) the LLC here may enforce the noncompete agreements as if it had stepped into the shoes of the original contracting companies, provided that the noncompete agreements are reasonable under the circumstances of this case. View "Acordia of Ohio, LLC v. Fishel" on Justia Law

Certain individuals who worked for American Chemical Society (ACS) founded Leadscope Inc. and later received a patent for technology similar to that on which they worked while at ACS. ACS filed a lawsuit against Leadscope. A newspaper subsequently published an article about the suit quoting ACS's counsel. In pertinent part, the jury returned verdicts in favor of Leadscope on its counterclaims for defamation and unfair competition. The court of appeals affirmed. The Supreme Court (1) upheld the appellate court's decision affirming the trial court's denial of ACS's motion for judgment notwithstanding the verdict (JNOV) on the unfair competition claim, holding (i) a party alleging a claim for unfair competition must show the action is baseless and the opposing party had the intent to injure the party's ability to be competitive, and (ii) the jury instructions here did not meet that test, but the jury could not reasonably have made any other determination with proper instructions; and (2) reversed the appellate court's finding that the trial court properly overruled ACS's motion for JNOV on Leadscope's counterclaim for defamation, holding (i) ACS's statements were not defamatory, and (ii) a client is vicariously liable for its attorney's defamatory statements only if the client ratified the statements. View "Am. Chem. Soc'y v. Leadscope, Inc." on Justia Law

This matter arose out of a controversy over a phrase in a trust. The language at issue established the calculation of the price of trust property offered for sale to certain trust beneficiaries. One of the trust beneficiaries filed a complaint for declaratory judgment, seeking judicial interpretation of the disputed provision. The trial court concluded that the disputed phrase was unambiguous and that the option price was the fair market value as determined by the appraisal. The court of appeals reversed after reviewing the trust document de novo, finding that the option language was susceptible to more than one interpretation and that the option price was the federal and/or Ohio qualified-use value. At issue on appeal was what standard of review an appellate court should employ in reviewing legal issues in a declaratory-judgment action. The Supreme Court affirmed, holding that the de novo standard of review is the proper standard for appellate review of purely legal issues that must be resolved after the trial court has decided that a complaint for declaratory judgment presents a justiciable question.

In this action the Cincinnati City School District Board of Education asked the Supreme Court to rule on the validity of a deed restriction it placed on school property that it offered for sale at a public auction. At issue was whether the deed restriction contravened public policy by preventing an unused school building from being used by a public charter school. The trial court concluded that the deed restriction was void as against public policy, and the court of appeals affirmed. The Supreme Court affirmed, holding (1) because this case involved a contract between a private party and a political subdivision, there was a compelling reason to apply the principle of the public policy exception to parties' rights to make contracts; and (2) therefore, the inclusion of a deed restriction preventing the use of property for school purposes in the contract for sale of an unused school building was unenforceable as against public policy.

At issue in this appeal was whether a court should enforce several employees' noncompete agreement transfers by operation of law to the surviving company when the company that was the original party to the agreement merged with another company. Here the trial court concluded that the employees did not intend to make the noncompete agreements assignable to successors such as the surviving company. The court of appeals affirmed. The Supreme Court affirmed, holding that in this case, the language the agreement dictated that the surviving company could not enforce the agreement after the merger as if it had stepped into the shoes of the original company.

Appellants, homeowners, filed suit against Centex Homes, alleging various causes of action, including breach of contract, breach of express and implied warranty, and failure to perform in a workmanlike manner. Centex Homes moved for summary judgment, arguing that Appellants had waived all warranties except the specific limited warranty that Centex Homes provided in the sales agreements. The court of appeals affirmed. The Supreme Court reversed the court of appeals and remanded for a trial on Appellants' tort claims that Centex Homes breached its duty to construct their homes in a workmanlike manner using ordinary care, as (1) in Ohio a duty to construct houses in a workmanlike manner using ordinary care is imposed by law on all home builders; and (2) a home buyer cannot waive his right to enforce the home builder's duty to construct the house in a workmanlike manner. Remanded.

Amber Williams and Frederick Ormsby, who were not married, lived together in a house Amber received through her divorce settlement. Frederick eventually paid the remaining mortgage balance, and Amber gave him title to the property by executing a quitclaim deed. As a result of a later separation, Amber and Frederick signed a document in March 2005 to sell the house and allocate the proceeds. The couple subsequently tried to reconcile and, in June 2005, they signed a second document, purportedly making themselves equal partners in the house and providing for property disposition in the event that their relationship ended. After their relationship ended, the parties filed suit against each other. The trial court determined that the March 2005 agreement was supported by consideration but that the June 2005 agreement was not and held that title to the property was vested in Frederick exclusively. The federal court of appeals reversed, concluding that moving into home with another and resuming a relationship can constitute consideration sufficient to support a contract. The Supreme Court reversed, holding that merely moving into a home with another while engaging in a romantic relationship is not consideration for the formation of a contract.

Appellee was injured by a falling tree located near, but outside, an easement maintained by Utility Company. Utility Company had hired Service Contractor to inspect trees along its power lines and to remedy any situation in which trees or vegetation might affect the lines. Appellee filed suit against Appellants, Utility Company and Service Contractor, alleging that they were liable for Appellee's injuries based upon their failure to inspect, maintain, and remove the tree or to warn the landowner and the public of the danger raised by the tree. The trial court granted summary judgment in favor of Appellants, concluding that they owed no duty to Appellee and that Appellee was not a third-party beneficiary under the Appellants' contract. The court of appeals reversed, concluding that the contract was ambiguous regarding whether Appellee had enforceable rights as an intended third-party beneficiary. The Supreme Court reversed, holding (1) for an injured party to qualify as an intended third-party beneficiary under a written contract, the contract must indicate an intention to benefit that third party; and (2) because the contract between Appellants did not indicate an intent to benefit Appellee, the trial court properly granted summary judgment to Appellants.

Appellees, members of the Barbee family, were involved in an automobile accident. Appellant, Nationwide Mutual Insurance Company, insured the automobile. The policy contained a provision that required an action for underinsured motorist coverage be brought against the insurer within three years of the date of the accident. After receiving a judgment against the tortfeasors and more than four years after the accident, the Barbees filed suit against Nationwide to recover the outstanding amounts on their judgments. Nationwide filed a motion for summary judgment, arguing that the Barbees' claims were barred for failure to bring the claims within the three-year period required by the policy's limitation period. The trial court denied the motion. The court of appeals affirmed. At issue on appeal was whether a conflict between Nationwide's limitation provision and other provisions in the policy, which required that proceeds from any other available insurance be exhausted, rendered the limitation provision unenforceable. The Supreme Court reversed, holding (1) the three-year limitation provision was unambiguous and enforceable, and (2) the provision did not conflict with co-existing policy provisions because exhaustion of the tortfeasor's liability limits was not a precondition to filing suit by the insured against his insurer within the limitation period.