Justia Contracts Opinion Summaries

Neely, acting as his own general contractor, hired Grosvold to perform excavation work on his property under an oral contract. Grosvold worked from April to October 2021, but their relationship deteriorated, and Neely refused to pay for an invoice amounting to $55,858. Neely sent Grosvold a notice of alleged defects in the work, which Grosvold disputed. Grosvold then filed a complaint for breach of contract and prejudgment interest, while Neely counterclaimed for breach of contract, negligence, and construction defect.The District Court of the Third Judicial District in Anaconda-Deer Lodge County tried the case before a jury. The court refused to instruct the jury on Neely’s construction defect and negligence claims, reasoning that the evidence did not substantiate the work was done to a residence and that the case was strictly a breach of contract matter. The jury found Neely had breached the contract and awarded Grosvold $60,512.60 in damages. The court denied Grosvold’s request for prejudgment interest, finding the damages were not certain until the jury’s determination.The Supreme Court of the State of Montana reviewed the case. It affirmed the District Court’s decision not to instruct the jury on the construction defect claim, holding that the residential construction defect statute did not create an independent cause of action beyond breach of contract or tort. The court also affirmed the refusal to instruct the jury on negligence, finding that Neely’s substantial rights were not affected as the breach of contract instructions adequately covered the disputed subject matter. Finally, the court upheld the denial of prejudgment interest, concluding the amount of recovery was not capable of being made certain until the jury’s verdict. View "Grosvold v. Neely" on Justia Law

In February 2014, Clint Shalla entered into a debt settlement agreement with Greg and Heather Koch to prevent a foreclosure on his farm. The Kochs agreed to purchase the farm and give Clint an exclusive option to repurchase it by August 15, 2015, with written notice and financing commitment. Clint's wife, Michelle, was not a party to the agreement but conveyed her marital interest in the property. Clint sought financing from Christopher Goerdt, then president of Peoples Trust and Savings Bank, who allegedly agreed to secure financing. Clint missed the option deadline, and the Kochs later agreed to sell the farm for a higher price. Goerdt, who had moved to County Bank, secured financing for the Shallas, but was later found to be involved in fraudulent activities.The Iowa District Court for Washington County granted partial summary judgment in favor of Peoples Bank, dismissing Michelle's fraudulent misrepresentation claim. The court later reconsidered and dismissed the Shallas' negligence and fraudulent misrepresentation claims, citing Iowa Code section 535.17. The court ruled in favor of County Bank in the foreclosure action and found Goerdt liable for conversion. The Shallas appealed, and the Iowa Court of Appeals affirmed the district court's judgment, with a dissent on the application of the statute of frauds.The Iowa Supreme Court reviewed the case and affirmed the lower courts' decisions. The court held that Iowa Code section 535.17, the credit agreement statute of frauds, barred the Shallas' claims for negligence and fraudulent misrepresentation. The court concluded that the statute applies to all actions related to unwritten credit agreements, regardless of whether the claims are framed in contract or tort. The case was remanded to the district court for a determination of County Bank's attorney fees, including appellate attorney fees. View "County Bank v. Shalla" on Justia Law

Shanda Yates was bitten by a pit bull named Yurk while visiting her friend Neah Friar, who rented a property from TLM Investments, LLC. Friar's lease had a no-pet provision, which she disregarded by keeping Yurk and concealing his presence from TLM. Yates filed a personal injury claim against both Friar and TLM, alleging negligence on TLM's part for allowing Yurk on the property and claiming protections under the lease.The Prentiss County Circuit Court denied TLM's motion for summary judgment, leading to an interlocutory appeal. TLM argued that it had no knowledge of Yurk's presence or his dangerous propensities, as Friar had intentionally concealed the dog. TLM also contended that Yates failed to establish herself as an intended third-party beneficiary under the lease.The Supreme Court of Mississippi reviewed the case de novo and found that Yates did not provide evidence that TLM had actual or constructive knowledge of Yurk or his dangerous propensities. The court noted that the no-pet provision in the lease was not an admission that all dogs are dangerous but was intended to prevent property damage. Additionally, the court found that Yates did not have standing to claim protections under the lease as she was not a party to it and was not an intended third-party beneficiary.The Supreme Court of Mississippi reversed the trial court's denial of summary judgment, rendered summary judgment in favor of TLM, and remanded the case to the Prentiss County Circuit Court for any necessary further proceedings. The case against TLM was dismissed with prejudice. View "TLM Investments, LLC v. Yates" on Justia Law

In 2005, Island Pointe, LLC contracted Complete Building Corporation (CBC) to construct a condominium project, Palmetto Pointe at Peas Island. CBC subcontracted Tri-County Roofing (TCR) for roofing and related work. In 2014-2015, Palmetto discovered construction defects and sued CBC, TCR, and others for negligence and breach of warranty. Palmetto received $6,800,000 in settlements, including $1,000,000 from CBC's insurer for a covenant-not-to-execute and $1,975,000 from four other defendants.The trial began in May 2019, and the jury found CBC and TCR liable for $6,500,000 in actual damages and $500,000 each in punitive damages. The trial court apportioned 5% liability to two other defendants, making CBC and TCR jointly and severally liable for the remaining 90% of actual damages. TCR sought setoff for the $1,000,000 payment and the settlements from the four other defendants. The trial court denied TCR's motion for setoff, except for partial amounts conceded by Palmetto.The South Carolina Supreme Court reviewed the case. It reversed the court of appeals' decision, holding that TCR is entitled to set off the full $1,000,000 paid by CBC's insurer. The court affirmed the lower court's decision regarding the settlements from Novus, Atlantic, H and A, and Cohen's, agreeing that the trial court reasonably allocated the settlement amounts. The case was remanded to the trial court for the calculation of the judgment against TCR. View "Palmetto Pointe v. Tri-County Roofing" on Justia Law

HIVE Construction, Inc. served as the general contractor for the construction of Masterpiece Kitchen, a restaurant. The contract required HIVE to follow specific architectural plans, including installing two layers of drywall on a wall separating the kitchen and dining area. Instead, HIVE installed one layer of drywall and one layer of combustible plywood without approval. A fire started within the wall, causing significant damage and forcing the restaurant to close. Mid-Century Insurance Company, as the property insurer and subrogee of Masterpiece Kitchen, paid for the damages and then sued HIVE for negligence, alleging willful and wanton conduct.The district court initially allowed Mid-Century to amend its complaint to include a breach of contract claim but later reversed this decision, requiring Mid-Century to proceed with the negligence claim. At trial, the jury found HIVE's conduct to be willful and wanton, awarding damages to Mid-Century. HIVE appealed, arguing that the economic loss rule barred the negligence claim. The Colorado Court of Appeals agreed, reversing the district court's decision and instructing a verdict in HIVE's favor.The Supreme Court of Colorado reviewed the case and concluded that the economic loss rule does not provide an exception for willful and wanton conduct. The court held that the rule barred Mid-Century's negligence claim because the duty HIVE allegedly breached was not independent of its contractual obligations. Consequently, the court affirmed the judgment of the Colorado Court of Appeals, upholding the application of the economic loss rule to bar the negligence claim. View "Mid-Century Ins. Co. v. HIVE Construction" on Justia Law

Alebia, Inc. (Alebia) is a Rhode Island corporation that owned a property at 284-286 Atwells Avenue, Providence. In September 2005, Carmela Natale and Walter Potenza, purported owners and shareholders of Alebia, executed a promissory note and mortgage in favor of Equity One Mortgage Company. The mortgage lacked a legal description of the property, but the loan proceeds were used to pay off prior mortgages and taxes on the property. The note was intended to be secured by the property, but Natale and Potenza signed the mortgage in their individual capacities instead of as corporate representatives of Alebia.In 2011, Deutsche Bank National Trust Company (Deutsche Bank), the current holder of the note, filed a complaint in Providence County Superior Court against Natale and Potenza for breach of contract and against Alebia seeking reformation of the mortgage. Deutsche Bank obtained a judgment against Natale and Potenza in 2017 but could not proceed against the property. In 2021, Deutsche Bank filed a motion to equitably reform the mortgage against Alebia. The Superior Court held remote evidentiary hearings and granted the motion, reforming the mortgage to reflect that Natale and Potenza signed as corporate representatives of Alebia.The Rhode Island Supreme Court reviewed the case. The court held that the Superior Court did not abuse its discretion in admitting testimony and evidence, including the promissory note. The court found sufficient evidence to support the reformation of the mortgage due to mutual mistake. The court also held that the mortgage could be reformed without reforming the note and that the remote hearings did not violate due process, despite the error in holding them remotely without consent. The Supreme Court affirmed the judgment of the Superior Court. View "Deutsche Bank National Trust Company v. Alebia, Inc." on Justia Law

In 2020, Cody Sturzenbecher and his mother, Judy Sturzenbecher, entered into a series of transactions with Sioux County Ranch, LLC (Sioux County) related to the purchase of their family farm from a trust. Judy bought the farm using a loan from Sioux County, then sold the property to Sioux County, which leased it to Cody. The lease included an option for Cody to purchase the property. Cody defaulted on the lease, leading Sioux County to terminate the lease and list the property for sale.The Sturzenbechers sought declaratory and injunctive relief, arguing that Judy’s conveyance of the farm to Sioux County created an equitable mortgage rather than an absolute sale. The Circuit Court of the First Judicial Circuit in Turner County, South Dakota, granted the Sturzenbechers’ request for a preliminary injunction and denied Sioux County’s motion for judgment on the pleadings. Sioux County appealed both decisions.The Supreme Court of the State of South Dakota reviewed the case and affirmed the lower court’s decisions. The court concluded that the arrangement between the Sturzenbechers and Sioux County was intended as a financing agreement rather than an absolute sale. The court found that the agreements between the parties were unambiguous but unenforceable as an absolute sale due to public policy favoring a mortgagor’s right of redemption. The court held that the Sturzenbechers were likely to succeed on their equitable mortgage claim and that the circuit court did not abuse its discretion in granting the preliminary injunction. The court also affirmed the denial of Sioux County’s motion for judgment on the pleadings, finding that the Sturzenbechers had pled sufficient facts to support their claim. View "Sturzenbecher v. Sioux County Ranch" on Justia Law

The defendant, Clough, Harbour & Associates LLP (CHA), agreed to design a new athletic field for the plaintiff, Trustees of Boston University (university). The contract included an express indemnification provision, which required CHA to indemnify the university for any expenses resulting from CHA's negligent design. A defect in CHA's design caused the university to incur expenses to fix the field. The university demanded indemnification from CHA, which CHA refused. More than six years after the field opened, the university sued CHA for breach of the indemnification provision.The Superior Court judge granted summary judgment in favor of CHA, relying on the tort statute of repose, which bars tort actions for damages arising from design defects in real property improvements six years after the improvement's opening. The judge concluded that the university's claim was barred by this statute. The university appealed the decision.The Supreme Judicial Court of Massachusetts reviewed the case. The court held that the tort statute of repose does not apply to the university's contract claim for indemnification. The court emphasized that the claim was based on an express contractual provision, not a tort duty imposed by law. The court distinguished between claims for breach of an implied warranty, which are barred by the statute of repose, and claims for breach of an express warranty or indemnification provision, which are not. The court reversed the Superior Court's decision and remanded the case for further proceedings. View "Trustees of Boston University v. Clough, Harbour & Associates LLP" on Justia Law

The Orange County Transportation Authority (OCTA) awarded a contract to OC 405 Partners Joint Venture (OC 405) for improvements to Interstate 405. OC 405 then awarded subcontracting work to Golden State Boring & Pipe Jacking, Inc. (GSB). However, the parties disagreed on the scope of the subcontract work and did not execute a written subcontract. OC 405 subsequently contracted with another subcontractor, leading GSB to file a lawsuit seeking benefit of the bargain damages, claiming OC 405 did not comply with Public Contract Code section 4107’s substitution procedures.The Superior Court of Orange County granted summary judgment in favor of OC 405 and other defendants, holding that GSB was not entitled to the protections of section 4107 because it did not meet the requirements of section 4100 et seq. Specifically, GSB was not a "listed subcontractor" in the original bid, and its proposed work did not exceed one-half of 1 percent of the prime contractor’s total bid, a threshold requirement under section 4104.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case. The court affirmed the lower court’s decision, concluding that section 4107’s substitution procedures did not apply to OC 405’s substitution of GSB. The court emphasized that the protections of section 4100 et seq. only apply to subcontractors whose proposed work exceeds the one-half of 1 percent threshold of the prime contractor’s total bid. Since GSB’s bid did not meet this threshold, it was not entitled to the protections under section 4107. The court also noted that the contractual provisions in the prime contract did not alter this statutory requirement. Thus, the judgment in favor of the defendants was affirmed. View "Golden State Boring & Pipe Jacking, Inc. v. Astaldi Construction" on Justia Law

NCO Financial Systems, Inc. (NCO) entered into a lease agreement with Montgomery Park, LLC (Montgomery Park) for over 100,000 square feet of office space in Baltimore, Maryland. The lease allowed NCO to terminate early after eight years if certain conditions were met. NCO attempted to terminate early, but Montgomery Park claimed the conditions were not satisfied. NCO vacated the premises and stopped paying rent, leading Montgomery Park to send a default notice. NCO then filed a lawsuit seeking a declaratory judgment that it had properly terminated the lease and that the rent was based on misrepresented square footage.The United States District Court for the District of Maryland found in favor of Montgomery Park after a bench trial, awarding it $9,854,566.95 plus ongoing interest. The court also set a schedule for determining Montgomery Park’s claim for costs, fees, and expenses. Montgomery Park filed a motion seeking approximately $3.8 million for these costs, which NCO opposed on several grounds, including the lack of a proper demand for payment and the inclusion of fees for defending against NCO’s initial suit.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court concluded that Montgomery Park made a valid demand for payment when it filed its motion for costs, fees, and expenses on August 24, 2022. The court held that default interest should run only from the date of this demand, not from when the costs were incurred, and remanded the case to recalculate the interest. The court affirmed the district court’s award of costs, fees, and expenses, including those incurred in defending against NCO’s claims and expert witness fees, finding no abuse of discretion or error in the district court’s decisions.The Fourth Circuit affirmed in part, vacated in part, and remanded with instructions to recalculate the default interest. View "NCO Financial Systems, Inc. v. Montgomery Park, LLC" on Justia Law