Justia Contracts Opinion Summaries

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

Salvador Rivas purchased a condominium unit with a mortgage loan from Flagstar Bank, secured by a deed of trust. Rivas fell behind on his condo association dues, leading the New Hampshire House Condominium Unit Owners Association (NHH) to foreclose on the unit in 2014. The foreclosure sale terms indicated the unit was sold subject to Flagstar’s first deed of trust of approximately $256,632. Advanced Financial Investments, LLC (AFI) bought the unit for $26,000, despite its tax-assessed value of $237,930. Flagstar later filed for judicial foreclosure, claiming its lien was extinguished by NHH’s foreclosure sale.The Superior Court of the District of Columbia dismissed Flagstar’s judicial foreclosure claim, reasoning that the lien was extinguished by the prior foreclosure sale. The court also dismissed Flagstar’s claims for declaratory relief, breach of fiduciary duty, and unjust enrichment as time-barred, as they were raised for the first time in an amended complaint filed almost four years after the foreclosure sale.The District of Columbia Court of Appeals reviewed the case. The court agreed with Flagstar that its judicial foreclosure claim was improperly dismissed, as rebuttals to affirmative defenses are not subject to any statute of limitations. However, the court affirmed the trial court’s ruling on the alternative ground that appellees were entitled to summary judgment on the judicial foreclosure claim. The court held that the 2014 foreclosure sale was not unconscionable as a matter of law, given the legal uncertainty at the time regarding whether Flagstar’s lien would survive the sale.The court also rejected Flagstar’s remaining arguments, except for the unjust enrichment claim against AFI. The court found that this claim should not have been dismissed as time-barred and could not be resolved on summary judgment. The case was remanded for trial on the unjust enrichment claim against AFI, while the trial court’s judgment was otherwise affirmed. View "Flagstar Bank, FSB v. Advanced Financial Investments, LLC" on Justia Law

Plaintiffs, E&I Global Energy Services, Inc. and E&C Global, LLC, sued Liberty Mutual Insurance Company for breach of contract and tort claims related to a construction project. The United States, through the Western Area Power Administration (WAPA), contracted with Isolux to build a substation, and Liberty issued performance and payment bonds for Isolux. After Isolux was terminated, Liberty hired E&C as the completion contractor, but E&I performed the work. Plaintiffs claimed Liberty failed to pay for the work completed.The United States District Court for the District of South Dakota granted summary judgment for Liberty on the unjust enrichment claim and ruled in Liberty's favor on all other claims after a bench trial. The court denied Plaintiffs' untimely request for a jury trial, excluded an expert witness report filed after the deadline, found no evidence of an assignment of rights between E&C and E&I, and ruled against Plaintiffs on their fraud, deceit, and negligent misrepresentation claims.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court held that the district court did not abuse its discretion in denying the jury trial request, as Plaintiffs failed to timely file the motion and did not justify the delay. The exclusion of the expert report was also upheld, as the district court properly applied the relevant factors and found the late report was neither substantially justified nor harmless. The court affirmed the district court's finding that there was no valid assignment of rights from E&C to E&I, meaning Liberty's promise to pay was to E&C, not E&I. The court also upheld the findings that Liberty did not have the intent to deceive or induce reliance, and that Bruce did not reasonably rely on Mattingly's statements. Finally, the court declined to address the unjust enrichment claim as Plaintiffs did not raise the argument below. The Eighth Circuit affirmed the district court's rulings in their entirety. View "E&I Global Energy Services v. Liberty Mutual Insurance Co." on Justia Law

Allan Gumarang entered into a lease agreement with Braemer on Raymond, LLC (Lessor) to operate an ice cream parlor. The lease included provisions requiring the Lessor to maintain the property and for Gumarang to obtain liability insurance and indemnify the Lessor against claims arising from his use of the property. In October 2017, a fire destroyed the property, and Gumarang alleged that the Lessor and its management (Management) failed to ensure the property had adequate fire prevention systems.Gumarang filed a lawsuit against the Lessor and Management for breach of contract, negligence, and other claims. In response, the Lessor and Management demanded that Gumarang defend and indemnify them under the lease terms. When Gumarang refused, they filed a cross-complaint for indemnity and breach of contract. Gumarang filed an anti-SLAPP motion to strike the cross-complaint, arguing it arose from his protected activity of filing the lawsuit.The Superior Court of Los Angeles County granted Gumarang’s anti-SLAPP motion in part, striking the cross-claims for comparative indemnity and equitable indemnity but denied it for the contractual indemnity and breach of contract claims. The court found that the latter claims did not arise from protected activity and that the indemnity provision in the lease was enforceable. The court also denied Gumarang’s request for attorney fees, finding he did not achieve a practical benefit from the partial success of his anti-SLAPP motion.The California Court of Appeal, Second Appellate District, affirmed the lower court’s decisions. The appellate court agreed that the cross-claims for contractual indemnity and breach of contract did not arise from Gumarang’s protected activity of filing the lawsuit but from his alleged breach of the lease’s indemnity provision. The court also upheld the denial of attorney fees, concluding that Gumarang did not obtain a significant practical benefit from the partial success of his anti-SLAPP motion. View "Gumarang v. Braemer on Raymond, LLC" on Justia Law

Cedar Hills Investment Co., L.L.C. leased part of the ground under the Battlefield Mall in Springfield, Missouri, to Battlefield Mall LLC. Cedar Hills suspected that Battlefield was improperly deducting certain costs from revenue-sharing payments owed under the lease. Cedar Hills sued Battlefield, and the district court found that Battlefield had improperly deducted capital expenditures and some administrative costs from shared revenue. The court approved the deduction of security costs and other administrative costs but held that Battlefield failed to state charges to subtenants for deducted costs separately as required by the lease. Cedar Hills was awarded approximately $3.5 million in damages.The United States District Court for the Western District of Missouri held a bench trial and ruled in favor of Cedar Hills on several points, including the improper deduction of capital expenditures and the failure to separately state charges. However, the court also found that Battlefield's deduction of security costs was permissible.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's findings regarding the improper deduction of capital expenditures and the failure to separately state charges. However, the appellate court found that the district court misidentified which administrative costs were deductible and miscalculated Cedar Hills's damages. The Eighth Circuit held that Battlefield's deduction of capital expenditures breached the lease, and the failure to separately state charges also breached the lease. The court affirmed the district court's finding that security costs were common area maintenance costs. The case was remanded for further proceedings to correctly identify deductible administrative costs and recalculate damages. The appellate court granted the parties' joint motion to supplement the record. View "Cedar Hills Investment Co. v. Battlefield Mall, LLC" on Justia Law

Island Girl Outfitters, LLC (IGO) operated a store called Hippie Gurlz at Eastern Shore Centre, an outdoor shopping mall owned by Allied Development of Alabama, LLC. IGO signed a five-year lease in late 2020 but closed the store after the first year due to slow sales. Allied Development filed a complaint in Baldwin Circuit Court seeking rent and other damages under the lease. The trial court entered a $94,350 judgment in favor of Allied Development against IGO and its owner, Anthony S. Carver, who had personally guaranteed the lease.The Baldwin Circuit Court granted partial summary judgment in favor of Allied Development, finding no genuine issues of material fact regarding IGO's liability for breaching the lease. The court then held a hearing to determine damages, ultimately awarding Allied Development $94,350. IGO and Carver appealed, arguing that Allied Development failed to market and maintain the mall adequately and that they should not be liable for future rent since the storefront was relet shortly after they vacated.The Supreme Court of Alabama reviewed the case de novo regarding the liability determination and under the ore tenus rule for the damages award. The court found that IGO and Carver failed to show that Allied Development had a contractual duty to market and maintain the mall in a specific manner. Therefore, the trial court's summary judgment on liability was affirmed. Regarding damages, the absence of a transcript from the damages hearing meant the court had to presume the trial court's findings were correct. Consequently, the $94,350 judgment was affirmed. View "Island Girl Outfitters, LLC v. Allied Development of Alabama, LLC" on Justia Law