Justia Contracts Opinion Summaries

An Oklahoma company, formed to acquire mineral rights in Appalachia, alleged that two Texas parties failed to convey certain West Virginia mineral interests as contractually agreed. The Oklahoma company, which included non-Texas owners and participants, had funded the purchase of these rights, but a number of mineral deeds were recorded in the name of the Texas seller rather than the buyer. As a result, royalties from those mineral rights were paid to the seller. The Oklahoma plaintiff sought to compel the Texas defendants to reform the deeds, perform their contractual obligations, declare the plaintiff’s entitlement to the royalties, and enjoin the defendants from transferring the disputed interests.The 141st District Court in Tarrant County, Texas, denied the defendants’ plea to the jurisdiction and ultimately granted summary judgment for the plaintiff, awarding specific performance, deed reformation, declaratory relief, an injunction, and monetary relief. The court found it had jurisdiction over the parties and the contract, even though the mineral rights were located in West Virginia. On appeal, the Court of Appeals for the Second District of Texas reversed, holding that Texas courts lacked subject-matter jurisdiction because the suit’s gravamen was the adjudication of title to foreign (West Virginia) real property.The Supreme Court of Texas reviewed the matter and disagreed with the appellate court’s application of the so-called “gist” rule. The Supreme Court held that Texas courts with personal jurisdiction over the parties may issue in personam judgments concerning contractual obligations to convey out-of-state real property, as long as the judgment binds only the parties and does not purport to establish or alter title to the property by the court’s own force. The Supreme Court reversed the appellate court’s judgment and remanded for consideration of remaining issues. View "BRAXTON MINERALS III, LLC v. BAUER" on Justia Law

A real estate transaction in Shelby County, Alabama, gave rise to this dispute. In 2007, a property owner named Ellison financed the purchase of her home with a loan secured by a mortgage, which was eventually sold to U.S. Bank Trust National Association and serviced by SN Servicing Corporation. After Ellison defaulted, U.S. Bank bought property at a foreclosure sale. Due to confusion over addresses and a lack of a survey, U.S. Bank and its agent mistakenly believed they were selling the Ellison property, a valuable bricked double-wide trailer, to Marco J. Bonilla. Bonilla purchased the property for $95,000, but later discovered that the deed conveyed a different and less valuable property. He was unable to resell the property he believed he owned.Bonilla sued U.S. Bank and SN Servicing in the Shelby Circuit Court, asserting claims for conversion, breach of contract, negligence, wantonness, and sought rescission of the deed. Both sides moved for summary judgment. The circuit court granted summary judgment for Bonilla on all claims, rescinded the transaction, ordered Bonilla to execute a quitclaim deed returning the property, and awarded him $114,000 in compensatory damages, $14,913.70 in interest, and $75,000 in punitive damages for wantonness. The court denied the defendants’ postjudgment motion without a hearing.On appeal, the Supreme Court of Alabama affirmed summary judgment for Bonilla on his claims for conversion, breach of contract, and negligence, as well as the compensatory and interest awards. However, the Court reversed the summary judgment on the wantonness claim and the award of punitive damages, holding that wantonness involves disputed factual issues concerning the defendants’ mental state that should be determined by a jury. The case was remanded for further proceedings on wantonness and punitive damages. View "U.S. Bank Trust National Association v. Bonilla" on Justia Law

This case involves two individuals who guaranteed loans for their business by executing promissory notes and trust deeds, which conveyed several real properties as security to a bank. After the business defaulted on the loans and entered bankruptcy, the bank sold both the business and the individuals’ properties through judicial foreclosure and trustee sales. The bank subsequently sought a deficiency judgment against the guarantors for the remaining debt, asserting that they owed over $3 million, while the guarantors argued that they should receive credit for the fair market value of the properties sold, in accordance with Nebraska’s antideficiency statute.The District Court for Johnson County granted summary judgment to the bank, finding the guarantors liable under their guarantees without credit for the property values. The court relied on a waiver provision in the guarantees, which stated that the guarantors waived any defense based on the bank not obtaining the fair market value of the collateral. The court also denied the guarantors’ motion for reconsideration or new trial, prompting the guarantors to appeal.The Nebraska Supreme Court reviewed the case de novo. It held that the antideficiency statute, Neb. Rev. Stat. § 76-1013, applies not only to borrowers but also to guarantors when their obligation is secured by a trust deed and a trustee sale occurs. The court determined that the waiver provision in the guarantees was unenforceable as a matter of public policy, given the legislative mandate of § 76-1013. Furthermore, the court found that evidence such as assessed values and appraisals raised a genuine issue of material fact regarding the fair market value of the properties at the time of the trustee sales. The court reversed the district court’s grant of summary judgment and remanded for further proceedings. View "American Exch. Bank v. Topp" on Justia Law

BMK Enterprises purchased a commercial property from Bailey Enterprises in 2018. As part of the transaction, the parties agreed to a provision granting BMK a right of first refusal if Bailey decided to sell the adjacent Bolinger Property, which contained storage units. In 2019, Bailey informed BMK of its intent to sell the Bolinger Property, but BMK did not purchase it at that time. Bailey later sold the Bolinger Property to a third party in 2021 without further notice to BMK. BMK subsequently filed suit against Bailey for breach of contract and breach of the implied covenant of good faith and fair dealing, alleging that Bailey failed to honor the right of first refusal provision. BMK also sued the real estate broker and agent involved in the sale, but those claims were dismissed and are not part of this appeal.The District Court of the Eighteenth Judicial District granted summary judgment in favor of Bailey. It concluded that the right of first refusal provision was unenforceable as a matter of law because it inadequately described the property subject to the right and failed to specify the price, rendering the contract provision ambiguous and void. The court declined to consider extrinsic evidence to clarify the parties’ intent, reasoning that the ambiguity could not be resolved through legal canons or extrinsic evidence.The Supreme Court of the State of Montana reviewed the District Court’s decision de novo. It held that while the provision was ambiguous, the District Court erred by not considering extrinsic evidence to ascertain the parties’ intent and resolve the ambiguity. The Supreme Court reversed the District Court’s grant of summary judgment and remanded the case for further proceedings to determine whether extrinsic evidence could clarify the object of the contract and render the right of first refusal enforceable. View "BMK Enterprises v. Bailey" on Justia Law

A dispute arose between a commercial landlord and tenant after government emergency orders during the COVID-19 pandemic required non-essential businesses in New York City to close. The tenant, operating a retail clothing store in Manhattan, stopped paying rent, arguing that the lease excused rent payments when government actions prevented it from operating its business. The landlord disagreed, terminated the lease for nonpayment, and sought damages for breach of contract. The tenant vacated the premises and counterclaimed, alleging the landlord wrongfully terminated the lease and wrongfully kept two payments made after termination.The United States District Court for the Southern District of New York granted summary judgment in favor of the landlord, finding that the government’s orders did not constitute a “taking” under the lease because the tenant was not fully deprived of the use or occupancy of the premises. The district court also rejected the tenant’s counterclaims for breach of contract and unjust enrichment, holding that the notice-and-cure provision applied and that the unjust enrichment claim was duplicative. The court awarded damages to the landlord, though the landlord cross-appealed, asserting the award was insufficient.The United States Court of Appeals for the Second Circuit reviewed the case. It held that the district court misinterpreted the lease’s takings provision, which excused the tenant from paying rent when it was unable to operate its business due to government orders. The appellate court reversed the summary judgment for the landlord on its breach of contract claim and concluded the tenant was entitled to summary judgment on both its own breach of contract counterclaim and its claim that the landlord improperly terminated the lease. The court further vacated the judgment on the unjust enrichment counterclaim and remanded for further proceedings. The landlord’s cross-appeal on damages was dismissed as moot. View "Delshah 60 Ninth, LLC v. Free People of PA LLC" on Justia Law

A homeowner obtained a home equity line of credit (HELOC) secured by a deed of trust, subsequently defaulted, and faced nonjudicial foreclosure initiated by a party claiming to be the beneficiary. The loan servicer, acting on behalf of the claimed beneficiary, executed a declaration asserting that the beneficiary was the “holder” of the HELOC agreement, as required by Washington’s Deed of Trust Act (DTA) for nonjudicial foreclosure. The homeowner challenged the foreclosure in federal court, arguing that a HELOC is not a negotiable instrument and, therefore, the entity seeking foreclosure could not be its “holder” as contemplated by the DTA.In the United States District Court for the Western District of Washington, the homeowner’s quiet title and some statutory claims were dismissed, but other claims were allowed to proceed. Recognizing that state law questions were central and unresolved, the district court certified two questions to the Supreme Court of the State of Washington: (1) whether a typical HELOC is a negotiable instrument under Article 3 of the Uniform Commercial Code, and (2) whether a party claiming to be a beneficiary can satisfy the DTA’s “holder” requirement by declaring it holds a HELOC agreement.The Supreme Court of the State of Washington held that a HELOC agreement, as described, is not a negotiable instrument because it does not contain an unconditional promise to pay a fixed amount of money. The court further held that under the DTA, “holder” means the holder of a negotiable instrument as defined by Article 3 of the UCC. Therefore, a party cannot fulfill the DTA’s proof-of-beneficiary requirement for nonjudicial foreclosure simply by declaring it is the holder of a nonnegotiable HELOC agreement. This does not preclude judicial remedies, but nonjudicial foreclosure is unavailable in such circumstances. View "Vargas v. RRA CP Opportunity Tr. 1" on Justia Law

A county entered into a contract in the late 1970s with various firms for the construction of a new jail, which was completed in 1981. Decades later, during a renovation in 2021, a construction defect was discovered: the original roof was not properly attached to the masonry walls. The county paid for repairs and, in 2023, sued the original architect, the general contractor, and the masonry subcontractor for negligence, fraudulent misrepresentation or nondisclosure, and breach of contract. Each defendant raised the statute of repose in 42 Pa.C.S. § 5536 as a defense, arguing the claims were filed more than 12 years after completion of the jail.The Court of Common Pleas of Clearfield County sustained the defendants’ preliminary objections, finding the statute of repose applied because the jail was completed in 1981, and the defendants had performed the qualifying construction services. The court further held that the doctrine of nullum tempus occurrit regi, which sometimes allows government entities to avoid statutes of limitations, did not apply to the statute of repose. The county appealed.The Commonwealth Court affirmed, assuming for argument's sake that nullum tempus could apply to statutes of repose, but concluding the county failed to meet the requirements for invoking the doctrine because constructing the jail was not enforcing an obligation imposed by law.Upon further appeal, the Supreme Court of Pennsylvania held that nullum tempus cannot preclude the application of the Section 5536 statute of repose. The court concluded the statute of repose is a legislative judgment eliminating liability for construction professionals after 12 years, and its purpose cannot be undermined by the common law doctrine of nullum tempus. The Supreme Court affirmed the Commonwealth Court’s order upholding dismissal of the complaint. View "Clearfield County v. Transystems Corp." on Justia Law

The dispute arose from a contract in which a company specializing in vehicle emissions testing equipment agreed to supply and install its products in a facility being constructed by a general contractor for a state agency. After receiving substantial payments, the equipment supplier sought additional compensation through arbitration. The general contractor defended by arguing that the supplier was not properly licensed as required by California’s Contractors State Licensing Law (CSLL), and thus could not recover payment. The supplier then initiated a lawsuit seeking a judicial declaration that it was exempt from the CSLL’s licensing requirements because its equipment did not become a “fixed part of the structure,” referencing an exemption in the law.The Superior Court of Riverside County reviewed cross-motions for summary judgment. The general contractor argued the exemption did not apply because the equipment became permanently affixed to the building, and the supplier had performed work before obtaining a license. The supplier contended its products were portable and not intended to be permanent fixtures, and that it acted as an equipment installer exempt under the law. The superior court granted summary judgment for the general contractor, finding that the evidence showed the equipment did become a fixed part of the structure and thus the supplier needed a contractor’s license.On appeal, the California Court of Appeal, Fourth Appellate District, Division One, found the lower court erred by deciding as a matter of law that the exemption did not apply. The appellate court held that whether the equipment became a fixed part of the structure is a factual question, not one suitable for summary judgment on the record before it. Because there was conflicting evidence—including expert declarations—on this issue, the trial court should have permitted the factual dispute to be resolved by a trier of fact. The appellate court reversed the judgment and remanded the case for further proceedings. View "AVL Test Systems v. Hensel Phelps Construction" on Justia Law

The case involves a dispute between an Arizona municipal corporation and a water conservation district, both of which are public entities. In 2002, the two parties entered into a long-term agreement for the sale and delivery of water, with specific provisions regarding termination. In 2018, the water district notified the city that it considered the agreement terminated and ceased performance, while the city maintained that the contract remained valid and that the district’s actions constituted breach and anticipatory breach. Over the subsequent years, the city repeatedly requested water delivery under the agreement, and the district consistently refused, reiterating its position that the agreement was no longer in effect. In 2022, after further unsuccessful attempts to enforce the contract, the city formally notified the district of a breach and then initiated legal action seeking specific performance and declaratory relief.The Superior Court in Maricopa County denied the district’s motion for summary judgment and granted summary judgment in favor of the city. The court found the city’s claims were subject to the one-year limitation period under A.R.S. § 12-821 but concluded the claims were timely because each refusal to deliver water constituted a new breach. The court also declared the agreement valid and enforceable. The district appealed, and the Arizona Court of Appeals reversed, holding that the statute of limitations in § 12-821 applied to the city’s claims and thus barred them.The Supreme Court of the State of Arizona reviewed the effect of § 12-821 on the common law nullum tempus doctrine, which exempts the state from statutes of limitation when acting as plaintiff. The Court held that § 12-821 does not expressly abrogate the nullum tempus doctrine for lawsuits between public entities and that the one-year limitation does not apply in such cases. Accordingly, the Court vacated the court of appeals’ opinion, reversed the superior court’s judgment as to timeliness, and remanded with instructions to grant summary judgment for the city, declaring the agreement valid and enforceable. View "CHANDLER v. ROOSEVELT" on Justia Law

A California company repurposed decommissioned military bunkers in South Dakota as survival shelters, offering them for sale or long-term lease. In 2020, an individual entered into a 99-year lease with the company for one of these bunkers, paying $35,000 upfront. The lease agreement incorporated a set of community rules, which the company reserved the right to modify with 30 days’ written notice. In 2021, the company amended the rules to expressly prohibit the brandishing of firearms except in designated areas. In 2023, the lessee was alleged to have brandished a firearm during an altercation, prompting the company to issue notices to vacate and, ultimately, to file a forcible entry and detainer action when the lessee secured the bunker but refused to return possession.The Circuit Court of the Seventh Judicial Circuit in Fall River County granted summary judgment in favor of the lessee. The court reasoned that the lease was illusory because the company could unilaterally modify the rules at any time, leaving the lessee with no recourse. The court concluded that this rendered the entire lease void and unenforceable, thereby preventing the company from evicting the lessee under the lease.The Supreme Court of the State of South Dakota reversed the circuit court’s summary judgment order. The Supreme Court held that the lease agreement was supported by valid consideration and was not illusory merely because the company retained the right to modify community rules, as such modifications were constrained by requirements of reasonableness and good faith. The Court ruled that the ability to modify rules, when exercised subject to notice and implied duties of good faith and fair dealing, does not make the underlying contract unenforceable. The case was remanded for further proceedings. View "Vivos Xpoint v. Sindorf" on Justia Law