Justia Contracts Opinion Summaries

The issue before the Supreme Court was the determination of the proper test for evaluating whether an oil or gas lease has produced "in paying quantities," as first discussed "Young v. Forest Oil Co.," (194 Pa. 243, 45 A. 1 (1899)). Appellant Ann Jedlicka owned a parcel of land consisting of approximately 70 acres. The Jedlicka tract is part of a larger tract of land consisting of approximately 163 acres, which was conveyed to Samuel Findley and David Findley by deed dated 1925. In 1928, the Findleys conveyed to T.W. Phillips Gas and Oil Co. an oil and gas lease covering all 163 acres of the Findley property which included the Jedlicka tract. The lease contained a habendum clause which provided for drilling and operating for oil and gas on the property so long as it was produced in "paying quantities." Notably, the term "in paying quantities" was not defined in the lease. Subsequently, the Findley property was subdivided and sold, including the Jedlicka tract, subject to the Findley lease. A successor to T.W. Philips, PC Exploration made plans to drill more wells on the Jedlicka tract. Jedlicka objected to construction of the new wells, claiming that W.W. Philips failed to maintain production "in paying quantities" under the Findley lease, and as a result, the lease lapsed and terminated. After careful consideration, the Supreme Court held that when production on a well has been marginal or sporadic, such that for some period profits did not exceed operating costs, the phrase "in paying quantities" must be construed with reference to an operator's good faith judgment. Furthermore, the Court found the lower courts considered the operator's good faith judgment in concluding the oil and gas lease at issue in the instant case has produced in paying quantities, the Court affirmed the order of the Superior Court which upheld the trial court's ruling in favor of T.W. Phillips Gas and Oil Co. and PC Exploration, Inc.

At issue in this case was a district court's grant of a motion for voluntary dismissal of a suit filed by Fern Peterson against Cecil and Yu Wen Davis, Kevin and Sherri Murray, David Lawrence and Private Wilderness, LLC (collectively, Private Wilderness). The issues arose from Peterson's attempt to sell property to the Davises, Murray and Lawrence. Private Wilderness asserted an easement over the property. Ultimately the case ended with the dismissal of a third-party complaint filed by Private Wilderness against Robert and Nancy Peterson (the Petersons). In resolving the appeal, the Supreme Court addressed issues raised by Private Wilderness concerning whether the district court erred when it concluded there was no prevailing party when it granted the voluntary dismissal. The Court also addressed the Petersons' cross-appeal, in which they argued that the district court erred in denying their motion for reconsideration of their I.R.C.P. 12(b)(6) and 12(c) motion to dismiss on the basis that it was moot, and by not addressing their pending summary judgment motion at the time of dismissal. Upon review, the Supreme Court vacated in part and remanded, upholding the district court's discretion concluding no prevailing party, but found the court erred by denying the motion for reconsideration.

Defendant Randy J. Rouleau appealed the decision of the Washington Civil Division which held that Wells Fargo Bank Minnesota, N.A., as Trustee for the registered holders of Credit Suisse First Boston Mortgage Security Corp., Commercial Mortgage Pass-Through Certificates, Series 2001-CF2 (Wells Fargo), was entitled to enforce his personal guaranty of a promissory note secured by mortgages on five mobile home parks.  The civil division concluded that Wells Fargo could enforce the guaranty as the holder of the note under 9A V.S.A. § 3-301(i), which defines who may enforce a negotiable instrument.  Defendant argued that the court erred in ruling that Wells Fargo has standing to enforce the guaranty because Wells Fargo could not prove the chain of assignments from the original lender to itself and therefore that Wells Fargo, and not some third party, is the assignee of the guaranty.  Defendant also argued that the court erred in treating assignment of the note as sufficient to show assignment of the guaranty because the guaranty, in contrast to the note, is a separate contract that must be expressly assigned.  Finally, defendant argued that because Wells Fargo lacked standing to enforce the guaranty, the court lacked jurisdiction over the enforcement action.  Based on the evidence presented, the Supreme Court could not conclude that the court's finding that Wells Fargo was assigned the note and mortgage was clearly erroneous.  Moreover, the court's finding on this point, essential to Wells Fargo's status as a holder, directly supports its conclusion that Wells Fargo has standing to enforce the guaranty.  Because Wells Fargo had standing, Defendant's final argument that the court lacked jurisdiction over the enforcement action has no merit. The Supreme Court affirmed the civil division.

This appeal arose from a decade-long fight over title to a piece of real property. Juan Cuevas allegedly agreed to sell the property to Defendant-Counterclaimant-Appellant Bernardino Barraza in 2001. However, after Barraza failed to pay the purchase price, Juan filed a quiet title action against Barraza. Barraza defaulted. While Barraza was seeking to set aside the default, Juan quitclaimed the property to his relative, Plaintiff-Counterdefendant-Respondent Wilfrido Cuevas. Meanwhile, Barraza was successful in setting aside the default on appeal. On remand, Juan defaulted and the district court quieted title in Barraza. Wilfrido then filed the present quiet title action against Barraza, in which the district court found the default judgment against Juan void and quieted title in Wilfrido. Upon review, the Supreme Court held that the default judgment against Juan is void, but vacated the summary judgment quieting title in Wilfrido as against Barraza.

Real estate purchasers Thomas and Vicki Stevenson appealed the district court's grant of summary judgment that dismissed their unjust enrichment claim against Windermere Capital Group (Windermere), broker to seller 323 Jefferson, LLC (Jefferson). The Stevensons desired to purchase a condominium from Jefferson, and the parties executed a Real Estate Purchase and Sale Agreement (REPSA) for that purpose. Pursuant to the REPSA, the Stevensons deposited $38,000 earnest money with Jefferson’s broker, Windermere. Upon the Stevensons' written authorization, Windermere transferred the funds to Jefferson. Jefferson then paid Windermere a partial commission pursuant to an Exclusive Seller Representation Agreement which obligated Jefferson to pay Windermere a commission whenever a ready, willing, and able purchaser was procured. Jefferson decided not to sell the condominium to the Stevensons and notified them that it was terminating the REPSA. The REPSA specified remedies upon default by either of the parties to the agreement. In the event that Jefferson failed to comply with any term of the agreement, the Stevensons were entitled to their deposit plus interest. Despite this unambiguous provision, Jefferson failed to return the deposit. The Stevensons filed suit against both Jefferson and Windermere. Their complaint alleged that Jefferson breached the REPSA and also advanced a claim of unjust enrichment against both Jefferson and Windermere. The Stevensons also asserted that the REPSA was unenforceable because it did not contain an adequate legal description. Jefferson settled with the Stevensons, agreeing to refund the Stevensons' earnest money, less the commission paid to Windermere. Windermere answered and cross-claimed against Jefferson, alleging two counts of breach of contract, two counts of unjust enrichment and one count of fraud. Windermere later moved for summary judgment as to the Stevensons’ unjust enrichment claim. Upon review, the Supreme Court held that the district court properly exercised its discretion and affirmed the award of summary judgment to Windmere.

Stiles Apartment filed suit asserting ownership over a parking area and sought interlocutory and permanent injunctive relief to prohibit ACC from exercising any control over the parking area. ACC counterclaimed for declaratory judgment, ejectment, and breach of contract. The trial court issued an order granting the request for injunctive relief against ACC's efforts to assert ownership or control over the parking area but denied a request to enjoin ACC from arresting Mr. Stiles for towing vehicles from the parking area. ACC appealed from the order. The court held that there was evidence authorizing the grant of interlocutory injunctive relief and the trial court did not abuse its discretion. The court rejected ACC's defenses of laches, waiver, and the statute of limitations. Accordingly, the court affirmed the judgment.

BB&T brought suit against Borrowers and Guarantors for more than $19 million then due under certain promissory notes at issue. The promissory notes were executed as a result of BB&T's issuance of 16 loans for residential housing development. In Case No. S1161728, appellants argued that the Court of Appeals in holding that no valid foreclosure sale occurred, erroneously relied on its determination that BB&T did not satisfy the Statue of Frauds. The court held that there were no valid foreclosure sales to prevent BB&T from suing on the notes in the absence of confirmation under OCGA 44-14-161, regardless of whether there was a valid executory sales contract which satisfied the Statute of Frauds. In Case No. S11G1729, the court held that, although the Court of Appeals correctly held that none of BB&T's claims was barred by its failure to seek confirmation after the foreclosure auctions, that court did err in holding that the 2008 guaranties did not sufficiently identify any pre-2008 notes and that the 2008 Guarantors were estopped by BB&T's part performance from asserting a Statute of Frauds defense to BB&T's claims against them on pre-2008 notes.

In 2007, Sea Gardens petitioned under OCGA 23-3-60 to quiet title to waterfront property in McIntosh County. Appellants appealed from the trial court's entry of a consent judgment purporting to resolve their ongoing dispute with Sea Gardens over title to the property at issue. Because both parties did not in fact consent to all terms of the consent judgment, the trial court erred in issuing it, and therefore the court vacated and remanded for further proceedings in the trial court.

In an insurance coverage dispute, the court was required to determine, under Florida law, what constituted "property damage" under a post-1986 standard form commercial general liability (CGL) policy with products-completed operations hazard (PCOH) coverage. Specifically, whether such a policy issued to a general contractor for damage to the part of the completed project performed by a subcontractor, but not to any other project component, caused by a subcontractor's defective work. In light of Florida precedent addressing the scope of similar CGL policies, the court concluded that the policy provided no coverage in this case. Therefore, the court affirmed the judgment of the district court, holding that the damage at issue was not covered under the policy.

Majorie Bedessem, as trustee of her revocable trust, filed a complaint against David and Susan Cunningham, seeking enforcement of an easement across the Cunningham property to access the Bedessem property. Bedessem claimed an implied access easement or, in the alternative, access pursuant to the restrictive covenants applicable to both properties. The district court granting Cunninghams' summary judgment motion after finding no evidence of an implied easement and that the restrictive covenants authorized only the Architectural Control Committee to sue for enforcement of the covenants. The Supreme Court affirmed, holding that the district court did not err when it ruled that Bedessem did not have standing to enforce a restrictive covenant against Cunninghams, as the covenants granted the Architectural Control Committee the sole right to enforce the covenants.