Justia Contracts Opinion Summaries

Plaintiff NexPoint holds $7.5 million in subordinated notes issued by Acis CLO-2015-6 Ltd. (the “Issuer”), as part of a CLO. The Issuer acquired the CLO collateral and conveyed it to a trust under an indenture between the Issuer and U.S. Bank National Association as Trustee (the “Indenture”). Defendant-appellee Acis Capital Management, L.P. (“Acis”) was engaged as the CLO’s portfolio manager pursuant to a Portfolio Management Agreement between the Issuer and Acis (the “PMA”). NexPoint claims that Acis, Terry, and Brigade (together, the “Advisers”) maximized their own profits at the expense of the CLO in violation of fiduciary duties imposed by Section 206 of the IAA. The district court concluded that NexPoint failed to state a claim under Section 215(b). NexPoint appealed, arguing that the District Court erred in limiting Section 215(b)’s application to contracts that require illegal performance, as opposed to lawful contracts performed in an unlawful manner.   The Second Circuit affirmed. The court held that under Section 215(b), a contract’s performance involves the violation of the IAA only if performing a contractual duty requires conduct prohibited by the IAA. No such unlawful conduct is required by the contracts NexPoint seeks to rescind. The court further explained that the text and structure of the IAA, interpreted with the benefit of TAMA, Oxford, and other precedent, make clear that a contract’s performance “involves” the violation of the IAA only if performing a contractual duty requires a party to engage in conduct prohibited by the IAA. NexPoint does not seek rescission of any contract requiring a party to engage in conduct prohibited by the IAA. View "NexPoint Diversified Real Est. Tr. v. Acis Cap. Mgmt., L.P." on Justia Law

The Supreme Judicial Court affirmed in part and vacated in part the summary judgment entered by the Business and Consumer Docket in an action brought by Defendant's neighbors issuing a declaratory judgment and injunction based on the court's determination that Defendant's short-term rentals had violated a deed restriction that limits the use and occupancy of certain property and the structures on it, holding that remand was required.Specifically, the Supreme Judicial Court (1) affirmed the lower court's declaration that Defendant's short-term rentals of his oceanfront property had violated a deed restriction that limited the use and occupancy of the property and the structures upon it, holding that there was no error in the summary judgment as to these issues; but (2) vacated the court's injunction against further violations, holding that the injunction lacked specificity on what did and did not comply with the deed restriction in question. View "Morgan v. Townsend" on Justia Law

The Court of Appeals held that an heirship judgment that conveyed mineral rights to a good faith buyer’s predecessor in interest was void for lack of jurisdiction. The issue presented for the New Mexico Supreme Court was whether the buyer was entitled to rely on the void judgment in its claim of bona fide purchaser status. In accordance with its Court’s decision in Archuleta v. Landers, 356 P.2d 443, the Court concluded that a party who purchases property sold under a judgment that is not void on its face is entitled to bona fide purchaser status. The Court further clarified that extrinsic evidence of lack of jurisdiction was not permitted to overcome the rights of a purchaser who properly relied upon the order of the court as “an authority emanating from a competent source.” Here, the Court held that Respondent Premier Oil & Gas, Inc. (Premier) was a bona fide purchaser, and affirmed the Court of Appeals. View "Premier Oil & Gas v. Welch" on Justia Law

The Supreme Court vacated the judgment of the court of appeals in this case involving the question of deed construction within the oil and gas context as to whether a royalty interest was fixed or floating, holding that further proceedings were required to evaluate this case in light of the framework articulated in Van Dyke v. Navigator Group, 668 S.W.3d 353 (Tex. 2023).The 1956 deed at issue expressly reserved an undivided 3/32's interest "(same being three-fourths (3/4's) of the usual one-eighth (1/8th) royalty)" in the oil, gas, and other minerals. The question before the Supreme Court was whether the reservation was a floating 3/4 interest of the royalty rather than a fixed 3/32 interest. The court of appeals concluded that the reservation was a floating 3/4 interest. Because the court of appeals' decision preceded Van Dyke, the Court's most recent double-fraction case, the Supreme Court granting the petition for review and vacated the lower court's decision, holding that this case must be remanded this case for further proceedings in light of Van Dyke. View "Thomson v. Hoffman" on Justia Law

The General Council of the Assemblies of God (General Council) governed the Assemblies of God denomination. Its affiliate, the Mississippi District Council for Assemblies of God (District), governed the denomination’s local churches in Mississippi, including Gulf Coast Worship Center (GCWC) in Long Beach. In January 2017, Kevin Beachy, the pastor of GCWC, did not renew his credentials as an ordained pastor with the General Council, ultimately informing the District that he and GCWC intended to disaffiliate from the General Council. The District then informed Beachy that GCWC was being placed under District supervision. On March 19, 2017, the GCWC congregation voted to disaffiliate from the General Council. The congregation voted also to remove a reverter clause from its constitution and bylaws; this clause would have caused the GCWC’s property to revert to the District in the event that GCWC ceased operating as a “church body.” In November 2017, the District filed a chancery court petition for declaratory judgment and injunctive relief against Beachy and the GCWC board of trustees, Eddie Kinsey, Andre Mulet, and Kris Williams (collectively, Defendants). Both the District and Defendants moved for summary judgment. The trial court granted the District’s motion for summary judgment and denied Defendants’ motion. Defendants appealed. After review, the Mississippi Supreme Court determined that issues concerning disaffiliation, i.e., actions taken at the congregational meeting on March 19, 2017, and whether GCWC was under the District’s supervision, were church-governing matters. Thus, the ecclesiastical abstention doctrine deprived the chancellor of jurisdiction to address those claims. But the Supreme Court found genuine issues of material fact remained regarding ownership of property. Therefore, the Court reversed the chancellor’s grant of summary judgment to the District and remanded all issues concerning ownership of property for further proceedings. View "Beachy, et al. v. Mississippi District Council for Assemblies of God" on Justia Law

The Supreme Court reversed the portion of the order of the district court granting summary judgment in favor of Buyer in this dispute arising from an ordinary course covenant in an asset purchase agreement, holding that the district court erred in granting summary judgment for Buyer.In April 2019, Seller entered into an agreement to sell a casino and hotel to Buyer. The agreement contained an ordinary course covenant requiring Seller to operate its business in the usual manner between the time the agreement was signed and closing. In March 2020, in response to the COVID-19 pandemic, Seller complied with the Governor's emergency directive mandating closure of all nonessential businesses. The pandemic also affected Buyer's duties under the agreement. Buyer subsequently terminated the agreement and sued Seller for return of the deposit, alleging various contract claims. Seller counterclaimed for breach of contract. The district court granted summary judgment for Buyer. The Supreme Court reversed, holding that Seller did not violate the agreement's ordinary course covenant by closing the casino and hotel as mandated by the Governor's emergency directive and was entitled to retain the earnest money deposit. View "Lucky Lucy D LLC v. LGS Casino LLC" on Justia Law

Defendant owned real property located at 3546 Multiview Drive in Los Angeles, California (the property). That year, he executed two deeds of trust against the property. Defendant obtained a HELOC from National City Bank, memorialized in an Equity Reserve Agreement and secured by a deed of trust against the property (collectively, the HELOC agreement). Piedmont Capital, L.L.C. (Piedmont)—a debt buyer—purchased the HELOC debt. Piedmont sued Defendant. Following a demurrer to the original complaint sustained with leave to amend, Piedmont filed the operative first amended complaint for (1) breach of contract, (2) money lent, (3) money had and received, and (4) declaratory relief. Although Piedmont alleged that the full amount of the HELOC debt Defendant owed totaled $186,587.26, Piedmont conceded that it was “not seeking to collect on any [amounts] that were already barred by the applicable statute of limitations at the time [the] action was filed.”   The Second Appellate District reversed. At issue is whether the borrower’s duty to make a monthly payment under such a HELOC agreement indivisible from the borrower’s duty to pay the full amount such that the statute of limitations to recover the full amount begins to run upon the first missed monthly payment. The court held that the duties are divisible. The court explained that the HELOC agreement in this case—by setting a fixed maturity date for the full amount and leaving it to the discretion of the lender whether to accelerate that date—necessarily contemplates that a breach as to a monthly payment does not constitute a breach as to the full amount. View "Piedmont Capital Management, L.L.C. v. McElfish" on Justia Law

A man and woman and the man’s grandmother decided to buy a home that they would share. They also decided that because the woman qualified for a mortgage with better terms than the others, the mortgage would be in her name. The grandmother sold her home to provide money to buy the shared home and signed a gift letter to enable the woman to qualify for a mortgage. The relationship between the man and woman deteriorated and she tried to sell the home. She refused to repay the grandmother the money the grandmother had contributed to the home purchase. The grandmother sued her. The superior court determined that the grandmother had not provided the money as a gift. The court also concluded that a written agreement the woman had signed confirmed their oral agreement to jointly buy the home and that therefore their agreement did not violate the statute of frauds. The court ordered the woman to repay the grandmother the money she had contributed to the home purchase, as well as a portion of the grandmother’s attorney’s fees. The woman appealed. Finding no reversible error, the Alaska Supreme Court affirmed the superior court’s decision. View "Shields v. Clark" on Justia Law

This consolidated appeal arose from a dispute regarding a purchase option within a lease agreement. Bronco Elite Arts & Athletics, LLC, and its manager and registered agent, Brandon Paine (collectively “Bronco Elite”), operated a gymnastics facility in Garden City, Idaho. The gymnastics facility was located on property that Bronco Elite leased from 106 Garden City, LLC (“106 Garden City”), and Tricon Properties, LLC (“Tricon”). The lease agreement provided Bronco Elite the option to purchase the Property five years into the initial ten-year lease term. However, when Bronco Elite attempted to exercise its option, 106 Garden City and Tricon refused to honor the option. Bronco Elite sued 106 Garden City and Tricon, seeking specific performance. 106 Garden City and Tricon argued that Bronco Elite was precluded from exercising its purchase option because Bronco Elite had breached the lease agreement by consistently failing to pay rent on time and the lease terms only permitted Bronco Elite to exercise the purchase option if it was not in breach. The district court granted summary judgment in favor of Bronco Elite and ordered 106 Garden City and Tricon to convey the Property to Bronco Elite. The specific performance ordered by the district court was stayed pending appeal. After review, the Idaho Supreme Court concluded the district court did not err in granting summary judgment to Bronco Elite, however, the Court found the trial court erred in setting the purchase price of the Property in the way that it did. The case was remanded for further proceedings. View "Bronco Elite Arts & Athletics, LLC v. 106 Garden City, LLC" on Justia Law

The First Circuit affirmed the judgment of the district court granting United States Liability Insurance Group's (USLI) motion to dismiss this lawsuit brought by Nahant Preservation Trust, Inc. to secure insurance coverage in connection with defense costs and indemnification arising from a state court action brought by Northeastern University, holding that there was no error.Northeastern sued Nahant in state court seeking a declaratory judgment regarding its rights concerning certain land. Nahant, which carried liability insurance through USLI, did not notify USLI of the suit until it wrote to USLI seeking coverage for defense costs. USLI refused to provide coverage on the grounds that Nahant had provided untimely notice of the claim. Thereafter Nahant sued USLI seeking, among other things, a declaratory judgment regarding USLI's duty to defend and indemnify. The First circuit granted USLI's motion to dismiss, concluding that the "exclusion agreement" signed by the parties excluded coverage. The First Circuit affirmed, holding that the district court properly accepted USLI's plausible reading of the exclusion amendment. View "Nahant Preservation Trust, Inc. v. Mount Vernon Fire Insurance Co." on Justia Law