Justia Contracts Opinion Summaries

Robert Frisk owns property at 1196 Swan Hill Drive, Bigfork, Montana, and John and Lori Thomas own the neighboring property at 1194 Swan Hill Drive. The properties share a common driveway and a water well located on Frisk’s property. Disputes arose over the width of the easement for the driveway and access to the water well, leading Frisk to file a lawsuit seeking a declaration of an easement and an injunction against Thomas. Thomas counterclaimed for breach of contract regarding the water well agreement and trespass due to Frisk’s fence and house encroaching on their property.The Montana Eleventh Judicial District Court granted Frisk a prescriptive easement over 15 feet of the existing roadway and an equitable easement for the encroaching portion of Thomas’s property. The court dismissed Thomas’s breach of contract claims but affirmed his right to access the water well, imposing additional restrictions on this access due to the parties' animosity. Thomas appealed the decision.The Supreme Court of the State of Montana reviewed the case and found that Montana law does not recognize the creation of an equitable easement. The court held that Frisk must remove his fence and gate from Thomas’s property but allowed the house to remain due to its de minimis encroachment. The court affirmed the additional restrictions on the water well agreement, finding them reasonable and consistent with the agreement’s terms. The decision was affirmed in part and reversed in part. View "Frisk v. Thomas" on Justia Law

Eric Bradley and Jacqueline Chuang filed a lawsuit in the Washtenaw Circuit Court against Linda Frye-Chaiken for breach of contract, specific performance, and promissory estoppel. The dispute arose from an agreement to sell a condominium in the Cayman Islands, which Frye-Chaiken later hesitated to complete following her mother's death. Frye-Chaiken claimed the contract was obtained through coercion or fraud and counterclaimed that her diminished capacity due to her mother's illness invalidated the agreement. The trial court granted summary disposition in favor of Bradley and Chuang, ordering specific performance of the contract and dismissing Frye-Chaiken's counterclaims.The Court of Appeals affirmed the trial court's decision, supporting the summary disposition and the order for specific performance. Bradley and Chuang then sought sanctions, arguing that Frye-Chaiken's defenses and counterclaims were frivolous. Frye-Chaiken hired Barry Powers to represent her in the sanctions proceedings. The trial court awarded $16,714.27 in attorney fees to Bradley and Chuang, holding Frye-Chaiken, Powers, and her previous attorneys jointly and severally liable for the sanctions.The Michigan Supreme Court reviewed the case and held that under MCR 1.109(E) and MCL 600.2591, sanctions for frivolous filings should only be imposed on the attorney who signed the frivolous documents and the represented party. The court found that Powers did not sign any of the frivolous documents and was only involved in litigating the amount of sanctions. Therefore, the trial court abused its discretion by holding Powers jointly and severally liable for the sanctions. The Michigan Supreme Court reversed the Court of Appeals' decision and remanded the case for further proceedings consistent with its opinion. View "Bradley v. Frye-Chaiken" on Justia Law

Fitness International, LLC ("Fitness") entered into a lease agreement with City Center Ventures, LLC ("City Center") for a property in Hopkins, Minnesota, where Fitness operated a health club. Due to executive orders during the COVID-19 pandemic, Fitness was mandated to close its business for approximately 3.5 months in 2020. Fitness sought to recover the rent paid during these closure periods, arguing that the doctrine of frustration of purpose excused its obligation to pay rent during the mandatory closure.The Hennepin County District Court granted summary judgment in favor of City Center, concluding that Fitness's obligation to pay rent was not excused. The Minnesota Court of Appeals affirmed, noting that Fitness cited no binding authority allowing the doctrine of frustration of purpose to establish a breach-of-contract claim. The court of appeals also determined that the mandatory COVID-19 closures did not prohibit all permitted uses of the property, thus not substantially frustrating the lease's purpose.The Minnesota Supreme Court reviewed the case to consider the doctrine of frustration of purpose. The court recognized that the Restatement (Second) of Contracts §§ 265 and 269 provide appropriate frameworks for analyzing claims of permanent and temporary frustration of purpose, respectively. However, the court did not decide whether the doctrine could be used affirmatively for a breach-of-contract claim. Instead, it concluded that even if Fitness could pursue such a claim, the obligation to pay rent was only suspended, not discharged, during the temporary frustration. Since Fitness did not establish that paying rent after the closure would be materially more burdensome, the court affirmed the lower courts' decisions, denying Fitness's claim for rent recovery.The Minnesota Supreme Court affirmed the decision of the court of appeals, holding that Fitness's obligation to pay rent was merely suspended during the temporary frustration and not discharged. View "Fitness International, LLC v. City Center Ventures, LLC" on Justia Law

David Hepfl and Jodine Meadowcroft had a complex romantic history, including two marriages and divorces. After their second divorce, they reconciled in 2016 and decided to build a cabin on Meadowcroft's property, which she had retained as nonmarital property. Hepfl paid for the construction and furnishing of the cabin, as well as additional structures like a dock and outhouse. Their relationship ended again in October 2020, and Meadowcroft obtained an Order for Protection (OFP) against Hepfl. Hepfl then filed a civil action alleging unjust enrichment to recover the cabin and its associated fixtures and furnishings or reasonable payment.The district court ruled in favor of Hepfl, concluding that Meadowcroft would be unjustly enriched if she retained the cabin and its associated items without compensating Hepfl. The court found that Hepfl had no intention of gifting the cabin to Meadowcroft and that his contributions were made with the expectation of shared use. Meadowcroft's motion for amended findings was denied, and she was ordered to pay Hepfl for the construction costs and return or compensate for the additional items.The Minnesota Court of Appeals affirmed the district court's decision, agreeing that Meadowcroft's retention of the cabin would result in unjust enrichment. The court noted that Hepfl's contributions were made with the expectation of shared use and that Meadowcroft's actions induced him to make these expenditures.The Minnesota Supreme Court reviewed the case and affirmed the lower courts' decisions. The court held that Hepfl did not need to show that Meadowcroft engaged in morally wrongful conduct to succeed in his unjust enrichment claim. Instead, it was sufficient that Meadowcroft's retention of the cabin and its associated items would be inequitable under the circumstances. The court emphasized that unjust enrichment claims between former partners in a cohabitating, marriage-like relationship should focus on the equities of the situation rather than the conduct of the parties. View "Hepfl v. Meadowcroft" on Justia Law

Windward Bora LLC purchased a junior promissory note signed by Constance and Royston Browne, secured by a junior mortgage on real property. Windward's predecessor had already obtained a final judgment of foreclosure on the junior mortgage. Without seeking leave from the court that issued the foreclosure, Windward filed a diversity action to recover on the promissory note. Both parties moved for summary judgment.The United States District Court for the Southern District of New York granted the Brownes' motion for summary judgment and denied Windward's. The court found diversity jurisdiction by comparing the national citizenship of the Brownes with that of Windward’s sole member, a U.S. lawful permanent resident, and concluded that state domiciles were irrelevant. It also held that the suit was precluded by New York’s election-of-remedies statute because Windward did not seek leave before suing on the note after its predecessor had already sued on the mortgage. The court found no special circumstances to excuse Windward’s failure.The United States Court of Appeals for the Second Circuit reviewed the case. It agreed with the district court that diversity jurisdiction was present but clarified that the state domiciles of the parties were relevant. The court resolved a divide among district courts, stating that there is no diversity jurisdiction in a suit between U.S. citizens and unincorporated associations with lawful permanent resident members if such jurisdiction would not exist in a suit between the same U.S. citizens and those permanent resident members as individuals. The court also affirmed the district court’s decision to grant summary judgment for the Brownes under New York’s election-of-remedies statute, finding no special circumstances to excuse Windward’s failure to seek leave. The judgment of the district court was affirmed. View "Bora v. Browne" on Justia Law

Keiland Construction, L.L.C. entered into a construction subcontract with Weeks Marine, Inc. for a project in Louisiana. Weeks terminated the contract for convenience, leading to a dispute over compensation. Keiland submitted pay applications and demobilization costs, which Weeks partially paid. The disagreement centered on whether the contract required lump-sum payments for work completed before termination or if it converted to a cost-plus basis upon termination.The United States District Court for the Western District of Louisiana held a bench trial and found the contract ambiguous. It construed the ambiguity against Keiland, the drafter, and ruled in favor of Weeks. The court awarded Keiland damages based on Weeks’s interpretation of the contract but denied Keiland’s claims for direct employee and demobilization costs. The court also awarded Weeks attorneys’ fees and costs, though less than requested, and denied Weeks’s motion for post-offer-of-judgment fees and costs.The United States Court of Appeals for the Fifth Circuit reviewed the case. It affirmed the district court’s findings, agreeing that the contract was ambiguous and that the ambiguity should be construed against Keiland. The appellate court upheld the district court’s rulings on damages, attorneys’ fees, and costs, including the denial of post-offer-of-judgment fees and costs. The court also affirmed the award of prejudgment interest to Keiland, finding no abuse of discretion.In summary, the Fifth Circuit affirmed the district court’s judgment in all respects, including the interpretation of the contract, the award of damages, attorneys’ fees, costs, and prejudgment interest. View "Keiland Construction v. Weeks Marine" on Justia Law

Southbridge RE, LLC (Southbridge) executed promissory notes and secured mortgages for two properties in Massachusetts with LendingHome, which later assigned the mortgages to Christiana Trust. However, LendingHome had previously issued blank assignments of the same mortgages to Toorak Capital Partners as security for a private funding agreement. Toorak filled in its name and recorded the assignments after Southbridge defaulted on the mortgages. Christiana Trust conducted foreclosure sales on both properties, which Southbridge contested, arguing that the blank assignments to Toorak broke the chain of title, rendering the foreclosures invalid.The United States District Court for the District of Massachusetts found that the blank assignments to Toorak were void under Massachusetts law and granted summary judgment in favor of Christiana Trust, declaring it had the authority to conduct the foreclosure sales. The court denied Southbridge's motion for summary judgment and defendants' cross-claims for slander of title, unjust enrichment, and promissory estoppel. Southbridge appealed the decision.The United States Court of Appeals for the First Circuit affirmed the district court's judgment. The appellate court held that under Massachusetts law, assignments in blank are void and convey no interest. The court found that Toorak's filling in its name on the blank assignments did not validate them, as Toorak lacked authorization from LendingHome. The court also determined that post-foreclosure affidavits confirming the invalidity of the Toorak assignments were proper and did not contravene state law. Additionally, the court ruled that the foreclosure sale notices did not need to reference the void Toorak assignments, as they were not part of the chain of title. Thus, the foreclosure sales conducted by Christiana Trust were valid. View "Southbridge RE, LLC v. Kiavi Funding, Inc." on Justia Law

The case involves a dispute over a Surface Use Agreement (SUA) between Mikkelson Land, LLLP, and Continental Resources, Inc. The disagreement centers on whether the SUA authorized Continental to install water pipelines on Mikkelson's property. Mikkelson claimed that the SUA did not permit such installations and filed a lawsuit alleging breach of contract, trespass, and seeking injunctive relief. Continental argued that the SUA explicitly allowed for the installation of water pipelines and moved forward with the project, compensating Mikkelson as per the SUA terms.The United States District Court for the District of North Dakota reviewed the case and granted summary judgment in favor of Continental. The court found that the SUA was unambiguous and explicitly authorized Continental to install water pipelines. The court also noted that the SUA included provisions for compensation related to the installation of such pipelines. Additionally, the court considered an addendum to the SUA, which expanded Continental's rights and further supported the installation of the pipelines. The district court concluded that Continental's actions were within the scope of the SUA and dismissed Mikkelson's claims.The United States Court of Appeals for the Eighth Circuit reviewed the appeal and affirmed the district court's decision. The appellate court agreed that the SUA's language was clear and unambiguous, granting Continental the right to install water pipelines. The court emphasized that the SUA specifically contemplated future installations of water pipelines and provided a payment structure for them. The court also found that the addendum to the SUA expanded Continental's rights, allowing for necessary operations, including the installation of water pipelines. Consequently, the appellate court upheld the summary judgment in favor of Continental, rejecting Mikkelson's arguments. View "Mikkelson Land, LLLP v. Continental Resources, Inc." on Justia Law

AGK Sierra De Montserrat, L.P. (AGK) entered into a Purchase and Sale Agreement (PSA) with Comerica Bank (Comerica) for the purchase of lots in a residential subdivision. The PSA included an indemnity provision requiring Comerica to indemnify AGK against claims arising from Comerica's position as the declarant. After the sale, Westwood Montserrat, Ltd. (Westwood) initiated several lawsuits against AGK, claiming declarant rights. Comerica refused to indemnify AGK, leading AGK to sue Comerica for breach of the indemnity provision.The United States District Court for the Eastern District of California found that Comerica breached the indemnity agreement and awarded AGK attorney fees incurred in the underlying lawsuits with Westwood. Additionally, the district court, relying on the Ninth Circuit's decision in DeWitt v. Western Pacific Railroad Co., awarded AGK attorney fees for the present breach of contract suit against Comerica. Comerica appealed the award of attorney fees for the present litigation.The United States Court of Appeals for the Ninth Circuit reviewed the case and reversed the district court's award of attorney fees for the present litigation. The Ninth Circuit held that DeWitt was only binding in the absence of subsequent indications from California courts that the interpretation was incorrect. Since DeWitt, California appellate courts have uniformly indicated that first-party attorney fees are not recoverable under an indemnity provision unless explicitly stated. The Ninth Circuit remanded the case for the district court to determine whether the attorney fees were otherwise recoverable under the PSA's attorney fees provision. The court emphasized that indemnity provisions generally cover third-party claims, not first-party litigation costs, unless specific language indicates otherwise. View "AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK" on Justia Law

Samuel Boytor, an engineer and businessman, and his wife Carol, defaulted on loans they had personally guaranteed. They entered into a settlement agreement with EFS Bank’s successor, restructuring their debt into three new promissory notes secured by mortgages on their properties. PNC Bank, which eventually held these notes, filed a complaint in 2018 against the Boytors for defaulting on two of the notes. PNC sought foreclosure on the Boytors’ residential property and a money judgment for the nonpayment of a separate note.The United States District Court for the Northern District of Illinois held a bench trial and found in favor of PNC on both counts. The court ordered foreclosure on the Boytors’ residential property and issued a deficiency judgment after the property was sold. The Boytors appealed the decision.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The appellate court held that PNC had established a prima facie case for foreclosure by presenting the mortgage and underlying note. The Boytors’ affirmative defenses, including lack of consideration and payment of the notes, were rejected. The court found that the $203,000 note was supported by consideration and that the Boytors had not paid the note. Additionally, the court determined that the $200,000 note was not paid, and the release of the mortgage did not extinguish the underlying debt. The court also rejected the Boytors’ argument of accord and satisfaction, finding no evidence of a new arrangement to pay less than the outstanding debt. View "PNC Bank, National Association v. Boytor" on Justia Law