Justia Contracts Opinion Summaries

MAPS Hotel and Resorts One LLC (the “Buyer”) agreed to purchase fifteen hotel properties from AB Stable VIII LLC (the “Seller”) for $5.8 billion. In response to the pandemic and without securing the Buyer’s consent, the Seller made drastic changes to its hotel operations, due in part to the damage the pandemic inflicted on the hospitality industry. The transaction was also plagued by problems with fraudulent deeds covering some of the hotel properties. The Buyer eventually called off the deal, relying on the Seller’s failure to comply with the sale agreement. The Seller sued in the Delaware Court of Chancery to require the Buyer to complete the transaction. The Court of Chancery concluded that the Buyer could terminate the sale agreement because the Seller breached a covenant and a condition in the sale agreement. According to the court, the Seller violated the ordinary course covenant by failing to operate in the ordinary course of its business - closing hotels, laying off or furloughing thousands of employees, and implementing other drastic changes to its business - without the Buyer’s consent. Additionally, a condition requiring title insurance for the hotel properties failed because the title insurers’ commitment letters had a broad exception covering the fraudulent deeds, and the Buyer did not cause the failure. On appeal, the Seller argued it satisfied the Ordinary Course Covenant because the covenant did not preclude it from taking reasonable, industry-standard steps in response to the pandemic; the court’s ruling negated the parties’ allocation of pandemic risk to the Buyer through the Material Adverse Effect provision; and its breach of the notice requirement in the covenant was immaterial. The Seller also claimed the Court of Chancery gave too expansive a reading to the exception in the title insurance condition, or, alternatively, that the court incorrectly found that the Buyer did not contribute materially to its breach. The Delaware Supreme Court affirmed the Court of Chancery’s judgment, finding the court concluded correctly that the Seller’s drastic changes to its hotel operations in response to the COVID-19 pandemic without first obtaining the Buyer’s consent breached the ordinary course covenant and excused the Buyer from closing. Because the Seller’s failure to comply with the ordinary course covenant was dispositive of the appeal, the Supreme Court did not reach whether the Seller also breached the title insurance condition. View "AB Stable VIII LLC v. Maps Hotels and Resorts One LLC" on Justia Law

Sandra Gleason filed suit against Charles Halsey and Jim McDonough d/b/a Jim McDonough Home Inspection ("McDonough"), seeking to recover for damage that Gleason allegedly incurred as a result of defendants' allegedly negligent and/or fraudulent conduct associated with Gleason's purchase of a house from Halsey and McDonough's inspection of the house. Although Gleason's claims against Halsey and McDonough involve different legal theories, the issue underlying the claims was essentially the same: whether the house was inspected. The issue underlying Gleason's claims against Halsey was whether McDonough's inspection of the house could be credited to Gleason for purposes of determining whether Gleason may assert an argument under the health or safety exception to the doctrine of caveat emptor; the issue underlying Gleason's claims against McDonough appeared to be whether McDonough owed Gleason a duty in inspecting the house or in consulting with Gleason as she personally inspected the house. The Alabama Supreme Court found that Gleason's claims against Halsey, the judgment on which was certified as final under Rule 54(b), and Gleason's claims against McDonough that remain pending in the circuit court "are so closely intertwined that separate adjudication would pose an unreasonable risk of inconsistent results." As a result, the Court concluded that the circuit court exceeded its discretion in certifying the June 23, 2021, order granting Halsey's summary-judgment motion as final. The Court therefore dismissed the appeal. View "Gleason v. Halsey" on Justia Law

The Supreme Court affirmed the ruling of the district court that the contractual default interest rate applied in this dispute over the redemption of farmland and affirmed the court of appeals' decision requiring timely full payment of the amount necessary, holding that remand was required in this case.An attorney representing an investor underpaid the amount necessary to redeem farmland by at least $1,798 below the minimum owed. After concluding that the redemption was timely the district court resolved the parties' dispute over the interest rate by ruling that the contract default rate of twenty-one percent controlled, not the 4.25 percent nondefault rate. The court of appeals affirmed the twenty-one percent interest rate but concluded that the attempted redemption was untimely. The Supreme Court affirmed the judgment of the court of appeals and declined to grant equitable relief, holding that the court of appeals correctly held that the attempted redemption failed as untimely. View "Great Western Bank v. Clement" on Justia Law

Tax sharing agreements between the County of San Benito and the City of Hollister require the city to pay the county a fixed fee (the “Additional Amount”) for each residential unit constructed on land that is annexed into the city from the county. Plaintiff entered into development agreements with the city to build residential units on land subject to the city-county tax sharing agreements, and agreed to satisfy certain obligations from the tax sharing agreements, but sued the city and the county seeking a declaration that payment of the Additional Amount is not among plaintiff’s obligations.The court of appeal affirmed a defense judgment. The plaintiff agreed to pay the city the Additional Amount fees as part of the development agreements. Nothing in the tax sharing agreement suggests that obligations created by it would cease to exist merely because a project annexed during its effective period was not constructed until after the agreement expired. The court rejected the plaintiff’s argument that because the Additional Amount is an obligation of the city to the county under the tax sharing agreement, it cannot be a “Developer’s obligation.” The reference to “Developer’s obligations” in the development agreement did not mean only the capital improvement and drainage fees discussed in the tax sharing agreement; the term includes the Additional Amount. View "Award Homes, Inc. v. County of San Benito" on Justia Law

A tax-sharing agreement between the County of San Benito and the City of Hollister requires the city to pay the county a fixed fee (Additional Amount) per residential unit constructed on land annexed into the city from the county during the period covered by that agreement. Plaintiff’s predecessor entered into an annexation agreement with the city, agreeing to comply with “all applicable provisions” of that tax sharing agreement. When the plaintiff purchased the annexed land and sought to develop it into subdivisions, the city informed the plaintiff that it was liable for the Additional Amount fees. Plaintiff paid the fees under protest, then sued, seeking a declaration of its rights and duties under various written instruments.The court of appeal affirmed a defense judgment. Plaintiff is contractually liable for the Additional Amount by the terms of the annexation agreement. Any challenge to the calculation of the Additional Amount is beyond the scope of a declaratory relief action and time-barred. The court rejected the plaintiff’s arguments that neither the annexation agreement nor the tax sharing agreement requires the plaintiff to pay the Additional Amount and that the fees violate the Mitigation Fee Act and federal constitutional constraints on development fees as monetary exactions. View "BMC Promise Way, LLC v. County of San Benito" on Justia Law

In case no. 1190816, appellant-plaintiff SE Property Holdings, LLC ("SEPH"), appealed a circuit court's denial of its petition seeking to hold appellee-defendant David Harrell in contempt for failing to comply with the trial court's postjudgment charging order entered in a previous action involving the parties and its failure to hold a hearing on its contempt petition. In case no. 1190814, SEPH petitioned the Alabama Supreme Court for a writ of certiorari, seeking the same relief. The Supreme Court consolidated the proceedings ex mero motu. In case no. 1190816, the Supreme Court found nothing in the record indicating that a hearing was held or that, if one was held, Harrell was "notified ... of the time and place for the hearing on the petition." Thus, in case no. 1190816, judgment was reversed and the matter remanded for further proceedings. Case 1190814 was dismissed. View "Ex parte SE Property Holdings, LLC" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals affirming the judgment of the district court dismissing Plaintiffs' claims against Intermountain GeoEnvironmental Services, Inc. (IGES), holding that the court of appeals correctly construed the Economic Loss Statute, Utah Code 78B-4-513(1) to (2), to reach Plaintiffs' negligence claims.After moving into their home, Plaintiffs discovered that the walls and foundation were cracking due to "failure surfaces" in the soil approximately sixty-five feet beneath their home. Plaintiffs brought suit against IGES, a geotechnical engineering firm that provided a geotechnical report stating that the site was safe for residential construction, asserting a variety of tort and contract claims. The district court dismissed the claims. The court of appeals affirmed. The Supreme Court affirmed, holding (1) Plaintiffs brought an action for defective design, and therefore, the Economic Loss Statute applied and barred Plaintiffs' negligence claims; and (2) the court of appeals did not err in failing to analyze whether a common law independent duty exception applied to their claims because no common law exception was available. View "Hayes v. Intermountain GeoEnvironmental Services, Inc." on Justia Law

Masiello Real Estate, Inc. appealed a superior court’s conclusions of law on its breach-of-contract, quantum-meruit, and negligent-misrepresentation claims following a bench trial. Masiello’s claims stemmed from seller Dow Williams’ refusal to pay it a real estate commission under their right-to-market agreement. Seller owned a 276-acre property in Halifax and Guilford, Vermont. In 2013, he executed a one-year, exclusive right-to-market agreement with Chris Long, a real estate broker who worked for Masiello. Seller and broker agreed on a $435,000 asking price and a fixed $25,000 broker commission. The agreement had a one-year “tail” that compelled seller to pay the commission if, within twelve months of the agreement’s expiration, seller sold the property and Masiello was the procuring cause. The listing agreement would be renewed several times after negotiations with prospective buyers failed. Michelle Matteo and Torre Nelson expressed an interest in the property. Nelson, having obtained seller’s contact information from seller’s neighbor, contacted seller directly and asked if he was still selling. Between August and September 2016, Nelson and seller discussed the fact that seller wanted $400,000 for the property and buyers wanted seller to consider a lower price. No offer was made at that time. The tail of a third right-to-market agreement expired on September 30, 2016. Between September and November of that year, Nelson and Matteo looked at other properties with the other realtor and made an unsuccessful offer on one of those other properties. Returning to seller, Nelson, Matteo and seller negotiated until they eventually agreed to terms. Believing that it was improperly cut out of the sale, Masiello sued seller and buyers. The superior court concluded that because the property was not sold during the tail period, and because Masiello was not the procuring cause, no commission was due under the contract. The court further held that there was no negligent misrepresentation and that Masiello was not entitled to recovery under quantum meruit. Finding no reversible error in that judgment, the Vermont Supreme Court affirmed. View "Masiello Real Estate, Inc. v. Matteo, et al." on Justia Law

Three appeals arose from an insurance coverage dispute following a wildfire that burned in Siskiyou County, California. In September 2014, the Boles Fire damaged and destroyed numerous homes in the town of Weed, including the homes owned by plaintiffs Gary Andrighetto, James Dalin, and Matthew Vulk. Plaintiffs and others filed suit against their insurance company, defendant State Farm General Insurance Company, alleging various claims, including breach of contract and negligence. Central to the parties’ dispute was whether State Farm intentionally or negligently underinsured plaintiffs’ homes. Plaintiffs argued their homes were insufficiently insured due to State Farm’s alleged failure to calculate reasonable or adequate policy limits on their behalf for the full replacement cost of their homes. After the trial court granted State Farm’s motion for summary judgment against Andrighetto, Dalin and Vulk stipulated to entry of judgment in favor of State Farm. Each plaintiff timely appealed, and the Court of Appeal consolidated the appeals for argument and disposition. Thereafter, the Court requested that the parties discuss in their briefing whether the judgments in the Dalin and Vulk matters needed to be reversed pursuant to Magana Cathcart McCarthy v. CB Richard Ellis, Inc., 174 Cal.App.4th 106 (2009). After review, the Court affirmed the trial court in the Andrighetto matter; the Court reversed in the Dalin and Vulk matters, and remanded those for further proceedings. View "Vulk v. State Farm General Ins. Co." on Justia Law

In case number 1190525, Paul Childs and Granger Construction Company, LLC ("Granger Construction"), appealed a circuit court judgment entered in favor of Harry ("Bud") and Brenda Pommer. In their cross-appeal, case number 1190580, the Pommers appealed the trial court's judgment entered in favor of Melissa Granger ("Melissa"), as the administratrix of the estate of Daniel Granger ("Granger"), deceased. In 2014, the Pommers decided to build a garage on property that they owned in Fairhope, Alabama. Childs was referred to Bud for the work. Childs brought Granger into the project as the licensed contractor for the work. The evidence presented at trial indicated that the project experienced significant delays. Evidence was presented indicating that Granger and Childs performed some of the physical labor on the project. In March 2015, when an invoice was presented to the Pommers, Bud and Brenda told the Childs and Granger that they did not want to give them another check based on how things had been going. A "heated" meeting between the parties resulted in the Pommers hiring an attorney. Bud requested the City conduct an inspection; the garage did not pass. The Pommers subsequently hired another contractor and other companies to repair work done by Granger Construction and to complete unfinished work on the project. The Pommers ultimately sued Childs and Granger Construction for breach of contract. Childs and Granger Construction filed their answer to the amended complaint and a counterclaim, asserting breach of contract/unjust enrichment against the Pommers. After review, the Alabama Supreme Court affirmed the trial court as to Granger Construction in case number 1190525. The Court reversed the trial court as to Childs, and rendered judgment in favor of Childs. In case number 1190580, the Court affirmed the trial court. View "Childs et al. v. Pommer" on Justia Law