Justia Contracts Opinion Summaries

The owners of units in Sienna Court Condominiums, a newly-constructed 111-residential-unit Evanston property sued, alleging that the developer, TR, sold the units with latent defects that resulted in water infiltration and other conditions that rendered the individual units and common areas unfit for habitation. The complaint alleged breach of an express warranty and breach of an implied warranty of habitability against TR, the general contractor, the architect and engineering design firms, material suppliers and several subcontractors. TR and the general contractor were bankrupt. The unit owners obtained relief from the automatic bankruptcy stay. TR and the general contractor had two separate insurance policies, each providing coverage of $1 million per occurrence with $2 million aggregate limits. Plaintiffs had recovered approximately $308,000 from TR through a warranty escrow fund required by Evanston ordinance. Subcontractors and the material suppliers asserted that they were not subject to an implied warranty of habitabililty. The circuit court denied their motion to dismiss. The Illinois Supreme Court reversed, holding that a purchaser of a newly constructed home may not assert a claim for breach of an implied warranty of habitability against a subcontractor who took part in the construction of the home, where the subcontractor had no contractual relationship with the purchaser. View "Sienna Court Condominium Assoc. v. Champion Aluminum Corp." on Justia Law

The Supreme Court affirmed the decision of the dismissing The Institute of Range and the American Mustang’s (IRAM) lawsuit seeking to void a seventeen-year-old deed of conservation easement and to quiet title to its property, holding that the circuit court did not err in granting summary judgment in favor of The Nature Conservancy on IRAM’s claims.Specifically, the Court held (1) because the statute of limitations expired more than six years prior to IRAM’s suit, the circuit court did not err in granting The Nature Conservancy summary judgment on IRAM’s fraud claim; (2) summary judgment was properly granted on IRAM’s ultra vires claim and claim to vacate deed for no meeting of the minds; and (3) the circuit court did not err in granting The Nature Conservancy summary judgment on IRAM’s claim to vacate the deed for failure of consideration. View "Institute of Range & American Mustang v. Nature Conservancy" on Justia Law

The issue raised on appeal in this matter centered on a trespass claim by Plaintiffs-Appellants Marvin and Mildred Bay that Defendants-Appellees Anadarko E&P Onshore LLC and Anadarko Land Corp. (together, “Anadarko”), that through a lessee, exceeded the scope of an easement by using excessive surface land to drill for oil and gas. The district court had diversity jurisdiction over the case and entered final judgment against the Bays pursuant to Federal Rule of Civil Procedure 54(b). The Tenth Circuit was presented with an issue of whether a deed reserving mineral rights in land (and the specific right to use the surface as “convenient or necessary” to access the minerals) requires applying a different test than the one prescribed in Gerrity Oil & Gas Corp. v. Magness, 946 P.2d 913 (Colo. 1997), to evaluate whether the mineral owner’s use of land constitutes a trespass. The Court concluded it did not, and reversed and remanded for further proceedings. View "Bay v. Anadarko E&P Onshore" on Justia Law

Trustee Annette Besaw held a security interest in fifty shares of stock of the Champlain Bridge Marina, Inc. She acquired the interest previously held by Ernest Giroux upon his death, in her capacity as trustee of his living trust. Champlain Bridge Marina was a family business in Addison, Vermont. Ernest (defendant Bryan Giroux’s grandfather) and Raymond Giroux (defendant’s father) started it in 1987. In the beginning, grandfather and father each owned fifty of the Marina’s 100 shares. On December 30, 1998, grandfather sold his fifty shares to father in exchange for the promissory note in which father promised to pay grandfather $272,000 plus interest. The associated January 1, 1999 security agreement gave grandfather a security interest in the fifty shares of Marina stock to secure payment on the note. Trustee appealed the superior court’s ruling on summary judgment that her suit to recover collateral under a security agreement was time-barred. The central issue in this case was when the trustee’s right to sue accrued, starting the statute-of-limitations clock. The Vermont Supreme Court concluded trustee’s right to sue under the security agreement accrued in 2013 when the borrower failed to pay the balance due on the note within forty-five days of trustee’s notice of default and borrower’s right to cure. Accordingly, the suit was not time-barred; the Court reversed and remanded. View "Besaw v. Giroux" on Justia Law

This appeal concerned a dispute over which party to a failed commercial real estate sale is entitled to the buyer’s deposit. The seller, 913 Market, LLC, claims that it was entitled to the deposit because the buyer failed to close the deal on the agreed date, and brought this action against the buyer claiming breach of contract and seeking a declaratory judgment regarding its rights under the purchase agreement. The buyer, Kamal Bathla, made two reasons why the deposit is rightfully his: (1) 913 Market could not convey title free and clear of all liens and encumbrances, as required by the purchase agreement, due to potential claims by a previous potential buyer of the building that had also failed to close; and (2) one of the conditions precedent was not satisfied because the title insurance commitment he received contained an exception, relating to litigation risk from the previous potential buyer, that did not exist in 913 Market’s existing title insurance policy. In either case, Bathla maintained, he was relieved of any obligation to close, and therefore had a right to get his money back. The Superior Court granted summary judgment for 913 Market. In rejecting Bathla’s first argument, the court reasoned that potential claims by the previous failed buyer did not cloud title because the previous buyer “had not perfected (nor did it seek to perfect) a lis pendens claim.” In rejecting Bathla’s second argument, the court read the purchase agreement as establishing a test based not on “what exceptions the Purchaser’s title insurance carrier might insist upon,” but rather on “whether Seller was able to convey satisfactory title, which it did.” The Delaware Supreme Court affirmed the Superior Court’s decision. "Contrary to Bathla’s exhortations, the mere possibility that a previous potential buyer who failed to close might later claim an interest in the building does not constitute a lien or encumbrance under the purchase agreement, and the condition precedent identified by Bathla does not require that he obtain a title commitment with exceptions that mirror those of 913 Market’s existing policy. And ultimately, the basic premise of Bathla’s case - that there was a genuine risk that the previous potential buyer would sue Bathla over the property - is implausible and does not provide a basis under the contract to avoid the obligation to close." View "Bathla v. 913 Market, LLC" on Justia Law

The Supreme Court answered two state-law questions from the Bankruptcy Appellate Panel for the United States Sixth Circuit Court of Appeals by holding that the failure to identify a person who has initialed, signed, and acknowledged a mortgage agreement by name in the body of the agreement does not render the agreement unenforceable as a matter of law against that signatory.The panel specifically asked whether a mortgage is invalid and unenforceable against a signatory who is not identified by name in the body of the mortgage agreement. The Supreme Court answered in the negative, holding that, as a matter of general contract interpretation, it is possible for a person who is not identified in the body of the mortgage, but who has signed and initiated the mortgage, to be a mortgagor of her interest. View "Bank of New York Mellon v. Rhiel" on Justia Law

Montecito neighbors had a dispute over an easement created by recording in 1994, which contained an unpaved road. The owner of the burdened property wanted the easement limited to historical use; a new owner of the other property wanted to use the road for construction traffic and asserted that he might pave the road. The trial court “interpreted” the easement, ruled that the easement was ambiguous, decided the case based upon extrinsic evidence of historic use, and added language limiting the easement. The court of appeal reversed and remanded with directions, noting that the use of the easement for construction traffic has become a moot issue. An ambiguity is not apparent from the “failure” to specify how frequently the road can be used or the type of vehicle allowed on the road, but ambiguity is not the test for admission of extrinsic evidence. A bona fide purchaser could reasonably rely on the language of the grant of the easement, which gave him “a use limited only by the requirement that it be reasonably necessary and consistent with the purpose[] for which the easement was granted,” i.e., “access, ingress, and egress to vehicles and pedestrians.” View "Zissler v. Saville" on Justia Law

The Supreme Judicial Court affirmed the order of the superior court allowing Defendant’s motion to dismiss this complaint seeking a judgment declaring that an appraisal was invalid and nonbinding and breach of the covenant of good faith and fair dealing, holding that the common-law rule established in Eliot v. Coulee, 322 Mass. 86, 91 (1947), properly balances the need for fair valuations with the need for finality in the appraisal process and that an appearance of bias alone is insufficient to invalidate an appraisal.The common-law rule established in Eliot provides that where parties agree that the fair value of a property shall be determined by an appraiser, the correctness of the methods of the appraiser’s valuation cannot be inquired into by the courts in the absence of fraud, corruption, dishonesty or bad faith. Plaintiff asked the Court to modify the rule to allow a judge to invalidate an appraisal where there is the appearance of bias on the part of the entity that employed the individual appraiser. The Supreme Judicial Court declined to modify the common-law rule and affirmed the dismissal of this case, holding that the facts alleged did not require a court to invalidate an independent appraisal agreed to by the parties. View "Buffalo-Water 1, LLC v. Fidelity Real Estate Company, LLC" on Justia Law

Lloyd Copenbarger, as Trustee of the Hazel I. Maag Trust (the Maag Trust), sued Morris Cerullo World Evangelism, Inc. (MCWE) for declaratory relief and breach of a settlement agreement made to resolve various disputes, including an unlawful detainer action. MCWE was the lessee of a 50-year ground lease (the Ground Lease) of real property (the Property) in Newport Beach. The Property was improved with an office building and marina (the Improvements). The Ground Lease was set to terminate on December 1, 2018. In 2004, MCWE subleased the Property and sold all of the Improvements to NHOM (the Sublease). Starting in 2009, NHOM experienced cash flow problems due to “a shortage of rents.” In June 2011, MCWE commenced an unlawful detainer action against NHOM based on allegations NHOM failed to maintain and undertake required repairs to the Improvements. Six months later, the Maag Trust intervened in the UD Action as a party defendant under the theory that if NHOM were evicted and the Sublease terminated, then the Maag Trust’s security interest created by the Maag Deed of Trust would be destroyed. In August 2012, MCWE, Plaza del Sol, and the Maag Trust entered into a settlement agreement (the Settlement Agreement). The Maag Trust alleged MCWE breached the settlement agreement by failing to dismiss with prejudice the unlawful detainer action and sought, as damages, attorney fees incurred in that action from the date of the settlement agreement to the date on which MCWE did dismiss the action. Following a bench trial, the trial court found MCWE had breached the settlement agreement by not timely dismissing with prejudice the unlawful detainer action. As damages, the court awarded the Maag Trust attorney fees it claimed to have incurred during the relevant time period. On appeal, MCWE did not challenge the finding that its failure to dismiss the unlawful detainer action constituted a breach of the settlement agreement. Instead, MCWE made a number of arguments challenging the damages awarded. After review, the Court of Appeal reversed the judgment against MCWE because there was a wholesale failure of proof of the amount of damages on the part of the Maag Trust. Therefore, the Court reversed with directions to enter judgment in favor of MCWE on the Maag Trust’s complaint. View "Copenbarger v. Morris Cerullo World Evangelism, Inc." on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the district court dismissing Plaintiff’s unjust enrichment, quantum meruit, and promissory estoppel claims, holding that the district court erred in granting Defendants’ motion for summary judgment on the promissory estoppel claim.Plaintiff, a farmer, sued Defendants, his neighbor’s heirs, claiming that he and the decedent entered into an option contract to purchase farmland that Plaintiff leased from he decedent and upon which Plaintiff had made substantial improvements. After the farm was sold, Plaintiff brought this action claiming that Defendants breached an option contract to sell him the property. Alternatively, Plaintiff alleged various equitable theories of promissory estoppel, quantum meruit, and unjust enrichment. A jury found in favor of Plaintiff on his contract claim, but the district court granted Defendants’ motion for directed verdict and refused to order a new trial on Plaintiff’s alternative equitable theories. The court of appeals remanded the case for further proceedings on the equitable claims. On remand, the district court granted Defendants’ motion for summary judgment on the remaining equitable claims. The Supreme Court reversed in part, holding that Plaintiff’s promissory estoppel claim survived summary judgment. View "Kunde v. Estate of Arthur D. Bowman" on Justia Law