Justia Contracts Opinion Summaries

In 2003, a corporation was assigned a lease that permitted a restaurant to operate. Xiao-Yan Cao, the corporation’s president, personally guaranteed the corporation’s performance. In 2006, the lease was assigned to Hong Lin. As part of the assignment, the lease term was extended until 2013. Both Cao and Lin signed the lease extension as guarantors. In 2010, Lin stopped making timely rent payments. Lin and the property’s landlord agreed to a repayment schedule to permit Lin to catch up. In 2013, Lin defaulted on rent payments. The landlord sued both Lin and Cao for a sum representing the last month’s rent and a balance from the month prior. The district court concluded that the 2010 repayment materially modified the contract and discharged Cao’s guaranty. The court of appeals reversed, concluding that extending the period within which a tenant could pay its rent did not materially modify the contract. The Supreme Court affirmed, holding that the court of appeals correctly determined that the 2010 repayment agreement did not materially modify the contract and that Cao was not relieved of her responsibilities as guarantor. View "PC Riverview, LLC v. Cao" on Justia Law

This case arose from competing claims to a portion of the Yuba Goldfields, a 10,000-acre valley on both sides of the Yuba River near Marysville. At issue was whether an arbitration award resolving a dispute between plaintiff Cal Sierra Development, Inc. (Cal Sierra), and Western Aggregates, Inc., served as res judicata to bar Cal Sierra’s lawsuit against Western Aggregates’ licensee George Reed, Inc., and the licensee’s parent Basic Resources, Inc. The Court of Appeal concluded yes. View "Cal Sierra Development v. George Reed, Inc." on Justia Law

The Eighth Circuit affirmed the district court's grant of summary judgment for CIC on the Trust's claims for breach of contract, vexatious refusal, and declaratory judgment. The court held that the district court properly afforded the appraisal provision its plain meaning in determining it was unambiguous, enforceable, and did not abridge the Trust's rights under Missouri's vexatious refusal statute; the district court properly concluded CIC did not waive the appraisal provision; the Trust's contention that there was no basis for the district court to order appraisal of all covered damages, including replacement cost, was unfounded; the district court committed no error in finding the Trust's breach of contract claim failed as a matter of law; and the district court properly granted CIC summary judgment on the Trust's vexatious refusal claim. View "Olga Despotis Trust v. Cincinnati Insurance Co." on Justia Law

Property owners who purchased through a foreclosure sale sued the bank that sold the house, alleging that they were mislead the bank’s deed of trust was the first deed of trust, when another remained on the property, and was not extinguished by the foreclosure sale. Wells Fargo assigned any claim against the title insurer it had to David and Lina Hovannisian (the property owners), and the Hovannisians sued First American Title Insurance Company, alleging breach of contract, negligent misrepresentation and breach of the implied covenant of good faith and fair dealing. First American moved for summary judgment, arguing its title insurance coverage had terminated, and no benefits were due. The motion was granted, and the Hovannisians appealed, arguing First American failed to establish that coverage did not continue under the title policy or there were no benefits due under the policy. They also contended triable issues of fact existed regarding their bad faith claim. The Court of Appeal affirmed, finding First American showed, based on the facts Wells Fargo and the Hovannisians presented before and after the underlying action was filed, that there was no potential for coverage under the policy. The Hovannisians did not learn about the first deed of trust until after they purchased the property at the foreclosure sale without warranty. Thus, the only potential claim they had against Wells Fargo was for the alleged misrepresentations for which there was no liability or loss under the policy. View "Hovannisian v. First American Title Ins. Co." on Justia Law

Under 42 U.S.C. 1485, the USDA's Rural Housing Service (RHS) makes loans for construction of affordable rental housing. From 1972-1982, each of 10 limited partnerships (with a common general partner, Olsen) entered into a 50-year loan agreement that stated that each borrower could pay off the loan and convert its properties to conventional housing after 15 or 20 years. The 1987 Emergency Low Income Housing Preservation Act, 42 U.S.C. 1472(c)), provided that before accepting prepayment, the USDA must attempt to enter into an agreement with the borrower. In 2002, Olsen was negotiating to sell to a nonprofit organization. He notified the RHS of “intent . . . to convert [some] units into conventional housing” and sought approval to pay off the mortgages. RHS responded with a checklist. Olsen did not proceed; the potential acquirer decided against purchasing the properties. In 2011, Olsen submitted more definite prepayment requests. RHS responded with an incentive offer concerning four properties, which Olsen accepted, remaining in the program. For three other properties, RHS informed Olsen that prepayment was not an option. Olsen purportedly believed that pursuing prepayment on any properties was futile. He did not submit additional applications. In 2013, the partnerships sued, alleging that the government, through the 1987 enactment or the 2011 correspondence, violated their prepayment rights. The Federal Circuit reversed the Claims Court's dismissal. The 2002 correspondence did not trigger the RHS’s duty to accept prepayment; RHS did not take any steps inconsistent with prepayment. The government did not breach its contractual obligation in 2002. Because the alleged breaches occurred no earlier than 2011, the contract claims are not barred by the six-year limitations period. The Claims Court implicitly premised the dismissal of takings claims on the same erroneous rationale. View "Airport Road Associates, Ltd. v. United States" on Justia Law

In 1999, Ayala, unable to qualify for a mortgage to buy a five-unit Vacaville residential property, sought assistance from Dawson, a real estate broker. According to Ayala, they orally agreed that Dawson would obtain the loan and buy the property in Dawson’s name for $330,000; Ayala would pay the 20% downpayment and pay Dawson a $200 per month fee, plus the monthly principal and interest on the mortgage. The parties executed a written contract provided by Dawson, which Ayala claims he understood to confirm an installment contract on terms the two had previously discussed. Ayala moved into one of the units and claims he spent hundreds of thousands of dollars improving the property. From 2000-2008, he paid Dawson $2,700 per month; from 2008-2012, he paid $2,900 per month. Ayala actually had signed a standard form lease/option; the option expired in 2004. In 2011 Dawson offered to sell Ayala the property for $330,000, with a credit for the down payment. In Dawson’s unlawful detainer action, Ayala defended by claiming he held equitable title. Dawson prevailed. In Ayala's separate action against Dawson for fraud, the court granted Dawson summary judgment. The court of appeal affirmed, stating that, under the doctrine of collateral estoppel, Ayala is barred from relitigating his fraud-in-the-inducement theory. View "Ayala v. Dawson" on Justia Law

The Fifth Circuit affirmed the dismissal of plaintiff's claims relating to his mortgage and the foreclosure of his home. The court held that the district court did not err in determining that diversity jurisdiction exists in this case; the district court did not err in dismissing plaintiff's claims for lack of standing to foreclose, quiet title, and breach of contract given that each of those claims was based on the assignment being void; in light of the district court's reasoning and the circumstances of this case, the district court did not abuse its discretion in denying plaintiff leave to replead his promissory estoppel claim; and plaintiff waived his argument that the district court erred in denying his motion to amend. View "Bynane v. The Bank of New York Mellon" on Justia Law

In this real estate purchase transaction the Supreme Court affirmed the court of appeal’s judgment reversing the trial court’s denial of an award of attorney fees. Here Seller brought a breach of contract action against Buyers for failing to purchase the subject property. The trial court concluded that Buyers were not liable under the purchase agreement because it had been superseded by the parties’ option agreement that granted Buyers the exclusive right, but not the obligation, to purchase the property. At issue before the Supreme Court was whether Buyers were entitled to attorney fees under the attorney fees provision in the option agreement. The Supreme Court held (1) Buyers’ assertion of the option agreement as an affirmative defense did not trigger the attorney fees provision in that agreement; but (2) under the circumstances of this case Buyers were nevertheless entitled to attorney fees under the attorney fees provision in the option agreement. View "Mountain Air Enterprises, LLC v. Sundowner Towers, LLC" on Justia Law

Plaintiff, the owner of a commercial property, filed suit against Defendant, a special servicer that handled the default side of loan servicing for its affiliate, after Plaintiff unsuccessfully sought to purchase a loan taken out to refinance existing debt on its property in an effort to avoid default. Plaintiff sought specific performance of a pre-negotiation agreement and injunctive relief to enjoin Defendant from foreclosing on the property until good faith negotiations occur under the pre-negotiation contract. The Court of Chancery granted Defendant’s motion to dismiss the complaint for failure to state a claim for relief, holding that each count of the complaint failed to state a claim for relief. View "Windsor I, LLC v. CWCapital Asset Management LLC" on Justia Law

Plaintiffs filed suit against the condo owners association after the foreclosure sale of their condo unit, alleging common law claims for breach of contract, wrongful foreclosure, negligent misrepresentation, and breach of fiduciary duty, as well as violations of the Federal Debt Collection Practices Act (FDCPA), Texas Fair Debt Collection Practices Act (TFDCPA), and Texas Deceptive Trade Practices Act (TDTPA). The Fifth Circuit affirmed the district court's grant of summary judgment on all claims, holding that regardless whether the district court abused its discretion, any evidentiary error the district court made was harmless. In this case, the issue whether the late fee increase was properly adopted by the Association was not dispositive of any claims, so it did not affect the outcome of the litigation and did not affect their substantial rights. The court also held that plaintiffs' could not maintain their suit for breaches of the Condominium Declaration when they have themselves been in default of the contract; there was no authority supporting plaintiffs' conclusion that an inaccurate balance included in a default notice constitutes a defect in the foreclosure proceedings; and plaintiffs failed to cite specific negligent misrepresentations by defendants. The court rejected plaintiffs' remaining claims. View "Mahmoud v. De Moss Owners Association, Inc." on Justia Law