Justia Contracts Opinion Summaries

Schellinger planned commercial development of a large Sebastopol tract that it had agreed to purchase from Cotter. Certification of an environmental impact report (EIR) under the California Environmental Quality Act (Pub. Resources Code, 21000) was stalled for five years. In the first lawsuit, the court of appeal rejected Schellinger’s contention that CEQA section 21151.1 imposed a mandatory deadline of one year for EIR approval of an EIR and noted that a significant portion of the delay was attributable to Schellinger’s changes to its proposal. Cotter then sued Schellinger for breach of the contract, arguing that the prior litigation established that Schellinger took an unreasonably long time to secure approval. The trial court rejected that argument, but fixed a date by which Schellinger must secure final approval. The court of appeal affirmed. Schellinger then sued Cotter for breaching the contract and obtained a $2,855,431.77 judgment, plus costs and attorney fees. The court of appeal affirmed, agreeing that Cotter committed a breach of contract “animated by egregious bad faith” after failing to obtain relief in prior litigation, by undermining Schellinger’s efforts to obtain approval and by Cotter’s management of the property and efforts to transfer the property to others. View "Schellinger Bros. v. Cotter" on Justia Law

Dickinson Elks Building, LLC, appealed after the district court forfeited a construction lien filed by Rick and Janan Snider, doing business as RJ Snider Construction, and awarded the Dickinson Elks attorney's fees. In December 2011, Snider contracted with Beaver Brinkman to perform work on real property owned by the Dickinson Elks. Snider recorded a construction lien in January 2013 against the property after it did not get paid for all of its work. In May 2014, the Dickinson Elks served Snider with a demand to start a lawsuit to enforce the lien and record a lis pendens within 30 days of the demand. Snider sued the Dickinson Elks in June 2014, seeking foreclosure of the construction lien and a money judgment. Snider recorded a notice of lis pendens in July 2014. The Dickinson Elks moved for summary judgment, arguing Snider's complaint should have been dismissed because Snider was not a licensed contractor when it started the work on the property. The Dickinson Elks also argued Snider did not have a valid construction lien, because Snider did not record a lis pendens within 30 days of receiving the demand to enforce the lien. The district court granted the motion in part and entered a judgment forfeiting Snider's construction lien because Snider did not record a lis pendens within 30 days of receiving the Dickinson Elks' demand to enforce the lien. After review, the Supreme Court concluded it did not have jurisdiction and dismissed the appeal. View "Snider v. Dickinson Elks Building, LLC" on Justia Law

The South Carolina Supreme Court granted certiorari to review a Court of Appeals' decision affirming a circuit court order denying petitioner's John Wieland Homes and Neighborhoods of the Carolinas, Inc.'s ("JWH") motion to compel arbitration. JWH sold lots and "spec" homes on a sixty-five acre residential subdivision. In 2007, respondents ("the Parsons") executed a purchase agreement to buy a home built and sold by JWH ("the Property"). In 2008, the Parsons discovered PVC pipes and a metal lined concrete box buried on their Property. The PVC pipes and box contained "black sludge," which tested positive as a hazardous substance. JWH entered a cleanup contract with the South Carolina Department of Health and Environmental Control. JWH completed and paid for the cleanup per the cleanup contract. The Parsons claim they were unaware the Property was previously an industrial site and contained hazardous substances. In 2011, the Parsons filed the present lawsuit alleging JWH breached the purchase agreement by failing to disclose defects with the Property, selling property that was contaminated, and selling property with known underground pipes. The Parsons further alleged breach of contract, breach of implied warranties, unfair trade practices, negligent misrepresentation, negligence and gross negligence, and fraud. JWH moved to compel arbitration and dismiss the complaint. The motion asserted that all of the Parsons' claims arose out of the purchase agreement, and the Parsons clearly agreed that all such disputes would be decided by arbitration. The circuit court denied the motion and found the arbitration clause was unenforceable. The Court of Appeals affirmed the circuit court's finding that the scope of the arbitration clause was restricted to Warranty claims and declined to address the circuit court's application of the outrageous torts exception doctrine. The Supreme Court disagreed with the appellate court's conclusion and reversed. View "Parsons v. John Wieland Homes" on Justia Law

This dispute arose from the construction of Cypress Point, a luxury condominium complex in Hoboken. Co-defendants Adria Towers, LLC, Metro Homes, LLC, and Commerce Construction Management, LLC (collectively, the developer) served as the project's developer and general contractor, and subcontractors carried out most of the work. During construction, the developer obtained four CGL policies from Evanston Insurance Company, covering a four-year period, and three from Crum & Forster Specialty Insurance Company, covering a subsequent three-year period (collectively, the policies). In this appeal, issue before the Supreme Court was whether rain water damage caused by a subcontractor's faulty workmanship constituted property damage and an occurrence under the developer's commercial general liability (CGL) insurance policy. In a published decision, the Appellate Division reversed, holding that, under the plain language of the CGL policies, the unintended and unexpected consequential damages caused by the subcontractors faulty workmanship constituted property damage and an occurrence. The Supreme Court agreed and affirmed, finding that the consequential damages caused by the subcontractors faulty workmanship constituted property damage, and the event resulting in that damage water from rain flowing into the interior of the property due to the subcontractors faulty workmanship was an occurrence under the plain language of the CGL policies at issue here. View "CypressPoint Condominium Association, Inc. v. Adria Towers, L.L.C., et al." on Justia Law

In 1995, Jazz Photo Corp., one of several commercial entities (collectively referred to as the Jazz Entities), entered into a factoring agreement with Rosenthal & Rosenthal, Inc. Jazz Photo sold Rosenthal its accounts receivable in return for cash. Five years later, Vanessa Benun, the daughter of Jack Benun, a principal of the Jazz Entities, guaranteed Jazz Photo's obligations under that agreement. At that time, Benun also executed a mortgage on real property she owned in Monmouth County as security for her personal guaranty. In March 2005, another of the Jazz Entities, Ribi Tech Products, LLC entered into a factoring agreement with Rosenthal. Benun personally guaranteed Ribi Tech's obligations to Rosenthal. In March 2007, Riker, Danzig, Scherer, Hyland & Perretti, L.L.P. (Riker), a law firm providing legal services to Jack Benun and the Jazz Entities, obtained a third mortgage from Benun on the same real property. This mortgage was executed in favor of Riker to secure Jack Benun's personal debt under a letter agreement. When Benun executed the mortgage, Jack Benun owed Riker $1,679,701.33 in unpaid legal fees, and the letter agreement reflected his obligations to Riker and Riker's promise to provide continuing legal representation. Riker's mortgage was recorded on April 13, 2007. Rosenthal received actual notice of the Riker mortgage in August 2007. Despite notice of the Riker mortgage, Rosenthal continued to make advances to the Jazz Entities that totaled millions of dollars. In September 2009, Jazz Products filed for bankruptcy. The Jazz Entities defaulted on their obligations to Rosenthal, owing Rosenthal close to $4 million. Benun, in turn, defaulted on her personal guaranty to secure the debt. After Riker recorded its mortgage on the Monmouth County property, it continued to perform legal services for Jack Benun, and his unpaid legal fees ballooned to over $3 million. Jack Benun, and the Jazz Entities defaulted on their obligation to Riker and Benun defaulted on her guaranty. Rosenthal filed a foreclosure complaint against Benun, her husband, and Riker. Benun and her husband did not respond, and Rosenthal requested that a default judgment be entered against them. Riker answered, disputing the priority of Rosenthal's mortgages. Later, both Rosenthal and Riker filed cross-motions for summary judgment regarding the priority of their respective mortgages. The trial court granted Rosenthal's motion, determining that the dragnet clauses in the Rosenthal mortgages were fully enforceable. With regard to priority, the trial court held that Riker's argument that its mortgage displaced the two Rosenthal mortgages was legally flawed because the firm accepted a mortgage on the property with knowledge of two prior mortgages, each securing an obligation of up to $1 million, and with knowledge of the anti-subordination clauses. The court concluded that there was no convincing justification for rewarding Riker a superior priority. Riker appealed, and the Appellate Division reversed. The Supreme Court affirmed the Appellate Division, finding that Rosenthal had advance notice of the law firm's intervening lien but nonetheless proceeded to make optional advances to the commercial entities. "Having done so, its mortgages securing those optional future advances were subordinated to the law firm's intervening lien." View "Rosenthal & Rosenthal, Inc. v. Benun" on Justia Law

A wildfire destroyed David and Kristina Parks’ house, which was insured by Safeco Insurance Company (“Safeco”). The Parks purchased an existing house, and Safeco paid the Parks a total of $255,000, the cost of the replacement house less the value of the land. The Parks filed a complaint against Safeco alleging: (1) they were entitled to $440,195.55 under the policy; and (2) Safeco committed bad faith in handling the claim. Safeco filed a Motion for Summary Judgment asserting that the policy was not breached and its conduct did not constitute bad faith. The Parks filed a Cross-Motion for Summary Judgment asserting that Safeco misrepresented the policy. Additionally, the Parks moved to amend their complaint to include a claim for punitive damages. The district court held that: (1) there was no breach of contract because the policy was unambiguous and the Parks received the amount due under the clear language of the policy; (2) Safeco did not commit bad faith in handling the claim because it complied with the terms of the policy and paid the Parks the amount owed; and (3) the Parks had not established a reasonable likelihood of proving facts at trial sufficient to support an award of punitive damages. The Parks appealed, but finding no reversible error, the Idaho Supreme Court affirmed. View "Parks v. Safeco Ins Co of Illinois" on Justia Law

At issue in this case were two provisions of a title insurance policy underwritten by Fidelity National Title Insurance Company. One provision insured against unmarketability of title, and the other insured against a lack of access to property. The owner of the policy, Woody Creek Ventures, LLC, contended that both provisions covered losses it sustained when it learned, after purchasing two parcels of land, that one parcel lacked permanent access. And although Fidelity obtained a 30-year right-of-way grant to that parcel, Woody Creek argued Fidelity failed to cure the lack of access and the title remained unmarketable. After review, the Tenth Circuit agreed with the district court’s conclusions that: (1) the policy did not insure a permanent right of access; (2) the right-of-way cured the lack of access to the parcel; and (3) the lack of permanent access did not render Woody Creek’s title unmarketable. View "Fidelity National Title v. Woody Creek Ventures" on Justia Law

In 2001, EQT sold or leased to Journey several oil- and natural-gas-producing properties in Kentucky. Both parties continued to conduct oil and natural-gas operations in the state, but Journey later concluded that EQT was operating on some of the lands that had been conveyed to Journey. Journey sought a declaration that it owned or controlled those properties and that EQT was liable for the oil and natural gas that EQT had removed from those properties. The district court concluded on summary judgment that the parties’ 2001 contract had unambiguously conveyed the disputed properties to Journey. A jury found that EQT’s trespasses on Journey’s lands were not in good faith. The court subsequently required EQT to pay $14,288,432 in damages and transfer certain oil and natural-gas wells to Journey. The Sixth Circuit affirmed, rejecting arguments that the district court erred in construing the parties’ contract, in excluding portions of EQT’s proffered evidence, and in crafting the remedy for EQT’s trespasses. EQT carried out its drilling despite obvious indicators that its ownership of the underlying property was doubtful, establishing an ample basis to conclude that EQT’s trespasses were not in good faith. View "Journey Acquisition-II, L.P. v. EQT Prod.Co." on Justia Law

In June 2012, a hailstorm damaged Plaintiff KCOM’s motel. Soon a dispute arose between KCOM and its insurer, defendant Employers Mutual Casualty (EMC), over the extent of the damage. In October 2012, following receipt of an inspection report, KCOM submitted a proof of loss of $631,726.87. EMC admitted coverage but not the amount of loss. Dissatisfied, KCOM invoked the insurance contract’s appraisal provision. KCOM claimed there were issues with the appraisal process, prompting it to ultimately file suit against EMC, alleging breach of contract, unreasonable delay and denial of benefits, and bad faith breach of the insurance contract. The threshold question presented for the Tenth Circuit's review in this state law diversity action was whether the Court had appellate jurisdiction over the district court’s non-final order denying confirmation of a property loss appraisal. The Court concluded it did not, and dismissed the appeal. View "KCOM, Inc. v. Employers Mutual Casualty Co." on Justia Law

The United States Court of Appeals for the Ninth Circuit certified a question of Washington law to the Washington Supreme Court: "Does a title company owe a duty of care to third parties in the recording of legal instruments?" This certified question arose out of a civil action for money damages. Plaintiffs Centurion Properties Ill LLC (CP Ill) and SMI Group XIV LLC (collectively Plaintiffs) asserted that defendant Chicago Title Insurance Company negligently breached its duty of care and caused damages when it recorded unauthorized liens on CP Ill's property. The Washington Supreme Court answered the Ninth Circuit's question "no," holding that title companies did not owe a duty of care to third parties in the recording of legal instruments. "Such a duty is contrary to Washington's policy and precedent, and other duty of care considerations." View "Centurion Props. III, LLC v. Chi. Title Ins. Co." on Justia Law