Justia Contracts Opinion Summaries

Robert Smith, a schizophrenic trash collector, was induced into acting as a straw buyer for two overvalued residential properties in Massachusetts. Smith sued various entities and individuals involved in the transactions. After a jury trial, the jury returned a verdict largely favorable to Smith on his claims of fraud and breach of fiduciary duty. The district court doubled and trebled certain damages pursuant to the Massachusetts Consumer Protection Statute, Mass. Gen. Laws ch. 93A. Two defendants, a real estate brokerage firm (Century 21) and a mortgage broker (NEMCO), appealed. Smith cross-appealed the dismissal of several of his claims. The First Circuit Court of Appeals (1) vacated the damage award against Century 21 and remanded for a new trial on damages; (2) reversed the judgment against NEMCO on Smith's common-law claims; (3) vacated the judgment against NEMCO on Smith's Chapter 93A claim and remanded for a determination on the merits; (4) vacated the judgment in favor of another defendant and remanded; and (5) reversed the dismissal of Smith's Chapter 93A claim against yet another defendant and remanded for a determination of the claim on the merits. View "Smith v. Jenkins" on Justia Law

Padraic Conroy and Heather Wicks owned real property as tenants in common. In 2010, Wicks filed a complaint seeking an equitable partition and sale of the house, with profits to be split equally between her and Conroy. Following a jury-waived trial, the trial court granted Wicks's petition and ordered the sale of the house. The court ordered the profits to be split equally between the parties subject to a credit due to Wicks for Conroy's rent-free occupancy of the downstairs apartment. The Supreme Court affirmed, holding that the superior court did not err in (1) finding there was no contract in which the parties agreed Conroy would live in the house rent-free; (2) crediting Wicks for one-half of the fair rental value of the downstairs apartment during the period Conroy lived there; and (3) denying Conroy the opportunity to buy out Wicks's interest in the property. View "Wicks v. Conroy" on Justia Law

Plaintiffs filed suit against Defendant for breach of a real estate contract after Defendant was unable to acquire financing to purchase a home owned by Plaintiffs. Defendant filed a third-party complaint against his real estate agent and the agent's employer. A jury returned a verdict in the Clines' favor on the breach of contract claim and in favor of Defendant on the third-party negligence claim. The Supreme Court reversed the award to Plaintiffs, holding that there was no contract between the parties. On remand, the circuit court dismissed the complaint and third-party complaint. Thereafter, Defendant filed a motion for attorney's fees and costs based on a provision in the real estate contract. The trial court awarded Defendant fees and costs but at an amount significantly less than the amount Defendant had requested. The Supreme Court affirmed, holding (1) the circuit court's finding that Defendant was not entitled to recover fees and costs under the contract was consistent with the Court's holding in Carter I that there was no contract; and (2) the circuit court did not err in finding that Appellant was not entitled to recover fees and costs related to his third-party claim and those fees and costs associated with his attorney. View "Carter v. Cline" on Justia Law

The Probate Court appointed Theodore Ballard's niece, Leala Bell, as Ballard's guardian. Bell signed a promissory note to a mortgage as a "borrower"; she did not expressly indicate that she was signing as Ballard's guardian or that her signature indicated only her "approval" of Ballard's action. The loan was secured by a mortgage on Ballard's real property. The mortgage deed granted and conveyed Ballard's property to CitiFinancial, including the power to sell the property. Ballard signed the mortgage deed but Bell did not. There was no showing that the probate court licensed the mortgage. CitiFinancial alleged that Ballard had failed to make the payments called for under the note and mortgage, and therefore breached these agreements. Ballard moved for summary judgment, arguing in relevant part that he lacked the legal capacity to execute a mortgage deed and promissory note while he was under guardianship. Upon review, the Supreme Court found that Ballard's argument relied on the notion that Bell participated in the transaction with CitiFinancial, subjected herself to personal liability as a cosigner of the note, signed the settlement statement as well as the promissory note, but did not actually approve Ballard's signing of the note. Although the mortgage deed purportedly executed by Ballard and the promissory note secured by that deed were executed as part of the same overall transaction, the two documents created distinct legal obligations. The Supreme Court concluded that the trial court erred in analyzing the note and mortgage as if they were one and the same, both subject to the requirement of probate court approval. Therefore the Court reversed the award of summary judgment to Ballard on CitiFinancial's claim on the promissory note and remanded the case back to the trial court for further proceedings on that claim. View "CitiFinancial, Inc. v. Balch" on Justia Law

Plaintiff, the owner of a home warranty plan from First American, filed a class action complaint alleging that First American refused to make timely repairs, used substandard contractors, and wrongfully denied claims. The district court dismissed some of plaintiff's claims under Rule 12(b)(6); First American made an offer of judgment on plaintiff's remaining claims; and, when plaintiff did not accept the offer, the district court dismissed the remaining claims for lack of subject matter jurisdiction. On appeal, plaintiff challenged the district court's dismissal of plaintiff's remaining claims. The court vacated the dismissal of the remaining individual claims, holding that an unaccepted Rule 68 offer that would fully satisfy plaintiff's claim was insufficient to render the claim moot. Therefore, plaintiff's remaining claims were not made moot by her refusal to accept First American's Rule 68 offer, even assuming that the offer would have fully satisfied her claims. View "Diaz v. First American" on Justia Law

Plaintiff filed a legal malpractice action against two attorneys and a law firm (Respondents) alleging that their negligence resulted in failed collateral in securing a promissory note, particularly a defective deed on certain property. Plaintiff then sued a holding company and two individuals to recover the remaining balance due under the note. In the collection action, the circuit court entered a stipulated settlement that extinguished the parties' obligations under the note. In the malpractice action, the circuit court awarded summary judgment to Respondents, concluding that Plaintiff had failed to prove he sustained damages as a result of Respondents' alleged professional negligence because the stipulated settlement extinguished the defective deed upon which Plaintiff based his claim for damages. After the circuit court entered a subsequent nunc pro tunc order in the collection action omitting the language extinguishing the parties' obligations under the note, Plaintiff sought relief from the summary judgment ruling in the legal malpractice action. The circuit court denied relief. The Supreme Court affirmed, holding (1) Plaintiff failed to prove Respondents' alleged professional negligence caused him to sustain any purported damages; and (2) based on the law of judicial estoppel, the circuit court correctly ruled that Plaintiff was not entitled to relief from its earlier summary judgment ruling. View "Burnworth v. George" on Justia Law

Appellant was in the business of extending high-risk loans to customers with poor credit ratings and operated primarily in Louisiana. Appellees, who resided in Arkansas, obtained four loans from Appellant at its location in Louisiana. After Appellees failed to make payments on the loans, Appellant filed in an Arkansas circuit court a notice of default and intention to sell Appellees' home. Appellees asserted the defenses of usury, unconscionability, esoppel, unclean hands, predatory lending practices, and a violation of the Arkansas Deceptive Trade Practices Act. The circuit court found that the loans constituted predatory lending by a foreign corporation not authorized to do business in Arkansas and that the contract between the parties was unconscionable and could not be given full faith and credit. The Supreme Court affirmed, holding (1) the circuit court's findings of unconscionability and predatory lending practices were not clearly erroneous; and (2) court did not err in refusing to enforce the mortgage, as to do so would contravene the public policy of the State of Arkansas. View "Gulfco of La. Inc. v. Brantley" on Justia Law

Defendant Ricardo Maldonado owned a business purchasing homes from financially distressed owners, negotiating with lenders, and repairing and selling the homes. Anthony D'Agostino saw an advertisement for Maldonado's company and contacted Maldonado in 2008, at which time the estimated fair market value of plaintiffs' property was $480,000. The parties verbally agreed that plaintiffs would pay Maldonado, and he would repair the property and bring the mortgage current using rental payments. The documents Maldonado prepared and plaintiffs signed created a trust naming Maldonado the sole trustee. An option allowed plaintiffs to recover title by paying Maldonado $400,000 within one year. In March 2008, plaintiffs executed a quitclaim deed transferring full interest in the property to Maldonado. The deed stated that Maldonado paid $360,000 for the interest, though he actually paid nothing. Over the following months, Maldonado spent his own money on mortgage payments, outstanding taxes, and repairs. Anthony D'Agostino later offered $40,000 to regain title. Maldonado declined, informing plaintiffs they could repurchase the property for $400,000. Plaintiffs filed a complaint, alleging a violation of the CFA. The trial court found that plaintiffs had sustained their burden with respect to the CFA violation since the transaction was based on misleading documents that gave rise to an "unconscionable commercial practice." The trial court voided the conveyance to Maldonado, restored title to plaintiffs, awarded treble damages and attorneys' fees. The parties appealed, and the Appellate Division remanded only for a recalculation of plaintiffs' damages. After its review, the Supreme Court concluded that the trial court correctly found Maldonado's execution of the transactions at issue gave rise to an unconscionable commercial practice, and that that the trial court did not abuse its discretion in its calculation and subsequent awarding of damages. View "D'Agostino v. Maldonado" on Justia Law

Terry Willis purchased a tract of property with funds that were apparently the proceeds from illegal drug sales. After Willis failed to make a payment, David Ferterrer contributed approximately half of the late payment. Willis was later sentenced to life imprisonment for drug-related crimes, which left him unable to pay for the property as the contract for deed contemplated. The parties agreed that Ferterrer would be responsible for completing the payments to purchase the property. Ferterrer also removed funds from Willis's checking account to prevent federal authorities from seizing those funds. Armed with a notarized agreement allegedly from Willis to sell the property to Ferterrer (the Deed), Ferterrer obtained a loan to purchase the property. Willis subsequently filed an action challenging Ferterrer's ownership of the property, also alleging that Ferterrer had converted the funds from Willis's bank account. The district court affirmed the validity of the Deed and concluded that Fertterer had not converted any funds belonging to Willis. The Supreme Court affirmed, holding (1) substantial evidence supported the district court's findings of fact; and (2) the district court properly determined that Willis failed to prove that Fertterer had converted funds from Willis's bank account. View "Willis v. Fertterer" on Justia Law

Plaintiff sued the servicer of his loan (Bank) in a putative class action, asserting that the Bank's requirement that he maintain flood insurance coverage in an amount sufficient to cover the replacement value of his home breached the terms of his mortgage contract. The mortgage was insured by the Federal Housing Administration (FHA). Specifically, Defendant contended that the Bank, under a covenant of the mortgage contract, could not require more than the federally mandated minimum flood insurance. The covenant was a standard uniform covenant prescribed by the FHA pursuant to federal law. The district court dismissed the complaint for failure to state a claim. The judgment of dismissal was affirmed by an equally divided en banc First Circuit Court of Appeals, holding that Plaintiff failed to state a claim for breach of contract, as (1) the Bank's reading of the contract was correct and Plaintiff's was incorrect; (2) Plaintiff could not avoid dismissal on the grounds that his specific understanding or the actions of the parties created an ambiguity; and (3) the United States' position articulated in its amicus brief, which stated that Plaintiff's interpretation of the contract was incorrect, reinforced the Court's conclusion. View "Kolbe v. BAC Home Loans Servicing, LP" on Justia Law