Justia Contracts Opinion Summaries

The Supreme Court held that tortious interference with at-will contracts requires independent wrongfulness and that a rule of reason applies to determine the validity of a settlement provision requiring Forward Pharma to terminate its agreement with Ixchel Pharma, LLC under Cal. Bus. & Prof. Code 16600.Ixchel, a biotechnology company, entered into an agreement with Forward jointly to develop a drug for the treatment of Friedreich's ataxia. Forward later withdrew from the agreement, which was allowed by the agreement's terms. Pursuant to a settlement with Biogen, Inc., another biotechnology company, Forward agreed to terminate its contract with Ixchel. Ixchel sued Biogen in federal court for tortiously interfering with Ixchel's contractual and prospective economic relationship with Forward in violation of section 16600. On appeal, the federal appeals court certified two questions to the Supreme Court. The Supreme Court held (1) tortious interference with at-will contracts requires independent wrongfulness, and therefore, Ixchel must allege that Biogen interfered with its at-will contract through wrongful means; and (2) the validity of the settlement provision at issue must be evaluated based on a rule of reason. View "Ixchel Pharma, LLC v. Biogen, Inc." on Justia Law

The Supreme Court held that the California Public Employees' Pension Reform Act's (PEPRA), Stats. 2012, ch. 296, 1, amendment of the County Employees Retirement Law (CERL), Cal. Gov. Code 31450 et seq., did not violate the contract clause under a proper application of the California Rule and declined to reexamine and revise the California Rule.At issue was whether a provision of PEPRA amending CERL's definition of "compensation earnable," which affected the pensions of persons who were first employed by a county prior to the effective date of PEPRA, violated the contract clause. The Supreme Court held (1) county employees have no express contractual right to the calculation of their pension benefits in a manner inconsistent with the terms of the PEPRA amendment; (2) the challenged provisions added by PEPRA met contract clause requirements; and (3) the test announced in Allen v. City of Long Beach, 45 Cal.2d 128 (1955), as explained and applied in this case, remains the law of California. View "Alameda County Deputy Sheriff's Ass'n v. Alameda County Employees' Retirement Ass'n" on Justia Law

The Supreme Court held that the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (Convention) does not apply when parties have agreed to waive formal service of process in favor of a specified type of notification.Defendant, a company based in China, and Plaintiff entered into a contract providing that the parties would submit to the jurisdiction of California courts and to resolve disputes between them through California arbitration. The parties further agreed to provide notice and service of process to each other through Federal Express or a similar courier. Plaintiff later sought arbitration. Defendant neither responded nor appeared for the arbitration, and the arbitrator awarded Plaintiff $414,601,200. Defendant moved to set aside default judgment for insufficiency of service of process, arguing that Plaintiff's failure to comply with the Convention rendered the judgment confirming the arbitration award void. The motion was denied. The court of appeal reversed. The Supreme Court reversed, holding (1) the Convention applies only when the law of the forum state requires formal service of process to be sent abroad; and (2) because the parties' contract constituted a waiver of formal service under California law in favor of an alternative form of notification, the Convention does not apply. View "Rockefeller Technology Investments (Asia VII) v. Changzhou SinoType Technology Co." on Justia Law

The Supreme Court considered two questions from the federal court of appeals regarding California's common-law notice-prejudice rule and held (1) the notice-prejudice rule is a fundamental public policy of the state in the insurance context, and (2) the rule generally applies to consent provisions in the context of first party liability policy coverage and not to consent provisions in third party liability policies.The insurance policy in this case contained a choice of law provision designating that New York law should govern all matters arising under the policy. Under section 187 of the Restatement Second of Conflict of Laws the parties' choice of law generally governs unless it conflicts with a state's fundamental public policy. The party opposing the application of the choice of law provision sought to establish that California's notice-prejudice rule was a fundamental public policy for the purpose of choice-of-law analysis. The federal court of appeals issued certified questions to the Supreme Court, which answered as set forth above. The Court left it to the federal court of appeals to decide whether the consent provision at issue in this case was a consent provision contemplated first party or third party coverage. View "Pitzer College v. Indian Harbor Insurance Co." on Justia Law

The Supreme Court reversed the decision of the court of appeal reversing the ruling of the trial court denying Defendants' motion for dismiss this breach of contract suit under the anti-SLAPP statutes, holding that Plaintiff met its burden of showing its breach of contract claim had "minimal merit" sufficient to defeat an anti-SLAPP motion.The parties to a tort action agreed to settle their lawsuit. The agreement, which was reduced to writing, included provisions purporting to impose confidentiality obligations on the parties and their counsel. All parties signed the agreement, and the parties' lawyers signed under a notation that they approved the agreement. Plaintiff brought this suit against Defendants, counsel in the tort action, alleging that Defendants violated the agreement by making public statements about the settlement. Defendants moved to dismiss the suit under the anti-SLAPP statutes. The trial court denied the motion. The court of appeal reversed, concluding that the notation meant only that counsel recommended their clients sign the document. The Supreme Court reversed, holding that it would be reasonable to argue that Defendants' signature on the agreement evinced a willingness to be bound by its terms. View "Monster Energy Co. v. Schechter" on Justia Law

The Supreme Court affirmed in part and reversed and remanded in part the judgment of the appellate court reversing the judgment of the trial court granted Defendants’ special motions to strike the second through sixth causes of action advanced by Plaintiffs in Plaintiffs’ dispute with the City of Carson and other defendants, holding that some of Plaintiffs’ causes of action were based on protected activities under Cal. Code Civ. Proc. 425.26(e)(2) and (e)(4) but others were not.After Plaintiffs brought this lawsuit Defendants responded by making a motion under the anti-SLAPP statute. The Supreme Court held that the causes of action asserted in Plaintiffs’ dispute with Defendants did not arise from Defendants’ acts in furtherance of their right of free speech in connection with a public issue with the exception of two discrete claims, which were within the scope of subdivision (e)(2) and (e)(4) of the anti-SLAPP statute, thus affirming in part and reversing in part the appellate court’s judgment. View "Rand Resources, LLC v. City of Carson" on Justia Law

In this dispute between a law firm and the party it previously represented, the Supreme Court affirmed the judgment of the Court of Appeal insofar as it reversed the superior court’s judgment entered on an arbitration award but reversed the Court of Appeal’s judgment insofar as it ordered disgorgement of all fees collected, holding that the law firm's conduct rendered the parties' arbitration agreement unenforceable but that the ethical violation did not categorically disentitle the law firm from recovering the value of services it rendered to the opposing party.A law firm agreed to represent a manufacturing company in a federal qui tam action. The law firm was later disqualified, and the parties disagreed as to the manufacturer’s outstanding law firm bills. The dispute was sent to arbitration in accordance with the arbitration clause in the parties’ engagement agreement, and the arbitrators ruled in favor of the law firm. The superior court confirmed the award. The Court of Appeal reversed, concluding (1) the law firm committed an ethical violation that rendered the parties’ agreement, including the arbitration clause, unenforceable in its entirety; and (2) the law firm was disentitled from receiving any compensation for the work it performed for the manufacturer. The Supreme Court agreed that the law firm’s conduct rendered the parties’ agreement unenforceable but concluded that the ethical violation did not categorically disentitle the law firm from recovering the value of the services it rendered to the manufacturer. View "Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co." on Justia Law

A-1 Self Storage Inc.’s alternative indemnity agreement was not subject to regulation under the Insurance Code because (1) A-1 was not acting as an agent for an insurer, and (2) the indemnification agreement was incidental to the principal object and purpose of renting storage space. See Cal. Ins. Code 1758.7 et seq.In its rental agreements with tenants, A-1 required the tenant to obtain insurance for loss of or damage to a tenant’s stored property, stating that A-1 shall not be liable for such losses. A-1 also offered an alternative to the requirement that the tenant obtain insurance. In exchange for an additional amount in rent per month, A-1 provided that it would reassume the risk of such losses, up to $2,500. Plaintiff brought this putative class action arguing that the alternative constituted an insurance policy, which A-1 was not licensed to sell, and therefore, A-1’s sale of this indemnity agreement violated the Insurance Code. The trial court concluded that the alternative indemnity agreement was not insurance and entered judgment for Defendants. The court of appeal affirmed. The Supreme Court affirmed, holding that the alternative indemnity agreement did not constitute insurance subject to regulation under the Insurance Code. View "Heckart v. A-1 Self Storage, Inc." 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 and Defendants entered into a business relationship embodied in a series of oral and written agreements. Two of the written agreements contained clauses subjecting disputes arising out of the agreements to the sole jurisdiction of Florida courts. Plaintiff later brought this action for breach of contract, fraud, and related causes of action. Citing the two Florida forum selection clauses, Defendants moved to dismiss the action on grounds of forum non conveniens. The trial court granted the motion. Defendants then moved to recover $84,640 in attorney fees incurred in connection with the motion to dismiss, relying on an attorney fee clause in the agreements. The trial court denied the motion, ruling that Defendants were not the prevailing party for purposes of Cal. Civ. Code 1717 because the merits of the contract issues were still under litigation. The Court of Appeal affirmed. The Supreme Court affirmed, holding that the trial court acted within its discretion in denying Defendants’ motion for attorney fees because Defendants’ success in moving the litigation to Florida did not make them the prevailing party as a matter of law under section 1717. View "DisputeSuite.com, LLC v. Scoreinc.com" on Justia Law