Justia Contracts Opinion Summaries

Articles Posted in Supreme Court of Indiana
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The Supreme Court vacated the section of the trial court's preliminary injunction purporting to enforce an unreasonable restrictive covenant in a noncompetition agreement, holding that parties to noncompetition agreements cannot use a reformation clause to contract around the principle that reviewing courts may delete, but not add, language to revise unreasonable restrictive covenants under Indiana's "blue pencil doctrine." Under the blue pencil doctrine, courts can make overbroad covenants reasonable by deleting language, but they may not add terms. The noncompetition agreement in this case contained an overbroad nonsolicitation covenant that contained a reformation clause authorizing the court to modify unenforceable provisions. The trial court granted a preliminary injunction enforcing the covenant. The court of appeals concluded that the nonsolicitation covenant was overbroad but revised the covenant to make it reasonable under the reformation clause. The Supreme Court granted transfer and held that since the nonsolicitation covenant could not be blue penciled, but rather required additional language to limit the scope of its restrictive covenants, it could not be enforced despite its reformation clause. View "Heraeus Medical, LLC v. Zimmer, Inc." on Justia Law

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In this litigation arising from a transaction in goods governed by the Uniform Commercial Code (UCC) the Supreme Court affirmed the trial court order denying summary judgment, holding that there remained genuine issues of material fact precluding summary judgment. An agreement governing the sale of forty dump trucks contained a warranty and a one-year limitations period for filing a breach of contract suit. Buyers sued for breach of warranty several years later. The Supreme Court held (1) under the express terms of their agreement, the parties contracted for a future-performance warranty, and any breach of warranty claims did not accrue until the buyers knew, or should have known, of the breach; (2) under the equitable estoppel doctrine, a party's conduct may toll a contractually agreed-upon limitations period; and (3) in the instant case, genuine issues of material fact remained relating to the above two issues, precluding summary judgment. View "Kenworth of Indianapolis, Inc. v. Seventy-Seven Limited" on Justia Law

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In this appeal concerning whether International Business Machines, Corp. (IBM) was entitled to post-judgment interest on its $49.5 million damages award running from the date of the original judgment or running from the judgment on remand the Supreme Court held that the post-judgment interest due to IBM runs from the judgment on remand. The State, acting on behalf of the Family and Social Services Administration, and IBM entered into a contract to improve Indiana's welfare eligibility system. The Supreme Court earlier determined that IBM materially breached the contract and remanded the matter to the trial court to determine damages and appropriate offsets. On remand, the trial court determined damages and that IBM was entitled to offsets in the amount of $49.5 million. The court of appeals determined that IBM was entitled to post-judgment interest on the $49.5 million damages award. In determining at what pointing time post-judgment interest runs the Supreme Court held that post-judgment interest due to IBM stems from the judgment on remand rather than the original judgment. View "International Business Machines Corp. v. State ex rel. Indiana Family & Social Services Administration" on Justia Law

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The Supreme Court affirmed in part and reversed in part the judgment of the trial court in this landlord-tenant dispute, holding that the parties' rent-to-buy agreement was not a land-sale contract but a rental agreement subject to Indiana's residential landlord-tenant statutes. Plaintiffs and Defendants entered into a purported rent-to-buy contract regarding a house. When Defendants fell behind in their payments, Plaintiffs tried to evict them. The case resulted in a small claims court order allowing Plaintiffs to retake possession. On appeal, Plaintiffs sought damages and attorney's fees, plus costs to clean and re-rent the property. Defendants asserted various counterclaims, including failure to meet landlord obligations under the residential landlord-tenant statutes. The trial court entered judgment for Defendants, concluding, inter alia, that the agreement was unlawful and unenforceable. The Supreme Court affirmed in part and reversed and remanded in part, holding (1) the parties' agreement was subject to the protections afforded by the residential landlord-tenant statutes; and (2) Defendants' claim that Plaintiffs violated Indiana's Deceptive Consumer Sales Act was without merit. View "Rainbow Realty Group, Inc. v. Carter" on Justia Law

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The Supreme Court held that International Business Machines, Corp. (IBM) was entitled to post-judgment interest on its $49.5 million damages award as entered by the trial court and affirmed by this Court in IBM I running from the date of the judgment on remand and not from the date of the original judgment in 2012. This case arose out of a contract entered into between the State, acting on behalf of the Family and Social Services Administration, and IBM to improve Indiana's welfare eligibility system. In IBM I, the Supreme Court determined that IBM materially breached the contract and remanded the matter to the trial court to determine damages and offsets. On remand, the trial court determined that damages to the State from the breach totaled $128 million and IBM was entitled to offsets in the amount of $49.5. Thus, IBM was ordered to pay the State $78.2 million, after offsets. On appeal, IBM argued, among other things, that it was entitled to post-judgment interest on the fees upheld by the Court in IBM I. The court of appeals agreed. The Supreme Court held that the post-judgment interest due to IBM ran from the judgment on remand and summarily affirmed the court of appeals on all other issues. View "International Business Machines Corp. v. State ex rel. Indiana Family & Social Services Administration" on Justia Law

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The Supreme Court affirmed the judgment of the trial court dismissing Plaintiff's claims against Indiana-resident defendants without prejudice, holding that the trial court erred in basing its dismissal on lack of personal jurisdiction but that dismissal was nevertheless warranted on the record. The parties in this case entered into an independent contractor agreement that contained a forum-selection clause providing that the parties agreed to litigate their disputes in Texas. Plaintiff later brought suit in an Indiana circuit court alleging breach of contract and fraudulent inducement. Defendants moved to dismiss under Trial Rule 12(B)(2). The court court dismissed the complaint without prejudice, concluding that the Indiana trial court lacked personal jurisdiction over the Indiana-resident defendants because the parties agreed to litigate their dispute in Texas. The Supreme Court affirmed but on different grounds, holding (1) the forum-selection clause was mandatory and unambiguous in requiring that suit be brought in Texas; and (2) Plaintiff failed to satisfy its burden of showing that the clause was invalid. View "O'Bryant v. Adams" on Justia Law

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At issue was whether an agreement between two children, executed before their father’s death, could be enforced using a chapter in the Probate Code providing for the adjudicated compromise of controversies. Father, who was terminally ill, asked his son and daughter to agree between themselves how they would divide some of his assets after his death. Before Father died, Son attempted to rescind the agreement. After Father died, Daughter sued to enforce the agreement as part of the probate process. The trial court found that the agreement was not a codicil to Father’s will and that Son rescinded the agreement. Accordingly, the court ordered the personal representatives to administer Father’s estate according to his will without reference to the agreement. The Supreme Court affirmed the trial court’s order and findings, except for its alternative finding that Son rescinded the agreement, holding that the Probate Code chapter at issue may be used to enforce only post-mortem compromises. View "In re Supervised Estate of Gary D. Kent" on Justia Law

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Indiana law allows a judgment-creditor to garnish a cash bail bond the judgment-debtor posted in an unrelated criminal matter. Here, Plaintiff obtained a default judgment against Defendant in the superior court. While the judgment remained unsatisfied, Defendant was arrested in an unrelated criminal matter and posted a cash bond with the county clerk. Plaintiff attempted to garnish the cash bail bond, but the trial clerk, who was named as a garnishee-defendant in the civil case, released it to Defendant’s attorney. Plaintiff sought to hold the clerk liable. The trial court determined that the bond was not subject to garnishment and ruled against Plaintiff. The Supreme Court reversed, holding (1) the clerk who holds the bond in a criminal case is an eligible garnishee-defendant in the civil case where the judgment was entered, and the bond is subject to the garnishment lien filed there; (2) the judgment-creditor may not recover on the bond until the criminal court releases it; and (3) in the instant case, the clerk was liable on the bond because she distributed its proceeds before the civil court determined Plaintiff’s right to them. View "Garner v. Kempf" on Justia Law

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The hospital that paid out a doctor’s ownership interest after his employment as a cardiologist terminated did not breach its agreement with the doctor. Dr. Roderick Sawyer worked as a cardiologist for St. Vincent Medical Group, Inc. (the Medical Group) and was a member-owner of The Care Group Heart Hospital, LLC (the Hospital). Sawyer agreed with the Medical Group and the Hospital that upon “any termination” of employment between him and the Medical Group, his ownership interest in the Hospital must be discontinued and redeemed. After the Medical Group terminated Sawyer’s employment, the Hospital paid out Sawyer’s ownership interest. Sawyer sued the Hospital, among others, alleging breach of contract. The jury returned a verdict against the Hospital for breach of contract. The Supreme Court reversed, holding (1) under the plain meaning of the contract language, the Hospital did not breach the agreement by discontinuing and redeeming Sawyer’s ownership interest; but (2) the Hospital did breach the agreement by delaying the payout, so Sawyer was entitled to interest on the delay. View "Care Group Heart Hospital, LLC v. Sawyer" on Justia Law

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Kennedy Tank & Manufacturing Company contracted with Emmert Industrial Corporation to transport an enormous process tower vessel to Indiana to Tennessee. Despite several troubles resulting in unforeseen costs, Emmert successfully delivered the vehicle. When Kennedy refused to pay any additional charges, Emmert sued, alleging breach of contract and, in the alternative, unjust enrichment. Kennedy moved to dismiss Emmert’s complaint, arguing that the federal statute of limitations preempts Indiana’s longer limitations period. The trial court denied the motion to dismiss, finding no preemption. The Supreme Court affirmed, holding that Indiana’s statute of limitations is not preempted by the federal statute of limitations. View "Kennedy Tank & Manufacturing Co. v. Emmert Industrial Corp." on Justia Law