Justia Contracts Opinion Summaries

Trailer Transit contracts with shippers for the movement of cargo, then contracts with independent drivers, who provide the rigs that carry the cargo, promising those 71% “of the gross revenues derived from use of the equipment leased herein (less any insurance related surcharge and all items intended to reimburse [Trailer Transit] for special services, such as permits, escort service and other special administrative costs.” In a class action, about 1,000 drivers claimed that Trailer Transit made a profit on its “special services” and owes 71% of that profit to the drivers. The district court rejected that argument. The Seventh Circuit affirmed, explaining: “That just isn’t what the contract says. Drivers are entitled to 71% of the gross charge for “use of the equipment” (the rigs), but the contract does not provide for a share of Trailer Transit’s net profit on any other part of the bill.” View "Walker v. Trailer Transit, Inc." on Justia Law

Stampley, an independent truck driver, sued Altom Transport, alleging that Altom had failed to pay him enough for driving his truck for it. Altom turned to its insurer, Westchester, for coverage in the suit. Westchester denied coverage; Altom handled its own defense; and the parties tried to settle. At that point, counsel for both Stampley and Altom tried to pull Westchester into the case, by making settlement offers within the limits of the Westchester policy and seeking Westchester’s approval. Westchester did not participate. Altom sought a declaratory judgment establishing that Westchester had a duty to defend, that it wrongfully had failed to do so, and that its handling of the matter had been unreasonable and vexatious. The Seventh Circuit affirmed dismissal of the suit, finding that all of the claims in the underlying suit arise directly from Stampley’s lease agreement with Altom and fell within the policy’s contract claim exception. View "Stampley v. Westchester Fire Ins. Co." on Justia Law

An individual and a company filed a putative class action suit alleging that United Parcel Service (UPS) overcharges customers for liability coverage against loss or damage for packages with a declared value of $300 or more. The complaint alleged breach of contract; sought declaratory relief (28 U.S.C. 2201); claimed violation of 49 U.S.C. 13708(b) (regulating billing and collecting practices for motor carriers); and, in the alternative, alleged unjust enrichment. The district court dismissed, agreeing with UPS that the language of the shipping contract at issue unambiguously precluded the plaintiffs’ interpretation. The Sixth Circuit affirmed with respect to 49 U.S.C. 13708(b), but reversed the dismissal of the remaining claims. Reasonable minds could differ on the correct interpretation of UPS’s Service Guide provision; the provision is at least ambiguous, so its meaning is a question of fact that is not properly answered by the court at this early stage in the proceedings. An unjust enrichment claim—that a benefit was unjustly conferred on UPS when customers paid an extra charge on packages despite UPS’s representations that it provided a portion of this service for free—is not precluded by his breach of contract claim. View "Solo v. United Parcel Serv. Co." on Justia Law

Exel, a shipping broker, sued SRT, an interstate motor carrier, after SRT lost a shipment of pharmaceutical products it had agreed to transport for Exel on behalf of Exel’s client, Sandoz. On summary judgment, the district court awarded Exel the replacement value of the lost goods pursuant to the transportation contract between Exel and SRT, rejecting SRT’s argument that its liability was limited under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. 14706. The Sixth Circuit reversed. Whether SRT had limited its liability was a question of fact for a jury. To limit its liability under the Carmack Amendment, a carrier must: provide the shipper with a fair opportunity to choose between two or more levels of liability obtain the shipper’s written agreement as to its choice of liability; and issue a receipt or bill of lading prior to moving the shipment. SRT did not meet its burden on summary judgment of establishing that it provided Sandoz with the opportunity to choose between two or more levels of liability. SRT did not explain what “classification or tariff . . . govern[ed]” the shipment, nor indicate whether it made this information available to Sandoz. View "Exel, Inc. v. S. Refrigerated Transp., Inc." on Justia Law

Beck filed suit against its franchisor, GM, for claims arising under the Motor Vehicle Dealer Act, N.Y. Vehicle & Traffic Law 460-473, and state contract law. The court certified the following questions to the New York Court of Appeals: (1) Is a performance standard that requires ʺaverageʺ performance based on statewide sales data in order for an automobile dealer to retain its dealership ʺunreasonable, arbitrary, or unfairʺ under New York Vehicle & Traffic Law section 463(2)(gg) because it does not account for local variations beyond adjusting for the local popularity of general vehicle types? and (2) Does a change to a franchiseeʹs Area of Primary Responsibility or AGSSA constitute a prohibited ʺmodificationʺ to the franchise under section 463(2)(ff), even though the standard terms of the Dealer Agreement reserve the franchisorʹs right to alter the Area of Primary Responsibility or AGSSA in its sole discretion?  Further, the court concluded that the district court did not err in dismissing plaintiffʹs vehicle allocation claim, denying plaintiffʹs request for attorneyʹs fees, or dismissing defendantʹs counterclaim for rescission. View "Beck Chevrolet v. General Motors" on Justia Law

In 2005, a Union Pacific freight train carrying steel injection molds to Plano Molding in Illinois derailed in Oklahoma; the molds broke through the floor of their shipping container, causing that train car and many behind it to derail. The molds had been manufactured in China and shipped to the U.S. before being transferred to the train. Three companies that were involved in the shipment and that sustained losses sued Plano, claiming that a company Plano hired packed the molds improperly, causing the floor of the container to break and ultimately causing the derailment, so that Plano was liable for breach of a warranty found in the “World Bill of Lading,” which provided shipping terms. Plano argued that the molds were properly packed and that they fell through the floor of the container because the container was defective. The district court found in favor of Plano, finding that the derailment was caused by deficiencies in the container. The Seventh Circuit affirmed. Plano had no obligation to explain why the accident occurred. Once the court found that plaintiffs had not met their burden of proving that Plano had breached the warranty, the actual cause of the accident became legally irrelevant. View "Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co." on Justia Law

The town of Yarmouth entered into a transportation contract with the Bay Colony Railroad Corporation whereby Bay Colony was to transport solid waste from the town’s waste transfer station to a facility in Rochester. The town later notified Bay Colony that it would terminate Bay Colony’s lease of certain rail lines, which meant that Bay Colony would no longer be able to transport the town’s waste by rail. A provision in the contract provided that, in the event the lease of the rail line was terminated, the town would permit Bay Colony to continue to transport the waste by “other modes of transportation.” Bay Colony notified the town that it would continue to transport waste by truck rather than rail. The town, however, began transporting its waste with the railroad operating company that was awarded the rail lease. A jury found that the town had committed a breach of the contract. The Supreme Judicial Court affirmed, holding (1) the town’s affirmative defense that it was barred by Mass. Gen. Laws ch. 160, 70A from allowing Bay Colony to transport its waste by truck failed as a matter of law; (2) a permit issued to the town by the Department of Environmental Protection did not render Bay Colony legally unable to perform the contract after it lost its rail lease; and (3) the contract remained in effect at the time of the town’s breach. View "Bay Colony R.R. Corp. v. Town of Yarmouth" on Justia Law

MileagePlus, United’s frequent flyer program, rewards customers with free flights and seat upgrades. Its Rules have always allowed United to change the terms of the program unilaterally, without notice. In 1997 United announced a new Million-Mile Flyer status: Lifetime Premier Executive status. “Mileage Plus members who have earned a total of one million paid flight miles on United will retain the benefits and privileges of Premier Executive status for life.” After merging with Continental, United changed the status levels and moved the Million-Mile Flyers from Premier Executive status to the new system. United decided that the Premier Gold level was equivalent, but Gold customers receive only a 50% bonus on miles flown, not 100%, and do not have regional and system-wide upgrades that Million-Mile Flyers previously received. Lagen enrolled in MileagePlus in 1993 and became a Million-Mile Flyer in 2006 after switching his airline loyalty from British Airways. He sued for breach of contract under the Class Action Fairness Act, 28 U.S.C. 1332(d)(2)(A). The district court granted United summary judgment, finding that no rational trier of fact could conclude that United had a distinct Million-Mile Flyer program that was not part of MileagePlus, subject to unilateral change. The Seventh Circuit affirmed. View "Lagen v. United Cont'l Holdings, Inc." on Justia Law

This case arose from a dispute between Franks and Union Pacific over whether Franks has the right to cross Union Pacific's train tracks on certain property in Caddo Parish originally owned by the Levy family at the turn of the 20th Century. On appeal, Franks challenged the district court's final judgment granting summary judgment for defendant and dismissing Franks's claims with prejudice. Franks argued that the district court erred in denying the existence of a predial servitude in the three crossings at issue. The court concluded that, under the law applicable to the interpretation of the 1923 deed, the contract is unambiguous; it does not establish a predial servitude with respect to Texas and Pacific Railway Company's obligation to provide three crossings across what was then its property; but, rather, it is merely a personal obligation which does not bind the railway's successors-in-interest. View "Franks Investment Co, L.L.C. v. Union Pacific Railroad Co." on Justia Law

Plaintiffs Sompo and Nipponkoa, subrogees of the cargo owners/shippers, filed suit against Defendants Norfolk Southern and KCSR to recover for the damages sustained to cargo by a train derailment. At issue in these appeals was the meaning and enforceability of provisions found in the bills of lading that purport to designate the ocean carrier as the sole entity responsible to the cargo owners for damage to the cargo. Further, Docket No. 13-3501 challenged Nipponkoa's ability to maintain its claim for contractual indemnification, a claim assigned to it by the upstream ocean carrier, against defendants. The court affirmed the judgment in Docket No. 13-3416 and concluded that summary judgment for defendants was proper where defendants are entitled to enforce the liability-limiting provision in the upstream carrier's bill of lading against plaintiffs. The court affirmed the judgment in Docket No. 13-3501 because defendants' arguments for reversal of Nipponkoa's judgment against them are all either waived or without merit. View "Sompo Japan Ins., Inc. v. Norfolk Southern Railway Co." on Justia Law