Justia Contracts Opinion Summaries

Jang, a doctor and inventor, sued BSC, the company to which Jang assigned his coronary stent patents, for breach of the patent assignment agreement, which required BSC to share profits from the patents with Jang, including any damages it recovers from third-party infringers. In 2010, BSC settled a claim against Cordis for infringement in combination with anther claim that Cordis had against BSC. BSC made a payment to Cordis, and the parties exchanged several patent licenses. BSC then denied that it had recovered any damages that it was obligated to share with Jang. The Third Circuit reversed judgment on the pleadings in favor of BSC. Two of Jang’s claims are sufficient to survive judgment on the pleadings: that BSC breached the contract because the cash offset qualifies as a “recovery of damages” and that BSC violated the implied covenant of good faith and fair dealing by structuring a settlement to thwart the agreed purpose of the patent assignment. View "Jang v. Boston Scientific SciMed Inc." on Justia Law

In 2007, Gager applied for a line of credit to purchase computer equipment. The application required that she provide her home phone number. Gager listed her cellular phone number without stating that the number was for a cellular phone, or indicating that Dell should not use an automated telephone dialing system to call her at that number. Gager defaulted on the loan Dell granted. Dell began using an automated telephone dialing system to call Gager’s cell phone, leaving pre-recorded messages concerning the debt. In 2010, Gager sent a letter, listing her phone number and asking Dell to stop calling it regarding her account. The letter did not indicate that the number was for a cellular phone. Dell continued to call, using an automated telephone dialing system. Gager filed suit, alleging that Dell violated the Telephone Consumer Protection Act of 1991, 47 U.S.C. 227(b)(1)(A)(iii). The district court dismissed on the theory that she could not revoke her consent once it was given. The Third Circuit reversed. The fact that Gager entered into a contract with Dell does not exempt Dell from the TCPA. Dell will still be able to call Gager about her delinquent account, but not using an automated dialing system. View "Gager v. Dell Fin. Servs. LLC" on Justia Law

In 1999, I-4 leased Florida land to Lazy Days, with an option to purchase, prohibiting assignment without written consent. In 2008, Lazy Days notified I-4 of its intention to file for Chapter 11 bankruptcy and assign the lease to LDRV. The parties negotiated a settlement agreement in 2009. I-4 consented to assignment. Lazy Days agreed not to “argue against the Bankruptcy Court abstaining from consideration of Lease interpretation issues ... except to the extent necessary in connection with the assumption and assignment of the Lease.” The agreement provided that “there is no intent to, nor is the Lease modified in any respect,” but did not state whether the purchase option survived. The Bankruptcy Court confirmed a reorganization plan incorporating the agreement and closed the case in 2010. In 2011, LDRV attempted to exercise the option. The parties each filed state court lawsuits and LDRV moved to reopen in Bankruptcy Court, which held that the anti-assignment provision was unenforceable and that refusal to honor the option violated the agreement. The district court vacated. The Third Circuit reversed, holding that the Bankruptcy Court properly exercised jurisdiction; the agreement’s exception applied because the proceeding was “in connection with ... assignment of the Lease.” The court rejected arguments that the parties agreed to waive application of 11 U.S.C. 365(f)(3) and that the Bankruptcy Court committed an unconstitutional taking and denied I-4 due process. View "In Re: Lazy Days' RV Ctr., Inc." on Justia Law

GSK holds patent and FDA rights to market and sell the pharmaceutical (paroxetine hydrochloride) controlled release tablets for treatment of depression, under the brand name Paxil. Under a 2007 settlement agreement, GSK granted Mylan certain rights to produce, market, and sell generic paroxetine. In 2010, GSK agreed, in an unrelated settlement, to begin supplying Apotex with GSK-produced generic paroxetine for marketing and sale. Mylan sued GSK and Apotex, claiming the 2010 agreement violated its licensing agreement, which did not permit GSK to provide its own form of generic paroxetine to another generic drug company to be marketed and sold in direct competition with Mylan. The district court found that the terms of the agreement were unambiguous and did not limit to whom GSK was permitted to market and sell its own version of generic paroxetine. The Third Circuit reversed the order of summary judgment on the breach-of-contract cause of action against GSK, but affirmed summary judgment on other claims. View "Mylan Inc. v. SmithKline Beecham Corp." on Justia Law

In 2009, the Union submitted three grievances on behalf of Company employee and Union member Lubik, alleging that the company violated a past practice by failing to schedule Lubik, a maintenance clerk, for Saturday overtime when the maintenance department was scheduled to work. After the Arbitrator sustained the three grievances and ordered the company to pay Lubik back wages for the missed overtime. The district court vacated the award because it concluded that the award did not draw its essence from the Collective Bargaining Agreement, determining that the plain language of the CBA unambiguously‖ gave the company the exclusive right to schedule its workforce. The Third Circuit reversed and ordered enforcement of the arbitration award. View "Akers Nat'l Roll Co. v. United Steel, Paper & Forest,Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union" on Justia Law

The Sponsors formed West Run to construct and manage West Virginia University off-campus housing and retained CBRE to secure financing. CBRE provided prospective lenders with confidential information. Huntington’s predecessor loaned $39.975 million and construction began. A competing project (Copper Beach) was built across the street. West Run learned that Huntington had loaned $20 million for that project; West Run alleged that Huntington divulged to Copper Beach proprietary West Run information provided by CBRE. West Run‘s occupancy dropped from 95 percent to 64 percent. West Run sued, alleging that Huntington had breached its duty of good faith and fair dealing by financing Copper Beech. Two similar projects, involving the Sponsors, alleged breach of contract based on Huntington‘s failure to provide funds under their construction loan agreements. Huntington claimed that they had sold insufficient units to require Huntington to disburse additional funds under the agreements. The district court dismissed. The Third Circuit affirmed in part, holding that the complaint contained no corroborating facts that confidential information was disclosed and that no contract terms prohibited Huntington from lending to competitors. The court vacated with respect to the other projects for a chance to provide evidence showing that the pre-sale numbers in the original complaint were incorrect. View "W. Run Student Hous. v. Huntington Nat'l Bank" on Justia Law

Burton founded and ran companies that manufactured and distributed medical device parts. By 2006, the companies employed approximately 140 people and generated annual revenue of $14 million. In 2007, Burton sold to Teleflex and entered into a two-year employment agreement with Teleflex, providing that she could terminate her employment by providing 30 days’ written notice. Teleflex could fire Burton without cause by providing 30 days’ written notice or could fire Burton for cause, upon written notice and an opportunity to cure. Burton, then age 67, became Vice President of New Business Development, supervised by Boarini. The two had a strained relationship. During an argument, Burton asked Boarini whether he wanted her to resign. There is evidence that she stated that she was resigning, stayed out of the office for two days, then left on a previously-scheduled vacation, after which SMD “accepted” her resignation in writing. The district court granted Telefex summary judgment on claims under the Age Discrimination in Employment Act, 29 U.S.C. 621; Title VII of the Civil Rights Act, 42 U.S.C. 2000e; and state law. The Third Circuit reversed, finding genuine issues of fact on whether Burton resigned. View "Burton v. Teleflex Inc." on Justia Law

The Condominium Association’s declaration required Bayside to provide fresh water and wastewater treatment to the Association and made all of the water facilities common property of the Association. Bayside contracted with TSG to construct and operate a system to fulfill its obligations. TSG charged Bayside $0.02 per gallon. By 2005, Bayside owed millions of dollars to creditors including TSG and the Association. Bayside assigned its rights to TSG, permitting TSG to charge $0.05 per gallon. To secure the Association’s consent Bayside and TSG threatened to cease providing services even though it was not feasible to obtain those services elsewhere. The Association’s Board consented and signed a Water Supply Agreement, which provided that Bayside owned the water facilities and contained an arbitration clause. After not receiving payments under the WSA, TSG temporarily stopped producing potable water for the Association, which then filed suit, asserting criminal extortion under the Racketeer Influenced Corrupt Organizations Act; breach of obligations under the Declaration; and ownership of the water treatment systems. The district court ordered arbitration. The Third Circuit affirmed in part but vacated in part. The Association raised a bona fide question as to whether its Board had authority to enter into the WSA, a question that requires judicial determination. View "SBRMCOA, LLC v. Bayside Resort Inc." on Justia Law

Sweeney owned a transmission shop and referred customers to Tradewell, who owned a nearby car rental business. Sweeney would sometimes simply refer customers to Tradewell or drive them to Tradewell’s business. If employees were available, Tradewell would have them take a car to Sweeney’s shop. Sweeney would sometimes pick up a car from Tradewell and deliver it to the customer and would occasionally use the car for personal errands. This was encouraged by Tradewell, who asked Sweeney to make sure the cars were running properly. In 2004 Sweeney, returning from a personal errand, was injured in an accident while driving a car owned by Tradewell that was intended for delivery to a customer the following morning. Sweeney sought underinsured motorist benefits pursuant to his policy with Liberty. Liberty sought a declaration that Sweeney was not entitled to coverage. On remand, the district court granted Liberty summary judgment, finding that “intended use” and “regular use” provisions did not bar coverage, but Liberty could deny coverage based on the “auto business” provision. The Third Circuit reversed, in favor of Sweeney, noting that Sweeney was on a personal errand, not engaged in “auto business” and did not have unfettered use of the cars. View "Liberty Mut. Ins. Co. v. Sweeney" on Justia Law

Attorneys Post and Reid were retained to defend a medical malpractice action. At trial, plaintiffs introduced evidence suggesting that Post and Reid had engaged in discovery misconduct. Fearing that the jury believed that there had been a “cover-up” involving its lawyers, and concerned with the “substantial potential of uninsured punitive exposure,” the hospital, represented by new counsel, settled the case for $11 million, which represented the full extent of its medical malpractice policy limits. The settlement did not release Post, Reid, the law firm where they began representation of the hospital, or their new firm from liability. The hospital threatened Post with a malpractice suit and sought sanctions. Post eventually brought claims of bad faith and breach of contract against his legal malpractice insurer. The district court awarded $921,862.38 for breach of contract. The Third Circuit affirmed summary judgment in favor of the insurer on the bad faith claim and remanded for recalculation of the award, holding that, under the policy, the insurer is responsible for all costs incurred by Post in connection with the hospital’s malpractice claim from October 12, 2005 forward and for all costs incurred by Post to defend the sanctions proceedings from February 8, 2006 forward. View "Post v. St. Paul Travelers Ins. Co." on Justia Law