Justia Contracts Opinion Summaries

Dameware Development, LLC Defined Benefit Pension Plan and Trust bought several life insurance policies from American General Life Insurance Company. After Dameware was unable to obtain the tax benefits it hoped would result from purchasing the policies, it sued American General for damages and for rescission of the contract. The district court granted summary judgment to American General. The Fifth Circuit Court of Appeals affirmed, holding that Dameware had not shown any basis for rescinding the contract nor any contractual duties breached by American General, and therefore, the district court did not err in granting summary judgment to American General.

DynMcDermott Petroleum Operations Company (DM) subcontracted with Petrofac, Inc. to design and install a plant to serve the Strategic Petroleum Reserve for the Department of Energy. DM and Petrofac agreed to resolve any claim under the subcontract through binding arbitration. Later, Petrofac sent DM a multi-volume Request for Equitable Adjustment (REA), asserting that DM disputed Petrofac's ability to perform its work and seeking damages. An arbitration panel awarded Petrofac damages. The district court affirmed. The Fifth Circuit Court of Appeals affirmed, holding that the district court properly confirmed the arbitration panel's arbitration award, as DM failed to demonstrate reversible error on appeal.

An individual owing a debt sued a debt collection agency. The suit alleged the agency's debt-collection letter violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692, by contradicting and overshadowing the statutory notices in the letter. The standard for evaluating any potential deception in the letter was whether an unsophisticated or least sophisticated consumer would be confused by the letter. The district court concluded that the letter did not violate the statute. The Fifth Circuit Court of Appeals affirmed, holding (1) the debt collection agency's letter was not inconsistent with and did not overshadow the letter's Section 1692g(a)'s notice; and (2) therefore, a least-sophisticated or unsophisticated consumer would not be confused by the letter.

Appellant was injured in a car accident. The other car in the accident was owned by Amanda Salgado, a superintendent of a church (the Church), and driven by Michael Meyer, a member of the Church. The accident occurred while Meyer and other Church members were taking a lunch break from cleaning and repairing Church property. Appellant sued the Church, Salgado, and Meyer in state court. The Church's insurer (Insurer) then sought a declaratory judgment in federal court resolving whether its insurance policy covered Appellant's accident. The district court held that Insurer had no duty to defend the Church and Salgado. The Fifth Circuit Court of Appeals vacated the district court's judgment, holding that the district court (1) erroneously held that Insurer had no duty to defend the Church and Salgado, (2) improperly adjudicated the scope of Insurer's duty to indemnify, and (3) improperly asserted jurisdiction over Appellant's state-law claims. Additionally, the Court held (1) Insurer had a duty to defend the Church and Salgado in Appellant's underlying state lawsuit, and (2) the scope of Insurer's duty to indemnify could not be adjudicated until after Appellant's claims are decided in state court.

Insurer issued Insured a commercial general liability policy. After a third party sued Insured, Insured rejected the representation offered by Insurer under the policy on the ground that Insurer's reservation-of-rights letter had created a conflict of interest. Insured hired its own independent counsel, and when Insurer refused to reimburse Insured for the cost of its independent counsel, Insured filed an action seeking a declaratory judgment that Insurer had a contractual duty to defend and indemnify Insured in the third party lawsuit. The magistrate judge rejected Insured's claim, ruling that Insurer was not required to reimburse Insured for the cost of independent counsel. The Fifth Circuit Court of Appeals affirmed, holding (1) because the facts to be adjudicated in the third party lawsuit were not the same facts upon which coverage depended, the potential conflict in this case did not disqualify the attorney offered by Insurer to represent Insured; and (2) therefore, Insured was not entitled to reimbursement from Insurer for the cost of hiring independent counsel.

This case arose from a contract entered into by the parties where Ewing agreed to construct tennis courts for the school district. At issue was the interpretation of a Commercial General Liability (CGL) insurance policy under Texas law. The district court held that a CGL policy's contractual liability exclusion applied in this case and that no exception restored coverage. The insured construction company faced liability, if at all, because it contracted to construct usable tennis courts for the school district and it had allegedly failed to perform. The court held that the district court correctly interpreted the contractual liability exclusion and correctly applied that exclusion with respect to the insurer's duty to defend the construction company. The court held, however, that the district court was premature in applying the exclusion to the insurer's duty to indemnify.

Greenwood filed a petition for damages in Louisiana state court, alleging that Chesapeake had damaged Greenwood's property where a mineral lease abutted land that Greenwood was developing into a subdivision. Sitting in diversity and applying Louisiana law, the district court granted summary judgment to Chesapeake, finding that the lease did not give Greenwood the right to recover consequential damages. The court found that the relevant provision of the lease was ambiguous and therefore vacated summary judgment and remanded for further proceedings.

Plaintiffs, 64 former employees of DuPont who worked at the company's manufacturing facility in La Porte, Texas, filed suit against DuPont alleging that they were fraudulently induced to terminate their employment with DuPont and accept employment with a wholly owned subsidiary. The district court granted summary judgment dismissing the claims and entered a take-nothing final judgment in favor of DuPont. The court deferred to the Texas appellate courts and concluded that the 60 day termination clause at issue rendered the covered employees' employment with DuPont at-will for the purpose of Texas law. Accordingly, they could not bring fraud claims against DuPont for loss of their employment and therefore, the court affirmed the judgment.

Ballard, successor in interest to Kilroy, sued Devon, successor in interest to Wise Oil, for breach of a provision in an American Association of Petroleum Land Men (AAPL) Model Form Operating Agreement (Operating Agreement) that was an exhibit to and incorporated by reference in a May 1971 Farmout Agreement (collectively, Joint Operating Agreement or JOA) between Kilroy and Wise Oil. Ballard's lawsuit turned on the interpretation of one sentence in the multi-paragraph "Area of Mutual Interest" (AMI) provision of the Operating Agreement. The court held that, because the entire AMI provision - including its acquisition provisions and its surrender provisions - expired before the claims asserted by Ballard arose, Devon had not breached its contract with Ballard, and the district court's summary judgment was proper.

In a consolidated appeal, plaintiffs contended that the district court erred in denying their motions to remand and in dismissing their workplace safety claims as time-barred. Plaintiffs claimed, inter alia, that Dresser failed to properly monitor and mitigate exposure to loud noise at Dresser's industrial facility and that these failures led to long-term hearing loss. The court concluded that Dresser owed plaintiffs duties under the collective bargaining agreement (CBA) and simultaneously owed non-negotiable, independent duties under Louisiana tort law. These duties formed the bases for two distinct types of claims - contract and tort - either of which plaintiffs could have brought before the district court. Plaintiffs chose to sue in tort, without reference to the CBA, and their claims could be adjudicated by sole resort to Louisiana tort law. Applying the Supreme Court's construction of section 301 of the Labor Management Relations Act, 29 U.S.C. 185(a), the district court was without jurisdiction and therefore erred in denying the motions to remand and in granting the motions to dismiss. Accordingly, the judgment was reversed and remanded.