Justia Contracts Opinion Summaries

GTI went bankrupt after it purchased OAI, a subsidiary of Onkyo for $13 million in cash and $12 million in three-year promissory notes. Onkyo filed a proof of claim for $12 million. GTI responded by suing Onkyo under the theory that the OAI purchase was a fraudulent, voidable transaction. The bankruptcy court agreed, finding that OAI was worth $6.9 million at the time of the transaction, not $25 million. The court voided GTI’s obligation to pay the remainder of the purchase price and ordered Onkyo to repay GTI $6.1 million. The district court and Sixth Circuit affirmed. The bankruptcy court’s determination that the indirect benefits were insubstantial was valid without the necessity of providing calculations; its adoption of GTI’s expert’s value based on the comparable transactions method was not clearly erroneous. Once the bankruptcy court determined that the sale of OAI had been a fraudulent transfer and Onkyo was a good-faith transferee, awarding GTI relief was a simple matter of subtraction. View "Onkyo Europe Elec., GMBH v. Global Technovations Inc." on Justia Law

In a 2009 opinion, the Sixth Circuit held that, in a 1998 collective bargaining agreement, CNH agreed to provide health-care benefits to retirees and their spouses for life, but rejected the suggestion that the scope of this commitment in the context of healthcare benefits, as opposed to pension benefits, meant that CNH could make no changes to the healthcare benefits provided to retirees. The court remanded for a determination of reasonableness with respect to CNH’s proposed changes to its retiree healthcare benefits, under which retirees, previously able to choose any doctor without suffering a financial penalty, would be put into a managed-care plan. The court listed three considerations: Does the modified plan provide benefits “reasonably commensurate” with the old plan? Are the proposed changes “reasonable in light of changes in health care”? And are the benefits “roughly consistent with the kinds of benefits provided to current employees”? On remand, the district court granted CNH summary judgment without reaching the reasonableness question or creating a factual record from which the determination could be made on appeal. The Sixth Circuit again remanded.View "Reese v. CNH America LLC" on Justia Law

Innotext represents automotive manufacturers. Stafford is its vice president. Petra is a sales, service, and support company that represents three offshore companies. In the 1990s, automakers outsourced work overseas to reduce labor costs. Stafford began looking for offshore companies that had the ability to manufacture automotive textile products. Stafford later testified that, based on a handshake agreement, he sought to generate business for Petra. After three sales to Johnson Controls, Innotext claimed that its efforts created an opportunity for Petra and sought commissions. The district court granted judgment as a matter of law on all counts. The Sixth Circuit reversed in part, finding that there was sufficient evidence that reasonable minds could differ, but affirmed dismissal of an implied contract claim. View "Innotext Inc. v. Petra'Lex USA Inc." on Justia Law

GenCorp owned a vinyl-manufacturing facility, including hazardous waste management units (RCRA units), which reclaimed solvent waste. Under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6901, GenCorp was obligated to obtain permits for the units. GenCorp had not received all of the required permits when it agreed to sell the facility. The agreement specified GenCorp’s retained liabilities, and contained a provision requiring each party to indemnify and defend against their retained liabilities. Textileather became the owner in 1990 and decided to discontinue use of the RCRA units. Textileather began the closure process required by Ohio Administrative Code 3745-66; the Ohio Environmental Protection Agency (OEPA) issued several Notices of Deficiency. Textileather challenged the OEPA’s 2001 closure plan and asserted that GenCorp was obligated to indemnify and defend. The district court ruled in favor of GenCorp, holding that, under the agreement, OEPA did not constitute a “third party” and Textileather’s RCRA closure proceedings did not constitute a “claim or action.” The Sixth Circuit reversed in part and directed the district court to enter judgment for Textileather on the legal question of whether the retained liabilities section of the agreement applies. The court affirmed that GenCorp retained only CERCLA claims covered by certain sections. View "Textileather Corp. v. GenCorp Inc." on Justia Law

TMTA obtained a policy, known as the CrimeShield Policy to transfer the risk of employee theft from the TMTA to Hartford. Almost immediately after the parties signed the Policy a TMTA employee began diverting funds into his own accounts from the TMTA Insurance Agency, a limited liability corporation controlled by the TMTA and from which the TMTA receives a significant portion of its income. The Agency is not a named insured under the policy. Hartford took the position that the Agency, not the TMTA, suffered the loss. The Sixth Circuit affirmed the district court, holding that the Agency a party is not directly covered by the policy, and that the policy does not otherwise provide for the TMTA to recover funds that were diverted from the Agency.View "Tooling, Mfg.& Tech. Ass'n v. Hartford Fire Ins. Co." on Justia Law

Watkins, an African-American, worked for the school district, overseeing security systems. Fultz supervised Watkins and, relying on Watkins’s advice, Fultz awarded Vision a $182,000 annual contract for service of security cameras. Vision’s president, Newsome, testified that Watkins called her and talked about a “finder’s fee.. Newsome went to Cleveland for a customer visit. She e-mailed Watkins and he replied: “Absolutely$.” Newsome believed that Watkins expected her to pay him at their meeting. Newsome notified Fultz. At the meeting, Watkins requested “an envelope.” After Fultz contacted police, the FBI recorded meetings at which Newsome gave Watkins $5,000 and $2,000. A white jury convicted on two counts of attempted extortion “under color of official right” (Hobbs Act, 18 U.S.C. 1951), and one count of bribery in a federally funded program, 18 U.S.C. 666(a)(1)(B). The court determined a total offense level of 22, applying a two-level enhancement for obstruction of justice, another two-level enhancement for bribes exceeding $5,000, and a four-level enhancement for high level of authority, plus an upward variance of 21 months under 18 U.S.C. 3553(a), and sentenced Watkins to six years’ incarceration. The Sixth Circuit affirmed, rejecting challenges to jury instructions, sufficiency of the evidence, the jury’s racial composition, and the reasonableness of the sentence.View "United States v. Watkins" on Justia Law

Plaintiffs are wholesalers of beer and wine; each acted as the exclusive distributor of Miller and/or Coors brands within a defined territory under written franchise agreements. In 2007, Miller and Coors entered a Joint Venture agreement, contemplating creation of MillerCoors, restructured their respective businesses and assets, and assigned distribution agreements to the Joint Venture. MillerCoors notified the plaintiffs that it intended to terminate their distribution rights as a successor manufacturer under Ohio Rev. Code 1333.85(D). The district court found that MillerCoors is not a “successor manufacturer” under Ohio law because it is controlled by Miller and Coors, and that the Act, therefore, prohibits MillerCoors from terminating the distributorships. The Sixth Circuit affirmed. Miller and Coors exercise control over MillerCoors through their equal voting power, veto power, the appointment of directors, all of whom are present officers or employees of the joint venture partners, and who owe their fiduciary duty only to Miller or Coors, their influence over the executive team, and their funding of MillerCoors. Even under the manufacturers’ proposed definition of “control,” the evidence shows that Miller and Coors together retain the power to “direct, superintend, restrict, govern, [and] oversee” MillerCoors. View "Beverage Distrib., Inc. v. Miller Brewing Co." on Justia Law

Plaintiffs, Lewis, Ross and Jennings, were limited guarantors of loans owed by River City, which filed for bankruptcy. Defendant acquired the original lender’s position and reported to credit reporting agencies that the plaintiffs were obligated in the full amount of the underlying loans rather than in limited amounts. In a suit under the Fair Credit Reporting Act 15 U.S.C.1681–1681x, defendant counterclaimed on the guaranty agreements. The district court found defendant liable to each plaintiff for FCRA violations and the plaintiffs in breach of their guaranty agreements. The court awarded Lewis $30,000 in actual damages and $120,000 in punitive damages and each remaining plaintiff $25,000 in actual damages and $100,000 in punitive damages. The court jointly awarded plaintiffs $20,024.55 in costs and $218,674.00 in attorney’s fees. On the breach of guaranty claims, the court found Lewises liable for $256,797.29, Jennings liable for $255,367.29, and Ross liable for $306,726.14. Defendant objected to Lewis’s garnishment, arguing that defendant was the net judgment creditor because the proper method of calculation required the court to: add the amounts defendant owed plaintiffs (including attorney’s fees and costs); add the amount paintiffs collectively owed defendant; then set off the former sum from the latter. The district court rejected the argument. The Sixth Circuit affirmed. View "Lewis v. United Joint Venture" on Justia Law

Branham began teaching in 1983 and was a tenured law professor. She sometimes suffered from seizures. She had a 12-month teaching contract for 2006. For the spring semester she was assigned to teach constitutional law and torts. Branham indicated that she did not want to teach the classes, citing health reasons and her greater experience with criminal law. She nonetheless taught the courses. In summer Branham sold her house, moved to Illinois, and was granted a leave of absence. Assigned to teach constitutional law after returning from leave, she refused to do so. The dean terminated her employment in December. Her contract required that dismissal be voted upon by faculty. That process was not initially followed. Branham sought damages for violations of the Americans with Disabilities Act and the Michigan Persons with Disabilities Civil Rights Act, intentional infliction of emotional distress, and breach of contract. The district court dismissed all but the contract claim, granted a motion to limit the remedy on the contract-breach claim to equitable relief, held that the school had breached the contract, and ordered compliance. Faculty and the board of directors concurred in the dismissal. The district court entered judgment against Branham. The Sixth Circuit affirmed. View "Branham v. Thomas M. Cooley Law Sch." on Justia Law

Ronske’s widow sued Heil after a dump truck body it manufactured caused Ronske’s death. Heil held a commercial general liability policy. Evanston insured the first $1 million loss in excess of $500,000 self-insured retention. Heil was required to defend, investigate, and accept any reasonable settlement offer within the SIR; Evanston could choose to assume charge of defense and settlement. Heil retained attorney Pelini. After more than two years, Evanston wanted to assume defense and appointed Sutter, with Pelini to remain involved. Pelini’s fees would count toward exhaustion of the SIR, and Evanston would pay Pelini’s fees in excess of the SIR. The parties settled for $5,711,000. Evanston paid $1 million, leaving Heil responsible for $4,711,000 and $63,533.79 in fees and costs in excess of its SIR. Evanston declined to pay fees and costs. A jury found that Evanston breached the contract and refused in bad faith to pay amounts owed under the policy, but did not fail to settle the wrongful death action in bad faith, awarded Heil compensatory damages plus prejudgment interest for breach of contract, $15,883.44 in statutory damages for bad faith refusal to pay, and $2 million punitive damages. The Sixth Circuit vacated the $2 million punitive damages award, but affirmed the finding of liability under state law. View "Heil Co. v. Evanston Ins. Co." on Justia Law