Justia Contracts Opinion Summaries

Plaintiff, a natural gas supplier, and defendants, a natural gas distributor and its executive, had a written contract. The relationship unraveled in the face of a failed acquisition, several million dollars' worth of unpaid invoices, and frequent disputes over pricing, inflamed by allegations that natural gas suppliers were manipulating the indices on which natural gas price quotes are based. The district court granted plaintiff summary judgment and ultimately issued a Rule 54(b) judgment on contract and guaranty claims and rejecting counterclaims. The court awarded $8,929,449 in pre-judgment interest on top of its damages of $13,693,943. The Seventh Circuit affirmed, rejecting arguments concerning exclusion of an affidavit submitted by defendant, the alleged existence of additional oral contracts, an implied agreement to waive interest, and the sufficiency of evidence. Without something linking defendant's downfall to plaintiff's divulgence or inappropriate use of information in violation of the confidentiality agreement, there was no issue warranting trial on that claim. There was insufficient evidence of price discrimination in violation of the Robinson-Patman Act, 15 U.S.C. 13(a).

The district court dismissed a complaint asserting breach of contract, breach of a covenant of good faith and fair dealing, breach of a settlement agreement, promissory estoppel, equitable estoppel, quantum meruit, unjust enrichment, constructive trust, accounting, reformation of contract, and several types of fraud in connection with agreements for "street furniture." After extensive discussion of whether the plaintiff, a sociedad anónima formed in Uruguay, was the equivalent of a corporation formed in the U.S., and the fact that the contract called for application of the law of Spain, the Seventh Circuit affirmed. The court concluded that, while the defendant did not treat plaintiff well, no rule of law entitles every business to a profit on every deal.

The qui tam suit, brought by a former contractor for one of the defendants, alleges that defendants violated the False Claims Act, 31 U.S.C. 3729(a)(1) in connection with a sale of F-16 fighter jets to Greece, which paid for the jets with money borrowed from the United States. The district court granted summary judgment in favor of defendants. The Seventh Circuit affirmed. An FCA claim requires proof of an objective falsehood. There was no evidence to support allegations: that defendant lied about use of funds loaned by the U.S. to capitalize a Greek business development company; that defendant failed to disclose promptly its decision to delete a price adjustment clause from the draft contract; that defendant made misrepresentations relating to provisions concerning spare part purchases and an ill-fated "depot program;" and concerning a number of misrepresentations in two amendments to the contract.

XMH sought Chapter 11 bankruptcy relief and obtained permission to sell a subsidiary's assets (11 U.S.C. 363), indicating that a contract between the subsidiary and WG would be assigned to purchasers. WG objected, claiming that the contract was a sublicense of a trademark and could not be assigned without permission. The bankruptcy judge agreed with WG, but allowed XMH to renegotiate so that the subsidiary would retain title to the contract but the purchasers would assume all duties and receive all fees. The district court granted a motion substituting the purchasers for XMH and ruled that the order barring assignment was erroneous. First holding that the order was appealable and that it should exercise jurisdiction despite the absence of the bankruptcy trustee as a party, the Seventh Circuit affirmed. If WG had wanted to prevent assignment, it could have identified the contract as a trademark sublicense to trigger a default rule that trademark licenses are assumed to be not assignable. The contract was not simply a sublicense: WG retained control over "all other aspects of the production and sale of the Trademarked Apparel." Such a designation would have been more effective than a clause forbidding assignment because it would have survived bankruptcy.

Plaintiff sued to recover a "break-up fee" it claimed was owed to it under the letter of intent the parties executed in relation to a negotiated sale of defendants' assets and real estate properties. At issue was whether the district court properly granted summary judgment in favor of defendants, holding that no break-up fee obligation had been triggered. The court held that there were genuine issues of material fact as to whether actual negotiations had terminated and therefore, the court reversed the order of summary judgment and remanded the case for further proceedings.

Plaintiff purchased a house in the early 2000s and fell behind on his payments. The lender extended two forbearance agreements, but assessed late fees and reported the late payments; plaintiff was unable to refinance and, when plaintiff was unable to catch up, the lender foreclosed. Plaintiff alleged violation of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2605 and Indiana Home Loan Practices Act, IND. CODE 24-9-1-1. The district court rejected the claims on summary judgment. The Seventh Circuit affirmed. The lender acted within its contract rights and did not violate the clear terms of the forbearance agreements.

After being diagnosed with fibromyalgia, chronic pain, anxiety, and depression, plaintiff was awarded long-term disability benefits under an employee benefit plan issued and administered by defendant. Benefits were discontinued about 24 months later, when defendant determined that plaintiff had received all to which she was entitled under the planâs self-reported symptoms limitation. Because plaintiff had retroactively received social security benefits, defendant also sought to recoup equivalent overpayments as provided by the plan. The district court dismissed. The Seventh Circuit reversed in part and remanded for reinstatement. The self-reported symptom limitation violates ERISA, 29 U.S.C., 1022; the policy sets out that long-term benefits will be discontinued after 24 months if disability is due to mental illness or substance abuse, but does not mention that the time limitation applies if a participantâs disability is based primarily on self-reported symptoms. The Social Security Act does not bar recovery of overpayments occasioned by receipt of social security benefits.

Plaintiff first sued tennis star Connors in 1997; the suit settled with payment of $10.5 million by Connors and an agreement that provided mutual promises of indemnification. In 2010, plaintiff's former law partner sued plaintiff, claiming fraud and concealment with respect to the money from Connors. Plaintiff sought indemnification. The district court dismissed, holding that the indemnity provision created an infinitely repeating loop of liability and failed by its terms; Illinois public policy generally prohibits contractual indemnification for intentional misconduct; and the indemnity provision was not specific enough to exempt it from the general rule. The Seventh Circuit affirmed, holding that the indemnity provision does not apply to this matter, and, if it did, would be unenforceable under Illinois public policy.

Plaintiff, an Illinois corporation, filed suit for conversion against a corporation based in South Korea and individuals. Although the defendants were served, there was no formal response. The individual defendants sent a letter asserting that they had no connection to the corporation and requesting dismissal. Several months later the court entered default judgment in the amount of $2,916,332. About a year later the defendants filed appearances and a motion to vacate for lack of personal jurisdiction. The district court denied the motion. The Seventh Circuit reversed and remanded. After noting that jurisdiction can be contested in the original proceeding or in a collateral action, the court concluded that the motion was not untimely. The letter did not constitute an appearance by the individuals and the corporation was not capable of making a pro se appearance. The defendants have submitted affidavits concerning whether they had "minimum contacts" with Illinois that must be considered by the court.

A suit by a school district employee, terminated after absence under the Family and Medical Leave Act, was dismissed. The Seventh Circuit remanded claims under the FMLA and for breach of contract. The parties entered a settlement agreement. After the superintendent for the district took his own life, the employee challenged the agreement and refused to sign the agreement. The district court dismissed the entire case and a motion for sanctions against the employee is pending. The Seventh Circuit affirmed. The oral settlement, agreed-to in the presence of a magistrate, is valid; the fact that the employee was unaware that the superintendent was under investigation for child molestation does not amount to concealment of a fact material to this case. The employee's refusal to comply with court orders to sign the agreement left the court with little choice but to dismiss her claims, causing forfeiture of a substantial settlement.