Justia Contracts Opinion Summaries
Articles Posted in U.S. 7th Circuit Court of Appeals
Matthews v. Wis. Energy Corp., Inc.
When the plaintiff left the company, the parties entered an agreement about how the company would handle requests for references. In a suit alleging breach, the district court entered summary judgment in favor of the company and awarded $173,232 in attorney fees. On remand a jury returned a general verdict that the company did not breach the agreement and the court awarded $522,527 attorney fees and costs and expenses in the amount of $40,493.64. On a second appeal, the Seventh Circuit affirmed. The trial court properly allowed the company to argue waiver. Jury instructions concerning waiver, agency, breach, and damages were within the court's discretion. The award of fees was commercially reasonable and not inequitable.
Jackman Financial Corp. v. Humana Ins. Co.
A $15,000 insurance policy covering the decedent named his brother as beneficiary. The brother was killed in the same accident that killed the decedent. Although the insurer received notice that the decedent's mother (estate administrator) had assigned the policy to pay for the funeral, the company obtained an order from the state court and paid the benefit to decedent's children, applying a "facility-of-payment" clause, which provided: "if the beneficiary he or she named is not alive at the Employeeâs death, the payment will be made at Our option, to any one or more of the following: Your spouse; Your children; Your parents; Your brothers and sisters; or Your estate." The assignee (finance company) filed suit. The federal district court entered judgment in favor of the insurer. The Seventh Circuit affirmed, exercising jurisdiction under the Employee Retirement Income Security Act, 29 U.S.C. 1132. Insurance companies have broad discretion under facility-of-payment clauses and the insurer's decision was not arbitrary. The court declined to award attorney fees.
Roche Diagnostics Corp. v. Medical Automation Sys., Inc.
Plaintiff makes glucose monitors and other diabetes-related products that incorporate software written by defendant, under a contract that entitles it to use the software for two years after the contractâs initial term, 2006-2010, and any extension. It also gives plaintiff a right of first refusal should defendant agree to sell its stock or assets to one of plaintiffâs competitors "during the term of this Agreement." Defendant would not extend the contract after the original expiration date. Plaintiff learned that investors in defendant were negotiating to sell stock to a company that plaintiff considers a competitor. Defendant asserted that, because the transaction would not close until 2011, the right of first refusal did not apply. Plaintiff sought an injunction pending arbitration. Based on concerns about irreparable harm to each party, the district court entered an injunction to allow the sale to proceed, subject to a requirement that plaintiff be allowed to use the software through 2012; the injunction expires when the arbitrator renders a decision. The Seventh Circuit affirmed, modifying to add conditions to ensure that defendant remains a separate firm so that the transaction can be undone if the arbitrator rules in plaintiffâs favor.
Digitech Computer, Inc. v. Trans-Care, Inc.
An Indiana medical transport company executed a software licensing agreement with the plaintiff to replace its dispatch and billing software. The software did not work as the Indiana company expected, so it attempted to exercise an option to terminate the agreement. Plaintiff sued and the Indiana company counter-claimed fraud. A magistrate dismissed the fraud claim and awarded plaintiff damages on the breach of contract claim and attorney's fees. The Seventh Circuit affirmed the decisions on fraud and breach of contract, but vacated the damages award and remanded. A party is not required to disclaim every departure from earlier proposals made during negotiations to avoid liability for fraud; there was no termination option. The plaintiff terminated the contract by locking the software, so the computation of damages was incorrect. The court ordered reconsideration of attorney fees, noting that the contract language did not appear to allow fees for defense of the fraud claim.
Denil v. DeBoer Inc.
Wanting to retire from the trucking business, the owner entered into employment contracts so that the plaintiffs would act as CEO and vice president and a stock purchase agreement. The relationship broke down while they were negotiating a buy-sell agreement. The owner fired the plaintiffs and paid benefits specified in the employment contract. The plaintiffs did not purchase stock or place $750,000 into an escrow, as they were entitled to do to secure their position. The district court ruled in favor of the owner. The Seventh Circuit affirmed, holding that neither party violated a clause in the stock purchase contract that required that they use "best efforts" to enter into a buy-sell agreement. The plaintiffs retained the right to purchase stock, but chose not to do so, which entitled the owner to terminate their employment. The owner took full advantage of his rights under the contracts, but did not exploit the plaintiffs.
