Justia Contracts Opinion Summaries

Atkinson filed suits against Kenray. Kenray filed a separate action against Hoosier, seeking insurance coverage for Atkinson’s claims. Atkinson and Kenray settled their suits. Kenray agreed to entry of judgments in favor of Atkinson. Atkinson agreed not to execute the judgments if Kenray pursued the coverage action against Hoosier. Kenray assigned claims against its insurance agent to Atkinson. State courts entered judgment in favor of Hoosier. Meanwhile, Atkinson sued Kenray’s insurance agent asserting errors and omissions claims. The agent obtained summary judgment. Atkinson returned to the district court that presided over the original suits to set aside the settlement covenant. Atkinson claimed fraudulent inducement: that it entered the agreement based upon Kenray’s representations that its agent had confirmed that Kenray had insurance coverage for Atkinson’s claims. The court held that, because the covenant contained an unambiguous integration clause, parol evidence could not be considered, but that if Atkinson could prove fraud in the inducement specific to the integration clause, it might prevail. Atkinson conceded that it could not establish fraudulent inducement as to the integration clause itself. The court declined to set aside the agreement. The Seventh Circuit reversed, holding that Indiana law does not impose the bright-line rule applied by the trial court. View "Judson Atkinson Candies, Inc. v. Kenray Assocs., Inc." on Justia Law

Phillips was beneficiary of a life insurance policy purchased by her fiancé, Strang, issued by Prudential. When Strang died, Prudential informed Phillips that the default method of payment was the “Alliance Account settlement option,” under which the insurer, instead of paying a lump-sum benefit, creates an interest-bearing account for the beneficiary and sends her checks that can be used to draw the funds, in part or in whole, at any time. The funds are held in Prudential’s general investment account, which allows Prudential to profit from the spread between its investment returns and interest paid to the beneficiary, in Phillips’s case, three percent. In a putative class action, Phillips claimed that establishment of the Alliance Account as the default payment method and her enrollment in it breached the insurance policy and unreasonably delayed payment of benefits in violation of the Illinois Insurance Code and that Prudential breached a fiduciary duty by not disclosing information regarding investments made with her funds and by keeping investment profits. The district court dismissed. The Seventh Circuit affirmed. “Whether this practice is disreputable is open to debate,” but It did not breach the policy, did not effect an unreasonable delay, and did not breach any fiduciary duty. View "Phillips v. Prudential Ins. Co." on Justia Law

In 2006, when the real estate market was strong, Burke, a citizen of Ireland, signed a contract with the developer for the Trump International Hotel & Tower in Chicago, to buy a condominium unit and two parking spaces in the Trump Tower. The total purchase price was $2,282,130, which included $150,000 for the parking spaces. Burke deposited $456,426 in earnest money. Burke later refused to close the purchase and, after the developer declined to refund his earnest money, he sued, claiming that the developer made a material change when it placed parking on the Trump Tower’s sixth floor. The Seventh Circuit affirmed dismissal, noting that the documents he signed demonstrate that Burke was on notice that the use of the sixth floor for parking was a possibility. The agreement was not void for lack of mutuality with respect to provisions for breach, as the developer had an obligation to act in good faith to convey the condominium. View "Burke v. 401 N. Wabash Venture, L.L.C." on Justia Law

In 1956, Sister Ephrem of the Most Precious Blood, experienced apparitions of the Virgin Mary, during which, Sister Ephrem claimed, she was told: “I am Our Lady of America.” The Archbishop supported a program of devotions to Our Lady of America. In 1965 Pope Paul VI approved creation of a cloister, which lasted until at least 1977, when surviving members left and formed a new congregation, dedicated to devotions to Our Lady of America. Sister Ephrem directed it until her death in 2000. Sister Therese succeeded Sister Ephrem, who willed to Sister Theres all her property, mostly purchased with donated money. Sister Therese worked with McCarthy, a lawyer, and Langsenkamp until 2007, when Langsenkamp and McCarthy established the Langsenkamp Family Apostolate in the chapel in which the Virgin Mary allegedly appeared to Sister Ephrem. They sued Sister Therese, claiming theft of physical and intellectual property, fraud, and defamation. She counterclaimed, alleging theft of a statue and of the website and defamation by calling her a “fake nun.” The district court denied McCarthy’s motion that the court take notice of the Holy See’s rulings on Sister Therese’s status in the Church. The Seventh Circuit reversed, with “a reminder” that courts may not decide (or to allow juries to decide) religious questions. Determination of the ownership of the property is likely possible without resolving religious questions. View "McCarthy v. Fuller" on Justia Law

Steine was a subcontractor for installation of thermal units at a Wal-Mart store in Gas City, Indiana. Steine rented a boom lift from NES. Steine foreman Crager signed a one-page, two-sided NES “Rental Agreement” with a signature line is at the bottom of its front side. Above the signature line, the Agreement states: “Signer acknowledges that he has read and fully understands this rental agreement including the terms and conditions on the reverse side” and “Please note that there are important terms on the reverse side of this contract, including an indemnification provision.” Menendez, a Steine employee, died from injuries he suffered while operating the 40-foot boom lift. His family filed sued NES and others, alleging negligence. NES sought indemnification from Steine. The district court entered summary judgment in favor of Steine. The Seventh Circuit affirmed. The indemnification clause in the rental agreement does not expressly state, in clear and unequivocal terms as Indiana law requires, that Steine agreed to indemnify NES for NES’s own negligence. View "NES Rentals Holdings, Inc.l v. Steine Cold Storage, Inc." on Justia Law

The law firm represented a potential buyer in the purchase of a drugstore. Buyer and Seller executed the sales contract separately. The firm misfiled the contract executed by Buyer, however, and Seller subsequently attempted to rescind the contract, which it characterized as an offer, because it had not timely received a copy of the contract executed by Buyer. When Seller’s efforts to avoid the purported contract were successful, Buyer sent a “formal notice of claim” to the firm, which sought coverage from its professional liability insurer. That insurer concluded that the firm was not entitled to coverage because it failed to properly notify the insurer of the mistake that ultimately led to the malpractice claim. The firm sought a declaratory judgment. The district court granted the insurer summary judgment. The Seventh Circuit affirmed, finding that the firm’s knowledge of the email exchange with Seller’s counsel and of an Alabama declaratory-judgment action constituted knowledge of “any circumstance, act or omission that might reasonably be expected to be the basis of” a malpractice claim. View "Koransky, Bouwer & Poracky, P. C. v. Bar Plan Mut. Ins. Co." on Justia Law

In 2008, Harris N.A. loaned Acadia money on a revolving basis. Acadia is a limited liability company consisting of members of the Hershey family and three trusts. The loan was personally guaranteed by Loren Hershey, a managing member of Acadia. The amount of the loan was enlarged to $15.5 million, again guaranteed by Hershey. The agreement enlarging the loan amount required Acadia to reduce its principal debt to Harris to less than 35 percent of the value of Acadia’s assets by the end of each quarter and to make a principal payment of $3 million by January 31, 2009. By February 2009, Acadia had not made the $3 million principal payment and was in default. After granting additional time, Harris declared a default and filed suit to collect the debt from Acadia and to enforce Hershey’s guaranty. The district court granted summary judgment in favor of Harris as to all issues except the calculation of prejudgment interest. Acadia sought bankruptcy protection and its appeal has been stayed. The Seventh Circuit affirmed as to Hershey and, finding the appeal frivolous, imposed sanctions under FRAP 8. The court noted that there was no evidence of various promises Hershey claimed were made. View "Harris N.A. v. Acadia Invs. L.C." on Justia Law

In 2004, Harmon contracted to provide Chicago Bulls rookie Gordon with financial and consulting services for the “duration of [his] playing career,” but outlining a compensation arrangement only for the length of Gordon’s rookie contract with the Bulls, which ended in 2008. In 2007, Gordon became dissatisfied with Harmon’s services, based in part on what he viewed to be a breach of a fiduciary duty relating to a bad investment, and prematurely terminated the agreement. Gordon sued first, claiming Harmon had breached a promissory note between the parties and had breached his fiduciary duties. Harmon asserted counterclaims for breach of the agreement and tortious interference with prospective business advantage. The district court dismissed Harmon’s counterclaims. Harmon refiled his breach of contract claim in Illinois state court and also alleged malicious prosecution, abuse of process, and tortious interference with prospective business advantage. After Gordon removed the case to federal court, the district court ruled in favor of Gordon, concluding that the parties had intended their agreement to last only for the length of Gordon’s rookie contract. The Seventh Circuit affirmed. View "Harmon v. Gordon" on Justia Law

Plaintiff bought a used pickup truck in 2011 for $28,000 and financed the purchase with a six-year installment contract at an interest rate of 23.9 percent. The dealer assigned the contract to AmeriCredit. After making the first installment the plaintiff sent AmeriCredit a copy of the installment contract that he had stamped “accepted for value and returned for value for settlement and closure,” and told AmeriCredit to collect the balance under the contract from the U.S. Treasury. AmeriCredit repossessed the truck, sold it, and billed the plaintiff $11,322.28 to cover the difference. The plaintiff sued AmeriCredit and its officers for $34 million in compensatory damages and $2.2 billion in punitive damages. The district judge could not make sense of the pro se complaint and dismissed it as frivolous. The Seventh Circuit vacated and remanded with directions that the judge either dismiss without prejudice or dismiss with prejudice, as a sanction; vacate the default judgment in favor of AmeriCredit on its counterclaim; and dismiss the counterclaim without prejudice. The court noted the earmarks of the “Sovereign Citizens” movement. View "Baba-Dainja El v. AmeriCredit Fin. Servs., Inc." on Justia Law

In 1999 the Sellers conveyed businesses to CT Acquisition Corp. The price was to be paid over time. The Sellers insisted on a surety bond (put up by Frontier Insurance) and personal guarantees by the principals of CT Acquisition. The Guarantors also promised to indemnify Frontier and promised to post collateral on Frontier’s demand. CT Acquisition did not pay, the Guarantors failed to keep their promise, and the Sellers turned to Frontier, which did not pay because it was in financial distress. Frontier demanded that the Guarantors post collateral. The district court read the agreement to require collateral only after Frontier’s obligation to the Sellers had been satisfied, or at least quantified. The suit was dismissed as unripe. Meanwhile the Sellers had sued Frontier and obtained judgment of $1.5 million. Frontier then filed another suit against the Guarantors. The district court concluded that, Frontier’s obligation having been quantified, the Guarantors must post collateral and, following remand, ordered the Guarantors to deposit with the Clerk $1,559,256.78, The Seventh Circuit affirmed, rejecting the Guarantors’ argument that they need not post collateral until Frontier has paid the Sellers. View "Frontier Ins. Co. v. Hitchcock" on Justia Law