Justia Contracts Opinion Summaries

Johnson Controls, a Wisconsin manufacturer of building management systems and HVAC equipment, and Edman Controls entered into an agreement giving Edman exclusive rights to distribute Johnson’s products in Panama. In 2009, Johnson breached the agreement by attempting to sell its products directly to Panamanian developers, circumventing Edman. Edman invoked the agreement’s arbitration clause. The arbitrator concluded that Johnson had breached the agreement and that Edman was entitled to damages. Johnson sought to vacate or modify the arbitral award, challenging the way in which the award took account of injuries to Edman’s subsidiaries and the arbitrator’s alleged refusal to follow Wisconsin law. The district court ruled in Edman’s favor. The Seventh Circuit affirmed and upheld the district court’s award of attorney fees. View "Johnson Controls, Inc. v. Edman Controls, Inc." on Justia Law

Wabash is a power generation cooperative. Northeastern purchases electricity from Wabash and resells it. In 1977, they entered into a contract: Northeastern agreed to purchase electricity from Wabash for 40 years at rates to be set by the Wabash board of directors “[s]ubject to the approval of the Public Service Commission of Indiana.” Revised rates would not be effective unless approved by the “applicable regulatory authorities,” and the federal Rural Electrification Administration. In 2012 Northeastern sought a state court declaratory judgment that Wabash breached the contract by taking action in 2004 that had the effect of transferring regulation of its rates from the Indiana Commission to the Federal Energy Regulatory Commission. Wabash removed the case under 28 U.S.C. § 1441(a), arguing that the claim arises under the Federal Power Act, 16 U.S.C. 791a. The district court denied remand and granted a preliminary injunction. The Seventh Circuit vacated, holding that federal courts lack subject matter jurisdiction. Northeastern’s claim is limited to construction of the contract and does not necessarily raise a question of federal law. While Northeastern may eventually use a favorable state court judgment to seek permission to terminate its obligations under the tariff filed with FERC,that cannot be achieved in this suit View "NE Rural Elec. Membership Corp. v. Wabash Valley Power Assoc." on Justia Law

In 1996 Beloit agreed to build high-speed paper-making machines for Indonesian paper companies. Two of the companies executed promissory notes in favor of Beloit reflecting a principal indebtedness of $43.8 million. The paper companies guaranteed the notes; Beloit assigned them to JPMorgan in exchange for construction financing. The machines were delivered in 1998 but did not run as specified. In 2000 the parties settled claims pertaining to the machines but preserved obligations under the notes. JPMorgan sued for nonpayment. The district court held that warranty-based claims were foreclosed by the settlement and that other defenses lacked merit; it awarded JPMorgan $53 million. After the appeal was filed, JPMorgan issued citations to discover assets. Although the companies raised an international conflict-of-law question, the district court ordered compliance with the citations. The Seventh Circuit affirmed. The settlement waived implied warranty defenses and counterclaims. The fraud defense is also mostly barred; to the extent it is not, the evidence was insufficient to survive summary judgment. The court also rejected defenses that the notes lacked consideration; that the notes were issued for a “special purpose” and were not intended to be repaid; and that JPMorgan is not a holder in due course. The discovery order was not appealable. View "JPMorgan Chase & Co., N.A. v. Asia Pulp & Paper Co., Ltd." on Justia Law

The Hancock Center in Chicago is managed by Shorenstein (several related companies). Shorenstein hired an architectural firm, MCA, to design and oversee renovation of windows and exterior walls; MCA hired a general contractor. In 2002, a scaffold fell from the 42nd floor in a high wind and killed three people in cars, severely injuring several others. Shorenstein settled with plaintiffs in 2006 for a total of $8.7 million. MCA’s contract with Shorenstein had required MCA to obtain liability insurance covering the owner, Shorenstein, and any other party specified by the owner. MCA obtained the required insurance policy from AMICO, covering “any person or organization to whom [MCA is] obligated by virtue of a written contract.” There was a dispute concerning which Shorenstein entities were covered. Shorenstein was awarded $959,866.02 by the district court. The Seventh Circuit affirmed in part and reversed in part, holding that the court erred in apportioning the award among the Shorenstein entities. The court rejected AMICO’s arguments that the claim was barred by an exclusion of coverage for injuries “due to rendering or failure to render any professional service” by an insured and that Shorenstein gave up its right to indemnity by AMICO by asking its other insurer for indemnification. View "Nat'l Union Fire Ins. Co. of Pittsburgh v. Am. Motorists Ins. Co." on Justia Law

In 2002, U.S. Health entered into a 20-year lease for a nursing home and adjacent property owned by Lock. Before mid-2006, U.S. Health assigned the lease to Americare without obtaining Lock’s written consent, a required by the lease. Two lawsuits followed. One charged that U.S. Health had violated a provision of the lease under which it was required to fund a replacement reserve and resulted in a stipulated judgment in Lock’s favor of $679,287.96, plus prejudgment interest. The next day, U.S. Health filed a motion to set aside the judgment. Days later, the parties stipulated to a new judgment of $485,430.56 with attorneys’ fees to be agreed by June 10, and entry of a supplemental judgment. After extensions, the court entered a final judgment of $485,430.56, plus post-judgment interest at 5.13 percent. The court later granted Lock’s motion for fees of $29,238.85. Weeks later, the court granted Lock’s motion under Federal Rule of Civil Procedure 60(b)(2) and (3) to modify the judgment to include Americare as a judgment debtor because it had only then learned that U.S. Health, without the necessary authorization from Lock, had assigned its lease to Americare. The Seventh Circuit affirmed, finding that it had jurisdiction. View "Lock Realty Corp. IX v. U.S. Health, LP" on Justia Law

Borrowers obtained secured loans from InBank. Their promissory notes established that InBank would calculate annual interest rates by adding a predetermined amount, usually one percent, to a variable index rate set by InBank at “its sole discretion,” which could change up to once per day. InBank stated that it would set the rate “at or around the U.S. prime rate.” Borrowers compared loan statements and found that the rate was neither consistent across customers nor close to the prime rate. After borrowers filed suit, the Illinois Department of Financial and Professional Regulation took control of InBank and appointed the Federal Deposit Insurance Corporation as receiver. MB Financial purchased InBank accounts. The borrowers filed an amended class action against MB, claiming violations of the Interest Act, 815 ILCS 205/1, and the Consumer Fraud and Deceptive Practices Act, 815 ILCS 505/1. The court granted a motion to substitute the FDIC as defendant, then dismissed. The Seventh Circuit held that dismissal was proper for failure to exhaust remedies under the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. 1821(d)(3)-(d)(13). The claims relate to InBank’s alleged acts and omissions, not MB’s, and there is no support for an assumption of liability argument.View "Farnik v. Fed. Deposit Ins. Corp" on Justia Law

OCV supplies equipment and licenses software for in-room hotel entertainment and sought a judgment of $641,959.54 against Roti, the owner of companies (Markwell, now defunct) that owned hotels to which OCV provided services. The district judge granted summary judgment, piercing the corporate veil, but rejecting a fraud claim. The Seventh Circuit reversed. While the Markwell companies were under-funded, OCV failed to treat the companies as separate businesses and proceed accordingly in the bankruptcy proceedings of one of the companies and made no effort to determine the solvency of the companies. View "On Command Video Corp. v. Roti" on Justia Law

Haight purchased an insurance policy that included underinsured motorist coverage for the named insured (him) and any family members. After his teenage daughter Nicole was injured while riding in a car driven by an acquaintance whose insurance did not fully compensate her, she made an underinsured motorist claim on her father’s policy. The insurance company maintained that Nicole is not entitled to coverage because she was not riding in a vehicle listed on her father’s policy when she was hurt. The district court ruled in favor of Haight. The Seventh Circuit affirmed. The policy provides underinsured motorist coverage to the named insured and his family members that does not require that they be occupying a vehicle listed on the policy during the accident. View "Grinnell Mut. Reins. Co. v. Haight" on Justia Law

Harley-Davidson had a licensing agreement with a subsidiary of DFS and received notice that the companies had merged. Harley-Davidson did not exercise its right to terminate, but later discovered that DFS had sold unauthorized products bearing the trademark to an unapproved German retailer. Harley-Davidon sent an e-mail saying that it believed DFS was in breach of contract and that it was suspending approval of products. DFS responded in kind. Harley-Davidson then attempted to recover unpaid royalties and to secure from DFS information required under the agreement. DFS refused these attempts, but submitted production samples for a new collection. Harley-Davidson reminded DFS of the termination. DFS advised Harley-Davidson that it had “wrongfully repudiated the License Agreement” and that DFS planned to act unilaterally in accordance with its own views of rights and obligations. The district court granted injunctive relief against DFS, which was attempting to litigate the dispute in Greece. The Seventh Circuit affirmed. Harley-Davidson made strong showings that DFS was deliberately breaching a licensing agreement and “has tried numerous legal twists and contortions to try to avoid the legal consequences.” The court rejected an argument that the agreement provision consenting to personal jurisdiction in Wisconsin was not binding on DFS. View "H-D MI, LLC v. Hellenic Duty Free Shops, S.A." on Justia Law

Trinity terminated Dr. Assaf’s employment in 2009t. Assaf filed suit for breach of contract. While the case was pending, Assaf negotiated with Trinity’s new CEO, Tibbitts, Apparently without attorneys, Assaf and Tibbitts signed an agreement that provided that Assaf would receive a salary of $50,000 each year from 2009 to 2011. After that, his employment would automatically renew for a year unless either party gave notice of termination. Trinity refused to honor the agreement. The district court decided to enforce the agreement, but granted Trinity’s motion to bar any evidence of Assaf’s lost professional fees. Trinity never re-employed Assaf, claiming that “there is a policy against ordering specific performance of a personal services contract.” The court ordered Trinity to reinstate Assaf. Rather than reinstating Assaf, Trinity filed a “motion to clarify or stay.” The court reversed its earlier order, proceeded, without trial, to award Assaf his salary for the years 2009 through 2011, attorney’s fees, and compensatory damages. The court did not award any amount in lost professional fees. The Seventh Circuit reversed, declining to address specific performance because Trinity properly reterminated Assaf in 2011. The district court abused its discretion in barring evidence of lost professional fees. View "Assaf v. Trinity Med. Ctr." on Justia Law