Justia Contracts Opinion Summaries

L Squared Industries, Inc., a Florida-based operator of gas stations, purchased a storage tank liability insurance policy from Nautilus Insurance Company to cover cleanup costs resulting from pollution caused by underground storage tank discharges. In 2018, after a consultant’s report identified groundwater contamination at one of its stations, L Squared did not notify Nautilus of the pollution condition until eight months later, despite a policy requirement to provide notice within seven days of becoming aware of such a condition. L Squared subsequently sought indemnification from Nautilus for cleanup and defense costs, but Nautilus denied coverage.L Squared filed suit in Florida state court, seeking a declaration of coverage and damages for breach of contract. The case was removed to the United States District Court for the Middle District of Florida. Both parties moved for summary judgment. The district court granted summary judgment to Nautilus, finding that L Squared failed to comply with the policy’s seven-day notice provision, and thus Nautilus had no duty to defend or indemnify. L Squared’s motion for reconsideration was denied, and it appealed.The United States Court of Appeals for the Eleventh Circuit reviewed the district court’s summary judgment order de novo. The appellate court held that, under Florida law, when an insured breaches a prompt-notice provision but provides notice within the policy period, coverage is not automatically forfeited; rather, the insurer is presumed prejudiced, but the insured may rebut this presumption. In this case, L Squared failed to timely raise arguments or evidence to rebut the presumption of prejudice. The Eleventh Circuit affirmed the district court’s grant of summary judgment in favor of Nautilus, holding that L Squared’s failure to comply with the seven-day notice provision barred coverage. View "L. Squared Industries, Inc. v. Nautilus Insurance Company" on Justia Law

Jay Gould served as CEO of Interface, Inc., a carpet manufacturer. After an incident at an annual sales meeting in which Gould allegedly became intoxicated and verbally abused an employee, Interface’s board of directors terminated his employment for cause. This followed a prior warning and an investigation by King & Spalding LLP, which corroborated the allegations. Under Gould’s employment agreement, termination for cause resulted in significantly reduced compensation compared to termination without cause.Gould filed suit in the United States District Court for the Northern District of Georgia, alleging breach of contract and arguing that Interface’s determination of cause was made in bad faith. Interface moved for summary judgment, asserting that the contract gave it absolute discretion to determine cause, or, alternatively, that it had acted in good faith. Gould’s arguments in the district court focused on the company’s alleged lack of good faith, contending that the investigation was a sham. The magistrate judge recommended granting summary judgment to Interface, finding both that the company had absolute discretion and, alternatively, that Gould had not shown bad faith. The district court adopted this recommendation and denied Gould’s subsequent motion for reconsideration, ruling that Gould had waived a new argument that Interface had no discretion to determine cause.On appeal to the United States Court of Appeals for the Eleventh Circuit, Gould advanced the new theory that Interface had no discretion to determine cause under the contract. The Eleventh Circuit held that this theory was a new issue, not a subsidiary argument, and that Gould had forfeited it by failing to raise it in the district court. The court affirmed the district court’s judgment, concluding that Gould’s remaining claims did not warrant reversal. View "Gould v. Interface, Inc." on Justia Law

A business operating a strip club featuring nude dancing and alcohol sales entered into a settlement agreement with DeKalb County, Georgia, in 2001, which was later amended in 2007. The amended agreement granted the club non-conforming status, allowing it to continue its business model for fifteen years, with the possibility of renewal, and required annual licensing fees. In 2013, the City of Chamblee annexed the area containing the club and subsequently adopted ordinances restricting adult entertainment establishments, including bans on alcohol sales, stricter food sales requirements for alcohol licenses, and earlier closing times. The City initially issued alcohol licenses to the club but later denied renewal, citing failure to meet new requirements and the club’s status as an adult establishment.The United States District Court for the Northern District of Georgia dismissed some of the club’s claims for lack of standing and granted summary judgment to the City on the remaining claims. The district court found that the club lacked standing to challenge certain ordinances as it was not an alcohol licensee, and that the City’s ordinances regulating adult entertainment and alcohol sales were constitutional under the secondary-effects doctrine, applying intermediate scrutiny. The court also determined there was no valid contract between the club and the City, rejecting the Contract Clause claims, and found no equal protection violation, as the club failed to identify a similarly situated comparator.On appeal, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s rulings. The Eleventh Circuit held that the club lacked standing for equitable relief due to its permanent closure, but had standing for damages for a limited period. The court upheld the application of intermediate scrutiny to the ordinances, found no impairment of contract, and agreed that the club failed to establish an equal protection violation. The district court’s judgment in favor of the City was affirmed. View "WBY, Inc. v. City of Chamblee, Georgia" on Justia Law

A manufacturer of fasteners and related parts entered into a long-term supply agreement with a home appliance company, which later spun off its outdoor products division into a separate entity. The agreement, intended to make the manufacturer the exclusive supplier for a broad range of parts, quickly became the subject of disputes over its scope and the parties’ obligations. The parties attempted to resolve their disagreements through a settlement memorandum and a consent order, but further conflicts arose regarding price increases, performance, and payment for inventory.The United States District Court for the Southern District of Georgia was first asked to interpret the scope of the parties’ agreements. It found the original contract too indefinite to enforce in its entirety but held that subsequent agreements and the parties’ course of performance clarified which parts were covered. The district court also sanctioned the manufacturer for discovery violations, specifically for failing to produce product-level cost data, and struck its lost profits claim. The court denied the manufacturer’s motion for sanctions against the defendants for alleged spoliation, finding the motion untimely and the missing evidence irrelevant. The court granted summary judgment to the defendants on the manufacturer’s price increase claim, finding insufficient evidence to support the requested increases, and denied the manufacturer’s motion to amend its complaint to add a claim for prejudgment interest due to undue delay.On appeal, the United States Court of Appeals for the Eleventh Circuit reviewed each of the manufacturer’s challenges. The court held that the district court properly interpreted the scope of the agreements, did not abuse its discretion in imposing or denying discovery sanctions, correctly granted summary judgment on the price increase claim, and appropriately excluded certain evidence at trial. The Eleventh Circuit affirmed all orders and the final judgment in favor of the defendants. View "Whitesell Corporation v. Husqvarna Outdoor Products, Inc." on Justia Law

NCR Corporation established five “top hat” retirement plans to provide supplemental life annuity benefits to senior executives. Each plan promised participants a fixed monthly payment for life, with language allowing NCR to terminate the plans so long as no action “adversely affected” any participant’s accrued benefits. In 2013, NCR terminated the plans and paid participants lump sums it claimed were actuarially equivalent to the promised annuities, using mortality tables, actuarial calculations, and a 5% discount rate. NCR knew that, statistically, about half of the participants would outlive the lump sums if they continued to withdraw the same monthly benefit, resulting in some participants receiving less than they would have under the original annuity.Participants filed a class-action lawsuit in the United States District Court for the Northern District of Georgia, alleging breach of contract and seeking either replacement annuities or sufficient cash to purchase equivalent annuities. The district court certified the class and granted summary judgment for the participants, finding that NCR’s lump-sum payments adversely affected the accrued benefits of at least some participants, in violation of the plan language. The court ordered NCR to pay the difference between the lump sums and the cost of replacement annuities, plus prejudgment and postjudgment interest.On appeal, the United States Court of Appeals for the Eleventh Circuit reviewed the district court’s summary judgment order de novo. The Eleventh Circuit held that the plan language was unambiguous and did not permit NCR to unilaterally replace life annuities with lump sums that reduced the value of accrued benefits for any participant. The court affirmed the district court’s judgment, including the remedy of requiring NCR to pay the cost of replacement annuities and awarding prejudgment interest. View "Hoak v. NCR Corp." on Justia Law

Caterpillar Financial Services Corporation and Venequip Machinery Sales Corporation Miami entered into an inventory loan agreement governed by Tennessee law, under which Venequip Miami could borrow funds by executing promissory notes. Venequip Miami executed six such notes, totaling approximately $4.77 million. The agreement specified that default would occur if Venequip Miami failed to repay principal or interest when due, or if there was a material adverse change in its financial condition. After a related affiliate defaulted on a separate loan in Curaçao, Caterpillar Financial declared an event of default under the inventory loan agreement, accelerated the debt, and demanded repayment. Venequip Miami did not repay, and Caterpillar Financial alleged that the outstanding amount exceeded $10 million.Caterpillar Financial filed a breach of contract suit in the United States District Court for the Southern District of Florida. Venequip Miami moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that Caterpillar Financial failed to specify which provision of the inventory loan agreement was breached. The district court agreed, finding the complaint insufficient because it did not identify the specific provision breached among several possible events of default, and dismissed the case with prejudice. Caterpillar Financial’s subsequent motion to amend the judgment and file an amended complaint was denied.The United States Court of Appeals for the Eleventh Circuit reviewed the dismissal de novo. The court held that under federal pleading standards, a breach of contract plaintiff is not required to identify the specific contractual provision breached, but must plausibly allege nonperformance. The court found that Caterpillar Financial’s complaint sufficiently alleged the existence of a contract, nonperformance by Venequip Miami, and resulting damages. The Eleventh Circuit reversed the district court’s judgment and remanded the case for further proceedings. View "Caterpillar Financial Services Corp. v. Venequip Machinery Sales Corp." on Justia Law

A qui tam relator, Sedona Partners LLC, alleged that several transportation service providers (TSPs) engaged in a fraudulent scheme to defraud a U.S. government shipping program. The TSPs were accused of submitting low-ball bids to win contracts and then falsely certifying the need for foreign flag vessel waivers, despite knowing that U.S. flag vessels were available. This allowed them to use cheaper foreign vessels, thereby increasing their profits while undercutting competitors who submitted legitimate bids.The United States District Court for the Southern District of Florida initially dismissed Sedona's first amended complaint without prejudice, citing a lack of specificity in the allegations. Sedona then filed a second amended complaint, which included new allegations based on information obtained during discovery. The defendants moved to dismiss this complaint and to strike the new allegations, arguing that they were derived from discovery and thus circumvented the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). The district court agreed, struck the discovery-based allegations, and dismissed the second amended complaint with prejudice, concluding that without these allegations, Sedona failed to meet Rule 9(b)'s particularity requirement.The United States Court of Appeals for the Eleventh Circuit reviewed the case and reversed the district court's decision. The appellate court held that Rule 9(b) does not prohibit courts from considering allegations based on information obtained in discovery when deciding a motion to dismiss. The court emphasized that Rule 9(b)'s text does not restrict the source of information used to satisfy its requirements and that supplementing the rule with such a restriction would contravene the Supreme Court's guidance against adding pleading requirements on a case-by-case basis. The appellate court vacated the district court's order dismissing the complaint and remanded the case for further proceedings. View "Sedona Partners LLC v. Able Moving & Storage Inc." on Justia Law

Bernard Perez, an ophthalmologist, entered into a disability insurance contract with MONY Life Insurance Company in 1988. After being diagnosed with throat cancer in 2011, Perez began receiving monthly disability benefits. MONY later suspected Perez of dishonesty in his disability claims and financial information, leading to the discontinuation of payments in February 2018. MONY sued Perez for unjust enrichment, and Perez counterclaimed for breach of contract.The Middle District of Florida held a nine-day trial where evidence showed Perez's deceitful conduct, including misrepresenting his ownership in his medical practice and overstating his physical ailments. The jury found in favor of MONY on the unjust enrichment claim, awarding $388,000, and rejected Perez's breach of contract counterclaim.The United States Court of Appeals for the Eleventh Circuit reviewed the case. The court held that under Florida law, an unjust enrichment claim cannot proceed when an express contract covers the same subject matter. Therefore, the district court erred in allowing the unjust enrichment claim to go to the jury. The Eleventh Circuit set aside the jury's verdict on this claim and directed the district court to vacate the judgment awarding MONY $448,930.06.Regarding Perez's breach of contract counterclaim, the Eleventh Circuit found that the district court erred in failing to interpret the ambiguous term "acceptable proof of loss" in the insurance contract. However, this error was deemed harmless because the evidence overwhelmingly showed Perez's dishonesty in his proofs of loss. Thus, the jury's verdict against Perez on his breach of contract counterclaim was affirmed. The court also affirmed the district court's evidentiary rulings and denial of sanctions. View "MONY Life Insurance Co. v. Perez" on Justia Law

A property insurance dispute arose between a church in Albany, Georgia, and its insurer following storm damage in 2014. The church's property, which included asbestos tile roofs, was insured under an all-risks policy. After the storm, the insurer's adjuster estimated repair costs at $2,300, but the church's contractor estimated over $1.3 million for full roof replacement. The church sued for breach of contract and bad faith. In 2018, Hurricane Michael caused further damage, and the church filed a claim with a different insurer, obtaining a lower repair estimate. The original insurer argued that the church's failure to disclose this second claim constituted a material misrepresentation.The United States District Court for the Middle District of Georgia excluded evidence of the alleged misrepresentation, finding it irrelevant. The jury awarded the church $1.75 million in damages, and the insurer's motion for a new trial was denied. The insurer appealed, arguing that the exclusion of misrepresentation evidence was erroneous and that the damages award was speculative and contrary to the policy terms.The United States Court of Appeals for the Eleventh Circuit reviewed the case. It found that the insurer had waived its misrepresentation defense by not objecting during trial and by explicitly withdrawing the defense. The court also held that the jury's award, which included increased construction costs due to delays, was supported by sufficient evidence and did not constitute double recovery when combined with prejudgment interest. The court affirmed the district court's rulings and the jury's verdict. View "Central Baptist Church of Albany Georgia Inc v. Church Mutual Insurance Co." on Justia Law

AST & Science LLC, a company in the satellite technology and communications business, hired Delclaux Partners SA to introduce it to registered broker-dealers for investment purposes. Delclaux introduced AST to LionTree Advisors LLC, which handled AST's Series A financing. Two contracts were involved: a Finder’s Fee Agreement between AST and Delclaux, and a separate agreement between AST and LionTree. After the Series B financing, Delclaux claimed it was owed fees from four transactions, which AST refused to pay, leading to AST suing Delclaux for breach of contract, alleging Delclaux acted as an unregistered broker-dealer.The United States District Court for the Southern District of Florida denied summary judgment on AST’s complaint and granted summary judgment to AST on Delclaux’s counterclaim. Delclaux appealed, but the appeal was voluntarily dismissed due to jurisdictional questions. The district court later held that it lacked diversity jurisdiction but claimed federal-question jurisdiction, asserting that the case involved a federal issue regarding the Securities Exchange Act.The United States Court of Appeals for the Eleventh Circuit reviewed the case and disagreed with the district court’s assertion of federal-question jurisdiction. The appellate court held that the breach-of-contract claim was governed by state law and did not meet the criteria for federal-question jurisdiction under the Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing test. The court found that the federal issue was not substantial enough to warrant federal jurisdiction. Consequently, the Eleventh Circuit vacated the district court’s judgment and remanded the case with instructions to dismiss it for lack of subject-matter jurisdiction. View "AST & Science LLC v. Delclaux Partners SA" on Justia Law