Justia Contracts Opinion Summaries

A group of medical students attended the University of Science, Arts and Technology (USAT), an international medical school based in Montserrat. USAT was licensed in Montserrat and, for years, was listed in the International Medical Education Directory, allowing its graduates to seek U.S. medical licensure. After a volcanic eruption in 2007, USAT began offering classes online and at alternative sites in the United States and Puerto Rico. In 2018, the Educational Commission for Foreign Medical Graduates (ECFMG) changed its policy, restricting certification to students educated in the country where the school was authorized. USAT students who took courses outside Montserrat after 2018 were no longer eligible for ECFMG certification, affecting their ability to obtain U.S. medical licenses. The students alleged that USAT misrepresented its accreditation and educational legitimacy, leading them to pay substantial tuition under false pretenses.The students filed suit in the United States District Court for the District of Puerto Rico, asserting federal RICO claims, as well as Puerto Rico law claims for fraudulent inducement, breach of contract, and unjust enrichment. The district court granted summary judgment in favor of the defendants, holding that the students failed to establish a “pattern of racketeering activity” as required under RICO, and dismissed the federal claims with prejudice. The court declined to exercise jurisdiction over the Puerto Rico law claims.On appeal, the United States Court of Appeals for the First Circuit reviewed the grant of summary judgment de novo. The court held that the students did not present sufficient evidence of closed- or open-ended continuity to establish a pattern of racketeering activity under RICO. As a result, the First Circuit affirmed the district court’s dismissal of the RICO claim and its decision not to exercise supplemental jurisdiction over the remaining claims. View "Pena-Torres v. University of Science, Arts and Tech" on Justia Law

A plaintiff who won a substantial lottery prize in Maine sought to protect his identity and that of his minor daughter from public disclosure. He entered into a non-disclosure agreement (NDA) with the mother of his child, intending to keep details of his lottery win and finances private. After the plaintiff believed the NDA was breached, he sued for injunctive relief and damages in the United States District Court for the District of Maine. Throughout the proceedings, both parties were initially allowed to litigate under pseudonyms, and a local news organization intervened to advocate for public access. As trial approached, the plaintiff moved to close the courtroom to the public and to continue using pseudonyms, arguing that disclosure could jeopardize his family’s safety and his daughter’s privacy.The District Court for the District of Maine denied both requests. It issued a detailed opinion emphasizing the strong presumption of public access to judicial proceedings, citing common-law tradition and relevant federal rules. The court found that while the case involved sensitive financial and familial information, such concerns did not outweigh the public’s right to access. The court determined that the plaintiff’s wealth and desire for privacy did not constitute “unusually severe harm” justifying deviation from established principles. Additionally, the court noted that any potential harm to the minor child would be mitigated by identifying her only by initials, a standard protocol. The plaintiff timely appealed these rulings.The United States Court of Appeals for the First Circuit reviewed the case under the abuse of discretion standard. It affirmed the District Court’s decision, holding that neither the plaintiff’s wealth nor purported risks to his family met the exceptional circumstances required for trial closure or continued pseudonymity. The appellate court found no abuse of discretion in the lower court’s balancing of public access against privacy interests and awarded costs to the appellees. View "Doe v. Smith" on Justia Law

A medical institution in Puerto Rico borrowed over $10 million from a bank in 1984 to build a hospital, but soon disputes arose regarding the loan. The bank claimed the institution defaulted, while the institution asserted the bank failed to disburse funds as required. Litigation and bankruptcy proceedings followed. In 1991, the parties settled, but the terms of that settlement—whether the debt was split into interest-bearing and non-interest-bearing portions—remained contested. Over the next decades, the loan changed hands, and in 2013 the institution filed for Chapter 11 bankruptcy again. The current loan-holder claimed a significantly higher outstanding balance than the institution believed was owed, due in part to differing interpretations of the 1991 agreement and subsequent bankruptcy plan.The United States Bankruptcy Court for the District of Puerto Rico previously addressed these disputes. It issued orders requiring the institution to demonstrate, with evidence, that the 1991 agreement created a non-interest-bearing note and that it had made payments in accordance with the bankruptcy plan. The court denied discovery, required summary judgment briefing, and ultimately issued an order with minimal analysis, granting the loan-holder’s motion to dismiss and denying the institution’s motion for summary judgment. The court’s reasoning was ambiguous, referencing both summary judgment and pleading standards, and did not clearly identify the basis for its decision.On appeal, the United States District Court for the District of Puerto Rico affirmed, concluding the bankruptcy plan did not incorporate the 1991 bifurcated note arrangement. The United States Court of Appeals for the First Circuit, reviewing the case, found the bankruptcy court’s order insufficiently reasoned to permit meaningful appellate review. The First Circuit vacated the lower courts’ decisions and remanded for further proceedings, instructing the bankruptcy court to clarify its reasoning, identify the applicable legal standards, and consider whether summary judgment or further fact-finding is appropriate. View "Instituto Medico del Norte, Inc. v. Greengift Capital, LLC" on Justia Law

A Puerto Rican distributor of HVAC products brought suit against a Miami-based manufacturer after their commercial relationship deteriorated. The distributor alleged that the manufacturer’s actions impaired its distribution rights under Puerto Rico’s Dealer’s Act (Law 75). After the distributor dismissed claims against certain non-diverse defendants, the manufacturer removed the case to federal court and asserted a counterclaim alleging the distributor owed over $235,000, as well as seeking a declaratory judgment that it had just cause to terminate the relationship.The United States District Court for the District of Puerto Rico granted summary judgment to the manufacturer on the Law 75 claim, finding in its favor, and dismissed the manufacturer’s declaratory judgment counterclaim as unripe. The court denied summary judgment on the remaining damages counterclaim, finding material factual disputes and setting it for trial. The distributor sought entry of final judgment under Rule 54(b), which the court denied due to overlap between the claims. The distributor’s attempt to obtain appellate review via a petition under Rule 5 was also denied by the United States Court of Appeals for the First Circuit. Subsequently, the manufacturer moved to voluntarily dismiss its remaining counterclaim without prejudice. The district court granted that motion, dismissing the counterclaim without prejudice and denying the distributor’s requests for dismissal with prejudice or for attorney fees and costs. The court then entered judgment dismissing the distributor’s claims with prejudice and the manufacturer’s counterclaim without prejudice.On appeal, the United States Court of Appeals for the First Circuit determined that it lacked appellate jurisdiction. The court held that a voluntary dismissal without prejudice does not produce a final decision under 28 U.S.C. § 1291 when the dismissed claim could be revived in the same district court. Consequently, there was no final, appealable judgment, and the appeal was dismissed. View "Air-Con, Inc. v. Daikin Applied Latin America, LLC" on Justia Law

Several employees of Veolia Water Contract Operations USA, Inc. sued their employer, seeking prevailing wages under the Massachusetts Prevailing Wage Act (PWA) for certain repair and replacement work they performed pursuant to a contract between Veolia and the Springfield Water and Sewer Commission. That contract was authorized by a 1997 Massachusetts Special Act, which provided that work falling within "the construction and design of improvements" remained governed by the PWA. The disputed work occurred during the contract’s second stage, which involved ongoing operation, maintenance, repair, and replacement of wastewater facilities.After both sides moved for summary judgment, the United States District Court for the District of Massachusetts ruled for Veolia. The court concluded that the employees’ work did not fall under "construction and design of improvements" as used in the Special Act and, relying on the Supreme Judicial Court of Massachusetts’s (SJC) decision in Metcalf v. BSC Group, Inc., determined that the structure of the procurement scheme made the PWA inapplicable to the service contract as a whole. The employees appealed.The United States Court of Appeals for the First Circuit, reviewing the case, certified two questions regarding Massachusetts law to the SJC. The SJC clarified that "construction and design of improvements" in the Special Act is broader than the PWA’s definition of “construction” but does not include ordinary repairs or maintenance. The SJC also held that the Special Act was not incompatible with the PWA and that Metcalf was not controlling. Based on the SJC’s answers, the First Circuit held that the district court’s summary judgment for Veolia could not stand, reversed the order, vacated the judgment, and remanded the case for further proceedings to determine which, if any, of the employees’ tasks fell within the statutory phrase. View "Nicholls v. Veolia Water Contract Operations USA, Inc." on Justia Law

A woman and her husband, after marrying, received a parcel of real estate from her parents, which they held as tenants by the entirety in Massachusetts. They planned and undertook substantial renovations, initially funded by gifts from the husband’s parents. When those funds ran out, the husband’s parents provided over $1.5 million more, which was later documented as a loan in a promissory note signed only by the husband, not the wife. The couple’s marriage deteriorated, leading to divorce proceedings. During the divorce, the husband’s parents obtained a default judgment against the husband (but not the wife) for the loan and secured a writ of execution against his interest in the property, which was recorded. After the divorce, the family court awarded the property solely to the wife, free from any claim by the husband, and clarified that it could not adjudicate the parents’ rights under the promissory note.Subsequently, the husband’s parents transferred their judgment to a family trust, which noticed a sheriff’s sale of the husband’s purported interest in the property. The wife sued in state court to stop the sale, the case was removed to federal court, and both sides sought summary judgment. The United States District Court for the District of Massachusetts granted summary judgment to the wife, holding that the divorce and property distribution extinguished the creditor’s interest and that, even if the loan were valid, the wife was not jointly liable because the funds were not spent on “necessaries” under Massachusetts law.On appeal, the United States Court of Appeals for the First Circuit vacated the district court’s prediction of state law concerning the effect of divorce on a creditor’s interest and remanded for factual findings on the validity of the loan as to the wife. The court also found that neither preclusion nor the state’s domestic relations exception barred the wife’s challenge, and that factual disputes remained as to whether the loan was spent on necessaries. The court affirmed, reversed, and vacated in part, remanding for further proceedings. View "Cosel v. Wendt" on Justia Law

A truck dealership and a manufacturer entered into a contract permitting the dealership to sell and service the manufacturer’s trucks in specified regions, with the manufacturer holding the right to appoint additional dealers in those regions at its sole discretion when it determined such appointments were warranted. The manufacturer appointed a new dealer within the dealership’s area, citing customer support needs and concerns about the dealership’s performance. Internal documents revealed the manufacturer had a plan to consolidate its dealer network for efficiency and improved sales, and had previously denied the dealership’s request to expand its franchise. Despite the appointment of the new dealer, the original dealership retained its nonexclusive right to sell trucks in its area.Prior to the current suit, the dealership protested before the Rhode Island Dealer Board, alleging statutory notice failures and bad faith denial of expansion, but the Board dismissed the protest as extraterritorial application of Rhode Island law. The dealership sought reversal in Rhode Island Superior Court, and the case was removed to the United States District Court for the District of Rhode Island, which granted summary judgment to the manufacturer. The United States Court of Appeals for the First Circuit affirmed summary judgment on certain claims and certified a question to the Rhode Island Supreme Court, which clarified statutory interpretation. Based on that, the First Circuit affirmed the district court’s summary judgment on the statutory-notice claim.Upon de novo review, the United States Court of Appeals for the First Circuit held that the manufacturer acted within its contractual discretion in appointing a new dealer, as the contract only required the manufacturer to have a reason related to its business objectives, not to market conditions. The court also held there was no breach of the implied covenant of good faith and fair dealing, as the manufacturer’s actions were consistent with the contract’s objectives. The court affirmed the district court’s grant of summary judgment in favor of the manufacturer. View "Rhode Island Truck Ctr., LLC v. Daimler Trucks North America, LLC" on Justia Law

Kendell Seafood Imports, Inc. and Mark Foods, LLC are both fish importers. Kendell alleged that Mark Foods tortiously interfered with its agreement with Chilean Sea Bass, Inc. (CSB), a fish distributor. According to Kendell, it had arranged with CSB to purchase the distributor’s entire catch for several years, including 2021, and that CSB agreed to roll over an outstanding 2020 balance into the 2021 price. Kendell further claimed that Mark Foods was aware of this agreement and attempted to solicit business from CSB during the same period, thereby interfering with Kendell’s relationship and causing it harm.After Kendell initially sued Mark Foods for tortious interference in the United States District Court for the District of Rhode Island, Mark Foods moved to dismiss the complaint. In response, Kendell filed an amended complaint with similar facts but with additional details about the agreement with CSB. The district court treated the amended complaint as operative and, after considering substantive arguments from both parties, granted Mark Foods’ motion to dismiss with prejudice. The district court found that Kendell’s allegations did not plausibly support three essential elements of tortious interference: the defendant’s knowledge of the contract, intentional interference, and resulting damages.The United States Court of Appeals for the First Circuit reviewed the case on appeal. It held that the district court properly applied the pending motion to dismiss to the amended complaint, as the amendments did not affect the relevant arguments. Applying Rhode Island law, the First Circuit concluded that Kendell had not sufficiently pleaded that Mark Foods knew about the specific agreement with CSB. Because this element was not plausibly alleged, the court affirmed the district court’s order dismissing the case with prejudice. View "Kendell Seafood Imports, Inc. v. Mark Foods, LLC" on Justia Law

The plaintiffs, who were long-time friends of the defendants, invested significant sums in a biopharmaceutical company controlled by the defendants. The defendants did not disclose that the company was in serious financial distress, under a substantial obligation to a lender, and prohibited from incurring additional debt. The investment was structured through promissory notes, which included false warranties regarding the company’s financial status and claimed the formation of a new entity that never materialized. Instead of funding a new venture, the defendants used the investment to pay off existing company debt. Less than two years later, the company declared bankruptcy, making the notes essentially worthless.The plaintiffs brought claims under federal and Massachusetts securities laws, the Massachusetts consumer protection statute, and for common law fraud and negligent misrepresentation in the United States District Court for the District of Massachusetts. The defendants moved to dismiss the action, relying on a forum selection clause in the promissory notes requiring litigation in Delaware courts. The district court granted the motion and dismissed the case without prejudice, concluding that the clause applied to the plaintiffs’ claims.On appeal, the United States Court of Appeals for the First Circuit reviewed the dismissal de novo. The plaintiffs argued that their claims did not “arise out of” the notes and that the forum selection clause was unenforceable as contrary to Massachusetts public policy. The First Circuit rejected both arguments, holding that the claims arose from the notes and that the plaintiffs did not meet the heavy burden required to invalidate the clause on public policy grounds. The First Circuit affirmed the district court’s dismissal without prejudice, leaving the plaintiffs free to pursue their claims in the contractually designated Delaware courts. View "Manzo v. Wohlstadter" on Justia Law

Gregory Parzych served as president of ZipBy USA, LLC, a parking technology company, after previously founding and selling a similar company, TCS. While employed by ZipBy, Parzych entered into several agreements restricting conflicts of interest and disclosure of confidential information. In 2020, Parzych learned that TCS might be for sale. He advised ZipBy’s owner against pursuing the acquisition, then secretly attempted to purchase TCS for himself via a shell company, using financial information he had obtained as a ZipBy executive. ZipBy discovered his actions, terminated his employment, and, along with affiliates, sued Parzych for breach of fiduciary duty, breach of contract, misappropriation of trade secrets, trademark infringement, and false designation.After a jury trial in the United States District Court for the District of Massachusetts, the jury found for ZipBy on all claims, awarding compensatory and exemplary damages. The district court later granted judgment as a matter of law for Parzych on the trade secret claims, striking the exemplary damages but upholding the other verdicts and damages. The court also entered a permanent injunction barring Parzych from acquiring TCS and awarded ZipBy a portion of its attorneys’ fees. Parzych appealed, contesting evidentiary rulings, denial of a trial continuance, and the fee award, while ZipBy cross-appealed the judgment on the trade secret claims.The United States Court of Appeals for the First Circuit affirmed the district court’s judgment. It held that the district court did not abuse its discretion in admitting ZipBy’s expert lost-profits testimony, excluding late-disclosed evidence, or denying a trial continuance due to counsel’s COVID-19 infection. The appellate court agreed with the district court’s judgment as a matter of law against ZipBy’s trade secret claims, finding insufficient evidence that Parzych’s actions constituted trade secret misappropriation. Finally, the fee award was affirmed as a reasonable enforcement of the IP Agreement’s fee-shifting provision. View "ZipBy USA LLC v. Parzych" on Justia Law