Justia Contracts Opinion Summaries

A wholesale food supplier, Vista Food Exchange, Inc. ("Vista"), sued Comercial De Alimentos Sanchez S De R L De C.V. ("Sanchez") for breach of contract, alleging that Sanchez failed to pay for over $750,000 worth of meat products. Vista claimed that Sanchez was required to make payments to Vista's headquarters in New York, but Sanchez contended it had paid the invoices in cash to Vista's salesman, Eduardo Andujo Rascón, in Tijuana, Mexico. Sanchez supported its claim with declarations and documents, including an affidavit from Rascón stating he received the cash payments.The United States District Court for the Southern District of New York granted summary judgment in favor of Sanchez, dismissing Vista's breach-of-contract claim. The court found that Sanchez provided unrefuted evidence of cash payments to Rascón, fulfilling its contractual obligations. It also ruled that even if paying Rascón in cash breached the contract, Vista could not show that its damages were proximately caused by the breach because Rascón's theft of the money was unforeseeable. The court dismissed Vista's other claims for breach of implied contract, promissory estoppel, and unjust enrichment, citing New York law that forecloses such claims when an enforceable contract exists.On appeal, the United States Court of Appeals for the Second Circuit found that genuine disputes of material fact existed regarding Sanchez's claimed performance, the modification of the contract, and the foreseeability of damages. The appellate court vacated the district court's judgment dismissing Vista's claims for breach of contract and unjust enrichment and remanded the case for trial on those claims. The appellate court affirmed the dismissal of Vista's claims for implied contract and promissory estoppel. View "Vista Food Exchange, Inc. v. Comercial de Alimentos Sanchez" on Justia Law

AMTAX Holdings 227, LLC ("AMTAX") filed a lawsuit against CohnReznick LLP ("CohnReznick") in federal court, alleging breach of fiduciary duty, professional negligence, unjust enrichment, and fraud. The dispute arose from CohnReznick's calculation of a purchase price for a property under a right of first refusal agreement, which AMTAX claimed excluded exit taxes required by Section 42 of the Internal Revenue Code. AMTAX argued that this exclusion violated the agreement and federal law.The United States District Court for the Southern District of New York dismissed AMTAX's complaint for lack of subject matter jurisdiction. The court applied the Grable-Gunn test to determine whether the state-law claims presented a substantial federal issue that would warrant federal jurisdiction. The district court concluded that AMTAX's claims did not meet the criteria for federal question jurisdiction, as they did not necessarily raise a substantial federal issue and allowing federal jurisdiction would disrupt the federal-state balance.The United States Court of Appeals for the Second Circuit reviewed the district court's decision de novo. The appellate court agreed with the lower court's application of the Grable-Gunn test, finding that AMTAX's claims were primarily based on contract interpretation rather than federal tax law. The court held that the federal issue was not substantial enough to warrant federal jurisdiction and that exercising jurisdiction would disrupt the balance of state and federal judicial responsibilities. Consequently, the Second Circuit affirmed the district court's dismissal of the case for lack of subject matter jurisdiction. View "AMTAX Holdings 227, LLC v. CohnReznick LLP" on Justia Law

In spring 2020, Czigany Beck, a full-time student at Manhattan College, paid tuition and a comprehensive fee for the semester. Due to the COVID-19 pandemic, the college transitioned to remote learning in March 2020, and Beck received only 46% of her education in person. Beck filed a class action lawsuit against Manhattan College, claiming breach of implied contract and unjust enrichment for not refunding a portion of her tuition and fees.The United States District Court for the Southern District of New York dismissed Beck's claims. The court found that the college's statements were not specific enough to constitute a promise for in-person classes or access to on-campus facilities. The court also ruled that the comprehensive fee was nonrefundable based on the college's terms, and thus Beck's unjust enrichment claim for fees was barred. The court granted summary judgment to Manhattan College on Beck's remaining unjust enrichment claim for tuition, concluding that the college's switch to online instruction was reasonable given the pandemic.Beck appealed to the United States Court of Appeals for the Second Circuit, arguing that the district court's judgment should be reversed based on the decision in Rynasko v. New York University. Manhattan College countered with decisions from the New York Supreme Court's Appellate Division, which supported affirming the district court's judgment. The Second Circuit identified a split between federal and state courts on New York contract-law principles and certified the question to the New York Court of Appeals: whether New York law requires a specific promise to provide exclusively in-person learning to form an implied contract between a university and its students regarding tuition payments. The Second Circuit reserved decision on Beck's appeal pending the New York Court of Appeals' response. View "Beck v. Manhattan College" on Justia Law

Hamilton Reserve Bank, the beneficial owner of $250,490,000 in Sri Lankan government bonds, sued the Democratic Socialist Republic of Sri Lanka in the United States District Court for the Southern District of New York after Sri Lanka defaulted on the bonds. Over a year later, Jesse Guzman, Ultimate Concrete LLC, and Intercoastal Finance Ltd. sought to intervene, claiming Hamilton defrauded them by using their deposited funds to purchase the bonds and then refusing to allow them to withdraw their money.The district court denied the motion to intervene, holding that it lacked jurisdiction over the intervenors' claims. The court found that the claims did not derive from a "common nucleus of operative fact" with Hamilton's breach of contract claim against Sri Lanka, as required for supplemental jurisdiction under 28 U.S.C. § 1367(a).The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the district court applied the correct "common nucleus of operative fact" standard for evaluating supplemental jurisdiction under Section 1367(a). The court concluded that the intervenors' claims, which involved a banking dispute with Hamilton, did not share substantial factual overlap with Hamilton's breach of contract claim against Sri Lanka. Therefore, the district court correctly determined it lacked jurisdiction over the intervenors' claims and denied their motion to intervene. View "Hamilton Reserve Bank v. Sri Lanka" on Justia Law

Little Hearts Marks Family II L.P. ("Little Hearts") was a member of 305 East 61st Street Group LLC, a company formed to purchase and convert a building into a condominium. 61 Prime LLC ("Prime") was the majority member and manager, and Jason D. Carter was the manager and sole member of Prime. In 2021, the company filed for bankruptcy and sold the building to another company created by Carter. The liquidation plan established a creditor trust with exclusive rights to pursue the debtor’s estate's causes of action. Little Hearts sued Prime and Carter for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment, seeking damages for lost capital investment and rights under the Operating Agreement.The bankruptcy court dismissed all claims, ruling that they were derivative and belonged to the debtor’s estate, thus could only be asserted by the creditor trustee. The district court affirmed this decision.The United States Court of Appeals for the Second Circuit reviewed the case. The court affirmed the dismissal of the breach of fiduciary duty and aiding and abetting breach of fiduciary duty claims, agreeing that these were derivative and could only be pursued by the creditor trustee. However, the court vacated the dismissal of the breach of contract and breach of the implied covenant of good faith and fair dealing claims, determining that these were direct claims belonging to Little Hearts and could proceed. The unjust enrichment claim was dismissed as duplicative of the contract claims. The case was remanded for further proceedings consistent with this opinion. View "In re 305 East 61st Street Group LLC" on Justia Law

Givaudan SA, a Swiss multinational manufacturer of flavors and fragrances, entered into a business relationship with Conagen Inc., a Massachusetts-based synthetic biology company. In 2016, the two companies executed a term sheet outlining several potential transactions, including Givaudan's purchase of a 5% equity stake in Conagen for $10 million and an exclusivity agreement for Conagen's intellectual property. Givaudan paid the $10 million and received the shares, but negotiations on the exclusivity agreement failed.Givaudan sued Conagen in the United States District Court for the Southern District of New York, claiming breach of contract, promissory estoppel, and unjust enrichment, seeking the return of its $10 million. After a bench trial, the district court found Conagen not liable on all claims and dismissed the case. Givaudan appealed the dismissal of its breach of contract claim.The United States Court of Appeals for the Second Circuit reviewed the case. The court affirmed the district court's decision, holding that Givaudan failed to prove damages, an essential element of a breach of contract claim under Delaware law. The court found that the $10 million payment for the 5% equity stake was a completed transaction and not contingent on the successful negotiation of the exclusivity agreement. The court also determined that the term sheet was a binding preliminary agreement that established a duty to negotiate in good faith, but Givaudan did not incur any costs or expenses that would qualify as reliance damages. Thus, the judgment of the district court was affirmed. View "Givaudan v. Conagen" on Justia Law

Carrington appealed the district court's judgment requiring them to pay plaintiff, the indirect purchaser and assignee of a limited prejudgment interest in defendants' fund, damages plus prejudgment interest for breach of the limited partnership agreement. Defendants principally contend that the district court erred in its interpretation of the agreement and should have granted summary judgment in their favor on the issue of liability. Defendants argue that, in any event, permitting plaintiff to withdraw from the fund would have precipitated a sale of fund assets at distressed prices, making it impossible for plaintiff to receive more than a minuscule distribution, if any. The court rejected defendants' challenges to the district court's ruling on the issue of liability. However, the court concluded that there were factual issues to be tried as to the calculation of damages. Accordingly, the court vacated and remanded for further proceedings. View "Umbach v. Carrington Investment Partners (US)" on Justia Law

Plaintiffs appealed the district court's conclusion that defendant, a licensed bail bond agent, was entitled to retain the bond premium in this case even though bail was denied. The court certified to the Court of Appeals of the State of New York the following question: Whether an entity engaged in the “bail business,” as defined in NYIL 6801(a)(1), may retain its “premium or compensation,” as described in NYIL 6804(a), where a bond posted pursuant to NYCPL 520.20 is denied at a bail-sufficiency hearing conducted pursuant to NYCPL 520.30, and the criminal defendant that is the subject of the bond is never admitted to bail. View "Gevorkyan v. Judelson" on Justia Law

Process America filed suit against Cynergy for breach of contract and Cynergy counterclaimed, alleging, inter alia, that Process America improperly solicited its customers. The district court held that although both parties had breached the contract, Cynergy’s liability was capped by the contract. The district court awarded Cynergy a net total of $8,521,182 in damages. The court concluded that the solicitation of merchants, and transfer of a portion of the Portfolio to a third party, violate the Independent Sales Organization (ISO) Agreement which permits transfer only pursuant to Section 2.6.B of the ISO Agreement, such that Cynergy is entitled to damages based on the increased rate of attrition of merchant accounts in the Portfolio; the court rejected Process America's argument that, even if the solicitation of merchants would ordinarily be a breach of the non‐solicitation clause, it is excused from performing its obligations under that provision as a result of Cynergy’s failure to pay Process America residuals; the court agreed with the district court's finding that the plain language of Section 4.6 limits damages for Cynergy’s breach of contract to $300,818; the court affirmed the district court’s damages calculation to the extent that it attributes 100% of the increased attrition to Process America; but the court agreed with Process America's contention that the damages calculation was erroneous because it improperly included residuals that would have been paid to Process America. Accordingly, the court affirmed the district court’s interim decisions regarding Process America’s liability. The court vacated the district court's calculation of damages and remanded for further proceedings. View "Process America v. Cynergy Holdings" on Justia Law

The principal issue in this appeal is whether the district court correctly determined the measure of compensation due to Noteholders, represented by BNY Melon, arising from the underpayment to the Noteholders by Chesapeake in connection with Chesapeake's early redemption of the Notes. The court concluded, substantially for the reasons set forth in the district court's thorough opinion, that the district court correctly determined the measure of compensation due to the Noteholders in the circumstances presented. In this case, applying New York law, Section 1.7 of the Supplemental Indenture - a contract Chesapeake does not contend was invalid or unenforceable - dictates the Noteholders’ recovery arising from Chesapeake’s underpayment for its May 13, 2013 redemption. Because Chesapeake completed its redemption on May 13, 2013, it owed the Noteholders the Make‐Whole Price for that redemption, pursuant to Section 1.7(c), and it breached the Supplemental Indenture by paying only the At‐Par Price. The court agreed with the district court that the correct damages award was the difference between the At‐Par Price and the Make‐Whole Price, plus prejudgment interest. To hold otherwise would frustrate the Noteholders’ legitimate expectations regarding their rights under the Supplemental Indenture. Furthermore, Chesapeake was similarly on notice at all relevant times that the district court could require it to pay the Make‐Whole Price for its May 13, 2013 redemption. Finally, the court rejected Chesapeake’s contention that, even if the district court properly awarded breach‐of‐contract damages, it erred by awarding compensation that allowed the Noteholders to recoup in excess of the value of the Notes before the redemption. Accordingly, the court affirmed the judgment. View "Chesapeake Energy v. Bank of New York Mellon Trust" on Justia Law