Justia Contracts Opinion Summaries

The case centers on a 2016 traffic accident in Will County, Illinois, involving a semi-tractor operated by Midvest Transport Corporation, pulling a chassis managed by two companies. The driver of the car involved sued multiple defendants: Midvest, its driver, and the chassis companies. All defendants were insured by Northland Insurance Company. Northland appointed separate counsel for its insureds, but the chassis companies (Consolidated) preferred their own attorneys and sought reimbursement from Northland for those legal expenses, also seeking statutory penalties under Illinois law.In the United States District Court for the Northern District of Illinois, Consolidated sued Northland for declaratory and compensatory relief, alleging breach of contract and seeking penalties under § 155 of the Illinois Insurance Code. The district court initially ruled for Northland, finding no conflict of interest that would entitle Consolidated to independent counsel at Northland's expense. On reconsideration, however, the court found a conflict existed, granted summary judgment for Consolidated on the breach of contract and declaratory relief claims, and awarded $115,000. The district court rejected Consolidated’s claim for penalties, finding Northland did not act vexatiously or unreasonably.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s rulings de novo. It held that Illinois law only creates a narrow exception to an insurer’s right to control the defense where a serious, actual conflict exists between the insurer and the insured. The court found no such conflict here, as Northland’s interests were not at odds with Consolidated’s, and any adversity between insured codefendants did not trigger the right to independent counsel. Accordingly, the Seventh Circuit reversed the judgment in favor of Consolidated on its breach of contract and declaratory relief claims, and affirmed the judgment in favor of Northland on the § 155 claim. View "Consolidated Chassis Management LLC v Northland Insurance Co." on Justia Law

Two long-term employees of a township senior center lost their jobs when a newly elected board, led by a candidate from the opposing political party, reorganized the center's leadership structure. The plaintiffs, both Republicans, had campaigned for the losing Republican candidate in the local election. After the incoming Democratic supervisor and board took office, they voted to eliminate the plaintiffs' positions as part of a broader reorganization, creating new roles and appointing others, including one individual who had also supported the Republican candidate.After their terminations, the plaintiffs filed suit in Illinois state court, naming the township and certain officials as defendants. They alleged, among other claims, that their First Amendment rights had been violated because their political activity was a motivating factor in their dismissals. The defendants removed the case to the United States District Court for the Northern District of Illinois. Following partial dismissal of claims, only the First Amendment retaliation and breach of implied contract claims against the township remained. After discovery, the district court granted summary judgment for the township, finding plaintiffs had not shown that their political activity was a motivating factor in the terminations, nor had they rebutted the township's evidence of legitimate reasons for the reorganization.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s decision de novo. The Seventh Circuit held that the plaintiffs had not produced sufficient evidence that their political activity motivated their terminations. The court found that the undisputed evidence showed neither the new supervisor nor the trustees knew of the plaintiffs' political involvement, and there were valid, non-retaliatory reasons for the personnel changes. The court affirmed the district court’s grant of summary judgment for the township. View "Fox v DuPage Township" on Justia Law

Two software development companies became involved in a dispute after a UK bank, Metro Bank PLC, hired one company, Arkeyo LLC, to create software for its coin-counting machines. Years later, as Arkeyo’s product became outdated, Metro Bank engaged Saggezza UK (a subsidiary of Saggezza, Inc.) to build replacement software. During development, Metro Bank provided Saggezza with an Arkeyo-operated touchscreen computer for reference. Arkeyo later alleged that Saggezza, Inc. infringed its copyrights and trade secrets, interfered with its contract and business relationship with Metro Bank, and converted Arkeyo’s property.The United States District Court for the Northern District of Illinois granted summary judgment for Saggezza, Inc. on all claims, ruling that Arkeyo did not show Saggezza, Inc. was responsible for the alleged infringement or tortious acts—these, if they occurred, were committed by Saggezza UK, which was not a defendant. The district court also denied Arkeyo’s motions for sanctions and for reconsideration based on purportedly new evidence, and it awarded attorney’s fees to Saggezza, Inc. under federal statutes.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court’s decisions. The appellate court held that Arkeyo’s copyright claims failed because there was no evidence of copying. The trade secret claims failed due to Arkeyo’s public disclosure of its software and the generic nature of the alleged secrets. The tortious interference claims were rejected because Saggezza’s competitive conduct was not “wrongful” under Illinois law, and the conversion claim failed since Arkeyo did not own or demand the property. The appellate court also affirmed the denial of sanctions, the denial of reconsideration, and the award of attorney’s fees. View "Arkeyo LLC v Saggezza, Inc." on Justia Law

A company that operated as a fixed-base operator at a municipal airport sued the city that owns and operates the airport. The company alleged that the city provided more favorable lease terms and selectively excused certain regulatory requirements for a competing operator, thereby disadvantaging the plaintiff. The city’s leases with the plaintiff and with its competitor differed in several respects, including rent abatement periods, required capital investments, and compliance with fuel storage and insurance requirements. The plaintiff argued that these differences, along with the city’s alleged failure to strictly enforce its own policies and federal grant assurances, constituted both an equal protection violation under a “class-of-one” theory and a breach of contract.The lawsuit was originally filed in Illinois state court, but the city removed it to the United States District Court for the Northern District of Illinois. The plaintiff amended its complaint to drop claims against the competitor and proceeded against the city for breach of contract and equal protection violations. After discovery, both sides moved for summary judgment. The district court granted summary judgment for the city on both claims, finding that the class-of-one theory did not apply in the context of government contracting and that the contractual documents did not incorporate the policies or grant assurances as enforceable obligations.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The appellate court held that a class-of-one claim under the Equal Protection Clause is not available where a company challenges the terms of its lease or its competitor’s treatment under a different lease, absent any class-based discrimination. The court also held that the city’s policy and grant assurances were not incorporated into the plaintiff’s lease as enforceable contract terms, nor did the law provide a private right to enforce them in this context. The court affirmed the district court’s summary judgment in favor of the city. View "Joliet Avionics, Inc. v City of Aurora" on Justia Law

A generic drug manufacturer and a brand-name drug company previously settled a patent infringement lawsuit concerning a medication used to treat osteoporosis. As part of their 2018 settlement, the generic manufacturer agreed not to sell its version of the drug until a specified “Entry Date,” and in return, the brand-name company covenanted not to take any action to prevent or delay the approval, launch, or marketing of the generic drug. The agreement did not specify a fixed expiration date for these obligations. Later, after the relevant patents expired in August 2019, the brand-name company submitted a supplemental application to the FDA, obtaining additional regulatory exclusivity that temporarily kept generics—including the plaintiff’s product—off the market.After being unable to enter the market due to this additional exclusivity, the generic manufacturer sued for breach of contract, arguing that the covenants in the settlement agreement required the brand-name company both to waive any exclusivity and not to interfere with its market entry. The United States District Court for the Southern District of Indiana dismissed the case, holding that the agreement and its obligations expired with the patents and therefore could not have been breached after that date.The United States Court of Appeals for the Seventh Circuit reviewed the dismissal de novo. It held that the generic manufacturer plausibly alleged breaches of contract terms that may have survived the expiration of the patents, as the settlement agreement did not clearly define its own duration. The court found that, under Indiana law, a contract without a fixed term remains effective for a “reasonable time,” which is a factual question not suitable for resolution on the pleadings. The Seventh Circuit reversed the district court’s judgment and remanded the case for further proceedings. View "Teva Pharmaceuticals USA, Inc. v Eli Lilly and Company" on Justia Law

A roofing contractor was sued in Illinois state court by the estates of two individuals who died when a building façade collapsed. The estates alleged that the contractor had negligently performed repairs on the building after it was damaged by a windstorm in August 2020. The repairs were completed by December 2020, and the fatal collapse occurred in April 2022. The contractor sought defense and indemnification from its commercial general liability insurer under a policy that began on February 8, 2022. The insurance policy included a “Prior Work Exclusion” that barred coverage for claims arising from work completed before the policy’s inception date.The insurer filed suit in the United States District Court for the Northern District of Illinois seeking a declaratory judgment that it had no duty to defend or indemnify the contractor in the underlying state lawsuit. The contractor counterclaimed for breach of contract and argued that the exclusion rendered coverage illusory. Both parties moved for judgment on the pleadings. The district court granted judgment to the insurer, holding that the exclusion applied because the work at issue was completed before the policy period and that the exclusion did not render the coverage illusory, as some coverage for completed operations remained.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The court held that, under Illinois law, the Prior Work Exclusion clearly barred coverage for claims arising from work completed prior to February 8, 2022. The court further held that the exclusion did not make completed-operations coverage illusory because the policy still provided coverage for work completed during the policy period. The judgment in favor of the insurer was affirmed. View "Nautilus Insurance Company v Bee Quality Inc." on Justia Law

Black & Veatch Construction, Inc. contracted The Boldt Company as a subcontractor for the assembly of a windfarm in Illinois. The project quickly encountered delays due to late delivery of turbine parts, unsuitable site conditions, and issues with equipment, for which Boldt provided several written notices to Black & Veatch. Despite these notices, Black & Veatch issued multiple default warnings and ultimately terminated Boldt for cause, taking over the remaining work. Boldt sued, claiming wrongful termination and seeking payment for completed work, while Black & Veatch counterclaimed that Boldt breached by failing to perform on time.The United States District Court for the Northern District of Illinois granted summary judgment in favor of Black & Veatch, ruling that Boldt defaulted by failing to perform on schedule and that Black & Veatch properly terminated the subcontract. At trial, the jury was tasked only with determining damages and awarded Black & Veatch nominal damages of $1. Both parties filed post-trial motions, which the district court denied.Upon appeal, the United States Court of Appeals for the Seventh Circuit affirmed the jury’s nominal damages verdict, finding no reversible error in the district court’s evidentiary rulings or jury instructions. The appellate court also affirmed the district court’s grant of summary judgment as to Boldt’s claims for payment for completed work and for Black & Veatch’s alleged failure to provide adequate construction works. However, the Seventh Circuit reversed the grant of summary judgment on the wrongful termination claim, finding the subcontract ambiguous about whether Boldt was responsible for delays absent specific notice and that material factual disputes remained. The case was remanded for further proceedings on the wrongful termination claim. View "Boldt Company v Black & Veatch Construction, Inc." on Justia Law

The Office of the Special Deputy Receiver (OSD), an Illinois non-profit that manages receiverships for insolvent insurance companies, purchased a Financial Institution Bond from Hartford Fire Insurance Company. The bond included coverage for computer systems fraud and for electronic mail initiated transfer fraud, subject to certain exclusions. Hackers infiltrated OSD’s Chief Financial Officer’s email account via a spear phishing attack, impersonated the CFO, and sent fraudulent instructions to other OSD employees, resulting in unauthorized wire transfers and a loss of nearly $4 million.OSD filed claims with both Hartford and another insurer. Hartford denied coverage, asserting that an exclusion in the bond applied to the loss. OSD sued both insurers in the United States District Court for the Northern District of Illinois, seeking declaratory relief and alleging breach of contract. The district court granted Hartford’s motion to dismiss under Rule 12(b)(6), finding that the policy’s exclusion for losses resulting from fraudulent instructions sent to OSD by email applied, and denied the other insurer’s motion. OSD later voluntarily dismissed its claims against the second company, and judgment was entered.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the dismissal de novo. The court held that the exclusion in Rider 17 of the Hartford bond unambiguously barred coverage for losses resulting from fraudulent email instructions sent to OSD—even if the sender was impersonating an internal employee—because the exclusion focused on the recipient, not the sender. The court found no ambiguity or conflict between the exclusion and other coverage provisions, and concluded that OSD’s losses fell outside the scope of coverage. The Seventh Circuit affirmed the district court’s dismissal of OSD’s claims against Hartford. View "Office of the Special Deputy Receiver v Hartford Fire Insurance Company" on Justia Law

A small Indiana telecommunications engineering company entered into a master services agreement with a larger firm, Crown Castle, for potential construction work on cell tower sites. The agreement did not guarantee specific work or payment, and required approval of any subcontractors. Before the agreement was signed, the company began discussions with a group including the defendants about subcontracting the construction work because it lacked sufficient resources. Communications between the parties included a draft proposal but no finalized agreement. Nevertheless, work commenced, with the defendants providing crews, equipment, and funding, and the plaintiff company also supplying resources and covering expenses. Throughout the project, both parties disputed their responsibilities, and payments were made and later charged back. Eventually, the defendants contacted Crown Castle directly seeking payment, and the project ended with Crown Castle terminating its contract with the plaintiff due to poor work quality.The United States District Court for the Northern District of Indiana granted summary judgment for all defendants. The court found there was no enforceable contract, as both sides admitted no final agreement was reached and essential terms were missing. The court also rejected the plaintiff’s claims for fraudulent inducement, fraud, and negligent misrepresentation, finding no actionable reliance or advisory relationship. The claim for unjust enrichment failed because no benefit was conferred that would make retention unjust. The claim of tortious interference with business relations was dismissed because the defendants’ actions were justified by their legitimate interest in payment. The district court accordingly granted summary judgment to the insurers as well.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The appellate court held there was no enforceable contract, no actionable fraud or misrepresentation, no unjust enrichment, and no tortious interference, and upheld summary judgment for all defendants. View "Peters Broadcast Engineering, Inc. v PEM Consulting Group, LLC" on Justia Law

Aberdeen Developers, LLC obtained a $41 million loan secured by a mixed-use building in Chicago. The loan was governed by two agreements: a Loan Agreement and a Cash Management Agreement (CMA). During the COVID-19 pandemic, a major tenant filed for bankruptcy, which under the CMA allowed the loan servicer, LNR Partners, LLC, to trigger a Cash Sweep Event Period. As a result, building income was redirected to a special account controlled by LNR Partners. The dispute arose over how long LNR Partners could retain the excess revenue (Excess Cash Flow) in this account: Aberdeen Developers argued for monthly disbursement, while LNR Partners asserted that it could hold the funds until a specific cure event occurred, which had not and might never happen.The case was initially filed by Aberdeen Developers in Illinois state court, alleging breach of contract. The defendants removed the case to the United States District Court for the Northern District of Illinois. The district court concluded that the relevant agreements unambiguously allowed LNR Partners to retain the Excess Cash Flow until the end of the contract term and dismissed the complaint under Rule 12(b)(6).Upon appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s dismissal de novo. The Seventh Circuit determined that the language in the Loan Agreement and CMA was ambiguous because both parties’ interpretations were reasonable. The court held that ambiguity in the contract meant the case could not be resolved on a motion to dismiss and factual development was required to determine the parties’ intent. The Seventh Circuit therefore reversed the district court’s dismissal and remanded the case for further proceedings. View "Aberdeen Developers, LLC v Wells Fargo Bank, N.A." on Justia Law