Justia Contracts Opinion Summaries

Articles Posted in US Court of Appeals for the Eighth Circuit
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The United States Court of Appeals for the Eighth Circuit heard an appeal brought by DRE Health Corporation, a personal protective equipment (PPE) wholesaler, against a district court's decision to deny its motion to stay litigation and compel arbitration under the Federal Arbitration Act (FAA) with Anhui Powerguard Technology Company, a Chinese PPE manufacturer. Anhui had filed a breach-of-contract action alleging that DRE Health failed to pay for over $9 million in fulfilled purchase orders.The crux of the case revolved around an agreement between the parties where Anhui agreed to reduce DRE Health's debt in exchange for the latter's promise to purchase additional shipments of gloves. This agreement stipulated that future disputes would be subjected to binding arbitration, but the court had to determine whether this stipulation was conditional on DRE Health's completion of initial payments.The court, applying the series-qualifier canon of contract interpretation and Missouri law, determined that the prefatory phrase in the agreement, “AFTER THE INITIAL PAYMENT OF $1,970,000.00 USD,” served as a condition precedent to all the obligations enumerated in the agreement, including the agreement to arbitrate. As DRE Health had not completed the initial payment, there was no contract between the parties to arbitrate.The court thus affirmed the district court’s judgment, concluding that the parties did not agree to submit their dispute to arbitration. View "Anhui Powerguard Tech Co, Ltd v. DRE Health Corporation" on Justia Law

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This case from the United States Court of Appeals for the Eighth Circuit involves a dispute between Midwest Medical Solutions, LLC and Exactech U.S., Inc. This is the second time the case has come before the court. The initial appeal by Midwest was regarding a summary judgment in favor of Exactech, which was based on the district court's interpretation of a non-compete clause in the parties' Sales Agreement. The Court of Appeals reversed the summary judgment, finding the clause unambiguous, and remanded the case for further proceedings.In the latest appeal, Exactech contends that the district court erred by denying its motion for leave to replead two counterclaims. Exactech had initially included these counterclaims in its pleadings but later removed them, believing they had been rendered moot by the district court's order interpreting the disputed contract language in Exactech's favor. Exactech attempted to reintroduce these counterclaims after the Court of Appeals reversed the summary judgment. The district court denied Exactech's motion to amend its pleadings, citing Exactech's lack of diligence in adhering to scheduling deadlines and the absence of changed circumstances that would justify its delay.The Court of Appeals affirmed the district court's decision. It found that the district court did not abuse its discretion in denying Exactech's motion to amend, as Exactech had failed to establish good cause for amending the scheduling order. The court noted that Exactech had voluntarily chosen not to replead these counterclaims in its amended pleadings, and that this decision could not be considered a changed circumstance. The court further noted that Exactech could have pleaded these counterclaims in the alternative, rather than omitting them entirely. View "Midwest Medical Solutions, LLC v. Exactech U.S., Inc." on Justia Law

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In this breach-of-contract dispute, the United States Court of Appeals for the Eighth Circuit upheld the decision of the District Court of Minnesota, which rejected Reach Companies, LLC's appeal for a new trial after a jury awarded $1,196,364 in damages to Newsert, LLC and David Serata. Reach Companies, a distributor of hand sanitizers, alleged that Newsert, a wholesaler of the same products, continued accepting late shipments despite delays and price fluctuations. Newsert countered that Reach failed to fulfill all but one of its purchase orders, causing Newsert to lose two customers. The court found that the purchase orders were unambiguous with respect to their terms, rejecting Reach’s argument that the "must ship by" dates were simply aspirational. The court also held that the evidence presented at trial was sufficient to prove Newsert's lost profits with reasonable certainty, dismissing Reach's argument that the losses were speculative and didn't account for overhead. Lastly, the court allowed the admission of evidence of prior criminal convictions of Reach’s Vice President for impeachment purposes, as the crimes involved fraud and deceit and were thus relevant to the issues in the case. View "Reach Companies, LLC v. Newsert, LLC" on Justia Law

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The City of Richmond Heights, Missouri filed a claim with Mt. Hawley Insurance Company under a commercial property policy for losses of tax revenue due to government-mandated COVID-19 closures. Mt. Hawley denied the claim and sued for a declaratory judgment that it was not obligated to cover the losses. Richmond Heights counterclaimed with five counts: (1) breach of contract, (2) vexatious refusal to pay, (3) fraudulent inducement and misrepresentation, (4) negligent misrepresentation, and (5) breach of fiduciary duty. The United States District Court for the Eastern District of Missouri dismissed the counterclaims, denied amendments to two of them, and granted declaratory judgment to Mt. Hawley. On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the decision of the lower court.The appellate court held that the insurance policy required "direct physical loss of or damage to property" for coverage which was not met by the COVID-19 shutdowns. The court also rejected the city's argument that the Additional Covered Property Endorsement in the policy removed the "physical damage or loss" requirement for losses of sales tax revenues. Furthermore, the court found that the city's claims of fraud, misrepresentation and breach of fiduciary duty were not distinct from its breach of contract claim and thus were properly dismissed by the district court. Lastly, the court affirmed the district court's denial of the city's motion to amend its breach of contract and vexatious refusal claims, concluding that the proposed amendments would not have survived a motion to dismiss. View "Mt. Hawley Insurance Company v. City of Richmond Heights" on Justia Law

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In this case before the United States Court of Appeals for the Eighth Circuit, Jet Midwest International Co., Ltd. (Jet Midwest International) sought attorneys’ fees and costs from Jet Midwest Group, LLC (JMG) and other defendants (collectively referred to as the Ohadi/Woolley defendants). The request was made in connection with a fraudulent transfer action filed under the Missouri Uniform Fraudulent Transfer Act (MUFTA), following a term loan agreement between Jet Midwest International and JMG which JMG failed to repay. The district court awarded attorneys’ fees and costs against the Ohadi/Woolley defendants, who were not parties to the term loan agreement, based on its finding that they conspired with JMG to violate the MUFTA.On appeal, the Eighth Circuit found that the district court erred in awarding attorneys’ fees and costs against the Ohadi/Woolley defendants based on the term loan agreement since they were not parties to that agreement. However, the court held that the district court's finding of "intentional misconduct" by the Ohadi/Woolley defendants in conspiring with JMG to violate the MUFTA could justify an attorneys’ fees award under the "special circumstances" exception to the American Rule (which generally requires each party to bear its own attorneys’ fees).The court vacated the award and remanded the case back to the district court to calculate a reasonable attorneys’ fee using the lodestar method (multiplying the number of hours reasonably expended by the reasonable hourly rates), and to determine the extent to which the claimed costs are recoverable under the relevant statute. The court's holding did not limit JMG’s ultimate responsibility for attorneys’ fees and costs under the term loan agreement. View "Jet Midwest International Co. v. Ohadi" on Justia Law

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In this case, the United States Court of Appeals for the Eighth Circuit affirmed the lower court's decision that the Pacific Life Insurance Company did not owe benefits to Katie Blevins, the beneficiary of a life insurance policy taken out by her late fiancé, Dr. Travis Richardson. Richardson applied for a life insurance policy and paid the first month's premium three days before he died. He did not sign the received policy or any required amendments. Blevins claimed that the policy was in effect at the time of Richardson's death, despite the policy not being physically delivered or formally accepted. Blevins also brought claims of bad faith, promissory estoppel, and apparent authority against the insurance company. In its decision, the court stated the policy was clear in its conditions, which required physical delivery and acceptance before the policy was in force. The court found these conditions were not met, as the policy was neither delivered nor accepted by Richardson before his death. Therefore, no death benefit was owed. As a result, Blevins' bad faith claim was also dismissed, as the insurer could not have acted in bad faith if there was no obligation to pay out the policy. View "Pacific Life Insurance Company v. Blevins" on Justia Law

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Contitech USA, Inc., a division of tire manufacturer Continental AG, contracted with a trucking company, McLaughlin Freight Services, Inc., and its owner, Dan McLaughlin, to deliver rubber between two of its facilities. The fee schedule included a base rate and a higher "rounder" rate, which required pre-approval from Contitech. Over three years, McLaughlin submitted 645 unapproved "rounder" bills to the third-party payments administrator, using fraudulent emails that purported to show pre-approval from Contitech. Contitech discovered the scheme and sued for fraud, unjust enrichment, and breach of contract.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court found that there was sufficient evidence for a reasonable jury to find for Contitech on the fraud and unjust-enrichment counts. The court rejected McLaughlin's argument that Contitech failed to prove proximate cause and damages, noting that under Iowa law, a defrauding defendant cannot claim that its misrepresentations did not cause any damages to the plaintiff. Furthermore, McLaughlin was contractually obligated not to charge rounder rates without pre-approval from Contitech. Thus, a reasonable jury could have found that the difference between the contractual base rate and the actual billed amount was the amount of money McLaughlin received, which in equity and good conscience belonged to Contitech.The court also affirmed the district court's decision to remit Contitech's unjust-enrichment award to $0 and to remit McLaughlin’s damages award to prevent double recovery. The court reasoned that while a party is entitled to proceed on various theories of recovery, it is not entitled to collect multiple awards for the same injury. Furthermore, the court held that the district court did not abuse its discretion in granting pre-judgment interest to Contitech, and that postjudgment interest is mandatory under 28 U.S.C. § 1961 and should be awarded regardless of whether the district court orders it. View "Contitech USA, Inc. v. McLaughlin Freight Services, Inc." on Justia Law

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In this case, the United States Court of Appeals for the Eighth Circuit affirmed the decision of the United States District Court for the Southern District of Iowa to dismiss the lawsuit of Iowa-based livestock feed seller Hawkeye Gold, LLC against China National Materials Industry Import and Export Corporation, also known as Sinoma, for lack of personal jurisdiction. Hawkeye Gold sued Sinoma to recover an unpaid default judgment it obtained against Sinoma's now-defunct wholly owned United States subsidiary, Non-Metals, Inc., for breach of a contract to purchase livestock feed. After six years of litigation, the District Court dismissed the case because it did not have personal jurisdiction over Sinoma, a decision which Hawkeye Gold appealed. The Appeals Court, after reviewing the evidence, agreed with the District Court's conclusion that Sinoma had insufficient minimum contacts with Iowa to support personal jurisdiction. The Court also rejected Hawkeye Gold's argument that Sinoma was a party to the contract or that Non-Metals was the alter-ego of Sinoma. Furthermore, the Court affirmed the District Court's denial of Hawkeye Gold's request for sanctions against Sinoma for alleged discovery violations. View "Hawkeye Gold, LLC v. China National Materials" on Justia Law

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A car dealership, Broadway Ford Truck Sales, Inc., in St. Louis, Missouri, suffered a significant fire damage to its business premises and filed claims under its insurance policy provided by Depositors Insurance Company. However, disputes arose over the coverage and Broadway Ford sued Depositors for breach of contract and vexatious refusal to pay. The United States District Court for the Eastern District of Missouri granted summary judgment favoring Depositors.At the time of the fire, Broadway Ford had an insurance policy that covered loss or damage to its Building and Business Personal Property (Building/Property) and loss of Business Income and Extra Expenses (BI/EE) due to a suspension of operations. Broadway Ford and Depositors later entered into a Limited Settlement Agreement and Release of Disputed Property Damage Claims (LSA), in which Depositors agreed to pay a certain amount for the fire damage and Broadway Ford released Depositors from any claims related to the property damage. BI/EE claims were not included in this agreement and remained open.Broadway Ford’s complaint against Depositors alleged that Depositors breached the policy's implied covenant of good faith and fair dealing and that Depositors’ conduct amounted to vexatious refusal under Missouri law. The district court granted Depositors' motion for summary judgment, finding that Broadway Ford’s complaint was foreclosed by the LSA. On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the grant of summary judgment de novo.The appellate court affirmed the judgment of the district court. The court found that Broadway Ford had released its claims related to the Building/Property coverage in the LSA and could not pursue litigation for additional compensatory damages in the form of the “business income” it lost and the “extra expenses” it incurred due to Depositors’ alleged mishandling of its Building/Property coverage claim. View "Broadway Ford Truck Sales, Inc. v. Depositors Insurance Company" on Justia Law

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Breadeaux’s Pisa, LLC (“Breadeaux”) initiated this action against its franchisee, Beckman Bros. Ltd. (“Main Street Pizza”), in federal court seeking a preliminary injunction, a permanent injunction, and a declaratory judgment. After litigating its preliminary injunction, mediating, and participating in discovery proceedings, Breadeaux filed a demand for arbitration in which it sought to relitigate its preliminary injunction and avoid the court’s adverse discovery rulings. Breadeaux then moved to stay all proceedings pending completion of arbitration. The district court denied Breadeaux’s motion.   The Eighth Circuit affirmed. The court explained that Section 3’s stay provision is mandatory when “the issue involved in such suit or proceeding is referable to arbitration” under a valid arbitration agreement. 9 U.S.C. Section 3. The court wrote that it is unpersuaded by Breadeaux’s assertion that the only reasonable reading of the arbitration provision in the Agreement is that all claims or disputes, besides Breadeaux’s equitable claims, must be arbitrated. Additionally, Breadeaux elected to enforce the Agreement by judicial process, not through mediation and arbitration. Under these circumstances, Breadeaux’s claims are not referable. View "Breadeaux's Pisa, LLC v. Beckman Bros. Ltd." on Justia Law