Justia Contracts Opinion SummariesArticles Posted in US Court of Appeals for the Eleventh Circuit
AFC Franchising, LLC v. Danilo Purugganan
AFC Franchising is an Alabama LLC with its principal place of business in Shelby County, Alabama. Defendant is a resident of New York. Defendant signed a “Master Developer Agreement” with another company, Doctors Express Franchising, to develop urgent-care centers in New York and Connecticut. After a series of acquisitions, AFC was assigned Doctors Express’s end of the bargain in 2013, and Defendant was notified of the assignment When the parties’ relationship soured, Purugganan threatened to sue AFC in either Connecticut or New York. AFC believed that the floating forum-selection clause required Defendant to sue in Alabama, where AFC had its principal place of business. It thus sought a declaratory judgment in Alabama state court (1) that the parties had to litigate their dispute in Alabama and (2) that AFC hadn’t breached the Master Developer Agreement. The district court sided with Defendant on the personal jurisdiction issue. The Eleventh Circuit reversed the district court’s decision and held that, in the circumstances presented, the clause is applicable and enforceable. The court explained that the court erred in dismissing for lack of personal jurisdiction. By voluntarily agreeing to an applicable and enforceable floating forum-selection clause, Defendant waived his right to contest personal jurisdiction in this dispute. Further, Defendant offers no reason why he might have consented to personal jurisdiction but not venue. View "AFC Franchising, LLC v. Danilo Purugganan" on Justia Law
Carol H. Stewart v. Hartford Life and Accident Insurance Company
Plaintiff sued to obtain two insurance benefits that she believes Hartford Insurance Company owes her: (1) long-term disability payments and (2) a waiver of life insurance premiums. Although it concedes that Plaintiff was covered by its policy, Hartford contends that she was ineligible for those benefits.The Eleventh Circuit affirmed the district court’s order granting Hartford summary judgment, concluding that Hartford’s determinations were permissible. The court explained that Plaintiff was not entitled to disability payments because Hartford’s interpretation of the disability exclusion was reasonable, and its conflict of interest didn’t lead it to make an arbitrary or capricious decision. Likewise, Plaintiff was not entitled to a waiver of life insurance premiums because she wasn’t disabled within the meaning of Hartford’s life insurance policy. View "Carol H. Stewart v. Hartford Life and Accident Insurance Company" on Justia Law
Jerrell Whitten v. Ronald F. Clarke, et al.
Plaintiff, a shareholder and citizen of Illinois, brought this shareholder derivative action alleging breach of fiduciary duties by FleetCor’s directors and executives without first making a demand on the board. Plaintiff argued that demand was excused because a majority of the board faced a substantial likelihood of liability for their breach of fiduciary duties. The district court held that Plaintiff had failed to adequately plead that demand was excused and dismissed Plaintiff’s claims. The Eleventh Circuit affirmed the district court’s dismissal of Plaintiff’s complaint under Rule 23.1. The court held that Plaintiff failed to plead particularized facts showing demand was excused. The court explained that because Plaintiff failed to adequately plead Board knowledge of the allegedly fraudulent scheme, all three of his claims that purportedly show that a majority of the Board faced a substantial likelihood of liability fail. View "Jerrell Whitten v. Ronald F. Clarke, et al." on Justia Law
Tecnicas Reunidas De Talara S.A.C. v. SSK Ingenieria Y Construccion S.A.C.
Técnicas Reunidas de Talara S.A.C., a Peruvian corporation, subcontracted with SSK Ingeniería y Construcción S.A.C., another Peruvian corporation, to provide electromechanical work on the refinery project. In response to a contract dispute, the arbitral panel issued a $40 million award to SSK. During the arbitration, two of Técnicas's attorneys withdrew and joined the opposing party’s law firm. More than a month later Técnicas objected in the International Court of Arbitration to alleged conflicts of interest held by the arbitrators, but its objection made no mention of the attorney side switching. The district court agreed with Técnicas that a public policy against attorney side-switching exists in the United States but concluded that the public policy was not contravened in this case because there was no actual prejudice and Técnicas waived its objection. At issue on appeal concerns whether a party to an international arbitration can obtain a vacatur of an adverse arbitral award because two of its attorneys withdrew and joined the opposing party’s law firm during the arbitral proceedings. The Eleventh Circuit affirmed the judgment. The court explained that Técnicas waived its right to complain. The court explained thatTécnicas, the losing party in the arbitration, had knowledge of the attorney side-switching but did not object until Técnicas received an adverse award more than a year later, The court wrote that its conclusion is consistent with the well-settled principle “that a party may not sit idle through an arbitration procedure and then collaterally attack that procedure on grounds not raised . . . when the result turns out to be adverse.” View "Tecnicas Reunidas De Talara S.A.C. v. SSK Ingenieria Y Construccion S.A.C." on Justia Law
Public Risk Management of Florida v. Munich Reinsurance America, Inc.
Public Risk Management of Florida (“PRM”) Munich Reinsurance America, Inc. (“Munich”) for breach of contract and sought declaratory relief that Munich is obligated by the parties’ reinsurance agreement (“the Reinsurance Agreement”) to reimburse PRM for the defense and coverage it provided to an insured in an underlying lawsuit. Munich counter-claimed for a declaratory judgment stating that it has no duty to reimburse PRM, and the district court granted that relief. On appeal, PRM argues, inter alia, that the Reinsurance Agreement contained a “follow the fortunes” clause, which forbids a reinsurer “from second guessing” an insurer’s “good faith decision” to pay a claim to the insured. The Eleventh Circuit affirmed the grant of summary judgment holding that the district court correctly decided that Munich had no duty to reimburse PRM for its defense and indemnification of the City in the underlying Section 1983 suit. The court explained that The Reinsurance Agreement contains language that is plainly inconsistent with the follow the-fortunes doctrine. Accordingly, the district court properly rejected the doctrine’s application in this case. Further, the court held that it will not infer the application of the follow-the-fortunes doctrine in a reinsurance agreement where the agreement’s plain and unambiguous language is inconsistent with the doctrine. Applying this rule the court concluded that it would be inconsistent with the plain, unambiguous terms of the Reinsurance Agreement to infer that Munich should be bound by PRM’s coverage decision. View "Public Risk Management of Florida v. Munich Reinsurance America, Inc." on Justia Law
Dustin C. Brink v. Direct General Insurance Company
Plaintiff suffered serious injuries in an automobile accident and won over $12 million in a suit against the other driver. To recover the judgment, Plaintiff sued that driver’s insurance company on the theory that it acted in bad faith toward its insureds. The jury returned a verdict in the insurer’s favor, but Plaintiff argued that the district court abused its discretion by failing to give his proposed jury instruction. The Eleventh Circuit reversed the district court’s ruling explaining that the district court’s instruction omitted the state law relevant to this theory of liability. The court explained that the district court instructed the jury on bad faith resulting from the failure to settle a claim. But Florida law provides—and Plaintiff argued at trial—that bad faith is also present when an insurance company fails to advise an insured about settlement offers and likely litigation outcomes. Further, Plaintiff’s proposed jury instruction correctly stated the legal basis for his failure-to-advise theory of liability, and the district court’s failure to give that instruction to the jury caused him prejudice. View "Dustin C. Brink v. Direct General Insurance Company" on Justia Law
Raniero Gimeno v. NCHMD, Inc., et al.
Plaintiff’s spouse was a medical doctor employed by NCHMD, Inc., which is a subsidiary of NCH Healthcare System, Inc. NCHMD’s human resources staff helped the spouse complete enrollment paperwork for life insurance benefits through an ERISA plan. Plaintiff was the primary beneficiary under the plan, and NCH Healthcare was the named plan administrator. After Plaintiff’s spouse died, Plaintiff filed a claim for benefits with the plan’s insurance company. The insurance company refused to pay any supplemental benefits because it had never received the form. Plaintiff sued NCHMD and NCH Healthcare, asserting a claim under ERISA, 29 U.S.C. Section 1132(a)(1)(B). The district court granted Defendants’ motion to dismiss and denied Plaintiff leave to amend. On appeal, the Eleventh Circuit reversed the district court’s ruling. The court wrote that at issue is whether Section 1132(a)(3) creates a cause of action for an ERISA beneficiary to recover monetary benefits lost due to a fiduciary’s breach of fiduciary duty in the plan enrollment process? The court answered “yes”, and explained that under the court’s precedents, a court may order typical forms of equitable relief under Section 1132(a)(3). As the Supreme Court and many sister circuits have recognized, courts in equity could traditionally order an “equitable surcharge”— that a fiduciary pay a beneficiary for losses caused by the fiduciary’s breach of fiduciary duty. Accordingly, the court held that a beneficiary of an ERISA plan can bring a lawsuit under Section 1132(a)(3) against a fiduciary to recover benefits that were lost due to the fiduciary’s breach of its duties. View "Raniero Gimeno v. NCHMD, Inc., et al." on Justia Law
Henry’s Louisiana Grill, Inc., et al v. Allied Insurance Company of America
When the first Covid-19 cases appeared in Georgia, the governor declared a public state of emergency. Plaintiff’s restaurant played its part by suspending dine-in service. To recover the income, it was losing by closing its doors, Plaintiff quickly filed a claim with its insurer, Allied Insurance Company of America. Under Plaintiff’s “Premier Businessowners Property Coverage” policy, Allied agreed to “pay for direct physical loss of or damage to Covered Property” if it was “caused by or resulting from any Covered Cause of Loss.” Allied denied coverage. It found that Plaintiff’s closure was not caused by any “direct physical loss or damage.” And under the policy’s Virus or Bacteria exclusion, Allied refused to “pay for loss or damage caused directly or indirectly” by any “virus.” The district court dismissed Plaintiff’s complaint for failure to state a claim. It held that no “direct physical loss of or damage to” property occurred because the restaurant and its dining room “underwent no physical change.” The Eleventh Circuit affirmed the district court’s ruling, holding that the harm does not extend to the intangible harm caused by Covid-19 or by a declaration of public emergency issued in its wake. Plaintiff alleged no actual change to its property. Even if the court assumed that the governor’s Covid-19 order caused loss because it deprived the restaurant of the use of its property, that does not result in a win for Plainitff. Allied agreed to provide for only one manner of loss—the physical loss of Henry’s property and to be physical it must be “tangible or concrete.” View "Henry's Louisiana Grill, Inc., et al v. Allied Insurance Company of America" on Justia Law
Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A.
Corporacion AIC, SA (“AICSA”) and Hidroelectrica Santa Rita S.A. (“HSR”), signed a contract for the construction of a hydroelectric power plant in Guatemala. Under the contract, AICSA was responsible for creating a new power plant for HSR. However, AICSA had to discontinue the project because HSR issued a force majeure notice. HSR sought reimbursement for the advance payments it had made to AICSA and ultimately commenced arbitration proceedings. AICSA sought dismissal of HSR’s claims, counterclaimed and sought to enjoin a subcontractor. A split, three-member arbitration panel denied AICSA’s request to join the subcontractor to the arbitration and ruled for HSR on the merits claims. The district court denied AICSA’s petition seeking to vacate the arbitral award on the basis that the arbitration panel had exceeded its powers. It said that Eleventh Circuit precedent foreclosed AICSA’s claim that a party to a New York Convention arbitration could challenge an arbitration panel’s decision on the exceeding powers ground. The Eleventh Circuit noted that the Circuit is out of line with Supreme Court precedent, however, the court affirmed the district court’s determination. On appeal the relevant questions were whether: (1) an arbitration panel exceeded its powers in a non-domestic arbitration under the New York Convention? And if so, (2) did the arbitration panel in this case indeed exceed its powers. The court held it was compelled to say, under Inversiones, that it may not vacate the arbitration award in this case on the exceeding powers ground. Consequently, the court could not the reach the merits of whether vacatur would be appropriate in the case. View "Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A." on Justia Law
Wadley Crushed Stone Company, LLC v. Positive Step, Inc.
Plaintiff, an Alabama granite processing business, worked with Defendant, a corporation that represents manufacturers in the sale of equipment used in the granite industry. Five years after the plant was completed, Plaintiff sued Defendant in Alabama state court, arguing, among other things, that Defendant breached its contract with Plaintiff. The district court granted summary judgment on the breach of contract claims. As to Defendant’s counterclaim, the district court determined Plaintiff had to pay the unpaid invoices and granted summary judgment on the counterclaim as well. Plaintiff appealed the district court’s orders On appeal, the Eleventh Circuit affirmed the district court’s grant of summary judgment finding that Plaintiff’s claim was time-barred. The court also affirmed the grant of summary judgment and denial of reconsideration as to Defendant’s counterclaim for unpaid invoices. The court held that summary judgment is appropriate, because this is a contract for goods, and the UCC’s applicable four-year statute of limitations has passed. The court reasoned that Plaintiff has cited no record document or case to suggest that the contracting parties agreed to the markups as disguised service charges, and it seems more logical to conclude that a sale of equipment will include a margin of profit for the seller. Further, the court held that Plaintiff’s argument on the statute of limitations defense is forfeited. The court reasoned that Plaintiff’s failure to raise the statute of limitations defense in its response to Defendant’s motion for summary judgment is not an “exceptional condition” that merits the court using its discretion. View "Wadley Crushed Stone Company, LLC v. Positive Step, Inc." on Justia Law