Justia Contracts Opinion Summaries

Occidental Petroleum Corporation acquired Anadarko Petroleum Corporation in 2019, resulting in a trust holding a significant amount of Occidental stock. Wells Fargo, acting as trustee, agreed via email to sell the stock between January 6 and January 10, 2020. However, Wells Fargo failed to execute the sale until March 2020, by which time the stock's value had significantly decreased, causing a loss of over $30 million. Occidental sued Wells Fargo for breach of contract based on the email chain and the Trust Agreement.The United States District Court for the Southern District of Texas granted summary judgment in favor of Occidental, finding that Wells Fargo breached the Trust Agreement by failing to sell the stock as planned. The court also dismissed Wells Fargo’s counterclaim and affirmative defenses and awarded damages and attorney’s fees to Occidental.The United States Court of Appeals for the Fifth Circuit reviewed the case and held that the 2019 email chain did not constitute a contract due to lack of consideration. However, Wells Fargo was judicially estopped from arguing that the Trust Agreement was not a contract, as it had previously asserted that the relationship was contractual to dismiss Occidental’s fiduciary-duty claim. The court affirmed that Wells Fargo breached the Trust Agreement by failing to prudently manage the Trust’s assets.The Fifth Circuit also upheld the district court’s calculation of damages, rejecting Wells Fargo’s argument that reinvestment should have been considered. The court found that reinvestment was speculative and unsupported by the record. Additionally, the court affirmed the dismissal of Wells Fargo’s counterclaim and affirmative defenses, as Wells Fargo failed to show a genuine dispute of material fact. Finally, the court upheld the award of attorney’s fees, finding no basis for segregating fees based on Wells Fargo’s different capacities. The district court’s judgment was affirmed. View "Occidental Petroleum v. Wells Fargo" on Justia Law

In this case, a primary insurer, Westport Insurance Corporation, and an excess insurer, Pennsylvania National Mutual Casualty Insurance Company, disputed liability for a judgment against their mutual insured, Insurance Alliance (IA). IA was sued by Lake Texoma Highport LLC for failing to procure requested insurance coverage, resulting in significant property damage. IA had a primary insurance policy with Westport and an excess policy with Penn National. Westport controlled the defense and rejected multiple settlement offers from Highport. A jury found IA liable, resulting in a $13.7 million judgment.The United States District Court for the Southern District of Texas determined that Penn National breached its duties to defend and indemnify IA. However, a jury found that Westport violated its Stowers duty by not accepting reasonable settlement offers. The district court ruled that Penn National's breaches occurred after Westport's Stowers violation and thus did not impact the case outcome.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed that Penn National breached its duties but held that Westport's Stowers duty was triggered by Highport's settlement offers, which Westport unreasonably rejected. The court found that the district court's jury instructions were correct and that Penn National had standing to assert a Stowers claim. The court also concluded that the district court did not err in its jury instructions or in setting aside the jury's verdict regarding the May 2009 demand.Ultimately, the Fifth Circuit affirmed the district court's judgment, holding that Westport was liable for the excess judgment due to its Stowers violation, and Penn National was entitled to reimbursement for the amount it paid on IA's behalf. View "Westport Insurance Corporation v. Pennsylvania National Mutual Casualty Insurance Company" on Justia Law

Highland Capital Management, L.P. (Highland) was an investment fund managed by James Dondero, who also managed several of its subsidiaries. Highland had a practice of lending money to its subsidiaries and to Dondero personally. During Highland's bankruptcy proceedings, Dondero was removed, and a court-appointed board took over. The board attempted to collect on promissory notes executed in Highland's favor by the subsidiaries and Dondero. When they refused to pay, Highland initiated adversary actions in bankruptcy court.The United States Bankruptcy Court for the Northern District of Texas handled the initial proceedings. Highland filed several adversary actions against Dondero and the subsidiaries, seeking enforcement of the promissory notes. The cases were consolidated, and the bankruptcy court recommended granting summary judgment in favor of Highland. The United States District Court for the Northern District of Texas adopted the recommendations and entered judgment against all defendants.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the district court's decision, holding that Highland had established a prima facie case for the validity and enforceability of the promissory notes. The court found that the defendants' arguments, including claims of oral agreements to forgive the loans, lack of authority to sign the notes, mutual mistake, prepayment, and Highland's responsibility to make payments, were unsupported by credible evidence. The court concluded that there were no genuine disputes of material fact and that Highland was entitled to judgment as a matter of law. View "Highland Capital v. NexPoint Asset" on Justia Law

The case involves a dispute between Century Surety Company, acting as a subrogee of Triangle Engineering, L.P., and Colgate Operating, L.L.C. over the interpretation of a Master Services/Sales Agreement (MSA) and the insurance policies of the parties. Colgate, an oil well operator, and Triangle, an oilfield consultancy, entered into the MSA in April 2017, which included mutual indemnity provisions supported by liability insurance. Both parties purchased insurance, but Colgate's coverage was significantly higher than Triangle's. Following an accident involving a worker, Century, as Triangle’s subrogee, sought reimbursement from Colgate for a settlement payment.The United States District Court for the Western District of Texas granted summary judgment in favor of Colgate. The court rejected affidavits from Colgate’s vice president and Triangle’s sole member, which were intended to clarify the parties' intentions at the time of the MSA signing. The district court concluded that the MSA did not specify a ceiling for insurance coverage and applied the "lowest common denominator rule" from the Texas Supreme Court’s decision in Ken Petroleum Corp. v. Questor Drilling Corp., limiting Colgate’s indemnity obligation to $6 million, the amount of coverage Triangle had purchased.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo and affirmed the district court’s judgment but on different grounds. The appellate court agreed that the district court correctly excluded the extrinsic evidence but found that the MSA itself provided both a floor and a ceiling of $5 million for mutual indemnity coverage. The court held that Colgate’s insurance policies did not alter this limit and that Colgate was not liable to Century beyond the $5 million specified in the MSA. Thus, the court affirmed the district court’s judgment in favor of Colgate. View "Century Surety Co. v. Colgate Operating" on Justia Law

Plaintiffs J.A. Masters Investments and K.G. Investments brought state-law claims of fraud and breach of contract against the defendant. The case was fully litigated in the United States District Court for the Southern District of Texas, which accepted jurisdiction based on the premise that the parties were citizens of different states under 28 U.S.C. § 1332(a)(1). However, the record only mentioned the residence of each party, not their citizenship, which is required to establish diversity jurisdiction.The district court conducted a five-day jury trial, and the jury rendered a verdict. Following the trial, the plaintiffs appealed to the United States Court of Appeals for the Fifth Circuit. Upon review, the Fifth Circuit identified a potential jurisdictional issue: the pleadings did not definitively establish the citizenship of each party, only their residency. The court requested a joint letter from the parties to address whether diversity jurisdiction existed. The parties insisted that jurisdiction was proper and even stipulated to facts they believed would confirm complete diversity. However, they failed to provide citations to the record establishing citizenship.The United States Court of Appeals for the Fifth Circuit found that the record did not adequately establish diversity jurisdiction. The court noted that citizenship and residence are not synonymous and that the parties had conflated the two. Given the incomplete record, the court decided to remand the case to the district court to allow the parties to supplement the record with the necessary jurisdictional facts. The court emphasized that without clear evidence of jurisdiction, any resolution would be nonbinding. The case was remanded for further proceedings to establish whether the parties are indeed citizens of different states, with the appellate panel retaining jurisdiction pending any further appeal. View "J.A. Masters Investments v. Beltramini" on Justia Law

In 2019, Ancor Holdings, L.P. (Ancor) and Landon Capital Partners, L.L.C. (Landon) entered into letters of intent to invest in and acquire a majority interest in ICON EV, L.L.C. (ICON). The deal fell through, and Landon and ICON entered into their own agreement. Ancor sued Landon and ICON for breach of contract and tortious interference, respectively. The trial court dismissed Ancor’s tortious interference claim against ICON as a matter of law and denied Ancor’s declaratory judgment claim. The jury found for Ancor on the breach of contract claim against Landon, awarding $2,112,542 in damages.The United States District Court for the Northern District of Texas initially handled the case. The trial court dismissed Ancor’s tortious interference claim against ICON and denied Ancor’s declaratory judgment claim. The jury found Landon breached the contract and awarded Ancor damages. Ancor appealed the dismissal of its claims, and Landon cross-appealed the jury’s verdict.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court reversed the trial court’s dismissal of Ancor’s declaratory judgment and tortious interference claims, remanding them for a jury trial. The appellate court affirmed the jury’s finding that Landon breached the contract but reversed the trial court’s judgment on the reimbursement amount, instructing it to determine 80% of all third-party costs incurred. The court held that Ancor was entitled to a jury trial on its declaratory judgment claim and that sufficient evidence supported the tortious interference claim against ICON. The court also found that the trial court did not err in submitting the breach of contract claim to the jury, nor did the jury err in its findings. View "Ancor Holdings, L.P. v. Landon Capital Partners, L.L.C." on Justia Law

A petrochemical company, Sasol, expanded its Lake Charles, Louisiana facility and required a storage-in-transit yard. The Kansas City Southern Railway Company (KCSR) was contracted to construct and lease the railyard to Sasol. The lease agreement stipulated that Sasol would pay KCSR $102 per linear foot of track annually. A dispute arose over whether the term "track" included the track within switches, which are used to divert trains from one track to another.The United States District Court for the Northern District of Texas found the lease ambiguous regarding whether "track" included switches. After a bench trial, the court ruled in favor of Sasol, interpreting the lease to exclude switches from the track for which Sasol had to pay. Consequently, the court set the rent at $14,806,932 annually, less than what KCSR had invoiced, and awarded Sasol damages and interest for overpayments.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo. The court examined the lease's language and found no ambiguity. It determined that the term "track" unambiguously included the track within switches. The court noted that the lease's various references to "track" and "switches" did not imply mutual exclusivity and that interpreting them as such would lead to absurd results. Therefore, the court held that KCSR was entitled to charge for all track within the leased premises, including switches.The Fifth Circuit reversed the district court's decision and remanded the case for further proceedings consistent with its opinion. View "The Kansas City Southern Railway Company v. Sasol Chemicals (USA), L.L.C." on Justia Law

A sub-subcontractor, Diamond Services Corporation, entered into a contract with Harbor Dredging, a subcontractor, to perform dredging work in the Houston Ship Channel. The prime contract for the project was awarded to RLB Contracting by the U.S. Army Corps of Engineers, and RLB obtained a surety bond from Travelers Casualty and Surety Company of America. During the project, unexpected site conditions, including the presence of tires, caused delays and increased costs. Diamond continued working based on an alleged agreement that it would be compensated through a measured-mile calculation in a request for equitable adjustment (REA) submitted by RLB to the Corps. However, RLB later settled the REA for $6,000,000 without directly involving Diamond in the negotiations and issued a joint check to Harbor and Diamond for $950,000.The United States District Court for the Southern District of Texas dismissed some of Diamond's claims, including those for unjust enrichment and express contractual claims against RLB, but allowed Diamond's quantum meruit claim to proceed. The court also denied Travelers' motion to dismiss Diamond's Miller Act claims but required Diamond to amend its complaint to include proper Miller Act notice, which Diamond failed to do timely. Subsequently, the district court granted summary judgment in favor of RLB and Harbor, dismissing Diamond's remaining claims and striking Diamond's untimely second amended complaint.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the district court's summary judgment against Diamond's quantum meruit claims, holding that the express sub-subcontract covered the damages Diamond sought and that Diamond failed to provide evidence of the reasonable value of the work performed. The court also affirmed the dismissal of Diamond's Miller Act claim, as the damages sought were not recoverable under the Act. The court dismissed Diamond's appeal regarding the tug-expenses claim due to untimeliness. View "Diamond Services v. RLB Contracting" on Justia Law

Molecular Biologicals, a pharmaceutical start-up, entered into a Master Service Agreement with Mission Pharmacal, a third-party logistics provider, in September 2017. Under this agreement, Mission provided distribution services for Molecular’s product, Keragel, including order processing and return processing. In 2018, Mission sold $2,387,704 worth of Molecular’s products to major pharmaceutical wholesalers, but due to lack of sales, $1,780,027 worth of products were returned in 2019. Mission issued credits to the wholesalers for these returns, a process referred to as "chargeback." Initially, Molecular agreed to reimburse Mission for these chargebacks but later refused, leading Mission to file a lawsuit.The United States District Court for the Western District of Texas held a bench trial and determined that the contract did not explicitly require Molecular to reimburse Mission for the chargebacks. The court found that the contract was unambiguous in its silence on this issue and ruled that Mission could not recover the costs of the returns under either a breach of contract or quantum meruit theory. The district court awarded Mission recovery for unpaid service fees but not for the chargebacks.The United States Court of Appeals for the Fifth Circuit reviewed the case and reversed the district court’s decision. The appellate court held that the contract, when interpreted in its entirety, clearly required Molecular to reimburse Mission for the chargebacks. The term "chargeback" in the contract implied that Mission would handle the logistics and bookkeeping of returns, while Molecular would bear the financial responsibility. The court found that the district court erred in its interpretation by not considering the harmonious reading of the contract provisions. Consequently, the Fifth Circuit ruled that Molecular breached the contract by failing to reimburse Mission and remanded the case for further proceedings consistent with this opinion. View "Mission Pharmacal v. Molecular Biologicals" on Justia Law

Jose Pedro Garcia was convicted of possession with intent to distribute 40 grams or more of a mixture containing fentanyl. He pled guilty to the charge. While awaiting sentencing, Garcia assaulted another detainee. This incident led the probation officer to determine that Garcia was not entitled to a reduction for acceptance of responsibility under U.S.S.G. § 3E1.1, a determination the Government adopted. The district court agreed and denied any reduction for acceptance of responsibility.Garcia appealed to the United States Court of Appeals for the Fifth Circuit, arguing that the Government breached the plea agreement by not recommending a three-level reduction for acceptance of responsibility. Garcia did not raise this issue in the district court, so the appellate court reviewed for plain error. Garcia contended that the plea agreement required the Government to move for a three-level reduction under § 3E1.1. However, the plea agreement only obligated the Government to move for the third point of reduction under § 3E1.1(b) if the district court awarded the initial two-level reduction under § 3E1.1(a). The agreement did not restrict the Government's arguments regarding the initial two-level reduction.The Fifth Circuit found that the Government's argument against the reduction was consistent with a reasonable understanding of the plea agreement and did not constitute a breach. Since Garcia did not demonstrate that the Government breached the plea agreement and did not argue that the appeal waiver in his plea agreement was invalid, the court dismissed the appeal. The court did not consider Garcia’s remaining arguments challenging the denial of the reduction under § 3E1.1. View "United States v. Garcia" on Justia Law