Justia Contracts Opinion Summaries

Seven years ago, A.D. was hired to create a PVT (“pressure volume temperature”) simulation software program. Sah was hired by A.D. to develop a PVT software program in exchange for a stake in one of A.D.’s companies, IPSS. Eight months later, a product called InPVT hit the market. Plaintiff Calsep started looking into InPVT. In Calsep’s assessment, A.D. didn’t have the technical skills or resources to develop a PVT product. Calsep filed another motion to compel, alleging that A.D. still hadn’t adequately disclosed his source code control system. Although A.D. had “produced [a] purported source code system” in April and July, Calsep claimed that these productions were “undoubtedly incomplete” and “had been manipulated.” Believing the deletions to be intentional, Calsep filed a motion for sanctions. Afterward, A.D. filed a motion for reconsideration based on newly discovered forensic images that “vindicated” him. The magistrate judge recommended denying the motion, and the district court agreed, denying the motion for reconsideration of the sanctions order. A.D. appealed.   The Fifth Circuit affirmed the district court’s decision on A.D.'s motion for reconsideration. The court explained that A.D. cannot offer any reason—other than mere forgetfulness—why he couldn’t acquire the images sooner. Further, A.D. hasn’t shown that he acted with diligence during the case to locate these images. Moreover, the court explained that although A.D. argues that the images change the game, Calsep’s expert insists that too much data is still missing from the source code control system, rendering a proper review impossible. The court noted that there was no reason to question the district court’s judgment crediting Calsep’s expert testimony. View "Calsep v. Dabral" on Justia Law

Sixteen professional models (the Models) sued three Texas strip clubs (the Clubs) following the Clubs’ use of the Models’ likeness for advertising campaigns without the Models’ consent. Relevant to those claims, Princeton Excess and Surplus Lines Insurance Company (PESLIC) filed this declaratory judgment action. PESLIC issued two commercial liability insurance policies to the Clubs covering the time period relevant to the Models’ claims. PESLIC named both the Models and the Clubs as Defendants. The parties disputed whether that policy’s Exhibitions and Related Marketing Exclusion rendered illusory the Personal and Advertising Injury coverage. The district court agreed with the Models and the Clubs that it did. The district court also held that PESLIC had a duty to indemnify the Clubs under the 02 Policy. PESLIC appealed.   The Fifth Circuit reversed, rendered in part, and remanded. The court explained that PESLIC does not have a duty to defend the Clubs under the 01 Policy. Its duty to indemnify under the 01 Policy depends on the final resolution of the state case. As for the 02 Policy, PESLIC does not have a duty to defend or indemnify under it because the 02 Policy does not provide coverage for the claims alleged by the Models. The court held that the district court erred by concluding otherwise. Accordingly, the court reversed the district court’s summary judgment, rendered in part, and remanded the remaining issue of indemnity under the 01 Policy with instructions for the district court to stay disposition of that issue pending final resolution of the underlying state court lawsuit. View "Princeton Excess v. AHD Houston" on Justia Law

Plaintiff planned on hosting a music festival in Austin, Texas. However, Austin canceled the event due to concerns related to COVID-19. In turn, ticket holders who were refused a refund sued, resulting in a judgment against PLaintiff of over $1 million. Plaintiff sued its insurer for failure to defend against the class action. The district court denied Plaintiff's motion for summary judgment and granted the insurer's motion for summary judgment. Plaintiff appealed.On appeal. the parties agreed that the district court had jurisdiction under 28 U.S.C. 1332(a)(1) and Plaintiff claimed the Fifth Circuit had jurisdiction pursuant to 28 U.S.C. 1291.Exercising its independent judgment, the Fifth Circuit could not find proper allegations or evidence of Plaintiff's citizenship, giving the parties an opportunity to respond. However, the Fifth Circuit found the proffered evidence of Plaintiff's citizenship insufficient, remanding the case for the limited purpose of determining whether jurisdiction exists. View "SXSW v. Federal Insurance" on Justia Law

PHH Mortgage Corporation (PHH) is the successor-in-interest to Ocwen Loan Servicing, LLC (Ocwen). PHH filed suit against Old Republic in district court, alleging a single cause of action for breach of contract. Old Republic filed a motion for summary judgment, arguing that PHH’s breach of contract claim failed as a matter of law because there was no defect in title to the Entire Southern Tract. The district court denied the parties’ cross-motions for summary judgment without reaching the merits of either motion. Rather, the district court construed the parties’ claims as a request for a declaration of title in the Entire Southern Tract. On this basis, the district court determined that any person claiming an interest in the Entire Southern Tract is a required party under Rule 19 and dismissed the case under Federal Rule of Civil Procedure 12(b)(7).   The Fifth Circuit vacated and dismissed. The court explained that the district court’s Rule 19(a) analysis is rooted in a misunderstanding of Texas law. Contrary to the district court’s conclusion below, Texas law draws a sharp distinction between a breach of contract action against a title insurance company and a trespass-to-try-title action. Further, the court explained that by deciding to dismiss this case based solely on its conclusions under Rule 19(a), the district court failed to do what “Rule 19 clearly requires a court to do: undertake an examination of the practical and equitable Rule 19(b) factors actually raised by the absence of a particular party in the case before it.” View "PHH Mortgage v. Old Republic National" on Justia Law

Princeton Excess and Surplus Lines Insurance Company (PESLIC) filed this declaratory judgment action. PESLIC issued two commercial liability insurance policies to the Clubs covering the time period relevant to the Models’ claims: Number 1RA3GL0000179–01, with a policy period of November 9, 2015, to November 9, 2016 (the 01 Policy); and Number 1RA3GL0000179–02, with a policy period of November 9, 2016, to November 9, 2017 (the 02 Policy). The policies have identical coverage provisions but contain slightly different exclusions. The parties dispute whether this exclusion renders illusory the Personal and Advertising Injury coverage provided in the 02 Policy. If it does not, then the Clubs have no coverage applicable to the Models’ claims; if it does, then they have coverage, as the district court held.   The Fifth Circuit reversed the district court’s summary judgment ruling. The court held PESLIC does not have a duty to defend or indemnify the Clubs in the underlying lawsuit because neither the 01 Policy nor the 02 Policy provides coverage for the claims alleged by the Models. The court explained that the text of the 02 Policy is not ambiguous, and Texas law “presumes that the party knows and accepts the contract terms.” Those terms disclose that the policy’s Personal and Advertising Injury coverage comprises a single category of coverage and further that the Exhibition and Related Marketing Exclusion removes much but by no means all, of that coverage. The 02 Policy is, therefore, not illusory, and the exclusion must be enforced, constraining the court to conclude there is no coverage for the Models’ underlying claims under the 02 Policy. View "Princeton Excess v. AHD Houston" on Justia Law

On a  Mesa Airlines flight from Birmingham to Dallas Fort Worth International Airport, a flight attendant grew concerned about two passengers, Plaintiffs.  She alerted the pilot, who, despite the reassurance of security officers, delayed takeoff until the flight was canceled. The passengers were told the delay was for maintenance issues, and all passengers, including the two in question (Plaintiffs), were rebooked onto a new flight that reached DFW. After learning the real reason behind the cancellation, Plaintiffs sued Mesa under 42 U.S.C. Section 1981. The airline countered that it had immunity under 49 U.S.C. Section 44902(b) and 49 U.S.C. Section 44941(a).     Given the unusual facts that all passengers had their flight canceled, the primary issue on appeal whether such conduct constitutes disparate treatment under Section 1981, whether a Section 1981 claim can exist without a “breach” of contract, and whether Section 44902(b) grants immunity to airlines for allegedly discriminatory decisions, thereby negating Section 1981’s application against airlines in this context.   The Fifth Circuit reversed the district court’s judgment. The court held that Section 1981 prohibits discrimination in contracting. Section 44902(b) provides immunity to airlines in their decision to remove passengers they feel are “inimical to safety.” There is a straightforward way to reconcile these two statutes: If a passenger’s protected status is the but-for cause of the airline’s decision to remove them (such that the passenger has made out a Section 1981 claim), then Section 44902(b) does not grant immunity to the airline because the decision is not based on a fear that the passenger was inimical to safety. View "Abdallah v. Mesa Air Group" on Justia Law

A Mississippi statute empowers boards of supervisors to contract “by the year” for legal counsel. The Hinds County Board of Supervisors hired Plaintiff and his law firm to perform legal work for the County. Plaintiff’s contracts with the County were each for a one-year term. But before the year was up, an election flipped the board’s composition, and the new board terminated both contracts. Plaintiff sued, arguing that the contracts required the County to pay him a fixed sum for the full year—even if the County no longer wanted his legal services. The district court granted the County’s motion to dismiss, reasoning that no statute expressly authorized the old board to bind the new one. On appeal, Plaintiff argued that the statutory phrase “by the year” gave the old board “express authority” to bind the new board.   The Fifth Circuit reversed the district court’s final judgment and remanded. The court held that Section 19-3-47 expressly authorized the board to bind successors. The court explained that the court’s research has revealed no statutes that would satisfy the standard that the district court relied on for express authorization. The court wrote that the Mississippi statute books are rife with laws that apparently would allow individual officers to bind their successors under Cleveland’s test but apparently would not allow officers to bind successors under the district court’s test. The court found that the phrase “by the year” is the kind of express authorization that Cleveland calls for. Any other reading leaves the phrase “by the year” as surplusage. View "Teeuwissen v. Hinds County, MS" on Justia Law

Inmarsat Global Limited and related entities(collectively, “Inmarsat”) operate a satellite network providing communications services to remote locations, including ships at sea. Inmarsat sells the services at retail to end-users and at wholesale to distributors. Speedcast International Limited was a leading Inmarsat distributor, purchasing Inmarsat’s services and providing them to its own customers. Speedcast is the debtor in the bankruptcy. Several contracts governed the business relationship among the parties. Their last contract terminated all of the creditors’ claims against the debtor except for narrowly defined “Permitted Claims.” The creditors sought a reversal of the district and bankruptcy court’s conclusion that a particular claim was not a permitted one.   The Fifth Circuit affirmed, holding that the Termination Agreement’s definitions of Released Claims and Permitted Claims are unambiguous. Consequently, the court wrote that it need not consider any extrinsic evidence. The court found Inmarsat’s pricing argument unpersuasive. The Shortfall Amount is not a payment for services delivered by Inmarsat to Speedcast. The SAA provides that the Shortfall Amount is part of the performance that Speedcast promised “[i]n exchange for” Inmarsat agreeing to grant a 30% discount. The Shortfall Amount, in turn, is not levied on the services that Inmarsat delivered to Speedcast; it is levied due to the customers Speedcast failed to provide. View "Inmarsat Global v. SpeedCast Intl" on Justia Law

Great Lakes Insurance, S.E. insured Hello Dolly VI, a boat owned by Gray Group Investments, L.L.C. The Hello Dolly sank in Pensacola, Florida, during a hurricane. Gray Group filed a claim under the insurance policy, Great Lakes denied coverage, and Great Lakes then sought a declaratory judgment that it properly did so. Specifically, Great Lakes faulted Gray Group for breaching the “hurricane protection plan” (the HPP) that Gray Group had submitted in response to Great Lakes’s “hurricane questionnaire” (the HQ). The issue on appeal is whether the HPP was incorporated by reference into the insurance policy and, if so, whether Gray Group breached the HPP.   The Fifth Circuit affirmed the district court’s ruling granting summary judgment for Great Lakes. The court explained that the HPP expressly identifies its contents, including the information in question, as warranties, providing that the insured “declare[s] that the particulars and answers in this form are correct and complete in every respect” and that “this declaration and warranty shall be incorporated in its entirety into any relevant policy of insurance.” Therefore, under the terms of the policy, as validly augmented by the HPP, Gray Group warranted that the Vessel would be “located” at the Orleans Marina during hurricane season. Gray Group’s breach of that warranty voided the policy ab initio, such that Great Lakes properly denied coverage. View "Great Lakes Ins v. Gray Group Invst" on Justia Law

Copart of Connecticut, Inc. (“Copart”) is a subsidiary of Copart, Inc., an online car-auction company that sells used, wholesale, and repairable vehicles. Copart owns several parcels of land in Lexington County, South Carolina, on which it operates “machine salvage junkyard and vehicle wash facilities.” This appeal concerns whether Copart’s insurer must defend or indemnify Copart with respect to a lawsuit filed against it in South Carolina Defendant Copart of Connecticut appealed the district court’s grant of summary judgment in favor of Plaintiffs Liberty Mutual Fire Insurance Company and Liberty Insurance Corporation.   The Fifth Circuit affirmed summary judgment as to Liberty’s duty to defend Copart in the Underlying Suit. The court reversed summary judgment as to Liberty’s duty to indemnify Copart with respect to the Underlying Suit and remanded to the district court for further proceedings to determine Liberty’s indemnity obligation, if any. The court explained that the duty to defend is negated here because the Livingston Plaintiffs only allege damage caused, either in whole or in part, by pollutants. But evidence arising from or related to the Underlying Suit may reveal that non-pollutants caused Plaintiffs’ damage. If, for example, relevant evidence shows that the plaintiffs’ “cloudy water” was caused only by sand and sediment, then the pollution exclusion may not apply. If this were so, Liberty may be obligated to indemnify Copart. View "Liberty Mutual Fire Ins v. Copart of CT" on Justia Law