Justia Contracts Opinion Summaries

Plaintiff, on behalf of a putative class of students, sued Southern Methodist University (“SMU”) for refusing to refund tuition and fees after the university switched to remote instruction during the COVID-19 pandemic. The district court dismissed Plaintiff’s complaint for failure to state a claim.   The Fifth Circuit reversed that decision in light of King v. Baylor University, 46 F.4th 344 (5th Cir. 2022), which was issued after the district court’s ruling and which teaches that Hogan adequately pled a breach-of-contract claim. Alternatively, the district court held that Texas’s Pandemic Liability Protection Act (“PLPA”) retroactively bars Plaintiff’s claim for monetary relief and is not unconstitutionally retroactive under the Texas Constitution. That latter ruling raises a determinative-but-unsettled question of state constitutional law, which the court certified to the Texas Supreme Court: Does the application of the Pandemic Liability Protection Act to Plaintiff’s breach-of-contract claim violate the retroactivity clause in article I, section 16 of the Texas Constitution? View "Hogan v. Southern Methodist Univ" on Justia Law

Mingtel, a Texas-based company, ordered two batches of computer tablets from Shenzen Synergy Digital, a Chinese company, hoping to resell them through the Home Shopping Network (“HSN”). The first batch bombed on HSN, with customers complaining about slow speeds and flawed screens. Mingtel then rejected the second batch out of hand. Synergy sued for breach of contract; Mingtel countersued, alleging Synergy provided nonconforming goods. The district court sided with Synergy.   The Fifth Circuit affirmed. The court explained that the district court found Mingtel did not examine the tablets as soon as practicable because it failed to inspect them when they arrived in the United States. Instead of testing those capabilities upon the tablets’ arrival in the United States, Mingtel shipped them directly to HSN’s warehouse and examined them only after they were sold and returned by customers. The court explained that it agreed with the district court that, given those facts, Mingtel did not timely inspect the tablets. It follows that Mingtel did not provide Synergy with a notice of nonconformity within a reasonable time. The court wrote that Mingtel was obligated to pay for the tablets and take delivery of them. Because it failed to do so, the district court properly found Mingtel liable. View "Shenzen Synergy Digital v. Mingtel" on Justia Law

Plaintiff-Appellant Weyerhaeuser NR Company (“NR”) entered into a manufacturing agreement with Simsboro Coating Services, LLC (“Simsboro”). That agreement required Simsboro to acquire commercial general liability insurance, which it obtained from Defendants-Appellees Burlington Insurance Company (“BIC”) and Evanston Insurance Company (“EIC”). It further required that “Weyerhaeuser and its Subsidiaries” be named as additional insureds. However, NR’s parent company, Weyerhaeuser Company (“W. Co.”), was never added to the insurance policies that Simsboro obtained from EIC and BIC. This insurance coverage dispute arose after several personal injury lawsuits were filed against Simsboro and W. Co. in state court. After those lawsuits settled, W. Co. and NR sued BIC and EIC, demanding that they defend and indemnify W. Co. and NR. EIC and BIC then filed Rule 12(b)(6) motions, which were granted by the district court.The Fifth Circuit affirmed the district court’s dismissal of Weyerhaeuser’s breach of contract claims. The court concluded that Defendants had no duty to defend or indemnify W. Co. and NR as additional insureds or as third-party beneficiaries to the CGL Policies or Excess Policy. The court explained that it was satisfied that BIC and EIC had no duty to defend W. Co. and NR as thirdparty beneficiaries. The indemnification inquiry, however, is fact intensive and may incorporate extrinsic evidence. The district court explained that because NR is listed on the CGL Policies as an additional insured and the CGL Policies might cover Simsboro’s indemnification obligation arising from the Agreement, NR might be a third-party beneficiary of the policies with respect to indemnification. View "Weyerhaeuser v. Burlington Insurance" on Justia Law

Plaintiff appealed the district court’s summary judgment of his claims against Safeco Insurance Company of Indiana (“Safeco”) for violating Section 541 and Section 542 of the Texas Insurance Code.   The Fifth Circuit explained that in 2017, the Texas legislature amended Section 542, raising an important issue of Texas insurance law as to which there is no controlling Texas Supreme Court authority, and the authority from the intermediate state appellate courts provides insufficient guidance. Thus, the court certified the following question of state law to the Supreme Court of Texas: In an action under Chapter 542A of the Texas Prompt Payment of Claims Act, does an insurer’s payment of the full appraisal award plus any possible statutory interest preclude recovery of attorney’s fees? View "Rodriguez v. Safeco" on Justia Law

A Listeria outbreak led to a shutdown of Blue Bell factories and a nationwide recall of its products. Consequently, Blue Bell suffered a substantial financial loss. A shareholder of Blue Bell Creameries brought a derivative action against Blue Bell’s directors and officers, alleging a breach of fiduciary duties. The shareholder, on behalf of Blue Bell, alleged that Blue Bell’s officers and directors breached their fiduciary duties of care and loyalty by failing “to comply with regulations and establish controls.” The Blue Bell Defendants appealed the district court’s grant of summary judgment in favor of Discover Property & Casualty Insurance Company and the Travelers Indemnity Company of Connecticut.   The Fifth Circuit affirmed. Here, only the duty to defend is at issue because the parties have stipulated that “If the district court finds there is no duty to defend, it may also find there is no duty to indemnify, but otherwise the duty to indemnify will not be a subject of the Parties’ motions.” Accordingly, the court wrote that it is confined by Texas’s “eight-corners rule,” which directs courts to determine an insurer’s duty to defend based on: (1) the pleading against the insured in the underlying litigation and (2) the terms of the insurance policy. The court explained that while it disagrees with the district court’s determination as to whether the directors and officers are “insureds” in relation to the shareholder lawsuit, it agreed with its determination that the complaint in the shareholder lawsuit does not allege any “occurrence” or seek “damages because of bodily injury.” Each issue is independently sufficient for affirmance. View "Discover Property Cslty v. Blue Bell" on Justia Law

Plaintiff was arrested and released on a surety bond provided by Big Bubba’s. Plaintiff was formally charged with the same offense in April 2016, but due to an epileptic seizure, he was hospitalized before receiving notice of the indictment. As a result, he was incapacitated for several months, but according to Plaintiff, his wife stayed in touch with Big Bubba’s on his behalf. Big Bubba’s filed a petition with the trial court, requesting an arrest warrant for Plaintiff on the grounds that he had failed to fulfill his contractual obligations by neglecting to check in and provide contact information. The trial court granted the request, and Plaintiff was arrested pursuant. Plaintiff sued Big Bubba’s, alleging that it violated their agreement and caused him to be wrongfully arrested by presenting misleading information to the court. The district court adopted the magistrate judge’s Memorandum and Recommendation and granted Big Bubba’s motion to dismiss. On appeal, Plaintiff contends that his false imprisonment and contract claims were wrongly dismissed.   The Fifth Circuit affirmed the judgment of the district court as to Plaintiff’s false imprisonment claim, and the court reversed and remanded his contract claim. The court explained that while Plaintiff’s false imprisonment claim was properly dismissed, his contract claim was not. The district court held that principals, such as Plaintiff, who seek to contest a surrender, are “limited to the remedy” set out in Tex. Occ. Code Section 1704.207(b)–(c). Thus the court concluded that Plaintiff is not limited to this remedy and therefore reverse the dismissal of his claim. View "Jeanty v. Big Bubba's" on Justia Law

This dispute began in 2016 when Defendants sued a motorist in state court for damages stemming from an automobile accident. The motorist fled the scene of the accident, was criminally charged for failing to provide his name, address, and insurance information, and pleaded nolo contendere to a criminal misdemeanor. The motorist was insured by Allstate Fire & Casualty Insurance Company (“Allstate”). Allstate paid Defendants claims for property damages, but Defendants rejected Allstate’s offers to resolve their physical injury claims, demanding the policy limit of $50,000. The district court determined that it had subject matter jurisdiction over the lawsuit, denying Defendants’ motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1). It subsequently granted summary judgment in favor of Allstate, finding that the motorist’s failure to cooperate in the underlying suit prejudiced Allstate and barred any legal obligation to pay Defendants the judgment amount of $163,822.   The Fifth Circuit affirmed the district court’s determination that it had subject matter jurisdiction. The court held that where the claim under the policy exceeds the value of the policy limit, courts considering declaratory judgments should ask whether there is a legal possibility that the insurer could be subject to liability in excess of the policy limit. The party seeking diversity jurisdiction should establish this possibility by a preponderance of the evidence. View "Allstate Fire and Casualty v. Allison Love" on Justia Law

CEATS, Inc. is a non-practicing intellectual property company that owns patents for technologies used in online ticketing. TicketNetwork, Inc. and Ticket Software LLC (together “Ticket”) maintain an online marketplace for tickets to live events. More than a decade ago, CEATS filed a patent-infringement lawsuit against Ticket and other providers (the “2010 Lawsuit”). CEATS and Ticket settled that suit. The settlement agreement gave Ticket a license to use CEATS’s patents in exchange for a lump-sum payment from Ticket and for ongoing royalty payments from Ticket and its affiliates (the “License Agreement”). CEATS continued its litigation against the remaining non-settling defendants, but the jury in that case found that CEATS’s patents were invalid. The Court of Appeals for the Federal Circuit affirmed.   The Fifth Circuit affirmed that part of the Sanctions Order that imposes joint and several monetary liability against CEATS. The court vacated those parts of the Sanctions Order that impose joint and several monetary liability against the Individuals, that impose the Licensing Bar, and that deny CEATS’s tolling request. The court vacated the Calculation Order and remanded for further proceedings. The court explained that here CEATS told the district court that a discovery violation “must be committed willfully or in bad faith for the court to award the severest remedies available under Rule 37(b).” CEATS also argued that it did not violate the Protective Order willfully or in bad faith because the “communications . . . were clearly inadvertent.” That argument was enough to put the district court on notice that CEATS opposed any definition of “bad faith” that includes inadvertent conduct. View "CEATS v. TicketNetwork" on Justia Law

Congress assigned implementation of the PPP to the Small Business Administration (SBA). Potential borrowers must have answered “No” to whether “any individual owning 20% or more of the equity of the Applicant [was] subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction, or presently incarcerated, or on probation or parole.” When completing a PPP loan application on behalf of law firm Ramey & Schwaller, L.L.P., owner William Ramey answered “No” to that question. Zions Bancorporation, NA, doing business as Amegy Bank, approved the law firm’s application and disbursed a $249,300 loan. Later, the bank learned that Ramey had actually been subject to a criminal complaint accusing him of attempted sexual assault in Harris County, Texas. So the bank held the law firm in default and froze the firm’s accounts as an offset to the loan balance. The law firm then filed this action against the bank, seeking a declaratory judgment that Ramey did not answer the application question falsely. The bank alleged a counterclaim for breach of contract. The district court granted summary judgment to the bank and dismissed the law firm’s claims.   The Fifth Circuit affirmed. The court explained that because Ramey was, at least, subject to “means by which formal criminal charges are brought” at the time he completed the Application, he answered Question 5 falsely on behalf of Ramey & Schwaller. Accordingly, the law firm was in default under the PPP loan documents, and the district court correctly entered summary judgment in favor of Amegy Bank. View "Ramey & Schwaller v. Zions Bancorp" on Justia Law

This case involves a contract dispute between an automobile-product manufacturer and one of its distributors. The distributor, Plaintiff Wesden, LLC, appealed the district court’s Rule 12(b)(6) dismissal of its fraud claim and summary-judgment dismissal of its breach-of-contract claim against the manufacturer, Defendant Illinois Tool Works, Inc. d/b/a ITW Evercoat (“ITW”).   The Fifth Circuit affirmed. The court explained that the issue here reduces to the plausibility of Wesden’s fraud claim. Construing the complaint in Wesden’s favor, the claim is that, at the September 2018 meeting, ITW promised Wesden that it could sell Auto Magic products through online marketplaces like Amazon and that ITW would not stop Wesden from doing so or otherwise appropriate those online markets for itself. The court concluded that Wesden’s complaint does not permit a reasonable inference of fraud. Wesden’s alleged facts do not allow us to reasonably infer that, in September 2018, ITW had “no intention” of adhering to its promise to permit Wesden’s sales on Amazon and similar marketplaces.   Further, ITW has invoked the statute of frauds to assert that the parties’ agreement is unenforceable. The court explained that a requirements contract still must satisfy the statute of frauds, which demands a written quantity term. Wesden has identified no written term either specifying a quantity of goods or stating that Wesden will buy all of its requirements from ITW. The contract thus fails to satisfy the statute of frauds and is therefore unenforceable. View "Wesdem v. Illinois Tool Works" on Justia Law