Justia Contracts Opinion SummariesArticles Posted in US Court of Appeals for the First Circuit
Axia NetMedia Corp. v. Massachusetts Technology Park Corp.
The First Circuit reversed the judgment of the district court vacating a portion of an arbitration award that voided the guaranty agreement at issue in this case, holding that, contrary to the conclusion of the district court, the arbitrator acted within the scope of his powers.Massachusetts Technology Collaborative (MTC) contracted with KCST USA, Inc. to operate and market a fiber optic network in western Massachusetts. MTC also secured a guaranty of KCST's obligations under the contract from KCST's parent company, Axia NetMedia Corporation. Axia later sued MTC over the guaranty agreement. MTC sought an order compelling arbitration, which the district court granted. The arbitrator found that MTC had materially breached the agreement with KCST, and, therefore, that the guaranty agreement was void for failure of consideration. The district court concluded that the arbitrator had exceeded the scope of his powers and vacated the award. The First Circuit reversed, holding that the arbitrator did not exceed the scope of his powers under section 10(a)(4) of the Federal Arbitration Act. View "Axia NetMedia Corp. v. Massachusetts Technology Park Corp." on Justia Law
Feliciano-Munoz v. Rebarber-Ocasio
The First Circuit vacated the decision of the district court dismissing Plaintiff's breach of contract claim, holding that the court erred in concluding that Plaintiff did not assert a breach of contract claim and abused its discretion when it employed the Fed. R. Civ. P. 12(b)(6) standard in dismissing the breach of contract claim instead of the summary judgment standard.Plaintiff filed a breach of contract action and asserted a secondary theory of liability related to deceit or "dolo." Defendant moved for summary judgment. The district court granted summary judgment for Defendant but dismissed the breach of contract claim under Fed. R. Civ. P. 12(b)(6) for failure to state a claim to relief that was "plausible on its fact." Applying the test for deceit in the formation of the contract, the court found that Plaintiff was not entitled to relief. The First Circuit vacated the judgment in part, holding that the district court (1) erred in concluding that Plaintiff did not assert a breach of contract claim and abused its discretion when it evaluated Defendant's motion for summary judgment with respect to the claim as if were a Rule 12(b)(6) motion to dismiss; and (2) did not err in granting summary judgment as to Plaintiff's fallback theory of dolo. View "Feliciano-Munoz v. Rebarber-Ocasio" on Justia Law
Foisie v. Worcester Polytechnic Institute
The First Circuit vacated the judgment of the district court dismissing Plaintiff's complaint seeking to recoup assets purportedly gifted to a charitable institution for less than adequate consideration by Plaintiff's ex-husband, holding that the district court erred by dismissing Plaintiff's claims on the basis that she lacked standing.Janet and Robert Foisie entered into a divorce settlement agreement in which each party agreed to a mutually acceptable split of assets. When Janet discovered that Robert had fraudulent transferred several million dollars to the Worcester Polytechnic Institute (WPI), Janet brought a civil action against WPI asserting claims of actual and constructive fraudulent transfers under both the common law and Connecticut's version of the Uniform Fraudulent Transfer Act (UFTA). The district court dismissed the complaint. The First Circuit vacated the judgment, holding (1) Janet easily satisfied the three elements of Article III standing, and her claims were ripe; (2) a choice-of-law analysis would be better performed on a more fully developed factual record; (3) the district court erred by dismissing Janet's UFTA claims on the basis that she lacked standing as a creditor; (4) the dismissal of Janet's common law claims on preemption grounds cannot stand; and (5) Janet's UFTA and common law claims were adequately pleaded. View "Foisie v. Worcester Polytechnic Institute" on Justia Law
TLS Management & Marketing Services, LLC v. Rodriguez-Toledo
The First Circuit reversed the district court's grant of summary judgment to TLS Management and Marketing Services, LLC (TLS) on its breach of contract claims against Ricky Rodriguez-Toledo, ASG Accounting Solutions Group, Inc. (ASG), and Global Outsourcing Services, LLC (GOS) and the court's finding that Rodriguez and ASG were liable for misappropriation of trade secrets, holding that TLS failed to prove its trade secret claims, and the nondisclosure agreements were unenforceable.Rodriguez was the founder of ASG, a company that, like TLS, offered services in tax planning. ASG signed a subcontractor agreement with TLS that included a nondisclosure provision. Rodriguez later began working for TLS and signed a nondisclosure agreement. After his departure from TLS Rodriguez provided tax services in competition with TLS through ASG and GOS. TLS alleged that Rodriguez and ASG misappropriated TLS's trade secrets and that Rodriguez, ASG, and GOS breached their nondisclosure agreements. The district court granted summary judgment to TLS on the breach of contract claims. After a non-jury trial on the trade secret claims, the district court found in favor of TLS. The First Circuit reversed, holding (1) TLS failed to satisfy its burden to prove the existence of trade secrets; and (2) the nondisclosure agreements were so broad as to be unenforceable. View "TLS Management & Marketing Services, LLC v. Rodriguez-Toledo" on Justia Law
Waithaka v. Amazon.com, Inc.
The First Circuit affirmed the district court's denial of Appellants' motion to compel arbitration in this putative class action, holding that the Federal Arbitration Act's (FAA) exemption for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce" encompasses the contracts of transportation workers who transport goods or people within the flow of interstate commerce.Plaintiff was a delivery driver for Amazon.com, Inc. and its subsidiary, Amazon Logistics, Inc. (collectively, Amazon) who collected packages for delivery in Massachusetts and did not cross state lines during the course of his deliveries. Plaintiff filed this putative class action asserting misclassification of Amazon's drivers contracted with through its smartphone application as independent contractors and violations of Massachusetts labor laws. Amazon moved to compel arbitration pursuant to the mandatory arbitration provision of Plaintiff's employment agreement with Amazon. The district court denied the motion in part, concluding that Plaintiff's agreement was exempt from the FAA and that the provision was unenforceable based on Massachusetts public policy. The First Circuit affirmed, holding (1) the FAA does not govern the enforceability of the dispute resolution section of the agreement; and (2) the district court rightly refused to compel arbitration pursuant to state law. View "Waithaka v. Amazon.com, Inc." on Justia Law
Caribbean Management Group, Inc. v. Erikon, LLC
The First Circuit affirmed the judgment of the district court denying a judgment creditor's motion for leave to execute on the judgment and its motion for reconsideration, holding that the district court did not abuse its discretion in viewing the judgment creditor's collection efforts as lacking in diligence and thus deeming unwarranted an extension of the period for execution of judgments.The district court entered a consent judgment in favor of Erikon LLC and against two defendants, jointly and severally, for $7.5 million. After Defendants stopped making payments, Erikon made no meaningful effort to collect the balance of the judgment for several years. Erikon eventually moved for leave to execute on the judgment. The district court denied the motion, reasoning that Erikon had waited to file its motion until more than six years after Defendants' final payment. The court then denied Erikon's motion for reconsideration. The First Circuit affirmed, holding that where, over the course of more than six years, Erikon took minimal steps to enforce the judgment, the district court did not abuse its discretion in deeming unwarranted an extension of the period for execution of judgments. View "Caribbean Management Group, Inc. v. Erikon, LLC" on Justia Law
Trout v. Organizacion Mundial de Boxeo, Inc.
The First Circuit vacated the decision of the district court granting the World Boxing Organization's (WBO) motion to compel arbitration of Austin Trout's claim under the Muhammad Ali Boxing Reform Act (MABRA), 15 U.S.C. 6309(d), and claims under Puerto Rico law for breach of contract, fraud, and negligence, holding that the arbitrator-selection provision set forth in the WBO Appeal Regulations is invalid.Trout, a professional boxer residing in New Mexico, sued the WBO, which is based in Puerto Rico, challenging the WBO's decision to remove him from its rankings for a certain weight class. The WBO moved to compel arbitration pursuant to a clause in the WBO Championship Regulations and the Federal Arbitration Act. The district court granted the motion and dismissed the claims without prejudice. The First Circuit vacated the district court's decision, holding (1) the arbitrator-selection provision that the Appeal Regulations sets forth, which grants the WBO exclusive control over the appointment of the arbitrators who will decide Trout's claims, is so unreasonable and unjust as to be unconscionable under Puerto Rico contract law; and (2) the case is remanded for the district court to determine whether the arbitrator-selection provision is severable from the remainder of the arbitration agreement. View "Trout v. Organizacion Mundial de Boxeo, Inc." on Justia Law
Kelly v. Riverside Partners, LLC
In this breach of contract action, the First Circuit affirmed the district court's grant of summary judgment for Defendants on all of Plaintiff's claims and all of Defendants' counterclaims, holding that, based on Plaintiff's waivers, summary judgment was appropriate.Plaintiff was the president of a company that Defendant Riverside Partners, LLC directed one of its portfolio companies to acquire. Defendant Steven Kaplan was a General Partner at Riverside. Plaintiff brought suit alleging that he had an oral side agreement under which Kaplan and Riverside would pay Defendant $1 million if the portfolio company acquired the company and that Defendants did not pay him. Defendant denied that any such side deal existed and counterclaimed for indemnification for breach of certain representations and warranties that Plaintiff had made. The district court granted summary judgment for Defendants and awarded Defendants attorneys' fees. The Supreme Court affirmed, holding (1) Plaintiff waived enforcement of the APA's forum selection clause; (2) Defendants' indemnification claim was ripe; and (3) based on Plaintiff's waivers, the indemnification claim provided a complete defense to Plaintiff's claims and indemnification of attorneys' fees. View "Kelly v. Riverside Partners, LLC" on Justia Law
Tomasella v. Nestle USA, Inc.
The First Circuit affirmed the district court's dismissal of Appellant's claims in three putative class action lawsuits against Defendants - Nestle USA, Inc., Mars, Inc., and The Hersey Company - holding that Appellant did not plausibly state a claim for relief under Mass. Gen. Laws ch. 93A and that Appellant's unjust enrichment claim was foreclosed by the availability of a remedy at law.Appellant alleged that Defendant's failure to disclose on the packaging of their chocolate products that upstream labor abuses existing in their cocoa supply chains violated Chapter 93A and that Defendants had been unjustly enriched by this packaging omission. The district court dismissed the claims. The First Circuit affirmed, holding (1) Appellant did not plausibly state a Chapter 93A unfairness claim; and (2) Appellant's unjust enrichment claims must be dismissed because an adequate remedy at law was available to her through Chapter 93A. View "Tomasella v. Nestle USA, Inc." on Justia Law
Concilio De Salud Integral De Loiza, Inc. v. JC Remodeling, Inc.
In this qui tam action, the First Circuit affirmed the decision of the district court denying the request of Concilio De Salud Integral De Loiza, Inc. (CSILO), on the eve of trial, to amend the pretrial order to include a discussion of damages CSILO claimed it was due under the False Claims Act, holding that the district court did not abuse its discretion when it denied CSILO's request to amend the pretrial order.CSILO, a non-profit organization in Puerto Rico, brought this action under the FCA against JC Remodeling, Inc. (JCR). Three years into litigation and after the close of discovery, CSILO moved the court for leave to amend the pretrial order to include a discussion of damages. The district court denied the request. After a trial, the jury found that JCR had violated the False Claims Act and entered judgment against JCR and imposed on it a $5,500 civil penalty. CSILO appealed, challenging the denial of its request to amend the pretrial order. The First Circuit affirmed, holding that the district court did not abuse its discretion when it decided that CSILO's request to amend the pretrial order would not have cause it "manifest injustice" and would have instead caused prejudice and hardship to JCR. View "Concilio De Salud Integral De Loiza, Inc. v. JC Remodeling, Inc." on Justia Law