Justia Contracts Opinion SummariesArticles Posted in US Court of Appeals for the Fourth Circuit
JTH Tax, Inc. v. Aime
Defendant was a successful franchise operator of several tax preparation businesses under the umbrella of JTH Tax, Inc. and SiempreTax+ LLC (together, "Liberty Tax"). In this case, Liberty Tax requested that defendant assign it the leases for the franchise properties, as provided for by the Purchase and Sale Agreement (PSA). However, the parties could not agree to terms for the assignment. Liberty Tax subsequently filed suit and defendant countersued. Defendant largely prevailed and was awarded a significant sum of damages. The Fourth Circuit vacated a substantial portion of the damages award but upheld the judgment in defendant's favor. On remand, the district court recalculated damages based on the Fourth Circuit's instructions and then, on defendant's motion, subsequently amended the judgment, increasing the damages based on purportedly new evidence. Both parties appealed again.The Fourth Circuit found no error in the district court's denial of defendant's arguments for reinstatement of much of the original damages. The court explained that the district court did not err in concluding that the Rule 59(e) standard and the mandate rule precluded defendant's disgorgement theory. However, the court found error in the district court's conclusion that defendant met the standard for relief based on newly discovered evidence and in the award of nominal damages. The court concluded that, in the declaration and now on appeal, defendant does not show he exercised reasonable due diligence during the three years of litigation to discover and present evidence of unpaid rent on the Burnside property. Furthermore, nominal damages were unavailable because defendant was awarded compensatory damages to remedy Liberty Tax's breach of contract, regardless of the finding that Liberty Tax also breached the contract by breaching the implied covenant. Accordingly, the court affirmed in part, reversed and vacated in part, and remanded with instructions to recalculae damages. View "JTH Tax, Inc. v. Aime" on Justia Law
Edwards v. CSX Transportation, Inc.
Residents and businesses of Lumberton, North Carolina filed a putative class action alleging that CSX Transportation caused their property to be flooded during Hurricanes Matthew and Florence. The district court dismissed each claim as either insufficiently pleaded or preempted by federal law.The Fourth Circuit concluded that dismissal of the breach of contract claim was premature because plaintiffs have plausibly alleged that the Tri-Party Agreement was intended to directly benefit the class of persons to which they belong—the residents and businesses of South and West Lumberton left vulnerable to flooding through the gap. However, the court's holding is limited to the Tri-Party Agreement. In this case, plaintiffs alleged the existence of a second, unnamed and undated agreement, but failed to produce it or to plead any of its essential terms. The court also concluded that plaintiffs' tort claims are preempted by the federal Interstate Commerce Commission Termination Act. Accordingly, the court affirmed in part, reversed in part, and remanded. View "Edwards v. CSX Transportation, Inc." on Justia Law
Macsherry v. Sparrows Point, LLC
A jury awarded plaintiff $1 million on his claims against Sparrows Point for nonpayment of a commission on the sale of a large parcel of industrial property located on the Sparrows Point peninsula. Defendants contend that the evidence is insufficient to support the jury's verdict as to all claims. In the alternative, they seek a new trial, contending that the district court erred in admitting evidence of an alleged effort to compromise plaintiff's claim to a commission and in granting plaintiff a jury trial.The Fourth Circuit held that the evidence of defendants' effort to compromise plaintiff's claim was not admissible for any purpose under Federal Rule of Evidence 408 and the error was not harmless. The court explained that, even assuming that the evidence is sufficient as a matter of law to support the jury's verdict, the court cannot be confident that the jury was not substantially swayed by the evidentiary error. Therefore, the court held that defendants are entitled to a new trial. Finally, the court found that the district court enjoyed ample discretion to grant plaintiff's untimely request for a jury trial under Federal Rule of Civil Procedure 39(b), and thus the new trial may remain before a jury. View "Macsherry v. Sparrows Point, LLC" on Justia Law
Navy Federal Credit Union v. LTD Financial Services, LP
In this action arising from a contract dispute between the parties, Navy Federal Credit Union filed suit in federal district court against Advantage Assets, asserting only state law claims and invoking diversity jurisdiction. For establishing diversity jurisdiction, Congress provides that, pursuant to 28 U.S.C. 1332(c)(1), a corporation "shall be deemed a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business."The Fourth Circuit held that Navy Federal, a federally chartered credit union, is a citizen of its principal place of business, Virginia. The court explained that 28 U.S.C. 1332(c)(1)'s text, structure, and context support Navy Federal's contention that a corporation shall be deemed a citizen of the state or foreign state where it has its principal place of business. In this case, section 1332(c)(1) requires the court to interpret and to give effect to the second clause of the statute even when the first clause does not specify a citizenship; the district court's and defendants' understanding of "and" conflicts with circuit precedent; and this approach to section 1332(c)(2) is supported by the Supreme Court's holding in Bankers Trust Co. v. Texas & Pacific Railway Co., 241 U.S. 295 (1916). View "Navy Federal Credit Union v. LTD Financial Services, LP" on Justia Law
Mey v. DIRECTV, LLC
The Fourth Circuit vacated the district court's order denying DIRECTV's motion to compel arbitration in an action brought by plaintiff, alleging violations of the Telephone Consumer Protection Act (TCPA). Plaintiff alleged that defendants called her cell phone to advertise DIRECTV products and services even though her telephone number is listed on the National Do Not Call Registry.Because plaintiff signed an acknowledgement expressly agreeing to the arbitration provision of the Wireless Customer Agreement with AT&T, which provision applies to her as an authorized user, the court rejected plaintiff's argument that she did not form an agreement to arbitrate. The court held that plaintiff formed an agreement to arbitrate with DIRECTV where the ordinary meaning of "affiliates" and the contractual context convinced the court that the term includes affiliates acquired after the agreement was signed. Furthermore, in light of the expansive text of the arbitration agreement, the categories of claims it specifically includes, and the parties' instruction to interpret its provisions broadly, the court must conclude that plaintiff's TCPA claims fall within the scope of the arbitration agreement. Therefore, the court remanded for further proceedings. View "Mey v. DIRECTV, LLC" on Justia Law
Parkway 1046, LLC v. U.S. Home Corporation
U.S. Home challenges the district court's orders granting judgment, prejudgment interest, and attorneys' fees to Parkway in an action stemming from disputes over land and purchase development contracts.The Fourth Circuit held that the plain language of the contracts supports the district court's conclusion that Parkway's lawsuit is timely. In this case, Parkway's cause of action did not accrue until 2017, and the lawsuit was filed in the same year. However, the court held that the district court erred in ordering U.S. Home to pay prejudgment interest dating from May 27, 2008 and attorneys' fees. Under Maryland law, the court explained that Parkway is entitled to prejudgment interest only from the date of the purchase in 2017. Under the contract, Parkway may not be awarded attorneys' fees. Accordingly, the court reversed and vacated in part, remanding for instructions to award prejudgment interest from April 21, 2017. View "Parkway 1046, LLC v. U.S. Home Corporation" on Justia Law
Affinity Living Group, LLC v. Starstone Specialty Insurance Co.
After Affinity was sued for allegedly submitting Medicaid reimbursement claims for services that they never provided, it sought coverage for the suit under its insurance policy with StarStone. StarStone denied coverage because the lawsuit's claims did not fall within the policy's coverage for "damages resulting from a claim arising out of a medical incident." The district court agreed and granted judgment on the pleadings against Affinity on a declaratory judgment claim and breach of contract claim.The Fourth Circuit first found that it had appellate jurisdiction over the appeal, because Affinity properly appeals from a "final" decision. In this case, Affinity properly appealed the district court’s order dismissing its contractual claims after voluntarily dismissing extra-contractual claims that were necessarily precluded by the order. On the merits, the court applied North Carolina law and held that the allegations in the underlying complaint fall within the insurance policy's coverage provision. The court found that the False Claims Act action "arises out of" a medical incident as required to fall under the coverage provision of StarStone's policy. Accordingly, the court vacated the district court's order granting StarStone's motion for judgment on the pleadings and vacated the order denying Affinity's motion for partial summary judgment. View "Affinity Living Group, LLC v. Starstone Specialty Insurance Co." on Justia Law
Fessler v. IBM Corp.
Fessler sued, alleging that his former employer, IBM. unlawfully “capped” his sale commissions despite representing to him that his commissions would be uncapped. The district court dismissed his claims on the basis that the Incentive Plan Letters (IPLs) that IBM presents to its employees foreclosed any reasonable expectation that Fessler would receive additional commissions.The Fourth Circuit vacated, finding that Fessler adequately stated claims for fraud, constructive fraud, unjust enrichment, quantum meruit, and punitive damages. Although the IPLs stated that they did not constitute a promise and IBM reserved the right to adjust the plan’s terms,.Fessler can plausibly allege that he reasonably relied on PowerPoint presentations that repeatedly informed him that his commissions would be uncapped, and his past experience that IBM never capped a commission before 2016. A jury could find that since the representations that his commission would be uncapped were presented subsequent to Fessler receiving IPLs, it was reasonable for Fessler to understand them as adjustments to the plan’s terms. Fessler can plausibly allege the requisite intent to deceive, based on IBM’s motivation to recruit good salespeople who would not work for IBM if they knew that their commissions would be capped. Fessler’s quantum meruit claim is sufficient because of the lack of a meeting of the minds with regard to the exact payment he would receive for his work. View "Fessler v. IBM Corp." on Justia Law
Expo Properties, LLC v. Experient, Inc.
Expo Properties owns an office complex in which they leased to Experient. When the lease term ended, the parties dispute the condition the premises should be in when defendant vacated, and who should pay for any work to put the premises into that condition.The Fourth Circuit affirmed the district court's grant of summary judgment to Experient, holding that the Estoppel Certificate did not satisfy the requirements of Maryland contract law for modification of a contract. Therefore, contrary to Expo Properties' contention, the Estoppel Certificate did not modify the Lease under Maryland law. Furthermore, the Lease unambiguously does not allocate all costs for all maintenance and repairs, no matter what, to the tenant. Consequently, the district court properly held that Expo Properties' parol evidence was inadmissible. View "Expo Properties, LLC v. Experient, Inc." on Justia Law
US f/u/b of Modern Mosaic, Ltd v. Turner Construction Co.
Modern filed suit against Turner, alleging claims arising from a subcontract outlining Modern's role in the construction of an FBI facility. The Fourth Circuit held that the district court properly applied West Virginia's law and rejected all of Modern's claims based on the plain language of the contract. In this case, the district court granted Turner summary judgment on the field verification claim, and subsequently ruled in favor of Turner on the remaining claims.The court held that Modern and Turner were two sophisticated parties that entered into a detailed contract spelling out their rights and responsibilities in the construction of the FBI facility, and the provisions of that contract directly addressed the very issues raised in this appeal. Furthermore, the provisions of the contract compelled the result reached by the district court. Accordingly, the court affirmed the judgment. View "US f/u/b of Modern Mosaic, Ltd v. Turner Construction Co." on Justia Law