Justia Contracts Opinion SummariesArticles Posted in US Court of Appeals for the Second Circuit
Loreley Financing (Jersey) No. 3 Ltd. v. Wells Fargo
Plaintiffs filed suit for fraud, rescission, conspiracy, aiding and abetting, fraudulent conveyance, and unjust enrichment alleging that defendants had misrepresented that collateral managers would exercise independence in selecting assets for collateralized debt obligations (CDOs). The district court granted summary judgment in favor of defendants.The Second Circuit affirmed and held that plaintiffs have failed to establish, by clear and convincing evidence, reliance on defendants' representations. In this case, plaintiffs based their investment decisions solely on the investment proposals their investment advisor developed; the advisor developed these detailed investment proposals based on offering materials defendants provided and on the advisor's own due diligence; plaintiffs premised their fraud claims on the advisor's reliance on defendants' representations; but New York law does not support this theory of third-party representations. The court also held that plaintiffs have failed to establish that defendants misrepresented or omitted material information for two of the three CDO deals at issue—the Octans II CDO and the Sagittarius CDO I. The court explained that defendants' representations that the collateral managers would exercise independence in selecting assets were not misrepresentations at all, and defendants did not have a duty to disclose their knowledge of the hedge fund's investment strategy because this information could have been discovered through the exercise of due care. View "Loreley Financing (Jersey) No. 3 Ltd. v. Wells Fargo" on Justia Law
Moreno-Godoy v. Kartagener
The Second Circuit vacated the district court's grant of summary judgment in favor of Defendants GDB, Stavis, and Kartagener, remanding for further proceedings. This appeal arose from breach of contract and quasi-contract claims brought by plaintiff stemming from defendants' legal representation of plaintiff.The court concluded that the district court erred in granting summary judgment to defendants on plaintiff's breach-of-contract claim because, under New York law, plaintiff can maintain a breach-of-contract claim without any showing that the $100,000 belonged to him. Although plaintiff's quasi-contract claims against Defendant Stavis and GDB do require a showing that he owned the money, the court further concluded that the district court erred in granting summary judgment to those defendants on those claims because there is sufficient evidence in the record from which a jury could conclude that the money indeed belonged to defendant. Finally, the court held that summary judgment for Stavis in his individual capacity was also inappropriate. View "Moreno-Godoy v. Kartagener" on Justia Law
Utica Mutual Insurance Co. v. Munich Reinsurance America, Inc.
Utica Insurance issued primary and umbrella coverage in 1973 and 1974 and subsequently paid asbestos losses incurred by the manufacturer (Goulds). Utica had ceded parts of its risk to the reinsurers, Munich and Century, in exchange for a share of the premiums, via facultative certificates, i.e., a reinsurance contract particular to that policy. Munich and Century each paid Utica $5 million for their undisputed one-fifth shares of the umbrella policy; but they refused to pay defense costs in addition to limits when Utica billed them an extra $2,760,534 each. Utica sued; in two suits before different judges of the same court, with inconsistent results.On the issue of whether the reinsurers (Munich and Century) were obligated to reimburse Utica for defense costs in addition to policy limits, the Second Circuit held that the 1973 certificates reinsure defense costs within limits, not in addition. A 2007 settlement agreement with Goulds did not independently require Century or Munich to pay defense costs in addition to limits. View "Utica Mutual Insurance Co. v. Munich Reinsurance America, Inc." on Justia Law
S. Katzman Produce Inc. v. Yadid
Defendant appealed from so much of the district court's judgment that orders him, jointly and severally with his codefendants Orel, to pay plaintiffs, suppliers of perishable goods, a total of $606,664.87, including principal amounts totaling $473,268.82, plus interest and attorneys' fees, because Orel failed to pay plaintiffs for goods purchased, and because of the dissipation of the statutory trust imposed on Orel's assets for the benefit of unpaid suppliers, in violation of the Perishable Agricultural Commodities Act (PACA). The district court granted plaintiffs' motion for summary judgment holding defendant liable on the ground that he was a person in control of the trust assets.The Second Circuit concluded that partial summary judgment was appropriate with respect to $40,000 of PACA trust assets that were placed in defendant's personal bank account, but that whether he had the necessary degree of control over other assets could not be resolved as a matter of law. In this case, defendant was neither an owner nor an officer of Orel. Accordingly, the court vacated the judgment in part and remanded for trial on the issue of defendant's control over other Orel assets. View "S. Katzman Produce Inc. v. Yadid" on Justia Law
Electra v. 59 Murray Enterprises, Inc.
Plaintiffs filed suit alleging that defendants unlawfully used photographs of them to advertise strip clubs owned by defendants in violation of New York Civil Rights Law sections 50 and 51. The district court granted summary judgment for defendants, holding that plaintiffs signed full releases of their rights to the photographs.The Second Circuit concluded that the terms of Plaintiff Shake and Hinton's release agreements are disputed material facts, and defendants concede that neither they nor the third-party contractors that created and published the advertisements secured legal rights to use any of the photographs at issue. The court held that the district court erred in granting summary judgment to defendants and in denying summary judgment to plaintiffs on liability. Therefore, the court vacated in part and remanded for further proceedings.The court affirmed in part and held that the district court correctly concluded that plaintiffs had not accepted the offer of judgment because the offer's settlement amount term was ambiguous, the parties disagreed over how to interpret the term, and there was accordingly no meeting of the minds. Finally, the court held that the district court correctly dismissed the Lanham Act, 15 U.S.C. 1125(a), New York General Business Law Section 349, and libel claims. View "Electra v. 59 Murray Enterprises, Inc." on Justia Law
Miller v. Metropolitan Life Insurance Co.
Plaintiffs enrolled in a Group Variable Universal Life Insurance (GVUL) policy offered by MetLife. During the enrollment process, neither plaintiff indicated that he smoked tobacco, but MetLife nevertheless designated them as tobacco smokers, thus triggering their payment of higher insurance premiums. Plaintiffs filed suit after MetLife refused to refund the amount of overpayments, alleging breach of contract and tort violations under New York law.The Second Circuit affirmed the district court's dismissal of plaintiffs' claims as time-barred under New York's applicable statute of limitations. The court held that the continuing-violation doctrine did not toll the limitations period for the breach of contract claim where the issue in this case rests on a single allegedly unlawful act, namely MetLife's initial designation of both plaintiffs as smokers. The court noted that determining whether the Securities Litigation Uniform Standards Act bar applies here is a fraught and unnecessary endeavor. View "Miller v. Metropolitan Life Insurance Co." on Justia Law
Compania Embotelladora Del Pacifico, S.A. v. Pepsi Cola Co.
This appeal stems from a contract dispute between PepsiCo and one of its independent Peruvian bottlers, CEPSA. After PepsiCo terminated its contract with CEPSA, CEPSA filed suit in district court alleging, inter alia, breach of contract claims based on wrongful termination and PepsiCo's alleged failure to protect CEPSA's rights as the exclusive bottler and distributor of PepsiCo products in specified areas of Peru.The Second Circuit affirmed the district court's judgment in favor of PepsiCo and held that the contract was terminable at will and that PepsiCo had no affirmative duty under the contract to protect CEPSA against the alleged harm to its exclusive rights. In this case, the court applied the New York common law of contracts, looked within the four corners of the contract, and concluded that the Exclusive Bottler Appointment (EBA) was terminable at will and that PepsiCo had no duty to police or prevent transshipment. The court considered CEPSA's remaining arguments on appeal and concluded that they are without merit. View "Compania Embotelladora Del Pacifico, S.A. v. Pepsi Cola Co." on Justia Law
In re Motors Liquidation Co. (Pillars)
The Second Circuit affirmed the district court's decision vacating the bankruptcy court's determination concerning whether General Motors assumed liability, through a judicial admission, for claims like appellant's. Appellant filed a wrongful death lawsuit against New GM after his wife was involved in an accident that left her incapacitated. She was driving a 2004 Pontiac Grand Am, a vehicle manufactured by Old GM, which allegedly had a faulty ignition switch.The Second Circuit held that for a statement to constitute a judicial admission, it must be intentional, clear, and unambiguous. In this case, the court held that the inadvertent inclusion of language from an outdated, non-operative version of a sale agreement was not intentional, clear, and unambiguous, and thus was not a judicial admission. Therefore, General Motors was not bound by the language. View "In re Motors Liquidation Co. (Pillars)" on Justia Law
Utica Mutual Insurance Co. v. Fireman’s Fund Inc.
The Second Circuit reversed the district court's award of $64 million to Utica. In this case, the jury found that the Fireman's Fund breached its obligations under reinsurance contracts issued to Utica. The court agreed with Fireman's Fund that the reinsurance contracts, by their terms, demonstrate as a matter of law that Fireman's Fund did not owe to Utica the obligations allegedly breached. The court explained that the umbrella policies unambiguously define their attachment point by reference to the underlying limits of liability "as stated in the Schedule[s]." Therefore, where the losses in question did not exceed the limits stated for bodily injury in the Schedules, Fireman's Fund had no obligation under the reinsurance contracts to pay for those losses. The court remanded for further proceedings. View "Utica Mutual Insurance Co. v. Fireman's Fund Inc." on Justia Law
Trina Solar US, Inc. v. Jasmin Solar Pty Ltd.
Jasmin appealed the district court's grant of Trina's petition to confirm an arbitration award entered in its favor and denial of Jasmin and JRC's motion to vacate the award. The district court relied on an agency and direct benefits theory of estoppel to find that Jasmin was bound by the arbitration clause.The Second Circuit reversed the district court's judgment as to Jasmin, holding that the district court erred when it determined that Jasmin was bound as a principal to the contract under agency theory. The court was not persuaded that JRC acted as Jasmin's agent in executing the contract or that, in the alternative, Jasmin was bound to the arbitration clause under a direct benefits theory of estoppel. In this case, the commercial contract containing the arbitration clause was governed by New York law and signed by Trina and JRC, not Jasmin. The court explained that Jasmin was not a party to the contract and thus could not enforce any rights or duties under the contract. The court remanded with instructions to enter an amended judgment dismissing the case as to Jasmin. View "Trina Solar US, Inc. v. Jasmin Solar Pty Ltd." on Justia Law