Justia Contracts Opinion SummariesArticles Posted in US Court of Appeals for the Second Circuit
In re Motors Liquidation Co.
This case arose out of the 2009 bankruptcy of Old GM, which resulted in a sale under 11 U.S.C. 363 of the bulk of its assets to a new entity that has continued the business (the new General Motors). The New General Motors assumed the liability of Old GM with respect to post‐Sale accidents involving automobiles manufactured by Old GM. The claims assumed included those by persons who did not transact business with Old GM, such as individuals who never owned Old GM vehicles and persons who bought Old GM cars after the Sale. At issue was whether the New General Motors was liable for punitive damages with respect to such claims.The Second Circuit held that the new General Motors did not contractually assume liability for punitive damages in its predecessor's bankruptcy sale, and thus the Post-Closing Accident Plaintiffs may not assert claims for punitive damages based on the predecessor's conduct. Accordingly, the court affirmed the district court's decision affirming the bankruptcy court's decision on the issue of punitive damages. View "In re Motors Liquidation Co." on Justia Law
Attestor Value v. Republic of Argentina
The Second Circuit affirmed the district court's grant of Argentina's motion to dismiss with prejudice under Federal Rule of Civil Procedure 12(b)(6) and denying as moot plaintiffs' motion for injunctive relief and expedited discovery. In this case, plaintiffs claimed that they entered into binding settlement agreements with Argentina over defaulted bonds.The court held, under its precedent and New York state law, that when an agreement expressly requires a party's countersignature to be binding and the factors set out in Winston Mediafare Entertainment Corp., 777 F.2d 78, 80 (2d Cir. 1985), otherwise indicate that the parties did not intend to be bound, no valid contract exists in the absence of a party's countersignature. In this case, the purported agreements between plaintiffs and Argentina expressly required Argentina's countersignature before binding the parties, and the parties did not intend to be bound in the absence of a countersigned agreement. View "Attestor Value v. Republic of Argentina" on Justia Law
Rich v. Fox News Network, LLC
Plaintiffs appealed the district court's dismissal of their state tort claims against defendants, alleging intentional infliction of emotional distress, tortious interference with contract, and negligent supervision or retention. Plaintiffs' claims stemmed from the actions of Fox News employees after their son, Seth Rich, was murdered during a botched robbery. A Fox News Reporter, Malia Zimmerman, and a Fox News commentator, Ed Butowsky, recruited a contributor to infiltrate the Rich family in order to find information to give credence to a conspiracy theory that Seth had leaked DNC emails to WikiLeaks and was assassinated for doing so.Applying de novo review, the Second Circuit held that the allegations in the complaint sufficiently stated a claim for intentional or reckless "extreme and outrageous" conduct against the Riches on the part of defendants; the complaint plausibly alleged that defendants tortiously interfered with the contract between the Riches and the contributor, who the Riches hired as a private investigator to look into the circumstances of Seth's death; and an amended complaint could likely cure any defect in plaintiffs' claim of negligent supervision or retention regarding the employment relationship between Fox News and Zimmerman and Wheeler. The court vacated and remanded for further proceedings. View "Rich v. Fox News Network, LLC" on Justia Law
Edwards v. Sequoia Fund, Inc.
Plaintiffs appealed the district court's dismissal of their claims against Sequoia Fund, alleging that Sequoia Fund breached a contractual obligation not to concentrate its investments in a single industry. The Second Circuit agreed with the district court's alternative holding and affirmed the judgment. The court assumed, without deciding, that plaintiffs plausibly alleged the existence of a contract that included the Concentration Policy as an enforceable term that could not be changed without a shareholder vote. Even assuming the existence of a binding contract, however, the court held that plaintiffs failed to plausibly allege a breach. In this case, because the SEC's 1998 Guidance ‐‐ and by extension the Concentration Policy ‐‐ allows for the passive increases at issue, plaintiffs have failed to allege a violation of the Concentration Policy. View "Edwards v. Sequoia Fund, Inc." on Justia Law
Mirkin v. XOOM Energy, LLC
Plaintiffs filed a purported class action against Xoom, alleging that the company breached a customer agreement by failing to set their electricity rates according to their actual or estimated supply costs. The district court dismissed the complaint for failure to state a claim and denied plaintiffs' post-judgment request for leave to amend under Federal Rules of Civil Procedure 59(e) and 60(b).The Second Circuit held that the district court failed to accept as true plausible allegations in the complaint and the proposed amended complaint (PAC). In this case, plaintiffs have alleged, with the support of the expert calculations included in the complaint and the PAC, that XOOM's rates showed significant upward deviations from the Market Supply Cost and continued to rise even when that cost fell. Therefore, these allegations were sufficient to state a claim for breach of contract. Furthermore, there was no support for the district court's suggestion that plaintiffs fabricated their calculations. Likewise, the district court erred in denying plaintiffs leave to amend their complaint, and the district court should have accepted the PAC, notwithstanding its presentation after judgment was entered. Accordingly, the court reversed in part, affirmed in part, and remanded for further proceedings. View "Mirkin v. XOOM Energy, LLC" on Justia Law
PHL Variable Insurance Co. v. Town of Oyster Bay
The Second Circuit affirmed the district court's decision declining to reconsider its original decision granting the Town's motion to dismiss the amended complaint alleging claims of, inter alia, breach of contract, innocent misrepresentation, and fraud in connection with plaintiff's loan to a licensee of the Town that was allegedly secured by the Town.The court held that PHL's arguments with regard to dismissals of the unjust enrichment and negligent misrepresentation claims were not properly before the court. Even if they were properly before the court, the court would still reject PHL's arguments. The court also held that PHL's amended complaint failed to state a claim on which relief can be granted for breach of contract or equitable relief because it failed to plausibly allege a valid contract; PHL's claims for misrepresentation failed because PHL failed to allege that it reasonably or justifiably relied on the misrepresentation; and there was no merit to PHL's contention that it should have been allowed to file a second amended complaint. View "PHL Variable Insurance Co. v. Town of Oyster Bay" on Justia Law
Universal Instruments Corp. v. Micro Systems Engineering, Inc.
The Second Circuit affirmed the district court's dismissal of plaintiff's claims for breach of contract, copyright infringement, misappropriation, and unfair competition arising from its sale of equipment and software for an automated assembly system. The court held that defendants' conduct did not breach Section 8.2(d) of the Equipment Purchase Agreement (EPA) and was non‐infringing because that provision permitted defendants to reproduce and use the station and server source code; defendantsʹ adaptation of the server source code was non‐infringing because it was authorized by 17 U.S.C. 117(a); Universalʹs contract claim that defendantsʹ modification of the server source code breached the EPA was preempted by the Copyright Act; Universalʹs claim of misappropriation of trade secrets was time‐barred; and MTA did not unfairly compete with Universal because its conduct was not in bad faith. View "Universal Instruments Corp. v. Micro Systems Engineering, Inc." on Justia Law
Valls v. Allstate Insurance Co.
The Second Circuit affirmed the district court's dismissal of plaintiffs' amended complaint under Federal Rule of Civil Procedure 12(b)(6). This appeal arose from a multitude of lawsuits filed by Connecticut homeowners whose basements walls were likely constructed with defective concrete manufactured by the now‐defunct J.J. Mottes Company.The court held that the "collapse" provision in the Allstate homeowner's insurance policy in this case did not afford coverage for basement walls that exhibit signs of deterioration but that have not collapsed suddenly, accidentally, and entirely, as required by the policy. Therefore, the horizontal and vertical cracking in plaintiffs' basement walls did not constitute a covered "collapse" under the policy and Allstate did not breach its contract by denying coverage for plaintiffs' claim. View "Valls v. Allstate Insurance Co." on Justia Law
GEOMC Co., Ltd. v. Calmare Therapeutics Inc.
Calmare appealed the district court's judgment requiring it to pay $10,352,170.41 to GEOMC after a bench trial of a contract dispute concerning sales of medical devices. The Second Circuit affirmed the district court's ruling striking two affirmative defenses and five counterclaims.The court held that the district court was within its discretion in striking the two affirmative defenses. In this case, striking the sixth defense lacked any indication of what conduct by GEOMC or others might have been a defense to the breach of contract claim added by the second amended complaint, and the seventh defense lacked any indication of which party needed to be joined or why. The district court was also within its discretion in striking the four counterclaims against Radiant on the ground of prejudice and one counterclaims because it was factually and legally deficient. View "GEOMC Co., Ltd. v. Calmare Therapeutics Inc." on Justia Law
NRP Holdings LLC v. City of Buffalo
NRP made preliminary arrangements with the City of Buffalo to build affordable housing on city‐owned land and to finance the project in part with public funds. The project never came to fruition, allegedly because NRP refused to hire a political ally of the mayor. NRP sued the city, the Buffalo Urban Renewal Agency, the mayor, and other officials The district court resolved all of NRP’s claims in favor of defendants. The Second Circuit affirmed. NRP’s civil RICO claim against the city officials is barred by common‐law legislative immunity because the mayor’s refusal to take the final steps necessary to approve the project was discretionary legislative conduct, and NRP’s prima facie case would require a fact-finder to inquire into the motives behind that protected conduct. NRP’s “class of one” Equal Protection claim was properly dismissed because NRP failed to allege in sufficient detail the similarities between NRP’s proposed development and other projects that previously received the city’s approval. NRP’s claim for breach of contract was properly dismissed because the city’s “commitment letter” did not create a binding preliminary contract in conformity with the Buffalo City Charter’s requirements for municipal contracting. NRP fails to state a claim for promissory estoppel under New York law, which requires proof of “manifest injustice.” View "NRP Holdings LLC v. City of Buffalo" on Justia Law