Justia Contracts Opinion SummariesArticles Posted in US Court of Appeals for the Tenth Circuit
ORP Surgical v. Howmedica Osteonics Corp.
In a dispute between ORP Surgical, LLC (ORP), and Howmedica Osteonics Corp., also known as Stryker, the United States Court of Appeals for the Tenth Circuit affirmed in part and reversed in part the district court's ruling. ORP and Stryker, both involved in medical device sales, had a successful business relationship under two sales contracts, the Joint Sales Representative Agreement (JSRA) and the Trauma Sales Representative Agreement (TSRA). The relationship soured when Stryker terminated the JSRA and hired one of ORP's sales representatives, and later, when ORP terminated the TSRA, Stryker hired a dozen of ORP's representatives. The district court ruled in favor of ORP, finding that Stryker breached the sales contracts and owed ORP damages, attorneys’ fees, sanctions, and costs. On appeal, Stryker challenged the rulings on the breach of contract claims, the attorneys’ fees award, and the nominal damages award. The Court of Appeals affirmed the district court’s holdings on the breach-of-contract claims but reversed its award of attorneys' fees under the indemnification provision. It also affirmed the award of nominal damages for Stryker's breach of the non-solicitation/non-diversion provision. The case was remanded for further proceedings. View "ORP Surgical v. Howmedica Osteonics Corp." on Justia Law
Harvest Group v. Love’s Travel Stops & Country Stores
The case revolves around a dispute between Harvest Group, LLC ("Harvest") and Love’s Travel Stops & Country Stores, Inc. and Musket Corp. (collectively, "Love’s") over a breach-of-contract claim. Harvest, a company that assists businesses in acquiring economic development incentives, entered into a contract with Love’s to help secure incentives for a renewable diesel facility. In return, Harvest would receive a fee of 10% of the value of any incentives it helped Love's secure.A property tax assessment for the project, which significantly reduced the estimated tax burden, was at the center of the dispute. Harvest claimed that this assessment qualified as an incentive under their agreement, and thus they were entitled to a fee. Love’s, however, argued that the assessment was not an incentive as defined by their contract and that it was not the product of Harvest’s efforts, but simply the result of the assessor’s application of Nebraska tax law.The United States Court of Appeals for the Tenth Circuit reversed the lower court's grant of summary judgment to Love’s on the issue of whether the assessment was an incentive/benefit under the Agreement and whether the assessment was the product of Harvest’s efforts. There were genuine disputes of material fact about these issues, meaning they must be decided at trial, not on summary judgment. The court also reversed the lower court on the issues of Harvest’s entitlement to interest and whether Harvest was the prevailing party. The case was sent back to the lower court for further proceedings. View "Harvest Group v. Love's Travel Stops & Country Stores" on Justia Law
Watchous Enterprises v. Mournes, et al.
In 2016 Watchous Enterprises, LLC contracted with one of the five individual defendant companies, Pacific National Capital, paying it a $7,600 nonrefundable deposit to secure help finding a lender or a joint-venture partner. Pacific introduced Watchous to companies affiliated with Waterfall Mountain LLC (collectively referred to as "Waterfall"). Watchous and Waterfall eventually executed a letter of intent to enter into a joint venture to which Waterfall would contribute more than $80 million. As part of the arrangement, Watchous paid Waterfall a $175,000 refundable deposit. Waterfall said that it would fund the venture through proceeds of loans backed by billions of dollars in Venezuelan sovereign bonds in the name of Waterfall or its lender (RPB Company). But Waterfall never funded Watchous, and Watchous was never refunded the $175,000. Watchous then filed suit under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and common-law claims under Kansas law against Pacific and Waterfall as well as against the five Appellants sued individually. The district court granted partial summary judgment in favor of Watchous on its fraud claims (leaving damages for the jury to decide), essentially on the ground that Appellants misrepresented and failed to disclose “the historic and contemporary facts about Waterfall’s dubious finances, loan defaults, and consistent lack of success in funding similar projects.” Watchous’s remaining claims proceeded to trial, where a jury found that Appellants engaged in a civil conspiracy to defraud Watchous, and had violated RICO. Appellants appealed, but finding no reversible error, the Tenth Circuit affirmed. View "Watchous Enterprises v. Mournes, et al." on Justia Law
Team Industrial Services v. Zurich American Insurance Company, et al.
Plaintiff Team Industrial Services, Inc. (Team) suffered a $222 million judgment against it in a wrongful-death lawsuit arising out of a steam-turbine failure in June 2018 at a Westar Energy, Inc. (Westar) power plant. Team sought liability coverage from Westar, Zurich American Insurance Company (Zurich), and two other insurance companies, arguing that it was, or should have been, provided protection by Westar’s Owner-Controlled Insurance Program (OCIP) through insurance policies issued by Zurich and the two other insurers. Team’s claims derived from the fact that its liability for the failure at the Westar power plant arose from work that had previously been performed by Furmanite America, Inc. (Furmanite), which had coverage under Westar’s OCIP. The district court granted summary judgment to Defendants, and Team appealed. Not persuaded by Team's arguments for reversal, the Tenth Circuit affirmed the district court. View "Team Industrial Services v. Zurich American Insurance Company, et al." on Justia Law
Monarch Casino & Resort v. Affiliated FM Insurance Company
Monarch Casino & Resort, Inc. appealed a district court’s grant of Affiliated FM Insurance Company’s (“AFM”) motion for partial judgment on the pleadings, which denied Monarch coverage under AFM’s all-risk policy provision, business-interruption provision, and eight other additional-coverage provisions. Monarch also moved the Tenth Circuit Court of Appeals to certify a question of state law or issue a stay. Monarch presented AFM with claims incurred through business interruption losses from COVID-19 and government orders directing Monarch to close its casinos. AFM denied certain coverage on the ground that COVID-19 did not cause physical loss of or damage to property. Monarch sued for breach of contract, bad faith breach of insurance contract, and violations of state law. The Tenth Circuit denied Monarch’s motions to certify a question of state law and issue a stay. And it affirmed the district court’s judgment: (1) AFM’s policy had a Contamination Exclusion provision that excludes all-risk coverage and business-interruption coverage from the COVID-19 virus; and (2) Monarch could not obtain coverage for physical loss or damage caused by COVID-19 under AFM’s all-risk provision, business-interruption provision, or eight additional-coverage provisions because the virus could not cause physical loss or damage and no other policy provisions distinguished this case. Accordingly, Monarch could not obtain the coverage that the district court denied. View "Monarch Casino & Resort v. Affiliated FM Insurance Company" on Justia Law
Dyno Nobel v. Steadfast Insurance Company
Explosives manufacturer Dyno Nobel tendered an action to its commercial general liability insurance policyholder, Steadfast Insurance Company (“Steadfast”), after being sued in Missouri for damages caused by the release of a nitric oxide plume from one of its Missouri plants. Steadfast denied the claim based on the insurance policy’s clauses precluding indemnification and defense of pollution-related bodily injury actions. Dyno Nobel thereafter filed an action in Utah state court seeking a declaratory judgment that Steadfast had a duty to indemnify and defend against this action under an endorsement titled “Vermont Changes – Pollution” (“Vermont Endorsement”). Contrary to Coverages A, B, and C in the insurance policy, the Vermont Endorsement would have required Steadfast to defend and indemnify against pollution-related bodily injury claims up to an aggregate amount of $3 million. Steadfast removed the action to federal court, and the federal district court entered judgment for Steadfast, concluding the Vermont Endorsement applied only to claims with a nexus to Vermont. Dyno Nobel appealed. After its review, the Tenth Circuit affirmed, finding the plain language of the insurance contract did not cover Dyno Nobel’s claim in the underlying action. View "Dyno Nobel v. Steadfast Insurance Company" on Justia Law
Grubb v. DXP Enterprises
In 2008 Plaintiff Bill Grubb signed an employment agreement with Defendant DXP Enterprises to lead the development and production of horizontal pumps. The agreement recited that the parties intended to create a new company to produce the pumps, and Grubb would own 10%. If the project became a success, Grubb had the right under the employment agreement to require DXP to buy his ownership stake at a price based on the new company’s gross revenue. The project was successful; in March 2019, Grubb gave notice to DXP that he wanted to sell his ownership stake in accordance with the agreement. But DXP informed Grubb it had never formed the new company, so there was nothing for it to purchase under the agreement. Grubb brought this action in the United States District Court for the Northern District of Oklahoma against DXP, asserting claims for breach of contract, actual and constructive fraud, conversion, breach of fiduciary duty, and unjust enrichment; and sought a declaratory judgment. After the parties filed cross-motions for summary judgment, the district court granted summary judgment in favor of DXP on all claims. Grubb appealed. After review, the Tenth Circuit found sufficient evidence of bad faith by DXP (in failing to form the new company) to support Grubb’s breach-of-contract claim but otherwise found no error in the rulings by the district court. Accordingly, the Court reversed in part the judgment below and remanded for further proceedings. View "Grubb v. DXP Enterprises" on Justia Law
McAnulty v. McAnulty, et al.
Husband Steven McAnulty was married twice: once to Plaintiff Elizabeth McAnulty, and once to Defendant Melanie McAnulty. Husband's first marriage ended in divorce; the second ended with his death. Husband’s only life-insurance policy (the Policy) named Defendant as the beneficiary. But the Missouri divorce decree between Plaintiff and Husband required Husband to procure and maintain a $100,000 life-insurance policy with Plaintiff listed as sole beneficiary until his maintenance obligation to her was lawfully terminated (which never happened). Plaintiff sued Defendant and the issuer of the Policy, Standard Insurance Company (Standard), claiming unjust enrichment and seeking the imposition on her behalf of a constructive trust on $100,000 of the insurance proceeds. The district court dismissed the complaint for failure to state a claim. Plaintiff appealed. By stipulation of the parties, Standard was dismissed with respect to this appeal. The only question to be resolved was whether Plaintiff stated a claim. Resolving that issue required the Tenth Circuit Court of Appeals to predict whether the Colorado Supreme Court would endorse Illustration 26 in Comment g to § 48 of the Restatement (Third) of Restitution and Unjust Enrichment (Am. L. Inst. 2011) (the Restatement (Third)), which would recognize a cause of action in essentially the same circumstances. Because the Tenth Circuit predicted the Colorado Supreme Court would endorse Illustration 26, the Court held Plaintiff has stated a claim of unjust enrichment, and accordingly reversed the previous dismissal of her case. View "McAnulty v. McAnulty, et al." on Justia Law
Ceska Zbrojovka Defence SE ("CZ") v. Vista Outdoor
Ceska zbrojovka Defence SE (“CZ Czech”) was a firearms manufacturer based in the Czech Republic. To do business in the United States, it had several subsidiaries, including CZ USA, CZ Czech’s Kansas-based subsidiary. Vista Outdoor, Inc. was a Minnesota company that designed, manufactured, and marketed outdoor recreation and shooting products. In November 2018, Vista and CZ Czech entered into an expense reimbursement agreement covering CZ Czech’s potential acquisition of a Vista firearm brand. Under the contract, Vista was obligated to reimburse CZ Czech for certain reasonable expenses in connection with its evaluation and negotiation of the proposed transaction. Even though the sale was not consummated, Vista refused CZ Czech’s subsequent reimbursement demands. CZ USA, not CZ Czech, filed a federal diversity action in the District of Kansas against Vista for breach of contract. The "twist" was that there was no contract between CZ USA and Vista, nor was CZ USA a beneficiary of the contract. CZ Czech, soon realizing the mistake, attempted to amend the complaint under Rule 15 of the Federal Rules of Civil Procedure and substitute itself as the party-plaintiff. The district court declined, finding that the original complaint controlled and that CZ USA, as a non-party to the contract, lacked standing to sue, meaning the court lacked subject-matter jurisdiction over the dispute. To this, the Tenth Circuit concurred and affirmed: the district court lacked subject-matter jurisdiction and correctly dismissed the lawsuit. View "Ceska Zbrojovka Defence SE ("CZ") v. Vista Outdoor" on Justia Law
Kazi, et al. v. KFC US
Plaintiff Zubair Kazi, through co-plaintiff KFC of Pueblo, Inc., owned the only Kentucky Fried Chicken restaurant in Pueblo, Colorado. In 2019 Defendant KFC US, LLC licensed a second Kentucky Fried Chicken restaurant in Pueblo. Kazi believed that KFC acted improperly in how it went about licensing this second restaurant and sued KFC for breach of contract, bad faith (breach of the implied covenant of good faith and fair dealing), promissory estoppel, and unjust enrichment. His lawsuit went to trial on his bad-faith claim only, and the jury found in his favor. KFC appealed. The Tenth Circuit held that Kazi’s claim for breach of the implied covenant of good faith and fair dealing was barred by Kentucky law because KFC’s alleged bad faith did not undermine any benefit or protection afforded to Kazi by his franchise agreement with KFC. The court therefore vacated the judgment and remanded for entry of judgment in favor of KFC and against Kazi and KFC of Pueblo, Inc. View "Kazi, et al. v. KFC US" on Justia Law