Justia Contracts Opinion Summaries

Articles Posted in US Court of Appeals for the Tenth Circuit
by
Banner Bank (“Banner”) provided a multimillion-dollar loan to James and Loree Smith and their business entities. As collateral, James Smith pledged several properties. Banner later contracted to release Loree Smith from all actions associated with the loan. When the loan entered default, Banner named Loree in this diversity action to foreclose on the collateral, notwithstanding the release. Loree brought a successful breach of contract counterclaim and recovered attorneys’ fees through Utah’s bad-faith fee-shifting statute. Banner appealed, arguing that every prong of the bad-faith statute was not met and the fee award was unreasonable. Finding that the judgment was final, the Tenth Circuit Court of Appeals exercised jurisdiction, but did not reach any of Banner’s specific statutory arguments. The Court reversed the fee award because it found Section 78B-5-825 was a procedural attorneys’ fees statute, so it could not be used to recover fees when a federal court sat in diversity. View "Banner Bank v. Smith, et al." on Justia Law

by
At issue in this appeal was a contract dispute between Ute Indian Tribe of the Uintah and Ouray Reservation (the Tribe) and Lynn Becker, a non-Indian. The contract concerned Becker’s work marketing and developing the Tribe’s mineral resources on the Ute reservation. Becker sued the Tribe in Utah state court for allegedly breaching the contract by failing to pay him a percentage of certain revenue the Tribe received from its mineral holdings. Later, the Tribe filed this lawsuit, challenging the state court’s subject-matter jurisdiction under federal law. The district court denied the Tribe’s motion for a preliminary injunction against the state-court proceedings, and the Tribe appealed. After its review, the Tenth Circuit Court of Appeals reversed, finding the Tribe was entitled to injunctive relief. The appellate court found the trial court’s factual findings established that Becker’s state-court claims arose on the reservation because no substantial part of the conduct supporting them occurred elsewhere. And because the claims arose on the reservation, the state court lacks subject-matter jurisdiction absent congressional authorization. Accordingly, under the particular circumstances of this appeal, the Tenth Circuit "close[d] this chapter in Becker’s dispute with the Tribe by ordering the district court to permanently enjoin the state-court proceedings." View "Ute Indian Tribe of the Uintah, et al. v. Lawrence, et al." on Justia Law

by
Plaintiff-Appellant Neil Hall appealed the district court’s grant of summary judgment in favor of Defendant-Appellee Allstate Fire and Casualty Insurance Company (Allstate) on his claim for underinsured motorist benefits. Hall challenged the district court’s determination that Allstate successfully asserted the affirmative defense of failure to cooperate, and that his bad faith claim also failed as a result. Hall was injured in a car accident caused by underinsured motorist Teri Johnson. Johnson only carried $25,000 in liability insurance coverage. Hall carried underinsured motorist coverage through Allstate. Allstate gave Hall permission to settle with Johnson for her $25,000 limit. Hall’s counsel submitted a request for benefits to Allstate asserting that he was entitled to more than the $25,000 he had received. An Allstate claims adjuster reviewed the medical expenses in the letter and determined that the reasonable amount of expenses was $25,011.68. Allstate sent Hall’s counsel a payment of $11.68 along with a letter that stated: “I will be in contact with you to resolve the remaining components of your client’s claim.” Counsel did not respond to any of the five attempts over three months: two voicemails and three letters. Without any prior notice to Allstate, Hall filed suit against Allstate for breach of contract, statutory unreasonable delay or denial of payment of benefits, and common law bad faith. The Tenth Circuit affirmed the district court, finding that because the district court found the insured's failure to cooperate resulted in a material and substantial disadvantage to the insurer, the insurer properly denied coverage on this ground, and summary judgment was proper as to the insured's bad faith claim. View "Hall v. Allstate Fire" on Justia Law

by
Plaintiffs-appellees Darrell Reeves and James King worked as welding inspectors for Enterprise Products Partners through third party staffing companies, Cypress Environmental Management and Kestrel Field Services. Reeves brought a collective action claim to recover unpaid overtime wages under the Fair Labor Standards Act. King later consented to join the putative collective action and was added as a named plaintiff. Enterprise argued that both Reeves and King signed employment contracts with their respective staffing companies that contained arbitration clauses for disputes. The Tenth Circuit found that indeed both plaintiffs’ respective contracts contained arbitration clauses, and that under the doctrine of equitable estoppel, these agreements require the claims to be resolved in arbitration. “Because Reeves and James’s claims allege substantially interdependent and concerted misconduct by Enterprise and non-defendant signatories, Cypress and Kestrel, arbitration should be compelled for these claims.” The Court reversed the district court’s denial of Enterprise’s motions to compel. View "Reeves, et al. v. Enterprise Products Partners" on Justia Law

by
Williams International Company LLC designed, manufactured, and serviced small jet engines. Dodson International Parts, Inc., sold new and used aircraft and aircraft parts. After purchasing two used jet engines that had been manufactured by Williams, Dodson contracted with Williams to inspect the engines and prepare an estimate of repair costs, intending to resell the repaired engines. Williams determined that the engines were so badly damaged that they could not be rendered fit for flying, but it refused to return one of the engines because Dodson had not paid its bill in full. Dodson sued Williams in federal court alleging federal antitrust and state-law tort claims. Williams moved to compel arbitration under the Federal Arbitration Act (FAA), relying on an arbitration clause on the original invoices. The district court granted the motion, and the arbitrator resolved all of Dodson’s claims in favor of Williams. Dodson then moved to reconsider the order compelling arbitration and to vacate the arbitrator’s award. The court denied both motions and, construing Williams’s opposition to the motion for vacatur as a request to confirm the award, confirmed the award. Dodson appealed, challenging the district court’s order compelling arbitration and its order confirming the award and denying the motions for reconsideration and vacatur. After review, the Tenth Circuit affirmed, holding: (1) the claims in Dodson’s federal-court complaint were encompassed by the arbitration clause; (2) the district court did not abuse its discretion in denying Dodson’s untimely motion to reconsider; and (3) that Dodson failed to establish any grounds for vacatur of the arbitrator’s award or for denial of confirmation of the award. View "Dodson International Parts v. Williams International Company" on Justia Law

by
Hetronic International, Inc., a U.S. company, manufactured radio remote controls, the kind used to remotely operate heavy-duty construction equipment. Defendants, none of whom were U.S. citizens, distributed Hetronic’s products, mostly in Europe. After about a ten-year relationship, one of Defendants’ employees stumbled across an old research-and-development agreement between the parties. Embracing a “creative legal interpretation” of the agreement endorsed by Defendants’ lawyers, Defendants concluded that they owned the rights to Hetronic’s trademarks and other intellectual property. Defendants then began manufacturing their own products—identical to Hetronic’s—and selling them under the Hetronic brand, mostly in Europe. Hetronic terminated the parties’ distribution agreements, but that didn’t stop Defendants from making tens of millions of dollars selling their copycat products. Hetronic asserted numerous claims against Defendants, but the issue presented on appeal to the Tenth Circuit centered on its trademark claims under the Lanham Act. A jury awarded Hetronic over $100 million in damages, most of which related to Defendants’ trademark infringement. Then on Hetronic’s motion, the district court entered a worldwide injunction barring Defendants from selling their infringing products. Defendants ignored the injunction. In the district court and before the Tenth Circuit, Defendants focused on one defense in particular: Though they accepted that the Lanham Act could sometimes apply extraterritorially, they insisted the Act’s reach didn’t extend to their conduct, which generally involved foreign defendants making sales to foreign consumers. Reviewing this matter as one of first impression in the Tenth Circuit, and after considering the Supreme Court’s lone decision on the issue and persuasive authority from other circuits, the Tenth Circuit concluded the district court properly applied the Lanham Act to Defendants’ conduct. But the Court narrowed the district court’s expansive injunction. Affirming in part, and reversing in part, the Court remanded the case for further consideration. View "Hetronic International v. Hetronic Germany GmbH, et al." on Justia Law

by
These appeals stemmed from an Independent Contractor Agreement (the Agreement) entered into by the Ute Indian Tribe of the Uintah and Ouray Reservation (the Tribe) and a non-Indian, Lynn Becker. Becker alleged the Tribe breached the Agreement and owed him a substantial amount of money under the terms of the Agreement. The Tribe disputed Becker’s allegations and asserted a host of defenses, including, in part, that the Agreement was void both because it was never approved by the Department of the Interior and because it purported to afford Becker an interest in Tribal trust property. The dispute between Becker and the Tribe over the Agreement spawned five separate lawsuits in three separate court systems. Before the Tenth Circuit were two appeals filed by the Tribe challenging interlocutory decisions issued by the district court in Becker’s most recent federal action, including a decision by the district court to preliminarily enjoin the Tribal Court proceedings and to preclude the Tribal Court’s orders from having preclusive effect in other proceedings. The Tenth Circuit concluded the tribal exhaustion rule required Becker’s federal lawsuit to be dismissed without prejudice. Consequently, the Tenth Circuit reversed the district court’s decision preliminarily enjoining the parties from proceeding in the Tribal Court action and enjoining the Tribal Court’s orders having preclusive effect in other proceedings. The case was remanded to the district court with directions to dismiss Becker’s federal lawsuit without prejudice. View "Becker v. Ute Indian Tribe, et al." on Justia Law

by
Texas resident Gerald Hamric joined a church group on an outdoor recreation trip to Colorado. The church group hired Wilderness Expeditions, Inc. (“WEI”) to arrange outdoor activities. Before the outdoor adventure commenced, WEI required each participant to complete a “Registration Form” and a “Medical Form.” On the first day, WEI led the church group on a rappelling course. In attempting to complete a section of the course that required participants to rappel down an overhang, Hamric became inverted. Attempts to rescue Hamric proved unsuccessful, and he fell and died. Alicia Hamric sued WEI for negligence. WEI moved for summary judgment, asserting the Registration Form and the Medical Form contained a release of its liability for negligence. A magistrate judge first declined to grant leave to amend the complaint due to Ms. Hamric’s failure to (1) sustain her burden under Federal Rule of Civil Procedure 16(b) because the deadline for amendments had passed; and (2) make out a prima facie case of willful and wanton conduct as required by Colorado law to plead a claim seeking exemplary damages. Next, the magistrate judge concluded WEI was entitled to summary judgment, holding the liability release was valid under both Colorado law and Texas law. Finally, the magistrate judge denied as moot Ms. Hamric’s motions for additional discovery and to disclose an expert out of time. Finding no reversible error, the Tenth Circuit affirmed the magistrate judge's order. View "Hamric v. Wilderness Expeditions, Inc." on Justia Law

by
In 2013, a refinery unit (“Unit”) at the Sinclair Wyoming Refinery Co. (“Sinclair”) in Sinclair, Wyoming caught fire and exploded because its “FV-241” control valve fractured and released flammable hydrogen gas. A high temperature hydrogen attack (“HTHA”) weakened the valve and caused the fracture. FV-241 was made from carbon steel, which was more susceptible to HTHA than stainless steel. Sinclair had purchased the Unit in 2004. Sinclair moved the Unit from California to Wyoming and converted it from its previous use to a hydrotreater, a refinery unit that introduced hydrogen to remove impurities from the product stream. Sinclair contracted the design, engineering, and construction work to other companies. During the moving and conversion process, FV-241 was remanufactured and installed on the Unit. Sinclair brought a diversity action against seven companies involved in dismantling the Unit, converting it to a hydrotreater, rebuilding it in Wyoming, and remanufacturing and installing FV-241. Sinclair alleged various contract and tort claims. The district court granted several motions to dismiss and motions for summary judgment that eliminated all of Sinclair’s claims. The court also entered summary judgment in favor of certain Defendants’ indemnity counterclaim. Although its analysis diverged from the district court's judgment in some respects, the Tenth Circuit affirmed orders dismissing or granting summary judgment on all of Sinclair's claims, and granting summary judgment on the indemnity counter claim. View "Sinclair Wyoming Refining v. A & B Builders" on Justia Law

by
Reliance Standard Life Insurance (“Reliance”) appealed district court’s orders: (1) concluding that Reliance wrongly denied David Carlile’s claim for long-term disability benefits; (2) refusing to remand the case and instead ordering an award of benefits; (3) awarding attorney fees and costs to Carlile; and (4) denying Reliance’s motion to amend or alter judgment. After reviewing the policy at issue here, the Tenth Circuit determined the relevant policy language was ambiguous and therefore construed it in Carlile’s favor, and in favor of coverage. Furthermore, the Court concluded the district court did not err in refusing to remand the case back to Reliance or in awarding attorney fees and costs to Carlile. View "Carlile v. Reliance Standard Life Ins." on Justia Law