Justia Contracts Opinion Summaries

Badlia Brothers, LLC, a check-cashing business, cashed 15 checks issued by the State of Maryland. These checks had already been paid by the State before Badlia presented them for payment. Some checks were deposited using a mobile app, creating "substitute checks," and were then fraudulently or negligently presented to Badlia. Others were reported lost or stolen, leading the State to issue stop payment orders and replacement checks, which were also cashed by Badlia. Badlia accepted the checks without knowledge of prior payments and sought payment from the State, which refused.Badlia filed complaints in the District Court of Maryland, claiming the right to enforce the checks as a holder in due course. The court consolidated the cases, ruled that the State enjoyed qualified immunity, and dismissed the cases. The Circuit Court for Baltimore City reversed, holding that a check is a contract, and thus, the State had waived sovereign immunity. On remand, the District Court found that Badlia was a holder in due course entitled to enforce the checks. The Circuit Court affirmed, and the State petitioned for certiorari.The Supreme Court of Maryland reviewed the case and held that a check is a contract for purposes of the State’s waiver of sovereign immunity under § 12-201(a) of the State Government Article. The court affirmed the Circuit Court's decision, concluding that the State has waived sovereign immunity for claims by a holder in due course seeking payment on an authorized State-issued check. View "Comptroller v. Badlia Brothers, LLC" on Justia Law

Billy Ford worked as a full-time security guard for Parkwest Casino Lotus from September 2018 to December 2021. Upon hiring, Ford signed an arbitration agreement that excluded claims for workers' compensation, unemployment compensation, certain administrative complaints, ERISA claims, and "representative claims under [PAGA]." In February 2022, Ford filed a complaint against Parkwest under PAGA, alleging Labor Code violations, including mandatory off-the-clock health screenings and inaccurate wage statements. Parkwest moved to compel arbitration of Ford's individual PAGA claims and to dismiss the representative PAGA claims, citing Viking River Cruises, Inc. v. Moriana.The Superior Court of Sacramento County denied Parkwest's motion to compel arbitration, finding that the arbitration agreement specifically excluded all PAGA claims. Parkwest appealed, arguing that the agreement was ambiguous regarding the exclusion of individual PAGA claims and that such ambiguity should be resolved in favor of arbitration.The Court of Appeal of the State of California, Third Appellate District, reviewed the case. The court concluded that the arbitration agreement unambiguously excluded all PAGA claims, including individual claims. The court reasoned that the language of the agreement and the circumstances under which it was executed indicated that the parties intended to exclude all PAGA claims from arbitration. The court affirmed the trial court's order denying Parkwest's motion to compel arbitration. View "Ford v. The Silver F" on Justia Law

US Framing International LLC entered into a subcontract with Continental Building Company for framing services on two student-housing projects. Disputes arose, leading US Framing to leave the Knoxville project. Continental then filed an insurance claim alleging US Framing's breach of the subcontract. US Framing sued Continental and its officers, claiming insurance fraud under Tennessee law. The district court dismissed the case, stating US Framing failed to plead any injury directly caused by the alleged fraudulent insurance claim.The United States District Court for the Eastern District of Tennessee initially reviewed the case. The court granted Continental's motion to dismiss, concluding that US Framing did not demonstrate any direct injury resulting from Continental's insurance claim. US Framing then appealed the decision.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court's dismissal, holding that US Framing did not plausibly allege any economic damages directly resulting from Continental's alleged insurance fraud. The court also determined that US Framing could not recover attorney's fees or statutory penalties, as it did not establish itself as a prevailing party entitled to such relief. The court's decision was based on the interpretation of Tennessee law, which requires a direct causal link between the alleged fraud and the claimed damages. View "US Framing International LLC v. Continental Building Co." on Justia Law

Pemco and Boeing entered into a contractual "teaming arrangement" to bid for a 2008 Air Force contract, which included a master agreement, a work share agreement, and a non-disclosure agreement. The relationship soured, leading Pemco to sue Boeing for breach of contract and trade secret misappropriation under the Missouri Trade Secrets Act. The district court initially dismissed the trade secrets claim as time-barred but allowed the breach of contract claims to proceed, resulting in a jury awarding Pemco $2,132,038 in direct damages.On appeal, the Eleventh Circuit reversed the dismissal of the trade secrets claim, holding that the Missouri statute of limitations applied, not Alabama's. After remand, Pemco filed a new complaint asserting only the trade secrets claim. The district court dismissed this claim, concluding that the contractual limitation of liability provision barred all additional damages since Pemco had already recovered the maximum amount allowed for breach of contract.The Eleventh Circuit reviewed the case de novo and held that the limitation of liability provision in the master agreement applies to Pemco’s trade secrets claim, barring most categories of damages, including incidental, punitive, and consequential damages. However, the court found that the provision does not bar recovery for unjust enrichment, which Pemco had alleged. The court noted that unjust enrichment damages are distinct from the direct, out-of-pocket damages Pemco had already recovered and are not categorically barred by the limitation provision.The court reversed the district court’s dismissal of Pemco’s trade secrets claim and remanded the case for further proceedings, allowing Pemco to pursue recovery based on Boeing’s alleged unjust enrichment. The court denied Pemco’s request to reassign the case to a different district judge. View "Alabama Aircraft Industries Inc. v. Boeing Company, The" on Justia Law

In 2008, the plaintiff, ams-OSRAM USA Inc. (formerly Texas Advanced Optoelectronic Solutions, Inc. or TAOS), sued Renesas Electronics America, Inc. (formerly Intersil Corporation) in the Eastern District of Texas. TAOS alleged patent infringement and state-law claims of trade secret misappropriation and breach of a confidentiality agreement related to ambient-light sensors. The patent claim is no longer at issue. TAOS claimed that Intersil used confidential information disclosed during merger discussions to develop competing products.The district court entered a judgment in 2015 based on a jury verdict, awarding TAOS damages for trade secret misappropriation but not for breach of contract, deeming the latter duplicative. In 2018, the Federal Circuit affirmed Intersil’s liability for trade secret misappropriation on a narrower basis, vacated the monetary award, and remanded for further proceedings. The court also vacated the judgment denying contract damages as duplicative.On remand, the district court held additional proceedings, including a new jury trial. The court awarded TAOS $8,546,000 in disgorged profits for trade secret misappropriation, $17,092,000 in exemplary damages, and reasonable royalties for breach of contract totaling $6,637,693. The court also awarded prejudgment interest and attorneys’ fees. Both parties appealed.The United States Court of Appeals for the Federal Circuit affirmed the district court’s findings on the trade secret and contract claims, including the disgorgement and exemplary damages awards. However, the court reversed the finding that the trade secret became properly accessible in January 2006, determining the correct date to be February 28, 2005. The court affirmed the 26-month head-start period and the inclusion of profits from sales to Apple for the iPod Touch in the disgorgement award. The court vacated the prejudgment interest awards and remanded for further consideration of the appropriate accrual dates for interest on sales occurring after the complaint was filed. View "AMS-OSRAM USA INC. v. RENESAS ELECTRONICS AMERICA, INC. " on Justia Law

Plaintiffs, E&I Global Energy Services, Inc. and E&C Global, LLC, sued Liberty Mutual Insurance Company for breach of contract and tort claims related to a construction project. The United States, through the Western Area Power Administration (WAPA), contracted with Isolux to build a substation, and Liberty issued performance and payment bonds for Isolux. After Isolux was terminated, Liberty hired E&C as the completion contractor, but E&I performed the work. Plaintiffs claimed Liberty failed to pay for the work completed.The United States District Court for the District of South Dakota granted summary judgment for Liberty on the unjust enrichment claim and ruled in Liberty's favor on all other claims after a bench trial. The court denied Plaintiffs' untimely request for a jury trial, excluded an expert witness report filed after the deadline, found no evidence of an assignment of rights between E&C and E&I, and ruled against Plaintiffs on their fraud, deceit, and negligent misrepresentation claims.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court held that the district court did not abuse its discretion in denying the jury trial request, as Plaintiffs failed to timely file the motion and did not justify the delay. The exclusion of the expert report was also upheld, as the district court properly applied the relevant factors and found the late report was neither substantially justified nor harmless. The court affirmed the district court's finding that there was no valid assignment of rights from E&C to E&I, meaning Liberty's promise to pay was to E&C, not E&I. The court also upheld the findings that Liberty did not have the intent to deceive or induce reliance, and that Bruce did not reasonably rely on Mattingly's statements. Finally, the court declined to address the unjust enrichment claim as Plaintiffs did not raise the argument below. The Eighth Circuit affirmed the district court's rulings in their entirety. View "E&I Global Energy Services v. Liberty Mutual Insurance Co." on Justia Law

Allan Gumarang entered into a lease agreement with Braemer on Raymond, LLC (Lessor) to operate an ice cream parlor. The lease included provisions requiring the Lessor to maintain the property and for Gumarang to obtain liability insurance and indemnify the Lessor against claims arising from his use of the property. In October 2017, a fire destroyed the property, and Gumarang alleged that the Lessor and its management (Management) failed to ensure the property had adequate fire prevention systems.Gumarang filed a lawsuit against the Lessor and Management for breach of contract, negligence, and other claims. In response, the Lessor and Management demanded that Gumarang defend and indemnify them under the lease terms. When Gumarang refused, they filed a cross-complaint for indemnity and breach of contract. Gumarang filed an anti-SLAPP motion to strike the cross-complaint, arguing it arose from his protected activity of filing the lawsuit.The Superior Court of Los Angeles County granted Gumarang’s anti-SLAPP motion in part, striking the cross-claims for comparative indemnity and equitable indemnity but denied it for the contractual indemnity and breach of contract claims. The court found that the latter claims did not arise from protected activity and that the indemnity provision in the lease was enforceable. The court also denied Gumarang’s request for attorney fees, finding he did not achieve a practical benefit from the partial success of his anti-SLAPP motion.The California Court of Appeal, Second Appellate District, affirmed the lower court’s decisions. The appellate court agreed that the cross-claims for contractual indemnity and breach of contract did not arise from Gumarang’s protected activity of filing the lawsuit but from his alleged breach of the lease’s indemnity provision. The court also upheld the denial of attorney fees, concluding that Gumarang did not obtain a significant practical benefit from the partial success of his anti-SLAPP motion. View "Gumarang v. Braemer on Raymond, LLC" on Justia Law

A certified class of Ohio landowners alleged that a Colorado-based mining company, Antero Resources Corporation, underpaid them $10 million in natural gas royalties. The landowners claimed that Antero improperly deducted costs for processing and fractionation from their royalties. Antero counterclaimed, seeking authority to deduct additional costs related to gathering, dehydrating, compressing, and transporting the unrefined natural gas. The district court certified the class, denied Antero's motion for summary judgment, granted the landowners' motion, and entered a final judgment after the parties stipulated damages.The United States District Court for the Southern District of Ohio ruled in favor of the landowners, finding that Antero improperly deducted processing and fractionation costs from the royalties. The court determined that these costs were necessary to transform the gas into marketable form and thus could not be deducted under the lease agreement.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The court held that Antero could not deduct the costs of processing and fractionation from the landowners' royalties. The court found that the lease agreement's Market Enhancement Clause allowed deductions only for costs that enhanced the value of already marketable products, not for costs required to make the products marketable. The court concluded that the gas products first became marketable after processing and fractionation, and thus, these costs were not deductible. The court also noted that the Fourth Circuit had reached a similar conclusion in a related case involving the same defendant and lease terms. View "The Grissoms, LLC v. Antero Resources Corp." on Justia Law

Badlia Brothers, LLC, a check-cashing business, cashed 15 checks issued by the State of Maryland. These checks had already been paid by the State before Badlia presented them for payment. Some checks were deposited using a mobile app, creating "substitute checks," and then fraudulently or negligently presented to Badlia. Others were reported lost or stolen, leading the State to issue stop payment orders and replacement checks, which were then cashed by the original payees with Badlia. Badlia, unaware of the prior payments, presented the checks for payment, which the State refused.Badlia filed complaints in the District Court of Maryland, claiming the right to enforce the checks as a holder in due course. The court consolidated the cases, ruled that the State enjoyed qualified immunity, and dismissed the cases. The Circuit Court for Baltimore City reversed, holding that a check is a contract, and thus, the State had waived sovereign immunity. On remand, the District Court found that Badlia was a holder in due course entitled to enforce the checks. The Circuit Court affirmed, and the State petitioned for certiorari.The Supreme Court of Maryland held that the State has waived sovereign immunity for claims by a holder in due course seeking payment on an authorized State-issued check. The court affirmed the decision of the Circuit Court for Baltimore City, concluding that a check is a formal contract and that the State's waiver of sovereign immunity under § 12-201(a) of the State Government Article applies to such contracts. View "Comptroller of Md. v. Badlia Bros." on Justia Law

Three West Virginia residents, dissatisfied with their cable and internet service provided by Suddenlink, sued Cebridge Acquisition, LLC, Cequel III Communications I, LLC, Cequel III Communications II, LLC, and Altice USA, Inc. They alleged that Suddenlink failed to provide reliable services and sought damages for negligence, unjust enrichment, and breach of contract. Suddenlink moved to compel arbitration based on the arbitration agreement in its 2021 Residential Services Agreement (RSA). The district court denied the motions, concluding that a 2017 arbitration agreement controlled, was unconscionable, and could not be enforced.The United States District Court for the Southern District of West Virginia found the 2017 arbitration agreement procedurally and substantively unconscionable, citing the unequal bargaining power between the parties, the adhesive nature of the contract, and the complexity of the terms. The court also noted that the 2017 agreement lacked an opt-out provision and included terms that were overly harsh and lacked mutuality. Consequently, the district court denied Suddenlink’s motions to compel arbitration in all three cases.The United States Court of Appeals for the Fourth Circuit reviewed the case and determined that the 2021 arbitration agreement, not the 2017 version, governed the disputes. The court found that the 2021 agreement was valid and enforceable, as it satisfied all elements of contract formation, including mutual assent and valuable consideration. The court also concluded that the 2021 arbitration agreement was not procedurally or substantively unconscionable. The court reversed the district court’s judgments and remanded the cases with instructions to compel arbitration. View "Meadows v. Cebridge Acquisition, LLC" on Justia Law