Justia Contracts Opinion Summaries

The case in question involved a dispute between Epochal Enterprises, Inc., doing business as Divine Orchids, and LF Encinitas Properties, LLC and Leichtag Foundation, over a commercial lease agreement for a property containing dilapidated commercial greenhouses known to contain asbestos and lead paint. Epochal Enterprises claimed that the defendants failed to disclose the presence of these hazardous substances, which resulted in economic damage when the County of San Diego quarantined the leased premises. A jury found the defendants liable for premises liability and negligence, and awarded Epochal Enterprises damages for lost profits and other past economic loss.However, the trial court granted the defendants' motion for judgment notwithstanding the verdict (JNOV), based on a limitation of liability clause in the lease agreement that purported to prevent Epochal Enterprises from recovering the economic damages awarded by the jury.The Court of Appeal, Fourth Appellate District Division One State of California, reversed the trial court's judgment. It found that the jury necessarily concluded that the defendants had violated the Health and Safety Code by failing to disclose the existence of asbestos, and that this violation of law rendered the limitation of liability clause invalid under Civil Code section 1668. The court concluded that the limitation of liability clause could not bar Epochal Enterprises from recovering damages for the defendants' statutory violations.The court also affirmed the trial court's denial of the defendants' motion for partial JNOV on the issue of damages, finding that the jury had a reasonable basis for calculating the amount of lost profits. The court remanded the case for further proceedings. View "Epochal Enterprises, Inc. v. LF Encinitas Properties, LLC" on Justia Law

Contitech USA, Inc., a division of tire manufacturer Continental AG, contracted with a trucking company, McLaughlin Freight Services, Inc., and its owner, Dan McLaughlin, to deliver rubber between two of its facilities. The fee schedule included a base rate and a higher "rounder" rate, which required pre-approval from Contitech. Over three years, McLaughlin submitted 645 unapproved "rounder" bills to the third-party payments administrator, using fraudulent emails that purported to show pre-approval from Contitech. Contitech discovered the scheme and sued for fraud, unjust enrichment, and breach of contract.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court found that there was sufficient evidence for a reasonable jury to find for Contitech on the fraud and unjust-enrichment counts. The court rejected McLaughlin's argument that Contitech failed to prove proximate cause and damages, noting that under Iowa law, a defrauding defendant cannot claim that its misrepresentations did not cause any damages to the plaintiff. Furthermore, McLaughlin was contractually obligated not to charge rounder rates without pre-approval from Contitech. Thus, a reasonable jury could have found that the difference between the contractual base rate and the actual billed amount was the amount of money McLaughlin received, which in equity and good conscience belonged to Contitech.The court also affirmed the district court's decision to remit Contitech's unjust-enrichment award to $0 and to remit McLaughlin’s damages award to prevent double recovery. The court reasoned that while a party is entitled to proceed on various theories of recovery, it is not entitled to collect multiple awards for the same injury. Furthermore, the court held that the district court did not abuse its discretion in granting pre-judgment interest to Contitech, and that postjudgment interest is mandatory under 28 U.S.C. § 1961 and should be awarded regardless of whether the district court orders it. View "Contitech USA, Inc. v. McLaughlin Freight Services, Inc." on Justia Law

In April 2008, the Department of the Navy awarded a contract to Strategic Technology Institute, Inc. (STI) to provide various aircraft engineering and support services. The contract incorporated Federal Acquisition Regulation (FAR) 52.216-7, Allowable Cost and Payment, and FAR 52.242-4, Certification of Final Indirect Costs. STI was required to submit its cost rate proposals for fiscal years 2008 and 2009 by certain deadlines. STI did not submit these proposals until 2014, upon request by the government. After receiving these proposals, the government conducted audits and found that STI's proposals included approximately $1 million in unallowable costs. The government issued a final decision, demanding payment of unallowable costs, penalties, and interests.STI appealed to the Armed Services Board of Contract Appeals, arguing that the government's claim was barred under the six-year statute of limitations under the Contract Disputes Act. The Board rejected STI’s argument and held that the statute of limitations on any government claim for disallowed costs does not begin until the contractor submits the incurred cost proposal and provides sufficient audit records.STI then appealed to the United States Court of Appeals for the Federal Circuit. The court held that the event that started the clock for the statute of limitations is the submission of STI’s cost rate proposals in September 2014, not STI’s failure to timely submit the proposals. The court held that STI's liability for receiving overpayment was not fixed until STI submitted unallowable costs in the cost proposal. Therefore, the government’s claim could not have accrued until STI submitted its cost rate proposals. The court affirmed the decision of the Board. View "STRATEGIC TECHNOLOGY INSTITUTE, INC. v. SECRETARY OF DEFENSE " on Justia Law

The United States Court of Appeals for the First Circuit upheld a district court's decision concerning a wage dispute between an employee and his former employer. The employee, Paulo Trindade, claimed that his former employer, Grove Services, Inc., breached their contract and violated the Massachusetts Wage Act by short-changing him on his sales commission compensation. Grove Services challenged the timeliness of Trindade's Wage Act claim relating to the 2016 commission, but the court agreed with the district court that the claim related back to his original complaint, making it timely. The First Circuit also upheld the district court's damages award. Trindade was awarded $330,597 in damages, which included compensation for late and unpaid wages for the 2016 commission, subject to mandatory trebling under the Wage Act, and damages for the 2014 breach of contract. View "Trindade v. Grove Services, Inc." on Justia Law

In a dispute between K&S Staffing Solutions, Inc. (K&S) and The Western Surety Company (Western) and VSS International, Inc. (VSSI), the Court of Appeal of the State of California Third Appellate District upheld the Superior Court of San Joaquin County's decision that K&S was not a “laborer” within the meaning of the mechanics’ lien law and that payment bonds issued for the projects in question were subject to the mechanics' lien law’s requirements.K&S, a staffing company, sued VSSI and Western to recover unpaid amounts for services provided on state projects, arguing it was a “laborer” under the mechanics' lien law and thus entitled to assert a claim against payment bonds for the projects. The court disagreed, interpreting the term “laborer” in the law as a person "acting as an employee" performing labor or bestowing necessary services on a work of improvement, and concluded K&S, as an employer, did not qualify.Furthermore, K&S argued that the payment bonds issued for these state projects were not subject to the mechanics' lien law’s requirements because they were not "payment bonds" within the meaning of the law. However, the court disagreed, ruling that the bond requirements of the mechanics' lien law apply to state projects that require a bond under Public Contract Code section 7103 and other public entity projects that require a bond under section 9550. Consequently, the court affirmed the lower court's attorney fee award to the defendants under section 9564, which mandates attorney fees be awarded to the prevailing party in any action to enforce the liability on a payment bond. View "K & S Staffing Solutions v. The Western Surety Co." on Justia Law

In November 2015, Joseph H. Reeves contracted with Wilson Floor & Wallcovering, Inc. ("Wilson Floor") and its owner, Tom Wilson, to replace the wood flooring in his home. After the work was completed, Reeves found the new flooring to be unlevel and claimed that Wilson Floor and Tom Wilson refused to make further repairs. Reeves filed a complaint against "Tom Wilson" and "Wilson Flooring" in May 2017, alleging negligence, fraudulent suppression, fraudulent inducement, and breach of contract.The Supreme Court of Alabama reviewed the case after the Autauga Circuit Court dismissed Reeves's claims against Wilson Floor due to "lack of service" under Rule 4, Ala. R. Civ. P. Although it was undisputed that Reeves's attempted service on Wilson Floor was ineffective, the Supreme Court of Alabama concluded that Wilson Floor was adequately informed of Reeves's action against it, and hence, the trial court's dismissal of his claims against Wilson Floor was prohibited under Rule 4(i)(2)(C).The Court noted that while Tina Wilson, Tom Wilson's wife, was not Wilson Floor's registered agent, she was one of the company's listed officers and could accept service on its behalf. As Tina had actually received the summons and the complaint, the Court established that Wilson Floor was informed of Reeves's action within time to avoid default. Therefore, the Supreme Court of Alabama reversed the trial court's order dismissing Reeves's action against Wilson Floor and remanded the case for further proceedings. View "Reeves v. Wilson Floor and Wallcovering, Inc." on Justia Law

In a case before the Court of Appeal of the State of California Fourth Appellate District Division Two, the plaintiff, a minor identified as J.R., filed a putative class action against Electronic Arts Inc. (EA), alleging causes of action for unlawful and unfair business practices, violation of the Consumer Legal Remedies Act, and unjust enrichment. J.R. claimed that EA deceptively induced players, particularly minors, to purchase in-game currency for its game, Apex Legends. EA sought to compel arbitration under the terms of its user agreement, which J.R. had accepted to play Apex Legends. The lower court denied EA's motion to compel on the grounds that J.R. had exercised his power under Family Code section 6710 to disaffirm all of his contracts with EA, including the arbitration agreement. EA appealed, arguing that an arbitrator, not the court, should decide issues of arbitrability due to a delegation provision within the agreement. The appellate court rejected EA's arguments, affirming the lower court's decision. The court held that J.R.'s disaffirmance of "any... contract or agreement" accepted through his EA account was sufficient to challenge the validity of the delegation provision specifically, thereby authorizing the court to assess the validity of J.R.'s disaffirmance. View "J.R. v. Electronic Arts" on Justia Law

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

In South Carolina, Phillip Francis Luke Hughes, on behalf of the estate of his late mother, Jane Hughes, sued Bank of America for fraud, fraudulent concealment, and breach of contract, alleging that the bank charged insurance premiums in connection with a home equity line of credit his parents obtained in 2006, even though they declined the insurance offer. The bank argued that the claims did not survive Jane Hughes's death, were barred by res judicata and the statute of limitations, and that their motion for sanctions was not premature.The Supreme Court of South Carolina held that the claims for fraud and fraudulent concealment survived Jane Hughes's death. However, it also held that all three claims were barred by the res judicata effect of rulings in related federal court litigation. The court affirmed as modified in part and reversed in part the lower court's decision. The court also affirmed the lower court's decision that the sanctions motion was not premature. The court further held that the claim for breach of contract accompanied by a fraudulent act survived Jane Hughes's death, but was also barred by res judicata.As for the statute of limitations issue, the court held that the statute of limitations had expired before the action was commenced and that the plaintiff was precluded from relitigating the equitable tolling issue. The court remanded Bank of America's sanctions motion to the lower court for disposition. View "Hughes v. Bank of America" on Justia Law

In the dispute between fashion designer and social media influencer Hayley Paige Gutman and her former employer, JLM Couture, Inc., the United States Court of Appeals for the Second Circuit considered the preliminary injunction and contempt order issued by the United States District Court for the Southern District of New York. The lower court had awarded JLM control of two social media accounts previously managed by Gutman and enforced a five-year restrictive covenant that prohibited Gutman from identifying herself as a designer of certain goods. The court also held Gutman in civil contempt for posts on Instagram that it deemed as marketing, violating an earlier version of the preliminary injunction.The Court of Appeals dismissed Gutman's appeal from the contempt order due to lack of appellate jurisdiction. It affirmed the district court's refusal to dissolve the preliminary injunction based on the law of the case. However, the Court of Appeals vacated the district court’s order that modified its preliminary injunction. The court found fault in the lower court's determination of the ownership of the disputed social media accounts and its failure to evaluate the reasonableness of the five-year noncompete restraint on Gutman. The case was remanded for further proceedings consistent with the opinion of the Court of Appeals. View "JLM Couture, Inc. v. Gutman" on Justia Law