Justia Contracts Opinion Summaries

A Chinese drone manufacturer and its subsidiary challenged their designation by the U.S. Secretary of Defense as a “Chinese military company” under Section 1260H of the National Defense Authorization Act. The designation, which is published annually, restricts the company from contracting with certain government agencies and can damage its business reputation. DJI was added to the list in 2022 and again in 2024 and 2025 without prior notice. DJI petitioned for removal, which was denied, and subsequently received a report explaining the designation, though portions of the rationale were redacted.DJI filed suit in the United States District Court for the District of Columbia, alleging violations of the Fifth Amendment’s Due Process Clause and the Administrative Procedure Act. The company argued that it was denied due process, that there was insufficient evidence for the designation, that the agency failed to explain disparate treatment compared to other companies, and that the Secretary’s finding that DJI “contributes” to the Chinese defense industrial base was unsupported. The district court granted summary judgment against DJI, relying solely on the unclassified administrative record and declining to review the classified materials.On appeal, the United States Court of Appeals for the District of Columbia Circuit reviewed the case de novo. The appellate court affirmed the district court’s rejection of DJI’s due process, evidentiary, and disparate treatment claims, holding that DJI failed to show deprivation of a protected liberty or property interest, and that sufficient evidence supported the finding that DJI received government assistance. However, the appellate court reversed the district court’s conclusion regarding DJI’s “contribution” to the Chinese defense industrial base, finding that the lower court improperly relied on post hoc agency arguments and failed to review the classified record. The case was remanded for further proceedings on that issue. View "SZ DJI Technology Co., Ltd. v. DOD" on Justia Law

A couple alleged that their home in Union Springs suffered significant roof damage from a storm in January 2024. They had a homeowners’ insurance policy with an insurer and submitted a repair estimate of $9,112.02 to the company, which responded with a significantly lower settlement offer. The couple sued the insurer in the Bullock Circuit Court, claiming breach of contract and bad faith, and alleged a systematic practice by the insurer of underpaying roof claims. During discovery, the couple requested documents relating to the handling of roof claims. The insurer objected, citing concerns over the breadth of the requests and the confidential nature of certain documents.After both sides submitted competing motions for protective orders, the circuit court entered an order that allowed some confidential materials produced by the insurer to be used not only in the couple’s case but also in other cases handled by their counsel involving similar claims against the insurer. The order also permitted sharing information with governmental agencies under certain conditions. The insurer petitioned the Supreme Court of Alabama for a writ of mandamus, seeking to vacate the protective order and require a more restrictive, non-sharing version.The Supreme Court of Alabama held that there is no per se prohibition against sharing provisions in protective orders, provided there are adequate safeguards. The court concluded that the circuit court did not exceed its discretion in allowing sharing with government entities. However, it required the protective order to be modified to (1) specify the exact cases in which sharing is permitted, (2) require all recipients to agree in writing to be bound by the order and submit to the circuit court’s jurisdiction, and (3) clarify obligations for returning or destroying confidential materials at the conclusion of each case. The petition for mandamus was granted in part and denied in part, and the writ was issued accordingly. View "Ex parte State Farm Fire and Casualty Company" on Justia Law

The case concerns a dispute stemming from a loan agreement between Christopher Huber and Janet Currie. In 2019, Currie sought to purchase a hemp business and borrowed $185,000 from Huber, agreeing to repay $370,000 within approximately six months—an effective annual interest rate of 200%. The agreement also required Currie to provide a mortgage to secure the loan, which she did not do. After acquiring the business, Currie transferred the property to another entity she controlled without compensating Huber and failed to repay the loan. Huber sued Currie and related entities for breach of contract and fraudulent transfer, seeking the contract amount, interest, and an equitable lien on the property.The Vermont Superior Court, Addison Unit, Civil Division, granted partial summary judgment to Huber on the breach-of-contract claim because Currie did not contest the essential facts or substantiate her listed affirmative defenses, including usury, in her response to Huber’s motion. The court denied summary judgment on the fraudulent-transfer claim. Currie later moved to vacate the summary-judgment order, arguing that the contract was usurious under Vermont law. The court denied this motion, finding Currie had waived the usury defense by failing to raise it at the summary-judgment stage. The court awarded Huber $185,000 with interest at the legal rate and imposed an equitable lien, but did not rule on Currie’s third-party claims.On appeal, the Vermont Supreme Court affirmed the lower court’s judgment for Huber, holding that Currie procedurally waived the usury defense by not properly raising it in response to the summary-judgment motion, and that the trial court acted within its discretion in refusing to revisit the issue. The Court remanded the case for consideration of Currie’s outstanding third-party claims. View "Huber v. Currie" on Justia Law

A group of former shareholders of a reinsurance provider’s parent company acquired the provider’s rights to seek recourse against third parties for losses stemming from a failed reinsurance program. The losses occurred after the provider’s agent advised participation in a structurally unsound London Market program, resulting in significant financial harm. The shareholders, now plaintiffs, alleged that an insurance brokerage firm failed to properly notify the agent’s professional liability insurers of claims arising from these events, as required under agreements between the broker, the agent, and the insurers.After unsuccessful attempts to recover from the provider’s agent and its bankrupt parent company, the plaintiffs notified the agent’s insurers, who denied coverage due to untimely notice. The plaintiffs then filed suit against the brokerage firm in the Circuit Court of Cook County, Illinois, asserting claims for professional negligence and breach of contract. The suit was removed to the United States District Court for the Northern District of Illinois. The district court dismissed the negligence claim and granted summary judgment to the brokerage firm on the contract claim, finding the provider was not a third-party beneficiary to the relevant agreements and the broker owed no duty to the provider.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court’s judgment. The court held that the provider was not a third-party beneficiary of the agreements between the broker and the agent, as the contracts did not expressly manifest an intent to benefit the provider. The court also held that the broker owed no professional duty to the provider to notify the agent’s insurers of claims. Finally, it concluded that the claims were time-barred under Illinois law. View "Ferguson v Aon Risk Services Companies, Inc." on Justia Law

Bristol-Myers acquired Celgene in 2019 and, as part of the transaction, issued contingent value rights (CVRs) to Celgene shareholders. These CVRs entitled holders to a one-time payment if certain FDA approvals were obtained by specified deadlines. The CVR Agreement established a trust to benefit CVR holders, with Equiniti Trust Company as the original trustee. After concerns that Equiniti was affiliated with Bristol-Myers, a majority of CVR beneficial owners sought to appoint UMB Bank as successor trustee. UMB, acting as trustee, later sued Bristol-Myers alleging breach of its diligent efforts obligations under the Agreement.The United States District Court for the Southern District of New York dismissed UMB’s claims for lack of subject matter jurisdiction, holding that UMB lacked Article III standing because it was not properly appointed as trustee under the strict terms of the CVR Agreement. The district court found UMB’s appointment invalid, and concluded this defect implicated standing and thus could not be cured. Bristol-Myers conditionally cross-appealed the district court’s denial of a prior motion to dismiss on alternative grounds.The United States Court of Appeals for the Second Circuit reversed, holding that any defects in UMB’s appointment implicated its capacity to sue, not Article III standing. The court determined that injuries to the trust and its beneficiaries provided standing, and that UMB’s claims as trustee did not require UMB to have suffered personal injury. The Second Circuit further concluded that, even if UMB’s appointment did not strictly comply with the Agreement, the conduct of both Bristol-Myers and Equiniti, along with the approval of a majority of beneficial owners, constituted waiver or ratification, precluding Bristol-Myers from challenging UMB’s capacity to act. The appellate court vacated the district court’s judgment, dismissed the cross-appeal, and remanded the case for further proceedings. View "UMB Bank v. Bristol-Myers" on Justia Law

Underwood Towers Limited Partnership leased land from the city of Hartford to build apartment buildings and financed the project with a mortgage loan. After defaulting, Underwood executed additional notes and a second mortgage in favor of HUD. Following further defaults and transfers, LPP Mortgage Inc. acquired the second mortgage and notes but did not receive the original of one note—only a lost note affidavit. LPP Mortgage then brought a foreclosure action, seeking not only to foreclose the mortgage but also damages against Underwood and its management agent, CDC Management Corporation.The Superior Court, Complex Litigation Docket, denied Underwood and CDC’s motion to dismiss, ruling that LPP Mortgage had standing to foreclose as the owner of the debt, even without possession of the lost note, relying on New England Savings Bank v. Bedford Realty Corp. Judgment of strict foreclosure and damages was entered. On appeal, the Connecticut Appellate Court affirmed, concluding that LPP Mortgage had standing to pursue foreclosure as the debt owner, despite not being able to enforce the note under the UCC. The case was remanded for setting new law days. After remand, Underwood and CDC again moved to dismiss, arguing that the Connecticut Supreme Court’s later decision in Bank of New York Mellon v. Tope changed the law, requiring possession of the note to foreclose.The Connecticut Supreme Court reviewed the case after transfer from the Appellate Court. The Court held that res judicata barred Underwood and CDC from relitigating LPP Mortgage’s standing, as the issue had already been fully litigated and decided by the Appellate Court. The Supreme Court further held that Bank of New York Mellon v. Tope did not overrule Bedford Realty Corp., and thus the law had not changed. The trial court’s denial of the motions to dismiss was affirmed, and the case was remanded for further proceedings. View "LPP Mortgage Ltd. v. Underwood Towers Ltd. Partnership" on Justia Law

A woman and her husband, after marrying, received a parcel of real estate from her parents, which they held as tenants by the entirety in Massachusetts. They planned and undertook substantial renovations, initially funded by gifts from the husband’s parents. When those funds ran out, the husband’s parents provided over $1.5 million more, which was later documented as a loan in a promissory note signed only by the husband, not the wife. The couple’s marriage deteriorated, leading to divorce proceedings. During the divorce, the husband’s parents obtained a default judgment against the husband (but not the wife) for the loan and secured a writ of execution against his interest in the property, which was recorded. After the divorce, the family court awarded the property solely to the wife, free from any claim by the husband, and clarified that it could not adjudicate the parents’ rights under the promissory note.Subsequently, the husband’s parents transferred their judgment to a family trust, which noticed a sheriff’s sale of the husband’s purported interest in the property. The wife sued in state court to stop the sale, the case was removed to federal court, and both sides sought summary judgment. The United States District Court for the District of Massachusetts granted summary judgment to the wife, holding that the divorce and property distribution extinguished the creditor’s interest and that, even if the loan were valid, the wife was not jointly liable because the funds were not spent on “necessaries” under Massachusetts law.On appeal, the United States Court of Appeals for the First Circuit vacated the district court’s prediction of state law concerning the effect of divorce on a creditor’s interest and remanded for factual findings on the validity of the loan as to the wife. The court also found that neither preclusion nor the state’s domestic relations exception barred the wife’s challenge, and that factual disputes remained as to whether the loan was spent on necessaries. The court affirmed, reversed, and vacated in part, remanding for further proceedings. View "Cosel v. Wendt" on Justia Law

A software company operated an online payment portal used by residents, including the plaintiff, to pay rent for Maryland apartments. Each time the plaintiff paid rent through the portal, she was charged a convenience fee. To complete a transaction, users were required to check a box agreeing to the portal’s hyperlinked terms and conditions, which included an arbitration provision, a clause allowing unilateral changes to the agreement, and a notice provision stating that notices would be posted on the portal. The plaintiff, on behalf of herself and similarly situated individuals, filed a class action, alleging that the company unlawfully acted as an unlicensed collection agency by collecting these fees.After the action was removed to the U.S. District Court for the District of Maryland, the company moved to compel arbitration based on the terms and conditions. The plaintiff opposed, arguing that the arbitration agreement was unenforceable under Maryland law because the company’s ability to unilaterally change the terms without advance notice rendered its promise to arbitrate illusory. The district court agreed, finding that the contract was a browsewrap agreement and that the modification and notice clauses allowed the company to change terms at will without meaningful notice or an opportunity for users to opt out before changes became binding.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the district court’s denial of the motion to compel arbitration de novo. The Fourth Circuit held that, under Maryland law, the arbitration agreement was unenforceable for lack of consideration because the company’s promise to arbitrate was illusory. The court reasoned that the change-in-terms clause gave the company unfettered discretion to modify the agreement at any time, without advance notice, thus failing to bind the company meaningfully. The court affirmed the district court’s judgment. View "Trimble v. Entrata, Inc." on Justia Law

A dispute arose concerning the payment rate for a surgical procedure performed at an out-of-network facility. The patient receiving the surgery was covered by an ERISA-governed health plan provided by the employer and administered by an insurance company. Prior to the surgery, the facility contacted the plan administrator to verify coverage and was told that the plan would reimburse at the usual, customary, and reasonable (“UCR”) rate, not the lower Medicare rate. Relying on this representation, the facility performed the surgery. However, the plan later paid only at the Medicare rate, far less than the full billed amount. The facility’s successor in interest, having obtained the rights to the claim, sought to recover the unpaid balance.The action was first brought in California state court, then removed to the United States District Court for the Central District of California. The plaintiff asserted both ERISA and state law claims. The district court dismissed the ERISA claim for lack of derivative standing, as the plaintiff was not properly assigned the right to sue under ERISA. The court also dismissed the state law claims for negligent misrepresentation and promissory estoppel, holding that these claims were preempted by ERISA because they related to an ERISA-covered plan.The United States Court of Appeals for the Ninth Circuit reviewed the case. It affirmed the district court’s dismissal of the promissory estoppel claim, holding that, under circuit precedent, such claims are preempted by ERISA. However, the Ninth Circuit reversed the dismissal of the negligent misrepresentation claim. The appellate court held that ERISA does not preempt a negligent misrepresentation claim by a provider’s successor in interest when the claim arises from representations made by the plan administrator during a pre-service verification call. The court concluded that such a claim does not sufficiently “relate to” an ERISA plan to trigger preemption, as it is not based on an ERISA-regulated relationship or enforceable under ERISA’s civil enforcement mechanism. The case was remanded for further proceedings on the negligent misrepresentation claim. View "HEALTHCARE ALLY MANAGEMENT OF CALIFORNIA, LLC V. WSP USA, INC." on Justia Law

Paul Sorum and Jeff Martinson, as co-owners of Clean Crude, entered into written lease agreements with Big Sky Limited of Wyoming for the rental of several aboveground oil storage tanks. After Clean Crude failed to make required lease payments and left the tanks in poor condition, Big Sky sued Clean Crude, Sorum, and Martinson, seeking damages for breach of contract and related claims. Martinson ultimately settled, and Mike Sikorski, having acquired Big Sky’s interest, was substituted as plaintiff. During a bench trial, Sikorski testified that Sorum and Martinson personally guaranteed payment of the leases if Clean Crude could not pay, but Sorum was not allowed to testify about the alleged oral guarantee.The District Court of Campbell County found Clean Crude liable for breach of the lease agreements and found Sorum personally liable for damages based on the oral guarantee. The court initially awarded damages, but Sorum appealed, and the Wyoming Supreme Court, in Sorum v. Sikorski, 2024 WY 124, reversed in part and remanded solely to allow Sorum to testify regarding the alleged oral guarantee. On remand, the district court restricted evidence to the issue of the oral guarantee, allowed Sorum to testify, and reaffirmed its finding that Sorum had made and breached a personal oral guarantee, awarding the same damages.The Supreme Court of Wyoming reviewed the district court’s actions on remand, holding that the district court properly limited the scope of evidence to the oral guarantee, consistent with the mandate rule and law of the case doctrine. The Supreme Court further held that the district court did not clearly err in finding that Sorum made an enforceable oral guarantee to pay the leases with personal funds and breached that guarantee. The Supreme Court affirmed the district court’s judgment in its entirety. View "Sorum v. Sikorski" on Justia Law