Justia Contracts Opinion Summaries

Mary Langbehn sued her son, Michael Langbehn, and his company, Langbehn Land and Cattle Co. (LL&C), alleging Michael breached his fiduciary duty as a co-trustee of his deceased father’s trust. Michael filed counterclaims for unjust enrichment and quantum meruit related to improvements he claimed to have made to real estate he leased from his father’s trust and Mary’s separate living trust. The circuit court granted summary judgment in favor of Mary on her claims and on Michael’s counterclaims. The court also removed Michael as a co-trustee and awarded Mary $513,796.94 in damages. Michael appealed.The Circuit Court of the Third Judicial Circuit in Beadle County, South Dakota, found that Michael had engaged in self-dealing and breached his fiduciary duty of loyalty to the credit trust by profiting from subleases. The court concluded that Michael failed to keep Mary reasonably informed and acted in bad faith. The court granted summary judgment on Mary’s claims and Michael’s counterclaims, and removed Michael as a co-trustee.The Supreme Court of the State of South Dakota reviewed the case. The court held that Michael did not engage in impermissible self-dealing because the trust instrument expressly allowed him to lease the land at below-market rates. However, the court found that genuine issues of material fact remained regarding whether Michael disclosed the subleases and additional income to Mary. The court reversed the summary judgment on Mary’s breach of fiduciary duty claims and the decision to remove Michael as a co-trustee, remanding for further proceedings. The court affirmed the summary judgment on Michael’s counterclaims for unjust enrichment and quantum meruit, as there was no evidence that Mary requested or agreed to pay for the improvements. View "Langbehn V. Langbehn" on Justia Law

The petitioner, Lin Luo, sought review of a final order from the Office of Administrative Hearings (OAH) that determined her ineligible for unemployment benefits from April 5, 2023, to June 28, 2023. Luo was terminated from her position at the American Chemical Society (ACS) and received post-termination payments under an Agreement and General Release. The OAH administrative law judge (ALJ) classified these payments as severance pay, which disqualified her from receiving unemployment benefits. Luo argued that the payments were settlement payments for sexual harassment claims, not severance pay.The Department of Employment Services (DOES) initially found Luo ineligible for benefits for a slightly different period. Luo appealed to OAH, where the ALJ held a hearing and excluded Luo's evidence of her harassment claims, citing the parol evidence rule. The ALJ concluded that the Agreement's language unambiguously indicated the payments were severance pay, based on Luo's years of service and lack of advance notice of termination. The ALJ also noted that the Agreement included a release of claims against ACS and found that Luo signed the Agreement without fraud, duress, or mutual mistake.The District of Columbia Court of Appeals reviewed the case and found that the ALJ erred in not considering parol evidence regarding the nature of the payments. The court noted that the parol evidence rule does not preclude evidence showing that factual recitals in an agreement are untrue. The court concluded that the ALJ should have considered Luo's testimony and evidence about her harassment claims to determine the parties' intent regarding the payments. The court vacated the OAH orders and remanded the case for further proceedings to consider this evidence. View "Luo v. District of Columbia Department of Employment Services" on Justia Law

A hospital in Siskiyou County, California, filed a lawsuit against the County of Siskiyou and other defendants, challenging the practice of bringing individuals with psychiatric emergencies to its emergency department under the Lanterman-Petris-Short (LPS) Act. The hospital argued that it was not equipped or licensed to provide the necessary psychiatric care and sought to prevent the county from bringing such patients to its facility unless they had a physical emergency condition. The hospital also sought reimbursement for the costs associated with holding these patients.The Siskiyou County Superior Court denied the hospital's motion for a preliminary injunction, which sought to stop the county from bringing psychiatric patients to its emergency department. The court found that the hospital had not demonstrated a likelihood of success on the merits and that the burden on the county and the potential harm to the patients outweighed the hospital's concerns.The hospital's complaint included several causes of action, including violations of Medicaid laws, disability discrimination laws, mental health parity laws, and section 17000 of the Welfare and Institutions Code. The hospital also alleged breach of an implied-in-fact contract for the costs incurred in providing post-stabilization services to psychiatric patients. The trial court sustained demurrers to the complaint without leave to amend, finding that the hospital failed to identify any clear legal mandate that the county or the Department of Health Care Services had violated.The California Court of Appeal, Third Appellate District, affirmed the trial court's judgment of dismissal. The appellate court concluded that the hospital had not identified any mandatory and ministerial duty that the county or the department had violated, which is necessary to obtain a writ of mandate. The court also found that the hospital's breach of contract claim failed because there were no allegations of mutual consent to an implied contract. Consequently, the hospital's appeal from the denial of its motion for a preliminary injunction was dismissed as moot. View "Siskiyou Hospital v. County of Siskiyou" on Justia Law

Warwick Wings, LLC, a Rhode Island limited liability company operating as Hooters of Warwick, faced significant damage to its building due to snow and ice in 2015. Odeh Engineers, Inc. evaluated the damage and concluded that the roof trusses needed a full rebuild. Nadeau Corporation estimated the repair costs at $1,250,000. Warwick Wings contracted Americo Mallozzi to provide architectural plans for the repairs, agreeing to pay 11% of the final construction cost, initially estimated at $137,500. Mallozzi completed several phases of the project, but Warwick Wings only paid $46,848.55 and later claimed to have terminated the contract.Warwick Wings filed a lawsuit against its insurer, Liberty Mutual, over the scope of necessary repairs. The case was settled for $785,000, but Warwick Wings did not make further payments to Mallozzi. Mallozzi then sued Warwick Wings in Providence County Superior Court for breach of contract and unjust enrichment, seeking the remaining amount due under the contract. The Superior Court found in favor of Mallozzi, awarding him $63,151.45 in damages and $74,777.74 in attorneys' fees.The Rhode Island Supreme Court reviewed the case and affirmed the Superior Court's judgment. The Court held that the contract was unambiguous and called for a lump-sum payment based on the initial estimated construction cost. The trial justice's findings that Mallozzi completed 80% of the contract and that Warwick Wings breached the contract were upheld. The Court also found no error in the trial justice's award of attorneys' fees, concluding that there was a complete absence of a justiciable issue raised by Warwick Wings. View "Americo Mallozzi v. Warwick Wings, LLC" on Justia Law

In the spring of 2020, Colorado State University (CSU) transitioned from in-person to online learning due to the COVID-19 pandemic. Renee Alderman and Tyler Stokes, both students, filed class action lawsuits seeking refunds for tuition and fees paid for that semester, alleging CSU breached its contract to provide in-person learning and access to facilities. They also claimed unjust enrichment. The district court dismissed the breach of contract claims, citing CSU's statutory authority to suspend operations during unforeseen calamities, and later dismissed the unjust enrichment claims, ruling that the contract covered the same subject matter.Alderman appealed, and the Colorado Court of Appeals reversed the district court's dismissal of her unjust enrichment claims, holding that CSU's invocation of the statute rendered the contract unenforceable, thus allowing the unjust enrichment claims to proceed.The Supreme Court of Colorado reviewed the case and concluded that the lower court erred in holding the contract unenforceable. The court held that the statutory provision allowing CSU to suspend operations was part of the contract, and the inability to state a breach of contract claim did not render the contract itself unenforceable. Consequently, Alderman's unjust enrichment claims failed as a matter of law because a valid, enforceable contract existed covering the same subject matter. The Supreme Court reversed the appellate court's decision and directed reinstatement of the district court's judgment in favor of CSU. View "Bd. of Governors of the Colo. State Univ. v. Alderman" on Justia Law

A Texas attorney, Robert M. Roach, claimed to have an oral agreement with Fred Schrader, the former owner of Schrader Cellars, LLC, regarding the creation of another company, RBS LLC, which Roach asserted had an ownership interest in Schrader Cellars. After Fred Schrader sold Schrader Cellars to Constellation Brands, Roach sued Fred and Constellation in Texas state court, claiming the sale was improper. Schrader Cellars then filed the current action, seeking declaratory relief that Roach had no ownership interest in Schrader Cellars, and Roach counterclaimed.The United States District Court for the Northern District of California granted summary judgment in favor of Schrader Cellars on its claim for declaratory relief and dismissed Roach’s counterclaims. The court concluded that the oral agreement violated California Rule of Professional Responsibility 3-300 and that Roach did not rebut the presumption of undue influence. The case proceeded to trial on Schrader Cellars’s claim for breach of fiduciary duty, where the jury found that Roach’s breach caused harm but did not award damages due to the litigation privilege defense.The United States Court of Appeals for the Ninth Circuit reversed the district court’s summary judgment in favor of Schrader Cellars on its claim for declaratory relief and Roach’s counterclaims, finding triable issues of fact regarding whether Roach rebutted the presumption of undue influence. The appellate court also held that the district court erred in concluding and instructing the jury that Roach breached his fiduciary duties. However, the Ninth Circuit affirmed the district court’s judgment after trial, concluding that the erroneous jury instruction had no effect on the outcome because the jury found that the gravamen of the breach of fiduciary duty claim was based on Roach’s filing of the Texas lawsuit, which was barred by the California litigation privilege. View "SCHRADER CELLARS, LLC V. ROACH" on Justia Law

First Baptist Church, located in Fort Smith, Arkansas, had property insurance policies with Zurich American Insurance Company. The church experienced leaks over the years and hired roofing companies to repair portions of its roofing system in 2016, 2017, and 2018. In 2022, a roofing company representative determined the roofing system had hail damage, and First Baptist filed a claim with Zurich, alleging the damage occurred on April 28, 2017. Zurich denied the claim, citing no damage from the alleged hail event and evidence of excluded causes such as wear and tear. First Baptist sued Zurich for breach of contract and insurance bad faith.The United States District Court for the Western District of Arkansas granted summary judgment in favor of Zurich, concluding that First Baptist failed to comply with the prompt notice provision in the insurance policy. The court based its decision on evidence first discussed in Zurich’s reply brief, which indicated that First Baptist knew of past loss or damage to its property as early as 2016. The court held that no reasonable jury could find that First Baptist promptly notified Zurich of the loss or damage nearly six years later in January 2022. First Baptist filed a motion to reconsider, which the district court denied.The United States Court of Appeals for the Eighth Circuit reviewed the case and concluded that there were potential genuine disputes of material fact not properly litigated. The court noted that First Baptist did not have a fair opportunity to counter Zurich’s evidence and arguments about past leaks and repairs. The court reversed the district court’s grant of summary judgment and remanded the case for further consideration of the issues related to past loss or damage and the effect on First Baptist’s claims. The court also reversed and remanded the grant of summary judgment on First Baptist’s bad faith claim. View "First Baptist Church v. Zurich American Insurance Co." on Justia Law

Rudolph Rivas, a home builder and real estate developer, engaged the accounting firm Pitts & Pitts, operated by Brandon and Linda Pitts, for various accounting services from 2007 to 2017. The services included preparing quarterly financial statement compilations and tax returns. In 2016, errors were discovered in the financial statements prepared by the Accountants, leading to financial difficulties for Rivas, including overpayment of taxes and loss of credit, which allegedly forced his business into bankruptcy. Rivas sued the Accountants in August 2020, claiming negligence, fraud, breach of fiduciary duty, and breach of contract.The district court granted summary judgment for the Accountants on all claims. The Court of Appeals for the Fifth District of Texas affirmed the summary judgment on the negligence and breach of contract claims but reversed it on the fraud and breach of fiduciary duty claims, holding that these claims were not barred by the anti-fracturing rule and had sufficient evidence to survive summary judgment.The Supreme Court of Texas reviewed the case and held that the anti-fracturing rule barred Rivas's fraud claim because the gravamen of the claim was professional negligence. The Court also held that no fiduciary duty existed as a matter of law under the undisputed facts, thus the breach of fiduciary duty claim failed. Consequently, the Supreme Court of Texas reversed the judgment of the court of appeals and rendered judgment for the defendants on all claims. View "Pitts v. Rivas" on Justia Law

The plaintiff, Steve Shehyn, owns a 20-acre avocado orchard in Moorpark, California. He alleged that sediment from the Ventura County Public Works Agency and Ventura County Waterworks District No. 1's (collectively, the District) water delivery system permanently damaged his irrigation pipes and orchard. The plaintiff claimed that the sediment was a direct result of the District's water supply facilities' plan, design, maintenance, and operation.The trial court sustained the District's demurrer to the plaintiff's first amended complaint, which included causes of action for breach of contract, negligence, and inverse condemnation. The court allowed the plaintiff to amend the breach of contract and negligence claims but sustained the demurrer without leave to amend for the inverse condemnation claim, citing that the plaintiff "invited" the District's water onto his property. The plaintiff filed a second amended complaint, maintaining the inverse condemnation claim unchanged and indicating his intent to seek a writ of mandamus. The trial court entered judgment for the District after the plaintiff voluntarily dismissed his contract and negligence claims without prejudice.The California Court of Appeal, Second Appellate District, Division Six, reviewed the case de novo. The court concluded that the plaintiff sufficiently pleaded his claim for inverse condemnation. The court found that the plaintiff's allegations that the District's water delivery system delivered a disproportionate amount of sediment to his property, causing damage, supported a claim for inverse condemnation. The court disagreed with the trial court's reliance on Williams v. Moulton Niguel Water Dist., stating that the issue of whether the plaintiff "invited" the water goes to the merits of the claim, not its viability at the pleading stage. The appellate court reversed the judgment and remanded the case with instructions to enter a new order overruling the demurrer. View "Shehyn v. Ventura County Public Works Agency" on Justia Law

Katelyn Hove was hospitalized in 2018 for pregnancy complications, and the Billings Clinic billed Blue Cross Blue Shield (BCBS) of Montana for her services. BCBS of Montana indicated that BCBS of Texas was her insurance provider. BCBS of Texas paid part of the bill, leaving a balance that Hove did not pay. The clinic assigned the unpaid debt to CB1, a debt-collection agency, which then sued the Hoves for breach of contract, breach of obligation, and unjust enrichment. The Hoves named BCBS of Montana as a third-party defendant. CB1 moved for summary judgment, supported by affidavits from the clinic. Hove responded with a written declaration disputing the charges, including an EOB from BCBS of Texas and an email from the Montana Commissioner of Securities and Insurance.The Thirteenth Judicial District Court, Yellowstone County, granted summary judgment in favor of CB1, reasoning that Hove's declaration and attached EOB were unverified and inadmissible. The court entered a final monetary judgment against the Hoves. The Hoves filed a motion to amend the judgment, attaching a sworn affidavit with the same information as the declaration. The District Court denied the motion, stating that the declaration and its attachments were inadmissible hearsay and that the declaration did not meet the statutory criteria under § 1-6-105, MCA.The Supreme Court of the State of Montana reviewed the case and found that a declaration under § 1-6-105, MCA, is equivalent to an affidavit. The court determined that Hove's declaration, which stated she never spent time in the ICU despite being billed for it, raised a genuine issue of material fact. The court reversed the District Court's summary judgment and remanded the case for trial on the merits. View "CB1 v. Hove" on Justia Law