Justia Contracts Opinion Summaries

The plaintiff, New England Property Services Group, LLC (NEPSG), appealed from a summary judgment in favor of the defendant, NGM Insurance Company (NGM). NEPSG had been assigned the insurance claim benefits by the policyholders, Stephen and Betty Callahan, for storm-related damage to their residence. NGM initially covered some damages but denied others, leading to a series of inspections and disagreements over the loss amount. Eventually, an appraisal process was conducted, resulting in an award that NEPSG found unsatisfactory due to updated labor costs published after the award was signed.The Superior Court granted summary judgment to NGM, finding that NEPSG was not entitled to a modification of the appraisal award or a second appraisal. The court also found that NEPSG failed to establish its claims for breach of contract, bad faith, unjust enrichment, and tortious interference with contractual relations. NEPSG argued that the award should be modified due to a miscalculation of labor costs and that NGM acted in bad faith by using unlicensed appraisers, among other claims.The Rhode Island Supreme Court reviewed the case de novo and affirmed the Superior Court's judgment. The court held that the appraisal award was akin to an arbitration award and thus subject to limited judicial review. NEPSG's request for modification based on post-award labor cost updates was not supported by admissible evidence. The court also found no basis for a second appraisal or for NEPSG's claims of breach of contract and bad faith, as NGM had fulfilled its contractual obligations and there was no evidence of bad faith. Additionally, the court rejected NEPSG's claims of unjust enrichment and tortious interference, finding no inequitable benefit retained by NGM and no evidence of intentional harm to NEPSG's contract with the policyholders. View "New England Property Services Group, LLC v. NGM Insurance Company" on Justia Law

Charles S. Keegan filed a complaint against the Estate of Phyllis C. Bradbury and its representatives, as well as Craig J. and Melissa M. Holmes, alleging that he had a right of first refusal to purchase a property at 1 Lower High Street in Eastport. Keegan based his claim on a purchase and sale agreement for a different property, which he argued included a provision granting him this right. The agreement's Section 26 stated that the buyer "would like the Right of First Refusal on the sale of abutting lot if ever sold."The Superior Court of Washington County dismissed Keegan's complaint for failure to state a claim upon which relief could be granted. The court found that the language in Section 26 was precatory and did not create an enforceable right of first refusal. Keegan's initial appeal was dismissed as interlocutory. Subsequently, the Holmeses filed a motion to dismiss, which the Superior Court granted, relying on the previous dismissal as the law of the case. This resulted in a final judgment against Keegan, who then appealed.The Maine Supreme Judicial Court reviewed the case de novo and affirmed the Superior Court's judgment. The court held that the language in Section 26 of the purchase and sale agreement was clear and did not create an enforceable right of first refusal. The phrase "would like" was deemed precatory, expressing a wish rather than a binding obligation. Consequently, Keegan's complaint failed to state a claim upon which relief could be granted, as there was no enforceable right of first refusal, no breach of contract, and no basis for rescission or equitable relief. View "Keegan v. Estate of Bradfury" on Justia Law

In 1957, Congress enacted the Price-Anderson Act (PAA) to amend the Atomic Energy Act of 1954, providing indemnity for contractors and others involved in nuclear activities. The PAA mandated that the government indemnify contractors and other "persons indemnified" for public liability arising from nuclear incidents. In 1962, the Atomic Energy Commission (AEC) entered into an indemnity agreement with Mallinckrodt Chemical Works, which processed uranium for the government. Cotter Corporation later purchased radioactive materials from Mallinckrodt and was sued in 2012 by plaintiffs alleging harm from these materials.The United States Court of Federal Claims dismissed Cotter's claim for indemnification under the PAA and the indemnity agreement, ruling that Cotter was not entitled to indemnification because its activities did not arise out of or in connection with the contractual activities of Mallinckrodt. The court also dismissed Cotter's contract claim, concluding that Cotter lacked standing as a third-party beneficiary and failed to state a claim for breach of contract.The United States Court of Appeals for the Federal Circuit reviewed the case and reversed the Claims Court's decision. The Federal Circuit held that Cotter's liability for the nuclear incident plausibly arose out of or in connection with the contractual activities of Mallinckrodt, as the materials causing the incident were produced under the contract. The court also found that Cotter sufficiently alleged it was an intended third-party beneficiary of the indemnity agreement and that the government breached the contract by not indemnifying Cotter. The case was remanded for further proceedings. View "COTTER CORP., N.S.L. v. US " on Justia Law

Following a wildfire near their home, plaintiffs Hovik Gharibian and Caroline Minasian submitted a claim to their property insurer, Wawanesa General Insurance Company. Wawanesa paid the plaintiffs over $20,000 for professional cleaning services that were never used. Dissatisfied with the resolution, the plaintiffs filed a lawsuit against Wawanesa for breach of contract and breach of the implied covenant of good faith and fair dealing.The Superior Court of Los Angeles County granted Wawanesa’s motion for summary judgment, finding that the plaintiffs' insurance policy did not provide coverage for the claimed loss. The court determined that there was no evidence of "physical loss" as required by the policy. Plaintiffs appealed the decision.The California Court of Appeal, Second Appellate District, reviewed the case. The court held that the plaintiffs did not demonstrate a "direct physical loss to property" as required by their insurance policy. The court referenced the California Supreme Court's decision in Another Planet Entertainment, LLC v. Vigilant Ins. Co., which clarified that "direct physical loss" requires a distinct, demonstrable, physical alteration to property. The court found that the wildfire debris did not cause such an alteration and could be easily cleaned or removed. Consequently, the court affirmed the trial court's decision, concluding that Wawanesa did not breach the insurance policy since the plaintiffs' claim was not covered. All remaining arguments were deemed moot. View "Gharibian v. Wawanesa Gen. Ins. Co." on Justia Law

Joseph Mirelez submitted a claim under his homeowner’s insurance policy with State Farm Lloyds for wind damage to his property. Disputes arose regarding the amount of loss and repair costs, leading Mirelez to invoke the appraisal process. In January 2023, an agreement on the loss amount was reached, but coverage issues persisted. Mirelez filed a lawsuit in state court in May 2023, alleging breach of contract, violations of the Texas Prompt Payment of Claims Act (TPPCA), various bad faith claims under the Texas Insurance Code, and breach of the duty of good faith and fair dealing. State Farm removed the case to federal court, citing diversity jurisdiction, and subsequently paid the appraisal award amount, minus the deductible and prior payments, plus interest.The United States District Court for the Southern District of Texas granted summary judgment in favor of State Farm on all claims. Mirelez conceded that summary judgment was appropriate for his breach of contract and TPPCA claims but contested the dismissal of his statutory and common law bad faith claims. The district court concluded that State Farm had paid all benefits owed under the policy and that Mirelez was not entitled to any additional damages under the Texas Insurance Code.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo and affirmed the district court’s decision. The court held that under Texas Supreme Court precedent, specifically Ortiz v. State Farm Lloyds, payment of an appraisal award forecloses an insurer’s liability for breach of contract and bad faith claims unless the insured suffered an independent injury. Since Mirelez only sought policy benefits that had already been paid and did not allege any independent injury, his extracontractual bad faith claims were barred. View "Mirelez v. State Farm" on Justia Law

Huntsman International, LLC, a chemical company, sued Praxair, Inc. for breach of contract, alleging that Praxair failed to supply sufficient hydrogen and carbon monoxide to Huntsman's Geismar, Louisiana plant. This failure allegedly caused Huntsman to lose sales of methylene diphenyl diisocyanate (MDI) and aniline, resulting in lost profits. Huntsman also sought cover damages for the additional costs incurred to purchase industrial gas from another supplier.The case proceeded to a three-week jury trial in the Parish of Orleans Civil Court, where the jury awarded Huntsman $88,117,405 in lost profits and $4,991,473 in cover damages. Praxair's motion for a new trial was denied. The Court of Appeal, Fourth Circuit, affirmed the trial court's judgment, with two judges dissenting in part on the award of lost profits.The Supreme Court of Louisiana reviewed the case and found that the jury abused its discretion by awarding lost profits not established with reasonable certainty. The court noted that the only expert witness, Rebecca Szelc, calculated lost profits to be $37,522,291 using a detailed methodology based on monthly production and sales data. The jury, however, used an alternative method suggested by Huntsman's counsel, which averaged the profit margins of the top-third most profitable transactions, resulting in a higher figure.The Supreme Court held that the jury's method was not supported by the evidence and relied on speculation. Consequently, the court amended the award, reducing the lost profits to $37,522,291, as calculated by Szelc. The judgment was thus amended in part. View "HUNTSMAN INTERNATIONAL, L.L.C. VS. PRAXAIR, INC." on Justia Law

Sioux Steel Company, a South Dakota corporation, designed and manufactured a new line of hopper bins for grain storage. After selling one of these bins to a distributor in Mexico, the bin failed catastrophically, causing fatalities and property damage. Sioux Steel had an insurance policy with the Insurance Company of the State of Pennsylvania (ISOP), which included a professional services exclusion. ISOP denied coverage based on this exclusion, leading Sioux Steel to settle with the affected party without ISOP's involvement.The United States District Court for the District of South Dakota granted summary judgment in favor of ISOP, finding that the professional services exclusion in the insurance policy was unambiguous and applicable, thus precluding coverage. The court also dismissed Sioux Steel's claims for bad faith, punitive damages, and attorney's fees.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo. The court affirmed the district court's decision, holding that the professional services exclusion was clear and unambiguous. The exclusion applied because the damage arose from professional engineering services provided by Sioux Steel's employee and an external engineering firm. The court also found that ISOP did not breach its duty to defend, as no civil proceeding or alternative dispute resolution process had been initiated with ISOP's consent. Consequently, Sioux Steel's claims for breach of contract and insurance bad faith were dismissed, and the district court's judgment was affirmed. View "Sioux Steel Company v. Ins. Co. of the State of PA" on Justia Law

Alrig USA Acquisitions LLC, a commercial real estate developer, entered into a purchase and sale agreement with MBD Realty LLC for a property in Portland. MBD was aware that the City of Portland planned to redevelop the area, which would involve condemning part of the property, but did not disclose this to Alrig. The agreement included clauses allowing Alrig to terminate the agreement and receive a refund of its deposit under certain conditions, including eminent domain. Alrig extended the inspection period multiple times, paying additional deposits, and eventually waived its due diligence and title review contingencies, making the deposit nonrefundable except in the event of MBD’s default. Alrig later learned of the redevelopment plans and terminated the agreement, seeking a refund of the deposit, which MBD refused.The Superior Court (Cumberland County) granted MBD’s motion to dismiss Alrig’s complaint for breach of contract and fraud, concluding that MBD had no duty to disclose the redevelopment plans. Alrig appealed the decision.The Maine Supreme Judicial Court reviewed the case and affirmed the Superior Court’s judgment. The court held that the amendment to the agreement unambiguously made the deposit nonrefundable except in the event of MBD’s default, and thus Alrig’s contract claim failed. Additionally, the court found that MBD did not actively conceal the City’s planned condemnation, and there was no special relationship imposing a duty to disclose. Therefore, Alrig’s fraud claim also failed as a matter of law. The court concluded that Alrig was not entitled to relief under any set of facts that might be proven in support of its claims. View "Alrig USA Acquisitions LLC. v. MBD Realty LLC" on Justia Law

The plaintiff law firm sought to recover damages from the defendant, a former client, for breach of contract in federal court. The defendant had engaged the plaintiff to represent it in a litigation matter but failed to pay the agreed-upon legal fees. The plaintiff claimed that the defendant's breach was wilful and malicious, and sought common-law punitive damages in addition to compensatory damages.The United States District Court for the District of Connecticut partially granted the plaintiff's motion for summary judgment on the breach of contract claim, awarding compensatory damages. However, the court found genuine issues of material fact regarding the plaintiff's claim for punitive damages and the defendant's counterclaims, including legal malpractice. The jury later found in favor of the plaintiff on all claims and counterclaims, determining that the defendant's breach was wilful and malicious. The District Court then certified a question to the Connecticut Supreme Court regarding the recoverability of common-law punitive damages for wilful and malicious breach of contract.The Connecticut Supreme Court concluded that a law firm may not recover common-law punitive damages for a client's breach of contract unless it pleads and proves the existence of an independent tort for which punitive damages are recoverable. The court noted that Connecticut appellate courts generally do not allow punitive damages for breach of contract claims, except in certain contexts like insurance and surety. The court emphasized the different purposes of compensatory damages in contract law and punitive damages in tort law, and declined to adopt a broader rule permitting punitive damages for wilful, malicious, or reckless breaches of contract. The court's decision aligns with the majority rule in other jurisdictions and the Restatements of Contracts and Torts. View "McCarter & English, LLP v. Jarrow Formulas, Inc." on Justia Law

A&T Maritime Logistics, Inc. had an insurance contract with RLI Insurance Company and a bareboat charter agreement with Alexis Marine, L.L.C. While operating the M/V Uncle John, a vessel owned by Alexis Marine, A&T Maritime caused the ship to allide with an embankment. Believing the damage to be minimal, A&T Maritime did not take immediate action. After a lawsuit was filed, RLI was notified of the claim. A&T Maritime and Alexis Marine sought defense and indemnification from RLI, which denied coverage under the insurance contract. The district court upheld RLI's denial of coverage on summary judgment, finding that RLI was prejudiced by the delayed notice.The United States District Court for the Eastern District of Louisiana initially denied A&T Maritime's and Alexis Marine's motions for partial summary judgment seeking reimbursement for defense costs, noting that the policy did not include a duty to defend. The Champagnes, who had purchased the damaged property, settled their claims for $200,000, funded solely by Alexis Marine. RLI then moved for summary judgment, arguing that the Uncle John was not covered under the policy. The district court disagreed but granted partial summary judgment to RLI, holding that the prompt notice requirements were breached and RLI was prejudiced.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's decision. The court held that RLI was actually prejudiced by the delayed notice from both A&T Maritime and Alexis Marine, as the damage worsened over time and the opportunity to settle for a lower amount was lost. Consequently, the denial of coverage for both A&T Maritime and Alexis Marine was appropriate. The court also concluded that RLI had no duty to reimburse defense costs, as indemnification depended on coverage, which was voided due to the breach of the prompt notice requirement. View "A&T Maritime Logistics v. RLI Insurance Co." on Justia Law