Justia Contracts Opinion Summaries

A Texas truck driver was injured while making roadside repairs in Iowa when his parked semi was struck by another vehicle. After the accident, the driver retained a Texas attorney to pursue his personal injury claim. That attorney negotiated with the insurer for the other driver, ultimately agreeing to a settlement of $125,000 and requesting a release. However, the client did not sign the release and later replaced his attorney, claiming he had not authorized the settlement. The client then filed a lawsuit in Iowa, seeking additional compensation and naming the driver, the driver’s employer, and others as defendants.The defendants responded by moving to enforce the settlement agreement in the Iowa District Court for Warren County. The district court, acting as factfinder with no objection from either party, held a hearing, accepted evidence, and considered the client’s affidavit. The court found that the attorney was presumed to have settlement authority and that the client had not rebutted this presumption with clear and convincing evidence. The court enforced the settlement and dismissed the case upon payment of the agreed sum. The client’s motion to reconsider was denied, and he appealed.The Iowa Court of Appeals affirmed, finding the district court’s factual findings were supported by substantial evidence. The Iowa Supreme Court granted further review. The Supreme Court held that, because the client did not object to the district court’s procedure, the court properly acted as factfinder. The Supreme Court further held that the district court’s finding—that the attorney had authority to settle—was supported by substantial evidence, and thus the settlement agreement was enforceable. The court affirmed the decisions of the lower courts. View "Recio v. Fridley" on Justia Law

Two brothers operated a farming and cattle partnership, with one managing the finances and records and the other handling outside operations. The financial brother, assisted by his daughter, maintained control over the partnership’s handwritten ledgers and inventory records, while the other brother relied on the information provided. Over several years, the managing brother made false entries in the ledgers, diverted partnership income into personal accounts, and concealed certain ownership interests in partnership assets from his brother. Suspicious discrepancies surfaced when the outside-operating brother noticed substantial errors affecting his reported net worth, prompting him to seek dissolution of the partnership and to sue for damages.The District Court for Thurston County conducted a bench trial, hearing evidence from the parties and expert witnesses. It found that the managing brother and his daughter had exclusive control over the partnership’s finances and intentionally concealed information. The court concluded that the outside-operating brother could not reasonably have discovered the wrongdoing earlier, given his lack of access to original records and his trust in the managing brother. The court awarded damages to the plaintiff under several theories, including breach of fiduciary duty, fraudulent concealment, fraudulent and negligent misrepresentation, conversion, unjust enrichment, and breach of contract, and imposed joint and several liability on both defendants.Upon appeal, the Nebraska Supreme Court reviewed the district court’s factual findings for clear error and legal questions de novo. It held that the claims for fraudulent misrepresentation and concealment were not barred by the statute of limitations, as discovery of the fraud occurred within the allowed period. The Supreme Court affirmed the lower court’s determinations regarding liability, damages, and the denial of post-trial motions, upholding the judgment in favor of the plaintiff. The court specifically affirmed the joint and several liability for both defendants and the calculation of damages, rejecting the appellants’ arguments regarding settlements, contract defenses, and the statute of limitations. View "Sebade v. Sebade" on Justia Law

A municipal water and gas board entered into four contracts with a contractor to replace and expand gas lines in and around a city. The total project cost exceeded $4 million, and the contractor began work after being the sole bidder for each project phase. After paying the contractor over $2.8 million, the board ceased payments, leaving over $800,000 due for completed work. The board asserted it could not continue payments because the advertisement for sealed bids had not strictly complied with the version of the applicable Alabama statute in effect at the time the bids were solicited. The contractor then sued the board for breach of contract and other claims.The Franklin Circuit Court granted summary judgment for the board, finding, in effect, that strict compliance with the statutory advertising requirements was necessary and that the contracts were void due to noncompliance. The trial court denied the contractor’s postjudgment motion, and the contractor appealed.The Supreme Court of Alabama reviewed the case de novo. It held that substantial compliance, rather than strict compliance, with the advertising requirements for public works contracts under the relevant statute can satisfy the law’s objectives. The court distinguished this situation from prior precedent where there was a complete absence of competitive bidding and evidence of favoritism or corruption. Here, there was no such evidence, and the board had taken affirmative steps to advertise, including publication and online postings. The court concluded that the contractor presented substantial evidence of substantial compliance, creating a genuine issue of material fact. The Supreme Court of Alabama reversed the summary judgment and remanded the case for further proceedings. View "Pinpoint Locating, Inc. v. The Water Works and Gas Board of the City of Red Bay" on Justia Law

Two financial advisors entered into two agreements as part of a business transaction: an operating agreement establishing them as members of a wealth management firm and a purchase-and-sale contract under which one advisor would gradually buy out the other's ownership interest. The operating agreement contained a noncompete clause and provisions for mediation and arbitration. After the buyout concluded, the selling advisor remained employed with the company and could only be terminated for cause. In January 2024, he was terminated for cause and immediately began working at a competing firm within the restricted radius specified in the noncompete provision.Following his termination, the company and the buying advisor filed suit in the Circuit Court of Forrest County, alleging breach of contract and seeking, among other relief, a temporary restraining order and preliminary injunction to enforce the noncompete clause. The trial court granted the injunction and denied the selling advisor’s motions to dissolve the restraining order, to deny the injunction, and to compel mediation and/or arbitration. The trial court found that the noncompete clause remained binding and that the parties had not shown a clear intent to compel mediation or arbitration for this dispute, given specific contractual language.On appeal, the Supreme Court of Mississippi reviewed whether the noncompete provision was enforceable, whether the trial court erred in issuing the preliminary injunction, and whether the denial of the motion to compel mediation/arbitration was proper. The Court held that the noncompete provision was binding based on the evidence at the preliminary injunction stage, that the trial court did not err in granting the preliminary injunction, and that the mediation/arbitration provisions were not clearly applicable to this dispute. The Supreme Court of Mississippi affirmed the trial court’s order in all respects. View "Wiggins v. Southern Securities Group, LLC" on Justia Law

Jet Oilfield Services was formed in 2018 by three individuals, with Brian Owen later acquiring a substantial membership interest. Jet’s governing agreement required Owen to obtain consent from at least one other member before entering transactions on Jet’s behalf. In 2022, Owen signed an agreement with Spin Capital, L.L.C., under which Jet would sell $4,500,000 of future receivables for $3,000,000. Spin attempted to confirm Owen’s authority by reviewing Jet’s bank statements and tax returns, noting Owen’s access to the company’s accounts and his designation as “Partnership Representative” and “General Partner or LLC member-manager,” though the tax return was unsigned by a member-manager. Jet subsequently filed for bankruptcy, and Spin filed a proof of claim based on this agreement and pursued related litigation.The United States Bankruptcy Court for the Western District of Texas held a trial on Jet’s counterclaims against Spin. The court found that Owen lacked both actual and apparent authority to bind Jet in the Spin Agreement and that Jet received no consideration for the contract. As a result, the bankruptcy court determined Spin’s claim was unenforceable. Spin appealed to the United States District Court for the Western District of Texas. Initially, the district court dismissed the appeal for an insufficient record but later reinstated it, allowing supplemental briefing. When Spin declined to submit further briefing, the district court dismissed the appeal with prejudice.On review, the United States Court of Appeals for the Fifth Circuit applied clear error review to the bankruptcy court’s factual findings and de novo review to its legal conclusions. The Fifth Circuit held that Owen did not have apparent authority to bind Jet, as Jet’s member-managers did not hold him out as an agent, and Spin’s reliance on Owen’s asserted authority was unreasonable. The court thus affirmed the judgment, holding that Spin’s claim against Jet was unenforceable. View "Spin Capital v. Jet Oilfield" on Justia Law

Four property-specific limited liability companies owned real estate in Wisconsin, which was leased to skilled nursing facilities operated by Kevin Breslin through his company, KBWB Operations, LLC. Breslin and his co-guarantors executed personal guaranties ensuring payment and performance under the leases. The nursing facility tenants defaulted on their rent obligations starting in 2018 and subsequently lost their operating licenses after a court-appointed receiver moved residents out. The tenants also failed to complete a purchase option for the properties, triggering a liquidated damages clause. Plaintiffs later sold the properties at a loss.The plaintiffs sued Breslin, his company, and co-guarantors in the United States District Court for the Northern District of Illinois to enforce the guaranties and recover damages. During the litigation, plaintiffs discovered that one co-guarantor was a California citizen, which destroyed complete diversity and thus federal jurisdiction. Plaintiffs moved to dismiss this non-diverse defendant, arguing he was not indispensable because the guaranties provided for joint and several liability. The district court agreed and dismissed him. Breslin did not oppose the dismissal. Plaintiffs then moved for summary judgment; Breslin, facing criminal charges, invoked the Fifth Amendment and presented no evidence on liability or damages. The district court granted summary judgment to plaintiffs and awarded nearly $22 million in damages across several categories.On appeal, the United States Court of Appeals for the Seventh Circuit held that jurisdiction was proper because the dismissed co-guarantor was not an indispensable party under Rule 19, given joint and several liability. The court affirmed the district court’s findings on most damages but vacated the awards for accelerated rent under one lease (pending further consideration of its enforceability as a liquidated damages clause) and for liquidated damages related to the purchase option (finding it unenforceable as a penalty). The case was remanded for recalculation of damages consistent with these holdings. In all other respects, the judgment was affirmed. View "CCP Golden/7470 LLC v. Breslin" on Justia Law

This case involves a dispute between two formerly married individuals regarding possession of their cat, Yasmine, following their divorce in 2015. Their Marital Property Settlement Agreement (MPSA) specified that the wife would be awarded possession of the cat, but the husband would care for Yasmine until the wife requested possession. If the husband’s new residence did not permit cats after the sale of the marital home, he was required to notify the wife, who then had 20 days to take custody or arrange for the cat’s care. After the marital home was sold in 2016, the husband notified the wife, but she was unable to take possession or arrange care for Yasmine immediately and requested more time. The husband agreed to a short extension, but the wife did not act within that period, and the cat remained with the husband. Several years later, in 2023, the wife sought custody of Yasmine, but the husband refused, claiming she had forfeited her rights under the MPSA.The Eleventh Judicial District Court, Flathead County, held a hearing in January 2024 on the wife’s motion for contempt, alleging the husband violated the MPSA. The court found that the husband had provided proper notice, the wife was aware of this, and she failed to take the cat or arrange for its care within the agreed-upon timeframe. The court denied the contempt motion and issued its findings and order in February 2024. Subsequent motions by the wife for reconsideration and an out-of-time appeal were denied or deemed denied.The Supreme Court of the State of Montana reviewed the case and affirmed the District Court’s decision. The Supreme Court held that the MPSA did not grant the wife an indefinite right to possess Yasmine and that her rights under the agreement expired months after the time extension, not years later. The court found no abuse of discretion in the District Court’s denial of the contempt motion. View "Marriage of Burgard & Jacobsen" on Justia Law

Extech Building Materials, Inc., a supplier, provided building materials to E&N Construction, Inc. under a two-page “Credit Application and Agreement.” Two E&N representatives, including Joaquim G. Ferreira, signed the agreement. Above the signature lines, a paragraph stated that the signers “personally guarantee unconditionally, at all times . . . the payment of indebtedness . . . of the within named firm.” However, the signature lines used the pre-printed words “No Title,” and neither signer specified whether they signed as representatives, individually, or both. E&N later defaulted on payment, and Extech sued, seeking to hold Ferreira personally liable as a guarantor.The Superior Court, Law Division, denied Extech’s motion for summary judgment and granted summary judgment in favor of Ferreira, finding the agreement did not make it clear that the signers were responsible as guarantors for E&N’s debt. Extech appealed, and the Appellate Division reversed, holding that genuine issues of fact about the parties’ intentions precluded summary judgment for Ferreira and Roney. The trial court’s denial of summary judgment to Extech was affirmed. Ferreira then petitioned for certification, which the Supreme Court of New Jersey granted.The Supreme Court of New Jersey held that a valid personal guaranty of a company’s indebtedness requires the signer to unambiguously manifest their intent to be personally bound. It is possible for a single signature to bind both a company and the individual as guarantor, but only if the agreement clearly expresses that intent. In this case, Ferreira did not unambiguously manifest an intent to be personally bound as guarantor. Accordingly, the Supreme Court reversed the Appellate Division and reinstated summary judgment in Ferreira’s favor, as well as dismissal of the complaint against Roney. View "Extech Building Materials, Inc. v. E&N Construction, Inc." on Justia Law

The plaintiff was an employee who brought claims for wrongful termination, Labor Code violations, and breach of contract against two defendants: the Los Angeles County Metropolitan Transportation Authority (MTA) and the Public Transportation Services Corporation (PTSC). MTA had created PTSC, a nonprofit public benefit corporation, to provide retirement and employment benefits to certain workers and to manage employees who support MTA’s transportation functions. The plaintiff did not file a prelitigation claim under the Government Claims Act (GCA) before suing these entities.The Superior Court of Los Angeles County first granted a motion for judgment on the pleadings in favor of both defendants, finding that the plaintiff had not alleged compliance with the GCA’s claim presentation requirements. The plaintiff was given leave to amend but continued to argue that PTSC was not a public entity subject to the GCA, and that even if it was, the claims presentation requirement should not apply because PTSC had not registered as required by statute. The trial court sustained a demurrer without leave to amend, finding both defendants to be public entities and that PTSC was not required to register separately from MTA. The court entered judgment for both defendants.On appeal to the California Court of Appeal, Second Appellate District, Division One, the plaintiff did not challenge the judgment in favor of MTA but contested the ruling as to PTSC. The appellate court held that PTSC qualifies as a public entity for purposes of the GCA’s claims presentation requirement, given its creation and control by MTA. However, the court found that if PTSC failed to register properly on the Registry of Public Agencies—including with county clerks where it maintains offices—this would excuse the plaintiff’s noncompliance with the GCA. The judgment for MTA was affirmed, but the judgment for PTSC was reversed and remanded to allow the plaintiff to amend his complaint. View "Black v. L.A. County Metropolitan Transp. Authority" on Justia Law

The dispute centers on a real estate transaction in which a buyer agreed to purchase a property in Miami for $5,450,000 from two sellers, with a closing set for October 2021. The sellers subsequently discovered a mortgage restriction preventing them from closing until January 2022, which resulted in their failure to close on time. They acknowledged the breach, but subsequent negotiations to revive the deal fell through because the buyer wanted a discounted price to account for damages incurred from the delay, which the sellers refused.The matter proceeded to litigation. The buyer sued for specific performance and damages in state court; the sellers removed the action to federal court and also brought their own federal suit seeking a declaratory judgment that the buyer, not they, had breached. The United States District Court for the Southern District of Florida dismissed the sellers’ declaratory action and granted summary judgment to the buyer on breach of contract, reserving the amount of damages for trial. After a bench trial, the district court awarded the buyer specific performance and damages, ordering the sale to proceed. The parties closed the transaction as ordered.On appeal, the United States Court of Appeals for the Eleventh Circuit held that the issue of specific performance was moot because the sale had already occurred and the property was now owned by third parties not before the court, making further relief impossible. However, the court found the damages issue remained live. It affirmed the district court’s damages award in all respects except for damages for lost tax savings, which it reversed due to insufficient evidence that the buyer itself suffered those losses. The case was remanded for recalculation of damages consistent with the appellate decision. View "Marmol v. Kalonymus Development Partners, LLC" on Justia Law