Justia Contracts Opinion Summaries

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Sedric Ward, an Army reservist, worked at the Shelby County Jail. In 2015, the County fired Ward but later entered into a settlement agreement in which Ward released “any and all claims whatsoever” related to his termination. Despite this, Ward later sued the County under the Uniformed Services Employment and Reemployment Rights Act (USERRA). The central issue was whether the settlement agreement effectively released Ward’s claim under the Act.The district court ruled in favor of Ward, asserting that the release’s scope—namely, “any and all claims whatsoever”—did not reach his USERRA claim. The case went to trial, and the jury found in Ward’s favor. The district court eventually ordered the County to pay Ward more than $1.5 million.The United States Court of Appeals for the Sixth Circuit disagreed with the district court's reasoning. The appellate court found that the release provision in the settlement agreement clearly encompassed Ward’s USERRA claim. However, the court also noted that USERRA imposes a second requirement for the release of a claim under the Act. Specifically, the Act requires that the agreement “establish” rights that are “more beneficial” for the servicemember than the ones he gives up. The court found that whether a particular settlement agreement provides greater benefits than a USERRA claim is for the servicemember to decide. Given the circumstances, the court concluded that a reasonable jury could find that Ward’s decision to enter into the agreement reflected a considered decision on his part, or instead that it reflected only desperation. The appellate court vacated the district court’s judgment and remanded the case for further proceedings. View "Ward v. Shelby County" on Justia Law

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The case involves Dennis Neate, a former employee of the James B. Oswald Company (Oswald), an insurance firm. Neate left Oswald to work for Hylant Group, Inc., another insurance firm, and some of his clients followed him. Oswald accused Neate of violating his non-solicitation agreement and sued in federal district court. The court issued a preliminary injunction ordering Neate and others to comply with Oswald’s non-solicitation agreement. Neate appealed.Previously, the district court granted a preliminary injunction after an evidentiary hearing. The injunction prohibited Neate and others from violating their agreements with Oswald, retaining or using Oswald's confidential information, and soliciting or accepting business from Oswald's clients. The injunction also required all defendants to return all of Oswald's property.The United States Court of Appeals for the Sixth Circuit vacated and remanded the case. The court found that the district court failed to properly apply Ohio law in determining the reasonableness of the non-solicitation agreement. The court also found that the injunction did not meet the specificity requirements of Federal Rule of Civil Procedure 65(d)(1), as it incorporated the non-solicitation agreement by reference. However, the court agreed with the district court that Oswald had shown a likelihood of success on its trade-secrets claims. View "James B. Oswald Co. v. Neate" on Justia Law

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Yasmin Varela filed a class action lawsuit against State Farm Mutual Automobile Insurance Company (State Farm) after a car accident. Varela's insurance policy with State Farm entitled her to the "actual cash value" of her totaled car. However, she alleged that State Farm improperly adjusted the value of her car based on a "typical negotiation" deduction, which was not defined or mentioned in the policy. Varela claimed this deduction was arbitrary, did not reflect market realities, and was not authorized by Minnesota law. She sued State Farm for breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and violation of the Minnesota Consumer Fraud Act (MCFA).State Farm moved to dismiss the complaint, arguing that Varela's claims were subject to mandatory, binding arbitration under the Minnesota No-Fault Automobile Insurance Act (No-Fault Act). The district court granted State Farm's motion in part, agreeing that Varela's claims for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment fell within the No-Fault Act's mandatory arbitration provision. However, the court found that Varela's MCFA claim did not seek the type of relief addressed by the No-Fault Act and was neither time-barred nor improperly pleaded, and thus denied State Farm's motion to dismiss this claim.State Farm appealed, arguing that Varela's MCFA claim was subject to mandatory arbitration and should have been dismissed. However, the United States Court of Appeals for the Eighth Circuit dismissed the appeal for lack of jurisdiction. The court found that State Farm did not invoke the Federal Arbitration Act (FAA) in its motion to dismiss and did not file a motion to compel arbitration. The court concluded that the district court's order turned entirely on a question of state law, and the policy contained no arbitration provision for the district court to "compel." Therefore, State Farm failed to establish the court's jurisdiction over the interlocutory appeal. View "Varela v. State Farm Mutual Automobile Insurance Co." on Justia Law

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The case revolves around a contract dispute over roofing work done in conjunction with the purchase of a house. The appellant, Carl Fleig, had purchased a house from homeowners who had contracted with the appellee, Landmark Construction Group, to replace a hail-damaged roof. After the purchase, the new roof leaked, causing damage to the house. Landmark refused to address the leaks, arguing that any warranty given to the prior homeowners did not transfer to Fleig. Fleig sued Landmark, asserting theories of implied warranty, contractual warranty, and fraud.The case was initially heard by two trial judges and was appealed twice. The trial court granted Landmark's motion for a directed verdict and awarded Landmark $5,000 in attorney fees. Fleig appealed, and the Court of Civil Appeals affirmed the trial court. The Supreme Court of the State of Oklahoma vacated the Court of Civil Appeals opinion and remanded the matter to the trial court. After a second bench trial, the trial court entered an award against Landmark for $2,725. Fleig appealed again, and the Court of Civil Appeals affirmed the trial court in part, reversed it in part, and remanded the cause.The Supreme Court of the State of Oklahoma granted certiorari to address whether the trial court's order awarding attorney fees evidenced that the trial court complied with the directives of State ex rel. Burk v. City of Oklahoma City. The court held that it did not. The court found that the trial court order awarding attorney fees did not set forth with specificity the facts and computation to support the award. The court held that the trial court must make findings of fact incorporated into the record regarding the hours spent, reasonable hourly rates, and the value placed on additional factors. The court vacated the Court of Civil Appeals opinion in part, reversed the trial court in part, and remanded the cause for proceedings consistent with its opinion. View "Fleig v. Landmark Construction Group" on Justia Law

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Frederic P. Zotos, an attorney residing in Cohasset, Massachusetts, filed a qui tam complaint against the Town of Hingham and several of its officials. Zotos alleged that the town and its officials posted speed limit signs and advisory speed plaques that did not comply with applicable federal and state laws and regulations. He further claimed that the town applied for and received reimbursements for these signs and plaques from both the federal government and the Commonwealth of Massachusetts. Zotos asserted that the town fraudulently induced the federal government to pay it roughly $3,300,000 and the Commonwealth to pay it approximately $7,300,000.The United States District Court for the District of Massachusetts dismissed Zotos's complaint for failure to state a claim upon which relief could be granted. The court concluded that the qui tam action was not barred by either claim or issue preclusion. However, it found that Zotos's claims fell short of the False Claims Act (FCA) and Massachusetts False Claims Act's (MFCA) requirements. Specifically, it ruled that Zotos failed to sufficiently plead that the alleged misrepresentations were material to the federal government's and the Commonwealth's respective decisions.On appeal, the United States Court of Appeals for the First Circuit affirmed the district court's decision. The appellate court found that Zotos's complaint did not adequately allege that the defendants' purported misrepresentations were material. It noted that the essence of the bargain under the Federal-Aid Highway Program (FAHP) and the Chapter 90 program was that the defendants incurred permissible costs on projects that were duly reimbursed. The court concluded that Zotos's allegations amounted to ancillary violations that, without more, were insufficient to establish materiality. View "United States ex rel. Zotos v. Town of Hingham" on Justia Law

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The case involves Alabama Relocation Services, Inc. ("ARS") and Patricia Buchannan, who filed a complaint against COWS USA, LLC ("COWS"), Trailpods Acceptance Corporation ("Trailpods"), Michael Frank, Ana Frank, and Leonard Rosenberg ("the COWS defendants"). ARS is a moving and storage company based in Mobile, Alabama, and Buchannan is its vice president. COWS is a Florida-based company that sells portable storage containers. ARS and Buchannan allege that they entered into a dealership agreement with COWS, which required them to lease equipment from Trailpods and finance the purchase of COWS equipment through Ascentium Capital, LLC ("Ascentium"). However, they claim that despite making payments, the promised equipment was never delivered.The COWS defendants filed a motion to dismiss the claims, arguing that the dealership agreement contained a forum-selection clause requiring disputes to be brought in Miami-Dade County, Florida. The Mobile Circuit Court denied their motion to dismiss. The COWS defendants then petitioned the Supreme Court of Alabama for a writ of mandamus, seeking an order directing the Mobile Circuit Court to vacate its order denying their motion to dismiss and to enter an order dismissing the claims.The Supreme Court of Alabama granted the petition. The court found that the dealership agreement's forum-selection clause clearly required actions between the parties to be brought in Miami, Florida. The court concluded that ARS and Buchannan failed to clearly establish that enforcement of the forum-selection clause would be unreasonable. The court directed the Mobile Circuit Court to vacate its order denying the COWS defendants' motions to dismiss and to enter a new order dismissing the claims against the COWS defendants, without prejudice. View "Ex parte Cows USA, LLC" on Justia Law

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The United States Department of Justice (DOJ) initiated an investigation into potentially anti-competitive practices in the real estate industry by the National Association of Realtors (NAR). In November 2020, the DOJ and NAR reached a settlement, and the DOJ sent a letter to NAR stating that it had closed its investigation and that NAR was not required to respond to two outstanding investigative subpoenas. However, in July 2021, the DOJ withdrew the proposed consent judgment, reopened its investigation, and issued a new investigative subpoena. NAR petitioned the district court to set aside the subpoena, arguing that its issuance violated a promise made by the DOJ in the 2020 closing letter. The district court granted NAR’s petition, concluding that the new subpoena was barred by a validly executed settlement agreement.The United States Court of Appeals for the District of Columbia Circuit disagreed with the district court's decision. The court held that the plain language of the disputed 2020 letter permits the DOJ to reopen its investigation. The court noted that the closing of an investigation does not guarantee that the investigation would stay closed forever. The court also pointed out that NAR gained several benefits from the closing of the DOJ’s pending investigation in 2020, including relief from its obligation to respond to the two outstanding subpoenas. Therefore, the court reversed the judgment of the district court. View "National Association of Realtors v. United States" on Justia Law

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A homeowner, Mohammad Rafiei, sued his builder, Lennar Homes, alleging personal injuries due to a construction defect. The purchase contract between Rafiei and Lennar contained an agreement to submit disputes to arbitration under the Federal Arbitration Act, including issues of formation, validity, or enforceability of the arbitration agreement. Lennar moved to compel arbitration, but Rafiei argued that the arbitration agreement was unconscionable because the cost of arbitration was prohibitively high. The trial court denied Lennar's motion to compel arbitration.The Court of Appeals for the Fourteenth District of Texas affirmed the trial court's decision, holding that Rafiei had sufficiently demonstrated that the cost to arbitrate was excessive, making the arbitral forum inadequate to vindicate his rights. The court of appeals concluded that if Rafiei were required to pay more than $6,000, he would be precluded from pursuing his claims.The Supreme Court of Texas reversed the judgment of the court of appeals. The court held that the record failed to support a finding that the parties' delegation clause was itself unconscionable due to prohibitive costs to adjudicate the threshold issue in arbitration. The court noted that Rafiei had not provided sufficient evidence to show that he could not afford the cost of arbitrating the arbitrability question. The court also noted that Rafiei had not provided evidence of how the fee schedule would be applied to resolve the unconscionability issue. The court remanded the case to the trial court for further proceedings consistent with its opinion. View "Lennar Homes Of Texas Inc. v. Rafiei" on Justia Law

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The case involves Century Aluminum Company and its subsidiaries (Century), and Certain Underwriters at Lloyd's, London (Lloyd's). Century uses river barges to transport alumina ore and other materials for its aluminum smelting operations. In 2017, the Army Corps of Engineers closed key locks on the Ohio River, causing Century to seek alternative transportation. Century filed a claim with Lloyd's, its maritime cargo insurance policy provider, for the unanticipated shipping expenses. While Lloyd's paid $1 million under the policy's Extra Expense Clause, it denied coverage for the rest of the claim.The case was first heard by the United States District Court for the Western District of Kentucky. Century sought a declaration that its denied claims were covered by the insurance policy and requested damages for Lloyd's alleged breach of contract among other violations of Kentucky insurance law. Lloyd's sought summary judgment, arguing that the policy did not cover the claims. The district court sided with Lloyd's.The appeal was heard before the United States Court of Appeals for the Sixth Circuit. Century argued that the policy's All Risks Clause, Risks Covered Clause, Shipping Expenses Clause, and Sue and Labour Clause required Lloyd's to cover the additional shipping expenses. The court rejected these arguments, affirming the district court's ruling. The court held that under the All Risks Clause and Risks Covered Clause, Century's alumina did not suffer any physical loss or damage. As for the Shipping Expenses Clause, it covered the risk of a failed delivery, not an untimely one. Lastly, under the Sue and Labour Clause, Century was required to mitigate Lloyd's exposure under the policy, but it did not obligate Lloyd's to pay anything for reducing losses that fall outside the policy. View "Century Aluminum Co. v. Certain Underwriters at Lloyd's, London" on Justia Law

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Scott Dahms hired Legacy Plumbing, LLC to perform plumbing work in a house built in the 1920s. Due to the age and condition of the piping, Legacy recommended replacing as much of the piping as possible. Dahms, however, wanted to keep costs low and did not want additional piping replaced. After Legacy completed the work, Dahms discovered a leak in the bathroom, which caused damage to the home. Dahms filed a lawsuit in small claims court for the cost to repair the damage from the leak. Legacy removed the case to district court, filed an answer, and moved for summary judgment. The district court granted summary judgment in favor of Legacy and dismissed Dahms’s claim.The district court granted summary judgment in favor of Legacy, concluding that there was no genuine issue of fact as to the source and cause of the leak. The court relied on affidavits and photographs provided by Legacy, which asserted that the source of the leak was the original lead and Oakum joint seal inside the main cast iron stack, not the PVC piping or hub part installed by Legacy. The court also concluded that the damage due to the leak was an incidental under the warranty clause of the contract between Dahms and Legacy.The Supreme Court of North Dakota reversed the district court's decision, concluding that a genuine issue of material fact exists as to the source and cause of the leak. The court found that the district court had improperly weighed the evidence and determined witness credibility by considering the experience of the affiants. The Supreme Court also found that a genuine issue of material fact exists regarding whether the damage was incidental to Legacy’s work under the agreement. The court denied Legacy's request for attorney’s fees and remanded the case back to the district court. View "Dahms v. Legacy Plumbing" on Justia Law