Justia Contracts Opinion Summaries

Brian Thomas sued Corbyn Restaurant Development Corp and its employees for personal injuries sustained during an altercation. The parties settled the lawsuit for $475,000, with the payment to be made to Thomas's attorney's client trust account. However, an unknown third party impersonated Thomas's counsel and sent fraudulent wire instructions to the defendants' counsel, who then wired the settlement funds to the imposter's account. When the fraud was discovered, Thomas requested the settlement money, but the defendants refused to pay again.The Superior Court of San Diego County reviewed the case and granted Thomas's application to enforce the settlement agreement. The court applied federal case law, which shifts the risk of loss to the party in the best position to prevent the fraud. The court found that the defendants were in the best position to prevent the fraud and that Thomas bore no comparative fault. Consequently, the court entered judgment in favor of Thomas for $475,000.The Court of Appeal, Fourth Appellate District, Division One, State of California, reviewed the case. The appellate court affirmed the lower court's judgment, agreeing that the defendants were in the best position to prevent the fraud. The court noted several red flags that should have alerted the defendants to the fraudulent scheme, including conflicting payment instructions, inoperable phone numbers, and spoofed email addresses. The appellate court held that the risk of loss from the imposter's fraudulent diversion of the wire transfer should be borne by the party in the best position to prevent the fraud, which in this case was the defendants. View "Thomas v. Corbyn Restaurant Development Corp." on Justia Law

The plaintiff, Joshua Naranjo, filed a class action lawsuit against Doctors Medical Center of Modesto, Inc., alleging violations of the unfair competition law (UCL) and the Consumers Legal Remedies Act (CLRA) due to the hospital's practice of charging an undisclosed "Evaluation and Management Services Fee" (EMS Fee) to emergency room patients. Naranjo claimed that the fee was charged without prior notification or agreement, making it an unfair, deceptive, and unlawful practice.The Superior Court of Stanislaus County sustained the hospital's demurrer to each cause of action in Naranjo's first amended complaint (FAC) without leave to amend and entered a judgment of dismissal. Naranjo appealed, and the Court of Appeal initially reversed the judgment, finding that Naranjo had stated valid causes of action under the UCL and CLRA and for declaratory relief. The court also directed the trial court to consider any future motion by Naranjo to amend his FAC to state a breach of contract cause of action.The California Supreme Court granted review and subsequently transferred the case back to the Court of Appeal, directing it to reconsider the matter in light of its ruling in Capito v. San Jose Healthcare System, LP. In Capito, the Supreme Court held that hospitals do not have a duty under the UCL or CLRA to disclose EMS fees to emergency room patients prior to treatment beyond what is required by the statutory and regulatory scheme.Upon reconsideration, the Court of Appeal concluded that Naranjo's claims are barred to the extent they are based on an alleged duty to disclose EMS fees prior to treatment. However, the court found that Naranjo had stated a valid contract-based cause of action for declaratory relief and should be allowed to amend his FAC to state causes of action for breach of contract and violations of the UCL and CLRA, subject to specific parameters. The judgment of dismissal was reversed, and the case was remanded for further proceedings. View "Naranjo v. Doctors Medical Center of Modesto, Inc." on Justia Law

Portfolio Recovery Associates, LLC, a debt purchaser, filed suits against three consumers, Jeannie Duvall, Allease Riddle, and Lorrena Terry, to collect past-due credit card debts. The consumers counterclaimed, alleging that Portfolio's debt-collection practices violated Alaska's Unfair Trade Practices and Consumer Protection Act (UTPA). The superior courts ruled in favor of the consumers on Portfolio's debt-collection claims, finding insufficient admissible evidence to prove Portfolio's ownership of the debts or the amounts owed. The courts also ruled in favor of the consumers on some of their UTPA counterclaims, awarding statutory damages and attorney's fees.In Duvall's case, the superior court granted summary judgment on her UTPA counterclaim that Portfolio sought unauthorized fees and charges, finding Portfolio failed to produce the original credit card agreement. The court excluded a late-disclosed witness and certain documents as inadmissible hearsay. Portfolio's contract claim failed due to lack of evidence. The court awarded Duvall partial attorney's fees under the UTPA and Rule 82.In Riddle's case, the superior court granted summary judgment on her UTPA counterclaim, finding Portfolio lacked standing to sue without proving ownership of the debt. The court awarded Riddle statutory damages and partial attorney's fees, reducing the award due to excessive litigation by both parties.In Terry's case, the superior court ruled in her favor on Portfolio's contract claim and her UTPA counterclaims after a bench trial. The court found Portfolio's conduct unfair and deceptive, awarding Terry statutory damages and full attorney's fees.The Alaska Supreme Court affirmed the superior courts' rulings on the merits and statutory damages. It found no abuse of discretion in the evidentiary rulings or the exclusion of the late-disclosed witness. The court affirmed the attorney's fees award in Duvall, remanded the fees award in Riddle for reconsideration, and remanded the fees award in Terry for a minor correction. View "Portfolio Recovery Associates, LLC v. Duvall" on Justia Law

Stamatios Kousisis and Alpha Painting and Construction Co. were awarded two contracts by the Pennsylvania Department of Transportation (PennDOT) for painting projects in Philadelphia. Federal regulations required subcontracting a portion of the contract to a disadvantaged business enterprise. Kousisis falsely represented that Alpha would obtain paint supplies from Markias, Inc., a prequalified disadvantaged business. However, Markias functioned only as a pass-through entity, funneling checks and invoices to and from Alpha’s actual suppliers, violating the requirement that disadvantaged businesses perform a commercially useful function. Despite this, Alpha completed the projects to PennDOT’s satisfaction and earned over $20 million in gross profit.The Government charged Alpha and Kousisis with wire fraud and conspiracy to commit wire fraud, based on the fraudulent-inducement theory. After a jury convicted them, they moved for acquittal, arguing that PennDOT received the full economic benefit of its bargain, so the Government could not prove they schemed to defraud PennDOT of money or property. The United States Court of Appeals for the Third Circuit rejected this argument, affirming the convictions and deepening the division over the validity of a federal fraud conviction when the defendant did not seek to cause the victim net pecuniary loss.The Supreme Court of the United States held that a defendant who induces a victim to enter into a transaction under materially false pretenses may be convicted of federal fraud even if the defendant did not seek to cause the victim economic loss. The Court explained that the text of the wire fraud statute does not mention economic loss and that the common law did not establish a general rule requiring economic loss in all fraud cases. The Court affirmed the Third Circuit’s decision, concluding that the fraudulent-inducement theory is consistent with both the text of the statute and the Court’s precedent. View "Kousisis v. United States" on Justia Law

Daniel Jones signed a blank application for a homeowner’s insurance policy, trusting his agent, J. Kim Hatcher Insurance Agencies, Inc. (Hatcher), to complete it accurately. Jones relied on Hatcher’s assurance based on their prior dealings and the commission Hatcher would earn. After Hurricane Florence destroyed Jones’s home, his insurer refused to cover the losses, citing material misrepresentations in the application. Jones discovered that Hatcher had omitted the existence of a pond and understated the property size.Jones sued Hatcher for negligence and gross negligence, among other claims. Hatcher moved to dismiss the ordinary negligence claim under Rule 12(b)(6), arguing contributory negligence. The trial court granted Hatcher’s motion, but the Court of Appeals reversed, finding that dismissal was not warranted as the complaint did not necessarily defeat Jones’s claim for ordinary negligence. The Court of Appeals also affirmed the dismissal of Jones’s claim for punitive damages.The Supreme Court of North Carolina reviewed the case. It agreed with the Court of Appeals that Jones’s complaint did not show contributory negligence as a matter of law, as the factual circumstances could support that Jones acted with ordinary prudence in trusting Hatcher. The court also found that Jones’s complaint sufficiently alleged a claim for punitive damages based on Hatcher’s willful and wanton conduct, giving Hatcher adequate notice of the claims. Therefore, the Supreme Court affirmed the Court of Appeals’ decision on the contributory negligence issue and reversed its decision on the punitive damages issue. View "Jones v. J. Kim Hatcher Ins. Agencies, Inc" on Justia Law

An egg farm owned by Rembrandt Enterprises, Inc. experienced a collapse of its poultry cage system in 2020, resulting in significant damage and the death of a farm worker. Rembrandt had contracted with Tecno Poultry Equipment, SpA in 2006 to design and manufacture the cage system, which included a provision for Tecno to supervise its installation. The installation was completed in 2007. Rembrandt sued Tecno in 2021, alleging strict products liability, breach of implied warranties, and negligence. The district court allowed the negligence claim to proceed to trial, where a jury found that Tecno did not breach its duty to supervise the installation.The United States District Court for the Northern District of Iowa granted summary judgment for Tecno on the strict products liability and breach of implied warranties claims. At trial, the jury heard conflicting expert testimony regarding the cause of the collapse. Rembrandt's expert attributed the collapse to missing screws and misplaced bolts, while Tecno's experts blamed improper manure disposal by Rembrandt. The jury ultimately sided with Tecno, and the district court entered judgment in favor of Tecno.The United States Court of Appeals for the Eighth Circuit reviewed the case. Rembrandt argued that the district court erred in denying its motions for judgment as a matter of law and in excluding a screenshot of Tecno's website. The appellate court held that Rembrandt failed to preserve its challenge to the sufficiency of the evidence by not renewing its motion under Rule 50(b) after the jury verdict. The court also found that the district court did not abuse its discretion in excluding the website screenshot, as it was not relevant to the 2006 contract. The Eighth Circuit affirmed the district court's judgment. View "Rembrandt Enterprises, Inc. v. Tecno Poultry Equipment, SpA" on Justia Law

Anna Dewdney, a children's book author, created a revocable trust in 2011, designating her daughters, Berol and Cordelia Dewdney, and her romantic partner, Ralph Duncan, IV, as beneficiaries. Initially, the trust allocated 40% of the income to each daughter and 20% to Duncan. Anna amended the trust several times, ultimately increasing Duncan's share to 50% and reducing each daughter's share to 25%. Anna passed away in 2016, and Duncan became the sole trustee. Plaintiffs allege Duncan pressured Anna to increase his share and entered into an oral agreement to make them his sole heirs in exchange for the increased distribution.The Superior Court, Windham Unit, Civil Division, granted summary judgment to Duncan on all claims brought by the plaintiffs, including intentional interference with expectation of inheritance (IIEI), breach of contract, promissory estoppel, unjust enrichment, and constructive fraud. The court ruled that plaintiffs needed to seek a remedy in probate court for their IIEI claim, failed to establish breach of contract due to anticipatory repudiation, could not show detrimental reliance for promissory estoppel, were receiving benefits from the trust for unjust enrichment, and did not meet the legal requirements for constructive fraud.The Vermont Supreme Court affirmed the lower court's decision. It recognized the tort of IIEI but held that plaintiffs must first seek a remedy in probate court due to the exclusive jurisdiction over trust administration. The court found no anticipatory breach of contract as Duncan's statement did not constitute a positive and unequivocal refusal to perform. It ruled promissory estoppel inapplicable due to the existence of a contract and lack of detrimental reliance. The unjust enrichment claim was barred as it involved trust administration, and the constructive fraud claim failed for similar jurisdictional reasons. View "Dewdney v. Duncan" on Justia Law

Cheryl Butler was hired as an assistant law professor at Southern Methodist University (SMU) in 2011. After a mandatory third-year performance review, her contract was renewed, and she became eligible for tenure consideration in the fall semester of 2015. Due to illness, Butler requested an extension of the tenure vote, which was denied, but she was later granted leave under the Family Medical Leave Act (FMLA) for the spring semester of 2016. Her tenure committee, chaired by Professor Roy Anderson, concluded that Butler met tenure standards for scholarship and service but not teaching. Consequently, the law faculty voted not to recommend tenure, and Butler's appeals to the SMU Law School Dean and the Provost were unsuccessful. Butler completed the 2016-2017 academic year without teaching any classes.Butler filed a lawsuit against SMU and several of its employees, alleging racially discriminatory tenure standards and processes, and retaliation for her internal complaints about race, disability, and FMLA discrimination. She brought federal statutory claims under 42 U.S.C. § 1981, Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans with Disabilities Act, Title IX, and the FMLA. Additionally, she asserted state-law discrimination and retaliation claims under Texas Labor Code Chapter 21, along with state common law claims for breach of contract and negligent supervision. Against the employee defendants, she claimed defamation, conspiracy to defame, and fraud.The United States District Court for the Northern District of Texas dismissed Butler's defamation and fraud claims against the employee defendants, citing preemption by Chapter 21 of the Texas Labor Code. The court held that the gravamen of these claims was unlawful employment discrimination and retaliation, which Chapter 21 specifically addresses. Butler appealed, and the United States Court of Appeals for the Fifth Circuit certified a question to the Supreme Court of Texas regarding whether Chapter 21 preempts common law defamation and fraud claims against employees based on the same conduct as discrimination claims against the employer.The Supreme Court of Texas held that Chapter 21 does not preempt common law defamation and fraud claims against employees. The court reasoned that Chapter 21 subjects only employers to liability for discriminatory and retaliatory conduct and does not immunize individuals from liability for their own tortious actions. Therefore, Butler's defamation and fraud claims against the employee defendants are not foreclosed by Chapter 21. View "BUTLER v. COLLINS" on Justia Law

This case involves a dispute between American Midstream (Alabama Intrastate), LLC (AMID) and Rainbow Energy Marketing Corporation (Rainbow) over a contract (MAG-0005) for the transportation and balancing of natural gas. Rainbow had contracts to transport gas through two interconnected pipelines, the Transco and the Magnolia, and used the MAG-0005 to leverage AMID’s balancing flexibility. The contract allowed Rainbow to run imbalances, withdrawing gas without simultaneously supplying an equal amount, provided they resupplied by the end of each month. Disputes arose when Transco began limiting imbalances more strictly, leading to AMID curtailing Rainbow’s nominations on several occasions.The trial court found in favor of Rainbow on all its claims, including breach of contract, repudiation, fraud, fraudulent inducement, and negligent misrepresentation, awarding over $6 million in lost profits. The court interpreted Section 9.1 of the MAG-0005 as excusing AMID’s performance only under specific conditions involving scheduled and physical imbalances. The Court of Appeals for the First District of Texas affirmed the trial court’s decision, agreeing with its interpretation of the contract and the award of damages.The Supreme Court of Texas reviewed the case and held that the trial court had erroneously inserted language into Section 9.1 of the MAG-0005. The correct interpretation of Section 9.1 excused AMID from providing balancing services on any day that Transco required AMID or Rainbow to limit imbalances attributable to Rainbow, without distinguishing between types of imbalances. The Supreme Court reversed the lower courts' decisions, rendered judgment for AMID on Rainbow’s contract-repudiation and tort claims, and remanded for a new trial on the breach-of-contract claims to determine if Transco mandates excused AMID’s performance on the days in question. View "AMERICAN MIDSTREAM (ALABAMA INTRASTATE), LLC v. RAINBOW ENERGY MARKETING CORPORATION" on Justia Law

Fred Karasov joined a fitness center operated by Calhoun Orange in 2017 and signed a "Client Intake Form" containing liability-shifting provisions. In 2019, Karasov suffered cardiac arrest during a workout at the center, resulting in significant brain injuries. Tina Lund, Karasov's conservator, sued Calhoun Orange, alleging negligence. The district court granted summary judgment to Calhoun Orange on Lund's claims of negligence, negligent undertaking, and medical negligence, citing the exculpatory language in the Client Intake Form. A jury found in favor of Calhoun Orange on Lund's claim of willful and wanton negligence.Lund appealed the district court's summary judgment decision. The Minnesota Court of Appeals affirmed the district court's ruling, holding that the Client Intake Form's indemnification clause was enforceable and barred Lund's claims of ordinary negligence. Lund then sought review from the Minnesota Supreme Court.The Minnesota Supreme Court reviewed whether the Client Intake Form was enforceable to shield Calhoun Orange from liability for its own negligence. The court held that the indemnification clause in the form, which explicitly stated that the client agreed to indemnify the fitness center for "all acts of active or passive negligence," was a clear and unequivocal expression of the parties' intent to shift liability for negligence. Therefore, the clause was enforceable under the strict construction standard, and Lund's claims of ordinary negligence were barred. The court affirmed the decision of the court of appeals, upholding the district court's grant of summary judgment to Calhoun Orange. View "Lund vs. Calhoun Orange, Inc." on Justia Law