Justia Contracts Opinion Summaries

An executive at a litigation funding company, Signal, resigned to start a competing business and sought legal advice from Signal’s outside counsel, Sugar Felsenthal Grais & Helsinger LLP. Signal sued the law firm and several of its attorneys, alleging legal malpractice, breach of contract, breach of fiduciary duty, and fraud. The district court dismissed some claims and granted summary judgment in favor of the defendants on the remaining claims. Signal appealed these rulings.The United States District Court for the Northern District of Illinois dismissed Signal’s breach of fiduciary duty claim and part of its fraud claim, allowing the legal malpractice, breach of contract, and fraudulent misrepresentation claims to proceed. The court also struck Signal’s request for punitive damages. During discovery, the court denied Signal’s motion to compel production of a memorandum prepared by one of the defendants. The district court later granted summary judgment in favor of the defendants on all remaining claims.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court’s rulings. The appellate court agreed that Signal failed to establish proximate cause and damages for its legal malpractice and breach of contract claims. The court also found that Signal waived its challenge to the summary judgment ruling on the fraudulent misrepresentation claim by not adequately addressing it on appeal. Additionally, the court upheld the district court’s decision to deny Signal’s motion to compel production of the memorandum, as Signal did not demonstrate that the document influenced the witness’s testimony. The appellate court concluded that the district court’s dismissal of the fraudulent concealment theory was harmless error and denied Signal’s motion to certify a question to the Illinois Supreme Court as moot. View "Signal Funding, LLC v Sugar Felsenthal Grais & Helsinger LLP" on Justia Law

PorterCare Adventist Health Systems had inadequate surgical-sterilization procedures for about two years, leading to over $40 million in liability from thousands of patients' claims. PorterCare sought coverage from AdHealth, its excess-liability insurer, for the full $40 million policy limit, arguing that the claims arose from one medical incident. AdHealth refused coverage, asserting that a medical incident covers injuries to a single person, not multiple people, and filed a complaint seeking a declaratory judgment. PorterCare counterclaimed for declaratory judgment and breach of contract.The United States District Court for the District of Colorado granted summary judgment to AdHealth, agreeing with its interpretation that a medical incident is limited to the acts or omissions causing injury to one person. The court found that AdHealth owed coverage only for the claims of a single patient that trigger the excess policy’s liability threshold, not for multiple patients' claims grouped together.The United States Court of Appeals for the Tenth Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the policy’s definition of “medical incident” unambiguously applies to the injuries of a single person. Therefore, AdHealth is liable only for individual claims exceeding PorterCare’s $2 million self-insurance retention, not for the aggregated claims of multiple patients. View "Adhealth, Limited v. PorterCare Adventist Health Systems" on Justia Law

In 2019, the Vermont Agency of Transportation (AOT) increased the rental fees for hangar space at state-owned airports. Five tenants, who own hangar facilities at the Northeast Kingdom International Airport and the Stowe-Morrisville State Airport, appealed the rate increases to the Transportation Board. They argued that the rent increase did not comply with the terms of their leases and was arbitrary. The leases allowed AOT to adjust rent based on the Consumer Price Index for All Urban Consumers (CPI-U), current market value for the land, and maintenance costs for the airport. The tenants contended that AOT improperly considered changes outside the previous lease term.The Transportation Board consolidated the tenants' appeals and reviewed the administrative records and memoranda submitted by both parties. The Board found that AOT had invested significantly in airport improvements and conducted a market-value analysis for leased space. However, the Board noted that details of the analysis were not included in the administrative record. The Board concluded that AOT was permitted to consider changes to market value and maintenance costs outside of the prior lease term but admonished AOT to provide a clearer analysis in the future.The tenants appealed to the Vermont Supreme Court, arguing that the rent increases were arbitrary and capricious due to a lack of transparent methodology. The Supreme Court affirmed the Board's conclusion that AOT could consider changes outside the prior lease term but reversed and remanded the decision concerning the fairness of the rent increases. The Court held that the Board should have sought a complete record from AOT to determine whether the rent levels were fair and conducted a new adjudication consistent with this opinion. View "In re State Airport Hangar Lease Disputes" on Justia Law

Barry and Jacklynn Graham hired Bradshaw Renovations, LLC to renovate their home. They agreed on a contract with an initial estimate of $136,168.16, which was later revised to $139,168.16. The contract included provisions for revising estimates and required written approval for changes. Throughout the project, Bradshaw sent invoices that varied from the initial estimate, leading to the Grahams' concerns about billing practices. After paying $140,098.79, the Grahams disputed a final invoice of $18,779.15, leading to a legal dispute.The Iowa District Court for Polk County held a jury trial, which found in favor of the Grahams on their breach of contract and consumer fraud claims, awarding them $16,000 and $40,000 respectively. The court denied Bradshaw's claims for unjust enrichment and quantum meruit. Bradshaw's motions for directed verdict and judgment notwithstanding the verdict were also denied. The court awarded attorney fees to the Grahams for their consumer fraud claim.The Iowa Court of Appeals affirmed the jury verdict, the district court's denial of Bradshaw's posttrial motions, and the dismissal of Bradshaw's equitable claims. It also affirmed the attorney fee award but remanded for determination of appellate attorney fees.The Iowa Supreme Court reviewed the case and found that the Grahams did not present substantial evidence of consumer fraud as defined by Iowa Code section 714H.3(1). The court reversed the district court's ruling on the consumer fraud claim and remanded for entry of judgment consistent with this opinion. The court affirmed the district court's dismissal of Bradshaw's unjust enrichment and quantum meruit claims, as these were covered by the written contract. The court also upheld the $16,000 jury award for the breach of contract claim. View "Bradshaw Renovations, LLC v. Graham" on Justia Law

Kepali Group procured insurance for its fleet of vehicles through an agent at Brown & Brown of Florida, with Prime Property & Casualty Insurance Company issuing a commercial automobile policy for the period from January 23, 2019, to January 23, 2020. The policy included a provision for after-acquired vehicles, requiring notification within 30 days of acquisition for coverage. On December 6, 2019, a 2009 Toyota Sienna owned by Kepali was involved in an accident. Kepali had acquired the vehicle on September 30, 2019, and notified Brown to add it to the Prime policy. Prime issued a quote for the additional premium, but Kepali did not pay it, and Prime did not issue an endorsement for the vehicle.The United States District Court for the Southern District of Florida ruled that Brown was acting as Kepali’s agent, not Prime’s, when attempting to procure insurance for the 3985 Toyota. However, the court concluded that the vehicle was covered under the policy’s after-acquired auto provision because Kepali met the two conditions: Prime covered all of Kepali’s vehicles, and Kepali notified Prime within 30 days of acquiring the vehicle. The court ruled that Prime had a duty to defend Kepali and Mr. Rodriguez but deferred ruling on the duty to indemnify until the underlying suit was resolved. The court granted summary judgment against Kepali and Mr. Rodriguez on their reformation and promissory estoppel claims and dismissed the remaining claims as moot.The United States Court of Appeals for the Eleventh Circuit affirmed the district court’s ruling. The court held that the after-acquired auto provision did not require payment of an additional premium within 30 days for coverage to continue. The court also found that the premium audit provision allowed Prime to compute the final premium and bill Kepali, and that Prime failed to perform this audit or send a bill. Therefore, Prime could not terminate coverage for non-payment without following the policy’s cancellation procedures. The court concluded that Prime had a duty to defend Kepali and Mr. Rodriguez in the underlying state court action. View "Prime Property and Casualty Insurance Company v. Kepali Group, Inc." on Justia Law

Ty Whitehead suffered a serious head injury during a bicycle training ride for a charity fundraiser due to a large pothole on Skyline Boulevard in Oakland. Whitehead alleged that the City of Oakland breached its statutory duty to maintain a safe roadway. Prior to the ride, Whitehead signed a release and waiver of liability, which included a provision discharging the City from any liability for negligence.The Alameda County Superior Court granted summary judgment in favor of the City, holding that the release was valid and enforceable, thus barring Whitehead’s claim. The court reasoned that the release did not affect the public interest, relying on the multifactor test from Tunkl v. Regents of University of California. The Court of Appeal affirmed the trial court’s decision, also relying on the Tunkl framework.The Supreme Court of California reviewed the case and concluded that the release was against public policy under Civil Code section 1668, which prohibits contracts that exempt a party from responsibility for their own fraud, willful injury, or violation of law. The court held that an agreement to exculpate a party for future violations of a statutory duty designed to protect public safety is unenforceable. The court reversed the judgment of the Court of Appeal and remanded the case for further proceedings, allowing the City to argue the doctrine of primary assumption of risk on remand. View "Whitehead v. City of Oakland" on Justia Law

Plaintiffs, mostly elderly individuals, purchased lifetime membership contracts for an RV resort in Oregon. The resort was sold to the defendant, who refused to honor these contracts despite knowing that some plaintiffs relied on them for housing. Plaintiffs sued for breach of contract and elder abuse.The Coos County Circuit Court held a four-day jury trial, resulting in a verdict for the plaintiffs on both claims. The jury awarded $500,000 for breach of contract and $900,000 for elder abuse. The trial court entered a judgment reflecting these awards, including treble damages for the elder abuse claim.The defendant appealed, arguing that the trial court erred in denying its motions for a directed verdict on both claims. The Oregon Court of Appeals affirmed the breach of contract ruling but reversed the elder abuse claim, remanding it for dismissal. Both parties sought further review.The Oregon Supreme Court reviewed the case. It upheld the trial court's denial of the directed verdict on the breach of contract claim, noting that the pleadings were amended to conform to the evidence, allowing the contracts to be binding as servitudes. The court found that the defendant's arguments about statutory preemption and lack of privity were not preserved for appeal.Regarding the elder abuse claim, the Supreme Court disagreed with the Court of Appeals, finding sufficient evidence that the defendant wrongfully took or appropriated the plaintiffs' property. The court concluded that the defendant's conduct, including purchasing the property at a reduced price with knowledge of the contracts and then refusing to honor them, could be seen as wrongful under ORS 124.110(1)(a).The Supreme Court affirmed in part and reversed in part the decision of the Court of Appeals, and affirmed the judgment of the circuit court. View "Adelsperger v. Elkside Development LLC" on Justia Law

Moosehead Mountain Resort, Inc., and OFLC, Inc. (collectively Moosehead) filed a civil action against Carmen Rebozo Foundation, Inc., alleging breach of contract, unjust enrichment, and breach of good faith and fair dealing. The dispute arose from a promissory note for $6,350,000 executed by Moosehead and assigned to the Foundation, which allegedly misrepresented the amount due, impacting Moosehead's efforts to sell a ski resort.The Superior Court (Piscataquis County) denied Moosehead’s motion for summary judgment and the Foundation’s motion for relief under Maine Rule of Civil Procedure 56(f), ordering a judicial settlement conference. The parties reached a settlement, agreeing to dismiss the case with prejudice. However, no docket entries were filed within the court's deadline, leading to the case's dismissal with prejudice. Moosehead then filed a motion for reconsideration and to vacate the settlement agreement, which the court denied. The Foundation's motion to enforce the settlement agreement was granted.The Maine Supreme Judicial Court reviewed the case. It affirmed the denial of Moosehead’s motion for reconsideration, finding no abuse of discretion. However, it vacated the judgment enforcing the settlement agreement, concluding that the court lacked jurisdiction to enforce it after the case was dismissed with prejudice. The court noted that the parties failed to take necessary steps to preserve the court's jurisdiction over the settlement agreement before the dismissal. The case was remanded for an order dismissing the motion to enforce the settlement agreement for want of jurisdiction. View "Moosehead Mountain Resort, Inc. v. Carmen Rebozo Foundation, Inc." on Justia Law

AMTAX Holdings 227, LLC ("AMTAX") filed a lawsuit against CohnReznick LLP ("CohnReznick") in federal court, alleging breach of fiduciary duty, professional negligence, unjust enrichment, and fraud. The dispute arose from CohnReznick's calculation of a purchase price for a property under a right of first refusal agreement, which AMTAX claimed excluded exit taxes required by Section 42 of the Internal Revenue Code. AMTAX argued that this exclusion violated the agreement and federal law.The United States District Court for the Southern District of New York dismissed AMTAX's complaint for lack of subject matter jurisdiction. The court applied the Grable-Gunn test to determine whether the state-law claims presented a substantial federal issue that would warrant federal jurisdiction. The district court concluded that AMTAX's claims did not meet the criteria for federal question jurisdiction, as they did not necessarily raise a substantial federal issue and allowing federal jurisdiction would disrupt the federal-state balance.The United States Court of Appeals for the Second Circuit reviewed the district court's decision de novo. The appellate court agreed with the lower court's application of the Grable-Gunn test, finding that AMTAX's claims were primarily based on contract interpretation rather than federal tax law. The court held that the federal issue was not substantial enough to warrant federal jurisdiction and that exercising jurisdiction would disrupt the balance of state and federal judicial responsibilities. Consequently, the Second Circuit affirmed the district court's dismissal of the case for lack of subject matter jurisdiction. View "AMTAX Holdings 227, LLC v. CohnReznick LLP" on Justia Law

In 2005, Island Pointe, LLC contracted Complete Building Corporation (CBC) to construct a condominium project, Palmetto Pointe at Peas Island. CBC subcontracted Tri-County Roofing (TCR) for roofing and related work. In 2014-2015, Palmetto discovered construction defects and sued CBC, TCR, and others for negligence and breach of warranty. Palmetto received $6,800,000 in settlements, including $1,000,000 from CBC's insurer for a covenant-not-to-execute and $1,975,000 from four other defendants.The trial began in May 2019, and the jury found CBC and TCR liable for $6,500,000 in actual damages and $500,000 each in punitive damages. The trial court apportioned 5% liability to two other defendants, making CBC and TCR jointly and severally liable for the remaining 90% of actual damages. TCR sought setoff for the $1,000,000 payment and the settlements from the four other defendants. The trial court denied TCR's motion for setoff, except for partial amounts conceded by Palmetto.The South Carolina Supreme Court reviewed the case. It reversed the court of appeals' decision, holding that TCR is entitled to set off the full $1,000,000 paid by CBC's insurer. The court affirmed the lower court's decision regarding the settlements from Novus, Atlantic, H and A, and Cohen's, agreeing that the trial court reasonably allocated the settlement amounts. The case was remanded to the trial court for the calculation of the judgment against TCR. View "Palmetto Pointe v. Tri-County Roofing" on Justia Law