Justia Contracts Opinion Summaries

Aquarian Foundation, Inc., a non-profit religious organization, alleged that Bruce Lowndes infringed on its copyrights by uploading spiritual teachings of its late founder, Keith Milton Rhinehart, to various websites. Lowndes claimed he had a license from Rhinehart, granted in 1985, to use the materials. Rhinehart passed away in 1999, bequeathing his estate, including the copyrights, to Aquarian.The United States District Court for the Western District of Washington granted partial summary judgment, confirming that Rhinehart's copyrights were properly transferred to Aquarian via his will. After a bench trial, the court ruled against Aquarian on its claims of copyright infringement, trademark infringement, and false designation of origin. The court found that Rhinehart created the works as his own, not as works for hire, and that he had validly licensed them to Lowndes. The court also determined that Lowndes did not breach the licensing agreement and that Aquarian could not terminate the license under 17 U.S.C. § 203(a). The court denied attorneys’ fees to both parties.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s findings that Rhinehart’s works were not created as works for hire, that he validly licensed the works to Lowndes, and that Lowndes did not breach the licensing agreement. The court also affirmed the decision not to award Lowndes attorneys’ fees under the Lanham Act. However, the Ninth Circuit reversed the district court’s determination regarding the termination of the license, holding that Aquarian’s termination letter in May 2021 was effective. The case was remanded for further proceedings to address any infringement that may have occurred after the license termination, as well as the denial of injunctive relief and attorneys’ fees under the Copyright Act. View "AQUARIAN FOUNDATION, INC. V. LOWNDES" on Justia Law

A California consumer entered into an agreement with an RV manufacturer that stipulated all legal disputes would be resolved in Indiana under Indiana law. The consumer later filed a lawsuit in California under the Song-Beverly Consumer Warranty Act, alleging the RV manufacturer failed to repair or replace a defective motorhome. The manufacturer moved to stay or dismiss the action based on forum non conveniens, arguing that the case should be heard in Indiana. To address concerns about the consumer's rights under the Song-Beverly Act, the manufacturer offered to stipulate that California law would apply to the warranty claims in Indiana.The Superior Court of Los Angeles County granted the manufacturer's motion, stating that the forum selection clause was not unconscionable and that the consumer's rights could be preserved by staying the California action while the Indiana case was pending. The court concluded that if the Indiana court declined to apply the Song-Beverly Act, the consumer could move to lift the stay in California.The California Court of Appeal, Second Appellate District, Division Two, reviewed the case and found that the lower court erred in its application of the legal standard. The appellate court held that the stipulation to apply California law in Indiana did not cure the unconscionability of the forum selection clause. The court emphasized that the agreement, as written, was void and against public policy because it attempted to waive unwaivable rights under the Song-Beverly Act. The appellate court concluded that severing the unconscionable terms would condone an illegal practice and that the lower court's solution violated California public policy.The Court of Appeal reversed and remanded the case, ordering the trial court to deny the motion to dismiss or stay. The appellate court's decision underscores the importance of protecting California consumers' unwaivable statutory rights and ensuring that forum selection clauses do not undermine those rights. View "Hardy v. Forest River, Inc." on Justia Law

Chesapeake Exploration, LLC (Chesapeake) and Morton Production Company, LLC (Morton) entered into a joint operating agreement for oil and gas development in Converse County, Wyoming. Morton sued Chesapeake for breach of contract, violation of the Wyoming Royalty Payment Act (WRPA), and conversion after Chesapeake adjusted Morton’s ownership interest and withheld production proceeds. Chesapeake counterclaimed for breach of contract, unjust enrichment, and breach of the implied covenant of good faith and fair dealing. The district court granted summary judgment in favor of Morton.Chesapeake appealed, challenging the district court’s summary judgment on Morton’s breach of contract claim, the supplemental decision on Chesapeake’s counterclaims and affirmative defenses, and the determination that Chesapeake violated the WRPA. The Wyoming Supreme Court reviewed the case.The Wyoming Supreme Court affirmed the district court’s decision. It held that Chesapeake breached the contract by adjusting Morton’s ownership interest and billing for costs beyond the twenty-four-month limitation period specified in the 1985 COPAS Form, which was incorporated into the joint operating agreement. The court found the language in the COPAS Form unambiguous and declined to consider extrinsic evidence. The court also upheld the district court’s use of Rule 60(a) to correct a clerical error in its original order and found that Chesapeake’s counterclaims were properly dismissed as they were rendered moot by the summary judgment on Morton’s claims. Additionally, the court ruled that Chesapeake violated the WRPA by withholding production proceeds without placing the disputed funds in escrow, as required by the statute. View "Chesapeake Exploration, LLC, v. Morton Production Company, LLC" on Justia Law

The plaintiffs, Jeffrey Cubberley and Philip Seaver, filed a lawsuit against The Commerce Insurance Company, seeking declaratory relief and compensation for alleged breach of contract. They claimed that Commerce was obligated to cover "inherent diminished value" (IDV) damages to their vehicles, which were damaged in collisions caused by Commerce's insured drivers. Commerce paid for the repairs but refused to compensate for IDV damages, leading the plaintiffs to argue that their vehicles were worth less in the resale market post-repair.The plaintiffs initially filed their lawsuit in the Superior Court, which was later transferred to the business litigation session. The case was stayed pending the outcome of McGilloway v. Safety Ins. Co., which held that IDV damages were recoverable under the 2008 standard Massachusetts automobile policy. After the stay was lifted, the plaintiffs filed a second amended complaint. Commerce moved to dismiss the claims, arguing that the 2016 standard policy excluded IDV damages. The motion judge granted the dismissal, concluding that the policy did not cover IDV damages and that the plaintiffs failed to allege facts suggesting an entitlement to relief. The plaintiffs appealed, and the Supreme Judicial Court granted direct appellate review.The Supreme Judicial Court affirmed the dismissal, holding that the plaintiffs lacked standing to pursue their breach of contract claims because they had not obtained final judgments against the insureds, as required by G. L. c. 175, § 113, and G. L. c. 214, § 3 (9). Additionally, the court found that part 4 of the 2016 standard policy explicitly excluded coverage for IDV damages to third-party vehicles. The court also determined that neither G. L. c. 90, § 34O, nor the decision in McGilloway provided a legal basis requiring insurers to cover IDV damages under the 2016 standard policy. Thus, the plaintiffs' complaint did not plausibly establish an entitlement to relief. View "Cubberley v. The Commerce Insurance Company" on Justia Law

The plaintiff, an adult in custody at an Oregon correctional institution, sued the Oregon Department of Corrections and others for breach of contract and civil rights violations. He sought economic damages based on lost future wages and employment opportunities, alleging that the department had breached an oral promise of nonretaliation by using negative video footage of him in training videos, which led to his loss of job assignments and income-generating opportunities. The plaintiff claimed $11,640 in economic damages due to this negative portrayal.The Marion County Circuit Court dismissed the plaintiff's complaint, agreeing with the department's argument that Article I, section 41(3) of the Oregon Constitution, which states that inmates have no legally enforceable right to a job or compensation for work performed while incarcerated, rendered the plaintiff unable to plead economic damages. The Court of Appeals affirmed the trial court's decision, reasoning that the constitution precluded the plaintiff from establishing economic damages in the form of lost income.The Supreme Court of the State of Oregon reviewed the case and held that the trial court erred in granting the department's motion to dismiss. The court concluded that the lack of a right to employment does not establish, as a matter of law, that the plaintiff cannot prove economic damages in the form of future lost wages. The court emphasized that challenges to the sufficiency of proof are properly suited to a motion for summary judgment or trial, not a motion to dismiss. The decision of the Court of Appeals was affirmed in part and reversed in part, and the judgment of the circuit court was also affirmed in part and reversed in part. The case was remanded to the circuit court for further proceedings. View "Huskey v. Dept. of Corrections" on Justia Law

Plaintiff Jenny-Ashley Colon-Perez sued her former employer, Security Industry Specialists, Inc. (SIS), alleging multiple causes of action related to her employment. After SIS moved to compel arbitration, the parties agreed to arbitrate, and the trial court ordered the claims to arbitration and stayed the court action. SIS paid two arbitration fee invoices but failed to pay the third invoice within the 30-day period required by California Code of Civil Procedure section 1281.98. Colon-Perez elected to withdraw from arbitration and moved to vacate the arbitration and stay order. The trial court granted the motion, ruling that SIS had materially breached the arbitration agreement and Colon-Perez was entitled to proceed with her claims in court. SIS then moved to vacate the order under section 473(b), which the trial court denied.The trial court ruled that the Federal Arbitration Act (FAA) did not preempt section 1281.98 and that SIS had materially breached the arbitration agreement by failing to pay the fees on time. The court also found that section 1281.98 did not violate the contracts clause of the United States and California Constitutions. SIS appealed, arguing that the FAA preempted section 1281.98, that section 1281.98 violated the contracts clause, and that it was entitled to relief under section 473(b).The California Court of Appeal, First Appellate District, Division One, affirmed the trial court's orders. The court held that the FAA did not preempt section 1281.98, as the state law could be applied concurrently with federal law. The court also found that section 1281.98 did not violate the contracts clause because it served a significant and legitimate public purpose and was appropriately tailored to achieve that purpose. Additionally, the court ruled that section 473(b) relief was not available for SIS's failure to timely pay arbitration fees, as the statute's strict 30-day deadline was intended to be inflexible. View "Colon-Perez v. Security Industry Specialists" on Justia Law

Bonnie Campbell, a federal employee, and Michael Campbell, her ex-husband, entered into a divorce property settlement agreement in which Mr. Campbell waived his rights to Ms. Campbell's Thrift Savings Plan (TSP) account. Despite this agreement, Ms. Campbell did not remove Mr. Campbell as the beneficiary of her TSP account before her death. After her death, Mr. Campbell received the balance of the TSP account. The estate of Ms. Campbell (the Estate) sued Mr. Campbell for breach of contract to enforce the terms of the divorce settlement agreement.The Circuit Court for Montgomery County granted summary judgment in favor of the Estate on its breach of contract claim, awarding money damages. The court rejected Mr. Campbell's argument that the Federal Employees’ Retirement System Act of 1986 (FERSA) preempted the Estate's claim. The Appellate Court of Maryland reversed, holding that FERSA preempted the Estate's breach of contract claim.The Supreme Court of Maryland reviewed the case and held that FERSA does not preempt the Estate’s post-distribution breach of contract action. The court found that FERSA’s purposes, which include establishing a federal employee retirement plan and ensuring it is fully funded and financially sound, do not concern plan beneficiaries. The court also noted that FERSA’s provisions elevate the requirements of a qualifying state property settlement agreement over a deceased participant’s designated beneficiary, provided notice is given before payment. The court concluded that a post-distribution suit to enforce contractual obligations in a divorce property settlement agreement does not hinder any governmental interest in administrative convenience or avoiding double payment. The judgment of the Appellate Court was reversed, and the Circuit Court's judgment was affirmed. View "In re Isely" on Justia Law

Michael Jones purchased Series EE federal savings bonds during his marriage to Jeanine Jones, designating her as the pay-on-death beneficiary. Upon their divorce, their divorce settlement agreement (DSA) did not specifically address the savings bonds but included a provision that any marital asset not listed would belong to the party currently in possession. The DSA also required Michael to pay Jeanine $200,000 in installments. After Michael's death, Jeanine redeemed the savings bonds and filed a creditor’s claim against Michael’s Estate for the remaining $100,000 owed under the DSA. The Estate argued that the redemption of the savings bonds satisfied Michael’s financial obligations to Jeanine.The trial court agreed with the Estate, ruling that the savings bonds counted towards Michael’s $200,000 obligation under the DSA and dismissed Jeanine’s claim for reimbursement. Jeanine appealed, and the Appellate Division reversed the trial court’s decision. The appellate court held that the federal regulations governing U.S. savings bonds preempted state law, and Jeanine was the sole owner of the bonds at Michael’s death. Therefore, the value of the redeemed bonds should not be credited towards the Estate’s obligations under the DSA.The Supreme Court of New Jersey reviewed the case and held that preemption was not an issue because N.J.S.A. 3B:3-14 does not conflict with federal regulations governing U.S. savings bonds. The Court found that the DSA did not direct the disposition of the savings bonds, and thus, the bonds should not be credited against Michael’s $200,000 obligation. The Court affirmed the Appellate Division’s judgment as modified, ruling that the Estate must make the remaining payments to Jeanine as required by the DSA. View "In the Matter of the Estate of Jones" on Justia Law

Kevin Lavery, an ophthalmologist, invented a vision screening device and patented it. He entered into an agreement with Pursuant Health, a company developing vision screening kiosks, to transfer his patent in exchange for royalties on the sales of these kiosks. Lavery's patent expired in May 2021, and Pursuant Health ceased paying royalties. Lavery sued Pursuant Health, seeking a declaration that the royalty payments should continue indefinitely, damages for breach of the Contribution Agreement, and damages for unjust enrichment.The United States District Court for the Eastern District of Michigan granted summary judgment in favor of Pursuant Health, ruling that the expiration of Lavery's patent rendered the royalty agreement unenforceable. Lavery appealed the decision, challenging the grant of summary judgment on his breach of contract claim.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that the royalty provision in the Contribution Agreement was unenforceable after the expiration of Lavery's patent. The court found that the agreement did not specify any non-patent contributions that would justify continuing the royalty payments beyond the patent's expiration. The court also noted that the royalty was based on the sales of kiosks that incorporated Lavery's patent, and thus, the royalty provision improperly extended beyond the patent's 20-year term. Consequently, the Sixth Circuit affirmed the district court's decision to grant summary judgment in favor of Pursuant Health. View "Lavery v. Pursuant Health, Inc." on Justia Law

Northstar Center, LLC entered into a real estate contract with Lukenbill Family Partnership, LLLP to purchase a 120-acre parcel of land. The contract was later assigned to Northstar by Templeton Enterprises, LLC. The agreement included an option to purchase an additional 105-acre parcel, which was amended to a commitment to purchase. Northstar provided a promissory note for a tax increase payment due by January 1, 2014, but paid it late. Lukenbill sold the disputed property to Tundra Properties, LLC, leading Northstar to sue for breach of contract and intentional interference with contract.The District Court of Williams County granted summary judgment in favor of Northstar on its breach of contract claim against Lukenbill and its intentional interference with contract claim against Tundra. The court also granted summary judgment in favor of Lukenbill on its indemnification claim against Tundra and dismissed Tundra’s breach of warranty claim against Lukenbill. The court held a bench trial on Northstar’s damages due to Lukenbill’s breach.The North Dakota Supreme Court reviewed the case and found that the district court erred in granting summary judgment for Northstar on its breach of contract and intentional interference claims. The Supreme Court determined that genuine issues of material fact existed regarding whether Northstar breached the contract by failing to make the tax increase payment on time and whether Tundra had knowledge of the contract amendments. The court also found that the district court improperly resolved factual disputes regarding Tundra’s knowledge and intent, and whether Tundra acted without justification.The Supreme Court affirmed the dismissal of Tundra’s breach of warranty claim but reversed the summary judgments on Northstar’s breach of contract and intentional interference claims, as well as Lukenbill’s indemnification claim. The case was remanded for further proceedings consistent with the Supreme Court’s opinion. View "Northstar Center v. Lukenbill Family Partnership" on Justia Law