Justia Contracts Opinion Summaries

Travelers Property Casualty Company of America (Travelers) petitioned for review of a court of appeals judgment affirming the district court’s denial of its motion for directed verdict in a lawsuit brought by its insured, Stresscon Corporation. Stresscon, a subcontracting concrete company, filed suit against Travelers, alleging, among other things, that Travelers acted in bad faith, unreasonably delaying or denying its claim for covered insurance benefits; and Stresscon sought awards of two times the covered benefits along with fees and costs, as prescribed by statute. Stresscon’s claims for relief arose from a serious construction accident in July 2007, which was caused by a crane operator employed by a company that was itself a subcontractor of Stresscon. Stresscon’s general contractor, Mortenson, sought damages from Stresscon, asserting Stresson’s contractual liability for the resulting construction delays, and Stresscon in turn sought indemnification from Travelers. Although there was much dispute over the factual and legal import of Travelers’ reservation of rights and other of its communications with both Stresscon and Mortenson concerning Mortenson’s claim, there was no dispute that by December 31, 2008, Travelers had not paid the damages asserted by Mortenson. The appellate court rejected Travelers’ contention that the no-voluntary-payments clause of their insurance contract relieved it of any obligation to indemnify Stresscon for payments Stresscon had made without its consent. Instead, the court of appeals found that the Colorato Supreme Court's opinion in "Friedland v. Travelers Indemnity Co.," (105 P.3d 639 (2005)) had effectively overruled prior “no voluntary payments” jurisprudence to the contrary and given Stresscon a similar opportunity. The Supreme Court found that its adoption of a notice-prejudice rule in "Friedland" did not overrule any existing “no voluntary payments” jurisprudence in Colorado, and because the Court declined to extend notice-prejudice reasoning in Friedland to Stresscon’s voluntary payments, made in the face of the no-voluntary-payments clause of its insurance contract with Travelers, the judgment of the court of appeals was reversed. View "Travelers Prop. Cas. Co. v. Stresscon Co." on Justia Law

Gosiger filed suit seeking damages for the diminished value of an aircraft that Elliott damaged. The district court granted summary judgment to Elliott. The court affirmed the district court's ruling that the contract did not allow diminution-in-value damages where Gosiger and Elliott never mutually agreed to modify the Specification Agreement to allow for diminution-in-value damages. View "Gosiger, Inc. v. Elliott Aviation, Inc." on Justia Law

FMS and Comco entered into a Management Agreement obligating Comco to broadly indemnify FMS as well as reimburse FMS for reasonable costs and expenses, including attorneys' fees. After Comco refused to indemnify FMS in the underlying lawsuit (the Brill litigation), FMS filed suit for reimbursement of attorneys' fees and other expenses. The court concluded that the district court correctly interpreted the indemnity provision as covering the Brill–FMS Litigation where the record does not support a finding that FMS committed any of the misconduct alleged by Brill. Even under a strict construction of the agreement, the court's decision in Harleysville Ins. Co. v. Physical Distribution Servs., Inc. forecloses Comco's argument where Harleysville held that a broad indemnity provision gave the indemnitor clear notice of an obligation to indemnify the indemnitee for future personal injury claims arising from the indemnitee's negligence. The court also concluded that the district court correctly limited FMS's recovery from Comco to the $87,350 FMS paid out of pocket. Accordingly, the court affirmed the judgment. View "Feed Mgmt. Sys., Inc. v. Comco Sys., Inc." on Justia Law

Bellingham filed a beach of contract claim against BancInsure after BancInsure denied coverage for loss that BancInsure claimed was not caused by employee-caused loss exclusions, exclusions for theft of confidential information,nor exclusions for mechanical breakdown or deterioration of a computer system. The district court granted summary judgment to Bellingham. The court concluded that no Minnesota case precludes application of the concurrent-causation doctrine to financial institution bonds. The court found that Minnesota courts would adhere to the general rule of treating financial institution bonds as insurance polices and interpreting those bonds in accordance with the principles of insurance law. Furthermore, the court rejected BancInsure’s argument that the Bond imposes a higher standard-of-proof than the concurrent-causation doctrine. Bellingham still had to show that its loss was directly caused by the fraudulent transfer, and the application of the concurrent-causation doctrine did not interfere with that requirement. The court also rejected BancInsure’s argument that the parties successfully drafted around the concurrent-causation doctrine in the Bond. As a matter of law, the Bond’s reference to “indirectly” is not a sufficient invocation of the “anti-concurrent causation” provision, and thus the Bond at issue in this matter does not contain such a provision. Finally, the court agreed with the district court's conclusion that the efficient and proximate cause of the loss was the illegal transfer of the money and not the employees' violations of policies and procedures. In this case, the overriding cause of the loss Bellingham suffered remains the criminal activity of a third party. Accordingly, the court affirmed the judgment. View "State Bank of Bellingham v. BancInsure, Inc." on Justia Law

The Texas Optometry Act prohibits commercial retailers of ophthalmic goods from attempting to control the practice of optometry; authorizes the Optometry Board and the Attorney General to sue a violator for a civil penalty; and provides that “[a] person injured as a result of a violation . . . is entitled to the remedies. In 1992, Wal-Mart opened “Vision Centers” in its Texas retail stores, selling ophthalmic goods. Wal-Mart leased office space to optometrists. A typical lease required the optometrist to keep the office open at least 45 hours per week or pay liquidated damages. In 1995, the Board advised Wal-Mart that the requirement violated the Act. Wal-Mart dropped the requirement and changed its lease form, allowing the optometrist to insert hours of operation. In 1998, the Board opined that any commercial lease referencing an optometrist’s hours violated the Act; in 2003, the Board notified Wal-Mart that it violated the Act by informing optometrists that customers were requesting longer hours. Optometrists sued, alleging that during lease negotiations, Wal-Mart indicated what hours they should include in the lease and that they were pressured to work longer hours. They did not claim actual harm. A jury awarded civil penalties and attorney fees. The Fifth Circuit certified the question of whether such civil penalties, when sought by a private person, are exemplary damages limited by the Texas Civil Practice and Remedies Code Chapter 41. The Texas Supreme Court responded in the affirmative, noting that “the certified questions assume, perhaps incorrectly, that the Act authorizes recovery of civil penalties by a private person, rather than only by the Board or the Attorney General.” View "Wal-Mart Stores, Inc. v. Forte" on Justia Law

Stampley, an independent truck driver, sued Altom Transport, alleging that Altom had failed to pay him enough for driving his truck for it. Altom turned to its insurer, Westchester, for coverage in the suit. Westchester denied coverage; Altom handled its own defense; and the parties tried to settle. At that point, counsel for both Stampley and Altom tried to pull Westchester into the case, by making settlement offers within the limits of the Westchester policy and seeking Westchester’s approval. Westchester did not participate. Altom sought a declaratory judgment establishing that Westchester had a duty to defend, that it wrongfully had failed to do so, and that its handling of the matter had been unreasonable and vexatious. The Seventh Circuit affirmed dismissal of the suit, finding that all of the claims in the underlying suit arise directly from Stampley’s lease agreement with Altom and fell within the policy’s contract claim exception. View "Stampley v. Westchester Fire Ins. Co." on Justia Law

In appeal no. 1140870, Southern Cleaning Service, Inc. ("SCSI"), appealed the grant of summary judgment entered favor of Essex Insurance Company and Genesee General Agency, Inc. (collectively, "the insurance defendants"), on SCSI's claims stemming from Essex's refusal to provide SCSI coverage under a commercial general-liability policy based on an alleged failure to timely notify Essex of the facts leading to the claim for coverage. In appeal no. 1140918, the insurance defendants cross-appealed the trial court's denial of their requests for costs. Winn-Dixie Montgomery, LLC entered into a contract with SCSI for provide floor-care and general janitorial services to multiple grocery stores in central Alabama. SCSI entered into a subcontract with Phase II Maintenance Systems, LLC, whereby Phase II became responsible for providing those services. That subcontract required Phase II to carry a minimum level of liability insurance and to list both SCSI and Winn-Dixie as "additional insureds" on such policies. Phase II contacted Alabama Auto Insurance Center ("Alabama Auto") for a policy; Alabama Auto in turn contacted Genesee, a managing general agency located in Georgia that connected independent agents like Alabama Auto with different insurance companies that provided the type of coverage being sought by the independent agent's customer. Ultimately, Genesee sent Alabama Auto a quote for a commercial general-liability policy issued by Essex that would meet Phase II's needs, and Alabama Auto presented that quote to Phase II. Phase II accepted the quote; Alabama Auto transmitted notice of that acceptance to Genesee; and Genesee, which held issuing authority for Essex, then issued Phase II the desired policy on behalf of Essex. In 2011, Beverly Paige was shopping at a Phase II-serviced Winn-Dixie in Montgomery when she allegedly slipped on a wet floor, fell, and was injured. A Phase II employee on duty at the store at the time of the fall reported the incident to Phase II's owner and president, William Wedgeworth, that same day, and Wedgeworth has given sworn testimony indicating that he separately notified both SCSI and Alabama Auto of the incident on the next available business day,and further specifically asked Alabama Auto to notify Genesee of the incident. After review of the trial court record, the Supreme Court concluded the trial court erred in granting summary judgment, citing several disputes of material fact that should have precluded the court's ultimate decision. As such, the Supreme Court reversed and remanded the outcome for further proceedings. The cross appeal was rendered moot. View "Essex Insurance Company and Genesee General Agency, Inc. v. Southern Cleaning Service, Inc." on Justia Law

DTC filed suit against JPMC and others, alleging willful patent infringement relating to electronic check-processing systems. JPMC was the first bank to reach a settlement agreement with DTC in 2005. As part of the settlement, JPMC entered into a consent judgment in which it admitted the patents were valid and enforceable and that JPMC had infringed them. It also entered into a license agreement permitting JPMC unlimited use of DTC’s patented technology going forward. At issue in this appeal is the district court’s interpretation of a most favored licensee (MFL) clause in the license agreement allowing JPMC to use DTC's patented check processing technology. JPMC invoked its rights under the MFL clause based on DTC’s granting a similar unlimited license to another entity for a lesser lump sum than JPMC paid. The court agreed with the district court that after comparing these two lump-sum license agreements, the later agreement is indeed more favorable, and JPMC therefore is entitled to a refund from DTC for the difference between the amount it paid for its license and the lesser amount bargained for in the later license agreement. Accordingly, the court affirmed the judgment. View "JP Morgan Chase Bank, N.A. v. Datatreasury Corp." on Justia Law

In 2005, Masterklad built a house in Glenview, including a brick patio that extended off the rear of the house. Because the ground underneath the patio sloped down, dirt and gravel were placed underneath it to support the bricks and make them level with the house's rear entrance. A retaining wall was built to contain the fill. In 2007, the house was sold by Masterklad to a Lubeck for $1,710,000. In the contract Lubeck “knowingly, voluntarily, fully and forever,” waived the implied warranty of habitability in exchange for an express warranty provided by Masterklad, with a one-year term. In 2010, Lubeck sold the house to Fattah, for $1,050,000, with a document stating that the house was being sold “as is” and that the seller made no representations or warranty regarding its condition. In 2011, parts of the retaining wall around the rear patio gave way and part of the patio collapsed. The owner sued. The circuit court found that the patio wall had given way due to latent defects in its construction, but that plaintiff could not recover because Masterklad had executed a valid, enforceable waiver of the implied warranty of habitability with Lubeck. The appellate court reversed. The Illinois Supreme Court reversed. The implied warranty of habitability may not be extended to a second purchaser of a house when a valid, bargained-for waiver of the warranty has been executed between the builder-vendor and the first purchaser. View "Fattah v. Bim" on Justia Law

Jarred Wellman, a West Virginia resident, was killed in a one-car rollover crash in West Virginia. Jarred was operating a 2002 Ford Explorer at the time of the accident. Plaintiff, a West Virginia resident and the father and administrator of Jarred’s estate, filed a complaint in the Circuit Court of Wyoming County against Ford Motor Company alleging product liability, negligence, and breach of warranty. Ford filed a motion to dismiss for lack of personal jurisdiction on the grounds that it was a nonresident corporation. The trial court denied the motion to dismiss. Ford requested the Supreme Court to issue a writ of prohibition seeking dismissal from the underlying action. The Supreme Court granted the requested writ as moulded, holding (1) Ford has not shown that it is entitled to extraordinary relief whereby the Court would dismiss it from the underlying civil action; but (2) Ford’s assertions regarding its challenge to jurisdiction are of such a significant nature that the parties are entitled to an opportunity to develop the record and submit argument to be considered and determined by the circuit court. View "State ex rel. Ford Motor Co. v. Hon. Warren R. McGraw" on Justia Law