Justia Contracts Opinion Summaries

Defendant-appellant CWPSC, Inc. (CW Painting) appealed a trial court order denying its motion to compel its former employee, plaintiff-respondent Martha Carbajal, to arbitrate her wage and hour claims under the arbitration provision in her employment agreement. The trial court denied the motion because it found the arbitration provision was both procedurally and substantively unconscionable. After review, the Court of Appeal found: (1) the arbitration provision was procedurally unconscionable because it was part of an adhesion contract CW Painting imposed on Carbajal as a term of her employment; (2) the arbitration provision was substantively unconscionable because it allowed CW Painting to obtain injunctive relief in court while requiring Carbajal to seek relief through arbitration, it waives the statutory requirement that CW Painting post a bond or undertaking to obtain injunctive relief, and it effectively waives Carbajal’s statutory right to recover her attorney fees if she prevailed on her Labor Code claims; and (3) pursuant to the Federal Arbitration Act, the party asserting the FAA bore the burden to show it applied by presenting evidence establishing the contract with the arbitration provision has a substantial relationship to interstate commerce, and CW Painting failed to timely present such evidence. Accordingly, the Court affirmed the trial court’s order. View "Carbajal v. CWPSC, Inc." on Justia Law

Four oil and gas leases were assigned in one instrument. At issue in this case was how to calculate a production payment reserved in the assignment of the four leaseholds. When two of the leases terminated, the payor asserted that the production payment should be reduced to reflect the loss of the underlying mineral-lease interests. The payee responded by asserting that the production payment burdened the four leases jointly and that the assignment included authorization to adjust the payment. The trial court construed the assignment as allowing for the production payment’s adjustment based on the expiration of an underlying lease. The court of appeals reversed, concluding that the production payment could not be reduced because the assignment failed to include “express language providing for a piecemeal reduction of the production payment.” The Supreme Court reversed, holding that the trial court rendered the correct judgment in this case. View "Apache Deepwater, LLC v. McDaniel Partners, Ltd." on Justia Law

This case arose from Plaintiff’s sale of property to Defendants. In November 2006, Plaintiff filed a complaint against Defendants alleging negligence, fraud, intentional infliction of emotional distress, and failure to follow home equity sales contract requirements. In May 2012, Fidelity National Title Insurance Company moved to dismiss the complaint for failure to bring the action to trial within the five-year time frame required by Cal. Code Civ. Proc. 583.310. The trial court dismissed the case in its entirety. In so doing, the trial court concluded that the time during which the court had vacated the trial date and ordered a 120-day stay of proceedings to permit the parties to engage in mediation did not support tolling. The court of appeal affirmed. The Supreme Court affirmed, holding that the trial court’s order did not effect a complete stay of the prosecute of the action, nor did it create a circumstance of impracticability, and therefore, the period of the “mediation stay” did not toll the five-year period. View "Gaines v. Fidelity Nat’l Title Ins. Co." on Justia Law

Automation & Electronics, Inc. (A&E) and Consolidated Electric Distributors, Inc. (CE) sued for Red Desert Reclamation, LLC for amounts due on their respective contracts. Pursuant to a stipulation between A&E and Red Desert, the district court entered judgment in favor of A&E. CE was later voluntarily dismissed from the case. A&E subsequently filed a motion for leave to amend its complaint to add CSC Group Holdings, LLC and Cate Street Capital, Inc. as defendants and to add alter ego and fraudulent conveyance claims. The district court granted the motion to amend. The district court then entered two default judgments in favor of A&E making CSC, Cate Street and Red Desert jointly and severally liable on Red Desert’s debt to A&E and setting aside as fraudulent a mortgage granted by Red Desert to CSC, thereby allowing A&E to execute on real property to recover on its judgment against Red Desert. The Supreme Court affirmed, holding that the district court did not lose subject matter jurisdiction over A&E’s motion to amend its complaint after signing off on the stipulated judgment in its favor because A&E was allowed to amend its complaint before CE was voluntarily dismissed from the action. View "CSC Group Holdings, LLC v. Automation & Electronics, Inc." on Justia Law

Steven Fustolo’s affiliate companies issued four promissory notes to Patton Drive, LLC. Fustolo personally guaranteed two of the notes. When the principal debtors defaulted on all four notes, Patton drive sued Fustolo. The Massachusetts state court found Fustolo liable for breach of contract and entered judgment against Fustolo. Fustolo appealed, challenging the interest due. Meanwhile, Patton Drive joined with two of Fustolo’s other creditors to file a petition seeking to place Fustolo into involuntary Chapter 7 bankruptcy. Fustolo, in turn, asserted that Patton Drive was not qualified it to serve as a petitioning creditor because his pending state court appeal subjected Patton Drive’s judgment to “bona fide dispute as to liability or amount.” The bankruptcy court allowed Patton Drive to join in initiating involuntary bankruptcy proceedings against Fustolo. The district court affirmed, finding that Fustolo’s state court appeal could not raise a bona fide dispute as to Patton Drive’s claim. The First Circuit affirmed, holding that because the amount of Fustolo’s liability on the guaranteed notes was not subject to bona fide dispute, and because Patton Drive’s claim on the guaranteed notes could be considered separately from Patton Drive’s claim on the judgment within which its underlying contract claims were submerged, Patton Drive qualified as a petitioning creditor. View "Fustolo v. 50 Thomas Patton Dr., LLC" on Justia Law

The Village of Piketon and Boone Coleman Construction, Inc. entered into a contract for construction of a public road. The contract contained a liquidated damages provision specifying that Boone Coleman would pay $700 to Piketon for each day after the specified completion date that the contract was not substantially completed. Boone Coleman did not complete the project until well over a year after the parties’ extended completion date. Boone Coleman sued Piketon alleging that Piketon had failed to pay $147,477 of the contract price for the construction. Piketon filed a counterclaim seeking liquidated damages. The trial court awarded Piketon $277,900 in liquidated damages. The appellate court reversed, holding that the resulting amount of liquidated damages was so unreasonable as to constitute a penalty. The Supreme Court vacated the judgment of the court of appeals, holding that the court erred in its use of a retrospective analysis to reach its conclusion and in failing to focus on the per diem nature of the liquidated damages. Remanded for consideration of the enforceability of the liquidated damages provision in light of this opinion. View "Piketon v. Boone Coleman Constr., Inc." on Justia Law

Affordable filed suit alleging breach of contract when Fannie Mae penalized Affordable for prepaying its loan after it was forced to sell its Jefferson Arms Apartments property to avoid condemnation. The district court found in favor of Fannie Mae. The court concluded that substantial evidence supports the district court's findings that the city's letter threatening condemnation did not cause the seller to sell Jefferson Arms because he had already intended to sell the property before receiving it. Moreover, the district court's findings were not based on an erroneous view of the law. In this case, the district court determined that the seller was not credible and the sequence of events leading to the sale of the property suggests that he did not actually fear condemnation and had requested the city letter merely to gain a tax advantage. The court also concluded that the district court did not err in determining that the voluntary payment doctrine prevents Affordable from recovering on its breach of contract claim. Accordingly, the court affirmed the judgment. View "Affordable Communities of MO v. Federal Nat'l Mortgage Ass'n" on Justia Law

After Sloan’s Cove, LLC executed a power of sale foreclosure on Armand Vachon’s property, Vachon and Oceanic Inn, Inc. (collectively, Oceanic) filed suit claiming that Sloan’s Cove improperly conducted the sale. The trial court (1) dismissed Oceanic’s claims for breach of fiduciary duty and negligent infliction of emotional distress, and (2) granted summary judgment against Oceanic on its claims for breach of contract and accounting and in favor of Sloan’s Cove on its counterclaim seeking a declaration that its foreclosure by sale of the Oceanic Inn property was legal and effective. The Supreme Judicial Court affirmed as amended, holding that the trial court did not err in its judgment, but that the judgment must be amended to correct a clerical error. View "Oceanic Inn, Inc. v. Sloan's Cove, LLC" on Justia Law

In 2012, a private equity firm purchased a trucking company now owned by Buyer through a merger transaction. Plaintiff initiated this action as the representative of the selling securityholders (Securityholders) to recover a preclosing tax refund. Buyer, in response, asserted several counterclaims. Securityholders sought to dismiss Buyer’s counterclaims. The Court of Chancery (1) denied Securityholders’ motion to dismiss Buyer’s common law fraud claim insofar as that claim asserted fraud based on extra-contractual statements made to Buyer before it entered the merger agreement, as Buyer was not prevented from asserting a claim for fraud based on representations outside the four corners of the merger agreement; (2) granted Securityholders’ motion to dismiss Buyer’s claim under the Delaware Securities Act and Buyer’s claim of unilateral mistake, as these claims failed to state a claim for relief; and (3) granted Plaintiff’s motion for summary judgment concerning the tax refund claim, as Buyer had no defense to Plaintiff’s motion. View "FdG Logistics LLC v. A&R Logistics Holdings, Inc." on Justia Law

The predecessors of Plaintiff and Defendants entered into a right-of-way agreement that created an express easement for the benefit of property owned by Plaintiff over a driveway located on the property owned by Defendants. Plaintiff commenced this action asserting a quiet title claim and a claim seeking an injunction restoring Plaintiff’s rights under the agreement. Defendants raised special defenses, asserting that Plaintiff’s property had been used for purposes other than “professional offices or residential uses” in violation of the terms of the agreement. The trial court entered judgment for Defendants, concluding that the easement was in effect until Plaintiff’s property was used by a mortgage brokerage, a home health-care agency, and an appliance delivery coordination service, which tenancies terminated the agreement. The Appellate Court affirmed. The Supreme Court reversed, holding (1) the Appellate Court improperly concluded that the term “professional offices,” as used in the agreement, was plain an unambiguous; and (2) using the broader definition of the term “professional” indicates that the agreement did not preclude offices of the type that had been previously operated out of Plaintiff’s property. Remanded. View "NPC Offices, LLC v. Kowaleski" on Justia Law