Justia Contracts Opinion Summaries

Plaintiff, individually and as surviving spouse of Arlie Walls, filed suit against Petrohawk alleging claims related to an oil and gas lease. The court concluded that Petrohawk's failure to pay royalties in a timely manner did not substantially defeat the purpose of the contract and therefore does not constitute a material breach of contract; plaintiff waived the breaches with respect to all of the assignments except the Petrohawk-Exxon assignment; the district court did not err in concluding that plaintiff unreasonably withheld consent to the assignment from Petrohawk to Exxon; the language of the lease does not support plaintiff's argument that the lease holds Petrohawk liable for breaches of previous assignees, specifically Alta; and plaintiff is not entitled to statutory penalties because she failed to make factual allegations of Petrohawk's willfulness or bad faith. Accordingly, the court affirmed the district court's judgment. View "Walls v. Petrohawk Properties, LP" on Justia Law

LimoLiner Inc. contracted with Dattco, Inc. to repair a luxury motor coach that LimoLiner owned. LimoLiner later filed this action in Massachusetts state court alleging breach of contract, misrepresentation, negligence, replevin, and violation of 940 C.M.R. 5.05, a Massachusetts regulation. Dattco removed the case to federal district court. The magistrate judge found that Dattco breached the repair contract by failing to do all of the work that LimoLiner had requested. The judge also ruled for Dattco on all of LimoLiner’s other claims, awarding LimoLiner a total of $25,123 in damages. LimoLiner appealed, arguing, among other things, that the magistrate judge erred in ruling that Dattco may not be held liable under 940 C.M.R. 5.05 for certain actions and omissions that occurred on the job. The First Circuit certified a question concerning 940 C.M.R.’s intended scope to the Supreme Judicial Court of Massachusetts and thus did not decide the merits of LimoLiner’s regulatory claims. The Court otherwise affirmed, holding that the magistrate judge did not err in concluding that Dattco did not breach the parties’ oral contract to make the repairs in a timely manner and owed damages only for the loss of use of the vehicle for one limited period of time. View "Limoliner, Inc. v. Dattco, Inc." on Justia Law

In the first appeal, the Supreme Court upheld the Court of Chancery’s finding that SIGA Technologies, Inc. in bad faith breached its contractual obligation to negotiate a license agreement consistent with the parties’ license agreement term sheet, known throughout this litigation as the “LATS.” The Supreme Court also held that where parties have agreed to negotiate in good faith, and would have reached an agreement but for the defendant’s bad faith conduct during the negotiations, the plaintiff could recover contract expectation damages, so long as the plaintiff can prove damages with reasonable certainty. Because the Court of Chancery ruled out expectation damages in its first decision, the case was remanded for consideration of damages to SIGA ("SIGA I”). On remand, the Court of Chancery reevaluated the evidence, and held that PharmAthene, Inc. met its burden of proving with reasonable certainty expectation damages and awarded PharmAthene $113 million. The parties once again appealed to the Supreme Court. SIGA raised two claims of error in this appeal: (1) the Court of Chancery was not free to reconsider its prior holding that lump-sum expectation damages were too speculative; and (2) if reconsideration was permitted, the expectation damages awarded following remand were too speculative. After careful consideration of SIGA’s arguments, the Supreme Court found that the law of the case doctrine did not preclude the Court of Chancery from reconsidering its earlier determination that lump-sum expectation damages were too speculative. The Court also found that the court did not abuse its discretion when it awarded PharmAthene lump-sum expectation damages, and its factual findings supporting its new damages determination were not clearly erroneous. Accordingly, the Court affirmed the judgment of the Court of Chancery. View "SIGA Technologies, Inc. v. PharmAthene" on Justia Law

In January 2010, Kory Clark received a telephone call around 3 a.m. from his brother asking for assistance with his pickup, which was stuck in a snowdrift. According to Clark's deposition, after the brothers were unable to pull the pickup out of the snowdrift, he drove to their grandfather's nearby farm to get a tractor to pull it out. Clark stated that after proceeding a short way down the road, the tractor broke down and he was unable to get over to the shoulder of the road or restart it. He then walked back to the farm to get his pickup and pick up his brother, who took him home and said he would take care of the tractor. Before the tractor was removed from the road, Rita Fred collided with it while driving to work. Fred sued Clark and his grandfather to recover for her injuries. At the time of the accident, Clark's grandfather had a farm liability policy with Farmers Union Mutual Insurance. Farmers Union defended the grandfather in the action brought by Fred, but declined to defend Clark, claiming he was not insured under the policy. Clark sought a declaratory judgment that Farmers Union had a duty to defend or indemnify him. He also sought damages for bad-faith refusal to defend. QBE Americas, Inc., joined as the third-party claims administrator for Farmers Union. Both Farmers Union and QBE moved for summary judgment, which the district court granted. Clark appealed, arguing the district court erred in granting summary judgment and holding he was not entitled to coverage under a farm liability policy. He also argued the district court should not have dismissed his claim for breach of duty to defend. Because the Supreme Court concluded the district court correctly held Clark failed to present evidence sufficient to raise genuine issues of material fact in regard to his claims, it affirmed the judgment. View "Clark v. Farmers Union Mutual Ins." on Justia Law

CMI filed suit against Bancorp, alleging breach of contract after Bancorp refused to cure or repurchase eleven loans. The district court granted summary judgment for CMI on eight of the eleven loans. Determining that Residential Funding Co. v. Terrace Mortg. Co. controls the court's analysis, the court held that the parties’ agreement granted the buyer sole discretion to determine whether a loan was defective and required the seller to repurchase if the buyer made such a determination, and the court should not inquire further by reviewing the validity of that determination. Even if CMI erroneously exercised its sole and exclusive discretion, Bancorp has presented no evidence that CMI exercised its discretion under the agreement in a manner intended to sabotage or evade the spirit of the agreement or to deny Bancorp the expected benefit of its bargain. Accordingly, the court concluded that the district court did not err in granting summary judgment on the Brown, Hansen, Maggio, and Perez loans. The court also concluded that the district court properly awarded CMI the repurchase price for the Brown and Bennett loans, as calculated using the formula set forth in the agreement. Finally, the court concluded that the district court did not err in granting summary judgment on the Curtis, Maggio, and Villares loans and rejected Bancorp's argument that there is a genuine issue of material fact regarding which party's negligent underwriting caused the loans to be defective. Accordingly, the court affirmed the judgment. View "CitiMortgage v. Chicago Bancorp." on Justia Law

Federal Insurance Company appealed a circuit court order denying its motion to compel arbitration of the breach-of-contract claim asserted against it by Kert Reedstrom. In 2008, Reedstrom entered into a written employment agreement with Marshall-Jackson Mental Health Board, Inc., d/b/a Mountain Lakes Behavioral Healthcare ("MLBHC"), to begin serving as its executive director in Guntersville. During the course of Reedstrom's employment with MLBHC, MLBHC held an executive-liability, entity-liability, and employment-practices-liability policy issued by Federal Insurance that generally protected certain MLBHC officers and employees described as "insureds" in the policy from loss for actions committed in the course of their employment with MLBHC. It was undisputed that Reedstrom was an "insured" covered by the Federal Insurance policy. The Federal Insurance policy contained an arbitration provision. A separate endorsement to the Federal Insurance policy further highlighted the arbitration provision and explained that its effect was that any disagreement related to coverage would be resolved by arbitration and not in a court of law. In July 2010, MLBHC terminated Reedstrom's employment and, in December 2010, Reedstrom sued MLBHC alleging that his termination constituted a breach of his employment contract. MLBHC asserted various counterclaims against Reedstrom based on his alleged misconduct while serving as executive director. Thereafter, Reedstrom gave Federal Insurance notice of the claims asserted against him and requested coverage under the terms of the Federal Insurance policy. Federal Insurance ultimately denied his claim and refused to provide him with counsel to defend against MLBHC's claims. A jury returned a verdict awarding Reedstrom $150,000 on his claim against MLBHC and awarding MLBHC $60,000 on its claims against Reedstrom. Consistent with its previous denial of his request for coverage, Federal Insurance refused Reedstrom's request to satisfy the judgment entered against him. Reedstrom sued Federal Insurance, asserting one claim of breach of contract and seeking $72,000 in damages ($60,000 for the judgment entered against him and $12,000 for the attorney fees he incurred in defending those claims). The Supreme Court reversed and remanded, finding that the trial court did not articulate its rationale for denying the motion to compel arbitration. The denial was apparently based on the court's resolving at least one of the arbitrability issues raised by Reedstrom in his favor and against Federal Insurance. However, because the subject arbitration provision delegated to the arbitrators the authority to resolve such issues, the trial court erred by considering the waiver and nonsignatory issues raised by Reedstrom instead of granting the motion to compel arbitration and allowing the arbitrators to resolve those issues. View "Federal Insurance Company v. Reedstrom" on Justia Law

This case arose out of a payment dispute between Coast, a contractor, and United, Coast's subcontractor. On appeal, United challenged the trial court's finding in favor of Coast, arguing that the trial court erred in finding that Coast was not liable for extra payments, as well as for failing to assess penalties and attorney’s fees against Coast for its delay in forwarding the retention payments. The court held that, pursuant to Civil Code section 8814, subdivision (c), a contractor is entitled to withhold a retention payment only when there is a good faith dispute regarding whether the subcontractor is entitled to the full amount of the retention payment. Accordingly, the court reversed the judgment of the trial court as to this issue. On remand, the trial court is directed, pursuant to section 8818, to award United penalties. Consequently, the court reversed the award of attorney fees as to the retention payments and remanded the issue. The court need not reach the merits of the breach of contract claims because United has failed to show that the trial court erred in its determination that United failed to prove damages. Accordingly, the court affirmed in part, reversed in part, and remanded. View "United Riggers & Erectors v. Coast Iron & Steel" on Justia Law

Plaintiffs Delbert Soseeah, Maxine Soseeah and John Borrego filed this action against defendants Sentry Insurance, Dairyland Insurance Company, Peak Property and Casualty Insurance Company, and Viking Insurance Company of Wisconsin (collectively Sentry) claiming, in part, that Sentry failed to timely and properly notify them and other Sentry automobile insurance policyholders of the impact of two New Mexico Supreme Court decisions regarding the availability of uninsured and underinsured motorist coverage under their respective policies. The complaint alleged that Delbert Soseeah, after being injured in a motor vehicle accident, made a claim for UM/UIM benefits under two policies of automobile insurance issued by Sentry to Mrs. Soseeah. According to the complaint, Mrs. Soseeah “never executed a valid waiver of UM/UIM coverage under the” two policies and, consequently, Mr. Soseeah “demanded that . . . Sentry reform” the two policies “to provide stacked uninsured/underinsured motorist coverage limits equal to the limits of the liability coverage on each of the vehicles covered by the” policies pursuant to the two New Mexico Supreme Court decisions. Sentry purportedly refused to reform the policies and rejected Mr. Soseeah’s claim for UM/UIM benefits. The complaint alleged that Sentry, by doing so, violated New Mexico’s Unfair Practices Act (UPA), violated a portion of New Mexico’s Insurance Code known as the Trade Practices and Frauds Act (TPFA), breached the implied covenant of good faith and fair dealing, and breached the terms of the two policies. The district court granted plaintiffs’ motion for class certification. Sentry subsequently sought and was granted permission to appeal the district court’s class certification ruling. Because plaintiffs failed to establish that all members of the general certified class suffered the common injury required by Rule of Civil Procedure 23(a)(2), the Tenth Circuit concluded that the district court abused its discretion in certifying the general class. Because the district court’s certification ruling did not expressly address the Rule 23 factors as they applied to each of the identified subclasses, the Court did not have enough information to determine whether the district court abused its discretion in certifying two subclasses. Consequently, the Court directed the district court on remand to address these issues. View "Soseeah v. Sentry Insurance" on Justia Law

Mind & Motion Utah Investments, LLC entered into a real estate purchase contract (REPC) with Celtic Bank to buy a piece of property the Bank had acquired from a developer through foreclosure. The prior owner and received approval to construct condominium units on the land but had not recorded the plats for the first phase of development. Mind & Motion agreed to purchase the property, but the REPC required the Bank to record the plats by a certain date and allowed Mind & Motion discretion to extend the recording deadline as necessary to allow the Bank enough time to record. Under the REPC, if Mind & Motion extended the deadline, the deadline to complete the transaction would be automatically extended. Mind & Motion extended the recording deadline once but refused to extend it a second time. Mind & Motion subsequently sued Celtic Bank for breach of contract. The district court granted summary judgment for Mind & Motion, concluding that the recording provision was unambiguously a covenant, not a condition. Celtic Bank appealed, arguing that the recording provision was unambiguously a condition. The Supreme Court affirmed, holding that the recording provision was a covenant, not a condition, and there was no latent ambiguity in the REPC. View "Mind & Motion v. Celtic Bank" on Justia Law

In 2006, CPM Virginia, LLC entered into an agreement with MJM Golf, LLC for the sale of a golf course. In 2013, CPM filed suit against MJM claiming that MJM failed to pay in full the purchase price by the date identified in the promissory note. MJM counterclaimed, alleging that CPM had violated the warranty provisions of the agreement. The trial court concluded that CPM breached the warranty requirements in the contract by failing to place eighteen inches of topsoil on top of fly ash on the property, thus entitling MJM to disregard the promissory note. The trial court canceled the note and awarded MJM $694,357 in damages. The Supreme Court reversed, holding that the warranty provisions in the agreement did not require CPM to cover the fly ash with eighteen inches of topsoil, and therefore, the trial court erred as a matter of law in finding a breach of contract and awarding damages to MJM as a result. Remanded. View "CPM Virginia, LLC v. MJM Golf, LLC" on Justia Law