Justia Contracts Opinion Summaries

The California Department of Transportation (CalTrans) and Papich Construction Company, Inc. appealed a trial court’s issuance of a writ of mandate to vacate the award of a public works contract to Papich. DeSilva Gates Construction submitted the second-lowest bid (the first bidder was disqualified for a non-responsive bid), and included the names and description of work by all subcontractors slated to perform work exceeding one-half of one percent of the bid amount. DeSilva later sent a letter to CalTrans noting DeSilva had inadvertently supplied CalTrans with additional information on the subcontractor list "above and beyond what was required." DeSilva explained it had not listed "All Steel Fence" as a subcontractor in its bid because the value of the bid items it would perform was less than one-half of one percent of the bid and the information for All Steel Fence (submitted within 24 hours of the bid) was additional information that was not required. Papich challenged DeSilva’s bid as having changed the subcontractor list. CalTrans rejected DeSilva’s bid as nonresponsive. DeSilva protested CalTrans’s determination that its bid was nonresponsive and protested Papich’s bid. The trial court granted the writ on grounds CalTrans erroneously rejected DeSilva's bid, and erred by awarding the contract to Papich despite Papich’s failure to comply with a material requirement of the information for bids. On appeal, CalTrans and Papich argued DeSilva’s bid was nonresponsive. Appellants also argued CalTrans had discretion to waive Papich’s mistake in failing to acknowledge the addendum to the information for bids. After review, the Court of Appeal concluded the trial court did not err. DeSilva’s disclosure of a subcontractor performing work amounting to only one-tenth of one percent of the total value of the contract was not required by the Public Contract Code or CalTrans’s information for bids. The additional information was accurate, albeit unnecessary, and did not render DeSilva’s bid nonresponsive. By contrast, CalTrans initially declared Papich’s bid to be nonresponsive and then waived Papich’s mistake and determined the bid to be responsive. The Court concluded CalTrans abused its discretion by awarding Papich the contract. Accordingly, the Court affirmed the trial court’s issuance of the writ of mandate. View "DeSilva Gates Construction, LP v. Dept. of Transportation" on Justia Law

Appellant/cross-appellee OXY USA Inc. appealed the grant of summary judgment to appellees/cross-appellants, a class of plaintiffs represented by David and Donna Schell, and Ron Oliver, on the question of whether their oil and gas leases required OXY to make "free gas" useable for domestic purposes. OXY also appealed: the district court’s certification of plaintiffs' class; the denial of a motion to decertify; and an order to quash the deposition of an absent class member. Plaintiffs cross-appealed the district court's: denial of their motion for attorneys' fees; denial of their motion for litigation expenses; and denial of an incentive award. Notably, plaintiffs also moved to dismiss the appeal as moot. OXY opposed dismissal for mootness, but argued that if the Tenth Circuit found mootness, the Court should vacate the district court’s decision. Appellees/cross-appellants were approximately 2,200 surface owners of Kansas land burdened by oil and gas leases held or operated by OXY, executed separately from approximately 1906 to 2007. The leases contained a "free gas" clause. The clauses weren't identical, but all, in substance, purported to grant the lessor access to free gas for domestic use. All of the plaintiffs who have used free gas obtain their gas from a tap connected directly to a wellhead line. In addition, some members of the plaintiff class (including about half of the current users of free gas) received royalty payments from OXY based on the production of gas on their land. In August 2007, OXY sent letters warning free gas users that their gas may become unsafe to use, either because of high hydrogen sulfide content or low pressure at the wellhead. These letters urged the lessors to convert their houses to an alternative energy source. On August 31, 2007, leaseholders David Schell, Donna Schell, Howard Pickens, and Ron Oliver filed this action on behalf of themselves and others similarly situated, seeking a permanent injunction, a declaratory judgment, and actual damages based on alleged breaches of mineral leases entered into with OXY for failure to supply free usable gas. After review of the matter, the Tenth Circuit held that that OXY’s sale of the oil and gas leases at issue here mooted its appeal; therefore, the Court granted plaintiffs’ motion to dismiss. Nevertheless, the Court concluded that the cross-appeal had not been mooted by this sale, and affirmed the district court’s judgment as to the denial of attorneys’ fees, litigation expenses, and an incentive award. View "Schell v. OXY USA" on Justia Law

DIRECTV and its customers entered into service agreements that included a binding arbitration provision with a class-arbitration waiver. It specified that the entire arbitration provision was unenforceable if the “law of your state” made class-arbitration waivers unenforceable. The agreement also declared that the arbitration clause was governed by the Federal Arbitration Act, 9 U.S.C. 2. After California customers entered into the agreement, the Supreme Court held that California’s rule invalidating class-arbitration waivers was preempted by the Federal Act. When California customers sued, the trial court denied DIRECTV’s request to order the matter to arbitration. The California Court of Appeal affirmed, finding the entire arbitration provision unenforceable under the agreement because the parties were free to refer in the contract to California law as it would have been absent federal preemption. The U.S. Supreme Court reversed. The California court’s interpretation does not place arbitration contracts “on equal footing with all other contracts,” as required by the Act. California courts would not interpret contracts other than arbitration contracts the same way. The language the court used to frame the issue focused only on arbitration. View "DIRECTV, Inc. v. Imburgia" on Justia Law

Adam Ray, a former employee of Granite Buick GMC, Inc., and Scott Hanna, a former employee of McKie Ford Lincoln, Inc., left their respect employment and started their own automobile dealership. Granite Buick and McKie Ford sought injunctions to enforce non-compete agreements Defendants signed during the course of their employment. After the Supreme Court reversed and remanded, the circuit court concluded that the non-compete agreements were valid but granted judgment in favor of Defendants on their affirmative defenses. The Supreme Court affirmed, holding that the circuit court properly determined (1) Ray’s covenant not to compete was fraudulently induced; and (2) McKie Ford waived its right to enforce Hanna’s covenant not to compete. View "Granite Buick GMC, Inc. v. Ray" on Justia Law

These interlocutory appeals were from a district court order that, inter alia, compelled a law firm (Mintz Levin) to produce documents relating to a fraud allegedly committed by David Gorski in his operation of Legion Construction, Inc. in order to qualify for and obtain government contracts. Gorski and Legion appealed the portion of the order that required attorney-client privileged documents connected with Mintz Levin’s representation of Legion to be produced under the crime-fraud exception. The government cross-appealed the portion of the district court decision to exclude communications between Gorski and his personal attorney from the production order. The First Circuit (1) dismissed Gorski’s appeal for want of appellate jurisdiction, holding that the Court did not have jurisdiction over Gorski’s appeal but did have jurisdiction over Legion’s appeal and the government’s cross-appeal; (2) affirmed the production order as to Mintz Levin, holding that a prima facie case for the crime-fraud exception had been made; and (3) vacated the district court’s decision to exclude Gorski’s communications with his personal attorney from the production order, holding that the district court employed incorrect legal reasoning with regard to these documents. View "United States v. Gorski" on Justia Law

Mark Galvin was the guarantor of a defaulted promissory note on a loan secured by an interest in a Cessna 421C aircraft. The note and security agreement were assigned to Harley-Davidson Credit Corp. After the borrower defaulted on the note, Harley-Davidson repossessed and sold the aircraft through a third-party dealer for $155,000 and then sought to collect $108,681 from Galvin. Galvin did not pay. Harley-Davidson subsequently filed a breach of contract action against Galvin to collect the deficiency. The district court entered partial summary judgment in favor of Harley-Davidson, concluding that there was no dispute of material fact that the sale was “commercially reasonable.” The First Circuit reversed, holding that a genuine issue of material fact existed as to whether the sale was “commercially reasonable,” and therefore, summary judgment should have been denied. Remanded. View "Harley-Davidson Credit Corp. v. Galvin" on Justia Law

Defendant-appellant Northrop Grumman Systems Corporation appealed a judgment of approximately $1.1 million plus interest, costs, and attorney fees of approximately $1.8 million in favor of plaintiff-respondent Hot Rods, LLC. This case involved an environmentally compromised property Hot Rods purchased from Northrop and the alleged damages stemming from environmental cleanup and related issues. The matter was tried by a referee pursuant to stipulation, and judgment was entered by the trial court, adopting the referee’s recommendations. Northrop alleged numerous errors. Upon review, the Court of Appeal found that there was language in the referee’s statement of decision indicating Northrop had negligently misrepresented certain facts, but did not find any damages were proximately caused, nor did the referee award any damages on that cause of action. The Court concluded the referee erred in admitting certain evidence, and that a finding of negligent misrepresentation was therefore improper, and not sufficiently supported by substantial evidence. The Court reversed the bulk of the damages award, and remanded for a reconsideration of which party was the prevailing party, and therefore entitled to attorney fees. View "Hot Rods v. Northrop Grumman Systems Corp." on Justia Law

Jon Norberg appealed a district court judgment allowing his former parents-in-law, Robert and Cheri Knorr, to buy back certain real property under an alleged oral lease. He argued the district court erred in concluding the Knorrs established promissory estoppel and constructive trust. After review, the Supreme Court affirmed the judgment, concluding the district court's findings of promissory estoppel were not clearly erroneous. View "Knorr v. Norberg" on Justia Law

Plaintiff sued Defendant for breach of contract and for wrongfully discharging him in retaliation for filing a workers’ compensation claim in good faith. Plaintiff’s breach of contract claim related to Defendant’s failure to remit accrued vacation pay upon his termination. A jury found in Plaintiff’s favor. The trial court rendered judgment in favor of Plaintiff, awarding him past and future lost earnings, employee benefits, and other damages. Defendant appealed the portion of the judgment on the retaliation claim. The court of appeals affirmed. The Supreme Court reversed and rendered a take-nothing judgment in favor of Defendant on Plaintiff’s retaliation claim, holding that no evidence supported the jury’s verdict on that claim. View "Kingsaire, Inc. v. Melendez" on Justia Law

Plaintiffs filed suit against Defendant, alleging breach of contract and misappropriation of trade secrets. Concerned by Plaintiffs’ counsel’s (Counsel) exposure to certain documents as a result of Counsel working “closely” with Defendant’s former finance manager, Defendant moved to disqualify Counsel from representing Plaintiff. The special master denied the motion to disqualify. The trial court, however, ordered Counsel’s disqualification. The court of appeals subsequently denied Plaintiffs’ petition for mandamus relief. The Supreme Court conditionally granted mandamus relief, holding that the trial court improperly disqualified Counsel under In re American Home Products Corp., as the American Home Products screening requirement does not govern a fact witness with information about his former employer if his position with that employer existed independently of litigation and he did not primarily report to lawyers. Rather, to the extent that a fact witness discloses his past employer’s privileged and confidential information, the factors outlined in In re Meador should guide the trial court’s decision regarding disqualification. View "In re RSR Corp. and Quemetco Metals Ltd., Inc." on Justia Law