Justia Contracts Opinion Summaries

The Lapideses renewed a loan from Venture Bank secured by a third mortgage on their home. Howard subsequently filed for Chapter 7 bankruptcy. After Howard’s personal debts were discharged, the Lapideses executed two “Change in Terms Agreements,” each of which extended the maturity date of the loan for six months. When Howard ceased making payments under these agreements, Venture Bank sought a declaratory judgment that the agreements were valid and enforceable. Howard counterclaimed that Venture Bank’s efforts to obtain payments after his discharge violated the discharge injunction under 11 U.S.C. 524(a)(2). The bankruptcy court denied Venture Bank’s claim for a declaratory judgment and awarded Howard damages and attorney’s fees. The district court and Eighth Circuit affirmed, upholding a finding that Howard’s payments were not voluntary within the meaning of section 524(f) and did not comply with the requirements of a reaffirmation agreement under section 524(c). The post-discharge agreements served no purpose other than reaffirmation agreements in which Howard agreed to repay all of his discharged personal debt and lacked consideration. View "Venture Bank v. Lapides" on Justia Law

American manufactures and Southland sells iron castings. After operating under a verbal agreement for years, the companies entered into a written “Exclusive Representation Agreement” in 2010. American was aware Southland represented other foundries. The contract incorporated lists of American’s active and potential customers and identified the companies with which Southland had an existing relationship, but did not define covered “products.” Both agreed to noncompete clauses. In 2011, Southland obtained $32.5 million in new sales —80% of American’s total new sales. In 2012, American CEO Fuller began advocating for replacement of Southland with an internal sales team. Fuller later determined that Southland was providing quotes that he considered to be a breach of the contract, but did not immediately address the issue. American began to organize an internal sales force. Meanwhile, Southland continued seeking orders and obtained $24 million in new business for American. After several months, American notified Southland that American considered Southland in breach and sent a termination letter. American did not explain and discontinued paying commissions. Southland sued, alleging American breached the contract by not providing adequate notice of breach or the opportunity to cure and by not paying continuing commissions. American alleged Southland had committed an incurable breach such that notice and the opportunity to cure were not necessary. The district court denied summary judgment, finding the contract ambiguous with respect to the terms “Products” and “compete.” The Eighth CIrcuit affirmed findings that American breached the contract and owed Southland $3.8 million in damages based on the sales during the post-termination period. View "Southland Metals, Inc. v. Am. Castings LLC" on Justia Law

Child Craft manufactured furniture. Bienias owns Summit. The parties had a long-standing business relationship. Child Craft contracted with Summit to supply raw wood for a planned line of high-end baby furniture, the “Vogue Line.” Summit sourced the goods from an Indonesian manufacturer, Cita. At Bienias’s request, Child Craft did not have direct contact with Cita. In 2008-2009 Child Craft issued purchase orders to Summit, worth about $90,000. Each included detailed specifications, including that the moisture content of the wood needed to be between 6% and 8%. The goods never conformed to its specifications, in spite of Bienias’s assurances that they would. Child Craft identified the goods as defective upon receipt and refused to pay for shipments. It spent considerable time trying to re-work the products. Child Craft was never able to sell the Vogue Line and ceased operations in 2009. Summit sued for breach of contract and conversion based on refusal to pay. Child Craft counterclaimed for breach of contract and negligent misrepresentation, seeking to $5 million in compensatory damages plus punitive damages of $5 million. Only Child Craft’s counterclaim for negligent misrepresentation against Bienias personally was tried. A judge awarded $2.7 million, against Bienias and Summit. The Seventh Circuit reversed the award. Under Indiana law, a buyer who has received non-conforming goods cannot sue a seller for negligent misrepresentation to avoid the economic loss doctrine, which limits the buyer to contract remedies for purely economic loss. There is no basis for transforming the breach of contract claim into a tort claim to hold the seller’s president personally liable. View "JMB Mfg., Inc. v. Harrison Mfg., LLC." on Justia Law

Otoe County School District 66-0111 (the District) and Facilities Cost Management Group, LLC (FCMG) entered into a contract whereby FCMG provided services in connection with the construction and renovation of three schools within the District. FCMG later filed suit against the District, alleging breach of contract for the District’s failure to pay the full amount due under the contract. The parties filed cross-motions for partially summary judgment on the issue of whether the contract was ambiguous, specifically sections 11.2 and 12.7. The district court determined that sections 12.7 and 11.2 were not ambiguous and granted summary judgment in favor of FCMG. The Supreme Court reversed, holding (1) the district court did not err when it determined that section 12.7 of the contract is not ambiguous, but the court erred when it determined that section 11.2 is not ambiguous; and (2) therefore, the district court committed prejudicial error when it instructed the jury that “the contract in this case is not ambiguous.” Remanded for a new trial. View "Facilities Cost Mgmt. Group v. Otoe Cty. Sch. Dist." on Justia Law

Creative, an Iowa corporation, designs and sells beauty products. LF, a Hong Kong corporation, with its principal place of business in Hong Kong, provides services, including product development, shipping oversight, and production planning. LF contacted Unger, President of Creative, in Iowa, seeking to manage Creative’s operations in China and e-mailed a presentation describing proposed services. Unger traveled to Hong Kong to execute the contract. LF managed Creative’s supply chain; the companies communicated extensively electronically and by telephone for two years. As required by the contract, LF shipped pre-production and production samples (made in China by third party factories) to Iowa. LF received payments from Creative’s customers on its behalf, and sent proceeds, less deductions, to Iowa. No LF agents or employees visited Iowa and LF has no connection with Iowa outside of this business relationship. Creative filed suit in Iowa, alleging that LF breached the contract by sending samples that could not be used because they were defective. The district court dismissed for lack of personal jurisdiction. The Eighth Circuit reversed, stating that a reasonable jury could find that LF had sufficient contacts with Iowa to justify the exercise of personal jurisdiction and that the exercise of jurisdiction would not offend traditional notions of fair play and substantial justice. View "Creative Calling Solutions Inc v. LF Beauty Ltd." on Justia Law

FedEx contracts with operators to take packages from its terminals to homes and businesses. FedEx assigns each territory to an operator. Former operators claim that FedEx defrauded them as to their employment status, denying them benefits, such as overtime pay and workers’ compensation. Operators were paid based on the numbers of packages and stops serviced and were not required to drive personally; they could hire others, subject to FedEx’s qualifications. Operators received a proprietary interest in their territories, which they could sell, subject to approval. FedEx could not fire the operators at will during their contract terms, but could fire them for cause, and could choose not to renew their contracts for any reason. Operators provided their own vehicles. FedEx managers could ride along on four delivery runs per year. Contracts stated that an operator made deliveries “strictly as an independent contractor, and not as an employee,” but FedEx required that operators’ vehicles bear FedEx’s logo and be painted “FedEx White.” Operators had to provide proof of inspection and maintenance. Drivers had to wear a FedEx uniform and meet FedEx personal appearances standards. Drivers were subject to background, credit, and drug checks. They had to use FedEx package scanners. The district court granted plaintiffs partial summary judgment, finding no genuine dispute that they were FedEx employees, even though under Missouri law employment status is an issue of fact. The Eighth Circuit reversed, finding that a reasonable jury could disagree. View "Gray v. FedEx Ground Package Sys., Inc." on Justia Law

The Judicial Council of California, (JCC) entered into a contract with Jacobs Facilities, a wholly owned subsidiary of Jacobs. Performance of the contract required a license under the Contractors’ State License Law. Facilities was properly licensed when it commenced work. Later, Jacobs, as part of a corporate reorganization, transferred the employees responsible for the JCC contract to another subsidiary and caused the new subsidiary to obtain a contractor’s license, while permitting the Facilities license to expire. Facilities remained the signatory on the JCC contract until a year later, when the parties entered into an assignment to the new, licensed subsidiary. JCC sued under Bus. & Prof. Code 7031(b), which requires an unlicensed contractor to disgorge its compensation. Defendants contended that Facilities had “internally” assigned the contract to the new subsidiary prior to expiration of its license; JCC ratified the internal assignment when it consented to the assignment to the new subsidiary; and Facilities had “substantially complied” with the law. After the jury found for defendants on the other defenses, the substantial compliance issue was not decidedd. The court of appeal reversed, concluding Facilities violated the statute when it continued to act as the contracting party after its license expired, and remanded for a hearing on substantial compliance. View "Judicial Council of Cal. v. Jacobs Facilities, Inc." on Justia Law

Rocio Trujillo's home loan was secured by a deed of trust encumbering the home. She defaulted, and Northwest Trustee Services Inc. (NWTS), the successor trustee, sent a notice of default and scheduled a trustee's sale of her property. NWTS had a beneficiary declaration from Wells Fargo Bank. RCW 61.24.030(7)(a) (part of the Deeds of Trust Act) required that a trustee not initiate such a nonjudicial foreclosure without "proof that the beneficiary [of the deed of trust] is the owner of any promissory note ... secured by the deed of trust," and must include "[a] declaration by the beneficiary made under the penalty of perjury stating that the beneficiary is the actual holder of the promissory note or other obligation secured by the deed of trust shall be sufficient proof as required under this subsection." NTWS' declaration did not contain that specific statutory language. Instead, it stated under penalty of perjury, "Wells Fargo Bank, NA is the actual holder of the promissory note . . . or has requisite authority under RCW 62A.3-301 to enforce said [note]" (This declaration language differed from the language of RCW 61.24.030(7)(a), by adding the "or" alternative). Following the Washington Supreme Court's decision in "Lyons v. U.S. Bank National Ass 'n," (336 P.3d 1142 (2014)), the Court held in this case that a trustee could not rely on a beneficiary declaration containing such ambiguous alternative language. The Court found that Trujillo alleged facts sufficient to show that NWTS breached the DTA and also to show that that breach could support the elements of a Consumer Protection Act (CPA) claim. However, her allegations did not support a claim for intentional infliction of emotional distress or criminal profiteering. The Court therefore reversed in part and remanded for trial. View "Trujillo v. Nw. Tr. Servs., Inc." on Justia Law

Insurer issued an automobile policy to Philip Laboy as the named insured. The policy provided that Insurer would pay “any negotiated reduced rate accepted by a medical provider.” Three members of Laboy’s family, also insureds under the policy, were involved in an automobile accident. The Laboys submitted some of their medical bills both to Insurer and to their health-insurance provider. The Laboys later reached a settlement with the third-party tortfeasor. When Insurer exercised its contractual right to subrogation against the Laboys, the Laboys objected, arguing that Insurer had overpaid the medical providers. As evidence, the Laboys showed that Insurer had paid discounted rates to medical providers totaling $1,441 in medical expenses but that their own health insurer paid only $648 for those same medical expenses. The Laboys filed a class-action lawsuit against Insurer, alleging claims for breach of contract and breach of good faith and fair dealing. The trial court entered summary judgment for Insurer. The Supreme Court agreed with the trial court’s judgment, holding that the only reasonable interpretation of the policy is that “any negotiated reduced rate accepted by a medical provider” means a negotiated reduced rate that Insurer was contractually entitled to pay and does not include the reduced rates negotiated by the Laboys’ health-insurance provider. View "Laboy v. Grange Indem. Ins. Co." on Justia Law

Client advanced Attorney funds to cover attorney’s fees in litigation. After Client terminated the representation, Attorney refused to return the unearned attorney’s fees. Attorney demurred on the ground that the lawsuit was barred by Cal. Civ. Proc. Code 340.6(a), which sets forth a one-year limitations period for actions against an attorney for a “wrongful act or omission” arising in the performance of “professional services.” The trial court sustained the demurrer, concluding that section 340.6(a) applied to Client’s claims and that she filed her complaint more than one year after Attorney informed her that he would not return her money. The Court of Appeals reversed the trial court’s order sustaining Attorney’s demurrer. The Supreme Court affirmed, holding (1) section 340.6(a) applies to a claim when the merits of the claim will necessarily depend on proof that an attorney violated a professional obligation in the course of providing professional services; and (2) in this case, Client’s complaint could be construed to allege a claim for conversion whose ultimate proof at trial may not depend on the assertion that Attorney violated a professional obligation. View "Lee v. Hanley" on Justia Law