Justia Contracts Opinion Summaries

Castellar Partners LLC was retained by appellees (collectively, the AMP parties) to review a “hedge fund portfolio” and the services being provided by another advisor. Castella and one of the AMP parties - AMP Capital Investors Limited (AMPCI), a subsidiary of AMP incorporated in Australia - executed an “Advisory Agreement” under which Castellar was required to provide its services regarding the fund in exchange for certain fees. The AMP parties terminated their relationship with Castellar the next year. Castellar filed suit, alleging that the AMP parties had “recklessly and willfully” misled it in order to obtain its services with regard to the fund. The district court dismissed one of Castellar’s claims, concluding that due to a forum selection clause, the claim for breach of contract was required to be litigated in New South Wales, Australia. The district court certified the dismissal of that claim as a final judgment, and Castella appealed. The Supreme Court dismissed the appeal for lack of jurisdiction, holding that the certification was improper, as Castellar’s claims entailed “similar issues” and “related facts,” and all of the parties remain involved in the litigation before the district court. View "Castellar Partners, LLC v. AMP Ltd." on Justia Law

Lariat and Tenant entered into a 10-year lease for operation of a restaurant. Debtor personally guaranteed Tenant's performance. Tenant was evicted in 2010 and obtained a judgment of $2,224,237.00, plus interest and attorney fees. In 2011, Lariat filed an involuntary chapter 7 petition against Debtor, which was dismissed by agreement. The same creditors filed suit against Debtor's wife. After the involuntary petition was dismissed, they added Debtor as a codefendant. The court held Debtor and his wife liable for fraudulent transfers ($795,098.00) and awarded interest and costs. In 2013, Debtor sued Lariat; the court dismissed, based on collateral estoppel. Appeal is pending. In 2014 Tenant filed a chapter 11 petition and an adversary proceeding against Lariat. The bankruptcy court dismissed the adversary proceeding. On the Trustee's motion, Tenant’s chapter 11 case was dismissed. Debtor filed his own chapter 11 petition. Lariat filed a proof of claim for $1,734,539.00. Debtor objected on grounds that the amount sought based on Debtor's personal guaranty under the lease exceeded the amount allowable under 11 U.S.C. 502(b)(6) and the amount sought based on fraudulent transfers was duplicative of, and subject to the same limitation as, sought based on thatl guaranty. Lariat filed an amended proof of claim for $1,610,787.00. The court capped Lariat's claim at $445,272.93. The Eighth Circuit Bankruptcy Appellate Panel remanded for recalculation of damages under the lease and of fees and expenses, but agreed that damages for fraudulent transfers were duplicative. View "Lariat Co., Inc. v. Wigley" on Justia Law

The Ninth Circuit Court of Appeals certified a question of Washington law to the Washington Supreme Court. The issue centered on how the term "collapse" was interpreted under Washington law in an insurance policy that insured "accidental direct physical loss involving collapse," subject to the policy's terms, conditions, exclusions and other provisions, but did not define "collapse" except to state that "collapse [did] not include settling, cracking, shrinking, bulging or expansion." The Washington Court concluded that in the insurance contract, "collapse" means "substantial impairment of structural integrity." "Substantial impairment of structural integrity" means substantial impairment of the structural integrity of a building or part of a building that renders such building or part of a building unfit for its function or unsafe and, under the clear language of the insurance policy here, must be more than mere settling, cracking, shrinkage, bulging, or expansion. View "Queen Anne Park Homeowners Ass'n v. State Farm Fire & Cas. Co." on Justia Law

The Montara Owners Association (homeowners) sued developer and general contractor, La Noue Development, LLC for damages caused by design and construction defects in the building of the Montara townhomes. The defects included problems with the framing, siding, decking, and windows, resulting in water intrusion and water damage. La Noue, in turn, filed a third-party complaint against multiple subcontractors, including Vasily Sharabarin, dba Advanced Construction (Sharabarin), who provided siding work on four buildings. Before trial, La Noue settled with the homeowners for $5 million (eliminating the first-party litigation from the case) and also reached settlements with most of the third-party subcontractors. La Noue did not settle with Sharabarin. Because of various pretrial rulings, the only claims submitted to the jury were La Noue’s breach of contract claims against Sharabarin and two other subcontractors. Before trial, the trial court granted summary judgment in favor of Sharabarin on La Noue’s claim for contractual indemnity, on the ground that the indemnification provision on which La Noue had relied was void under ORS 30.140. The trial court also held that the court would decide whether La Noue could recover the attorney fees that it had incurred in defending against the homeowners’ claims as consequential damages for Sharabarin’s breach of contract and that the court would resolve that issue after trial. In its post-trial ruling on the attorney fee issue, the court ultimately held that La Noue could not recover attorney fees as consequential damages in the case, even after trial, and denied La Noue’s claim for those attorney fees. The issues this case presented for the Supreme Court's review centered on: the proper application of ORS 30.140; whether it was error for the trial court to give an instruction on the economic waste doctrine in the absence of any evidence on the alternative measure of damages, diminution in value; and whether a third-party plaintiff can recover attorney fees as consequential damages for a third-party defendant’s breach of contract when the attorney fees were incurred in the first-party litigation in the same action. The Supreme Court concluded that it was error to have given the economic waste instruction. The Court affirmed on the Court of Appeals' decisions as to the other issues presented, and remanded for the trial court to consider the general contractor’s substantive right to attorney fees. View "Montara Owners Assn. v. La Noue Development, LLC" on Justia Law

Plaintiffs, a car dealership and related individuals, had an oral agreement that Defendant would use, free of charge, an empty bay at the site of its car dealership for its nonprofit and youth-outreach activities. Defendant put approximately $100,000 of improvements into the bay. One year later, Plaintiffs asked Defendant to sign a lease and to begin paying rent and utilities. When Defendant refused, Plaintiffs brought an action alleging unlawful detainer and seeking a writ of possession, damages, costs and attorney’s fees. Defendant filed a counterclaim and third-party complaint. The circuit court granted Plaintiffs’ motion for summary judgment, issued a writ of possession, and dismissed all of Defendant’s counterclaims and third-party claims. The Supreme Court affirmed in part and reversed and remanded in part, holding that the circuit court (1) properly granted summary judgment on the issue of unlawful detainer; (2) erred in granting summary judgment on Defendant’s counterclaims of promissory estoppel and detrimental reliance; and (3) did not abuse its discretion in denying Plaintiffs’ request for attorney’s fees. View "Anderson's Taekwondo Ctr. Camp Positive, Inc. v. Landers Auto Group No. 1, Inc." on Justia Law

Plaintiff Aroma Wines & Equipment, Inc. was a wholesale wine importer and distributor. Defendant Columbian Distribution Services, Inc. operated warehouses in Michigan. In 2006, Aroma agreed to rent some of Columbian’s climate-controlled warehouse space to store its stock of wine. According to the parties’ agreement, Columbian was required to maintain the wine within a temperature range of 50 to 65 degrees Fahrenheit. While the agreement required Columbian to provide Aroma with notice before Columbian could transport Aroma’s wine to a different warehouse complex, Columbian reserved the right under the agreement to move the wine without notice “within and between any one or more of the warehouse buildings which comprise the warehouse complex” identified in the agreement. Aroma’s sales declined sharply during 2008, and Aroma began falling behind on its monthly payments to Columbian. In January 2009, Columbian notified Aroma that it was asserting a lien on Aroma’s wine and that Aroma could not pick up any more wine or ship any more orders until past due invoices were paid. In March 2009, Columbian released to Aroma a small portion of its wine in exchange for a $1,000 payment on Aroma’s account. Notwithstanding this payment, Columbian asserted that Aroma had accrued a past-due balance of more than $20,000 on the account. At some point during this dispute, and contrary to the terms of the contract, Columbian removed the wine from its climate-controlled space and transported it to an uncontrolled environment. Aroma alleged that Columbian moved its wine to rent the space to higher-paying customers. Columbian conceded that it moved the wine but claimed that the move was temporary, that its purpose was to renovate the climate-controlled space, and that none of the wine was exposed to extreme temperature conditions. Aroma claimed that the time the wine spent in the uncontrolled space destroyed the wine’s salability. Aroma sued, alleging: (1) breach of contract; (2) violation of the Uniform Commercial Code; (3) common-law conversion; and (4) statutory conversion under MCL 600.2919a(1)(a). Columbian moved for a directed verdict on the statutory conversion claim, arguing that Aroma had failed to provide any evidence to support its assertion that Columbian converted Aroma’s wine to its own use. The motion on this count was granted, and Aroma appealed. After review, the Supreme Court limited review of the case to the trial court's decision on the statutory conversion claim, and reversed. The Court found that plaintiff proffered evidence at trial that would have allowed the jury to conclude that defendant used the wine for some purpose personal to defendant’s interests. As a result, the circuit court erred by granting defendant’s motion for directed verdict on this claim. View "Aroma Wines & Equipment, Inc. v. Columbia Distribution Svcs., Inc." on Justia Law

Plaintiff entered into a salvage contract with Defendant to obtain help when his boat went aground one night. Plaintiff later attempted to rescind the contract, claiming that he signed the contract under duress and disputing the sum owed to Defendant. The parties submitted the dispute to a panel of arbitrators pursuant to a binding arbitration clause in the salvage contract. Plaintiff then filed this lawsuit seeking a preliminary injunction against the arbitration and a declaration that the salvage contract was unenforceable. The district court denied the motion and stayed the case pending the outcome of the arbitration. The arbitration panel found in favor of Defendant and ordered Plaintiff to pay a salvage award. The district court affirmed the award. Plaintiff appealed, arguing that the district court erred in confirming the arbitration award without first addressing his claim that the arbitration clause was unenforceable. The First Circuit affirmed, holding that, where Plaintiff’s challenge to the validity of the arbitration clause itself came only after Defendant moved to confirm the panel’s award, the district court had no proper basis on which to refuse to confirm the arbitration panel’s award. View "Farnsworth, III v. Towboat Nantucket Sound, Inc." on Justia Law

The case involved an alleged fraudulent scheme involving United Bank and McQuade Appraisal Services (collectively, Respondents) to inflate the value of property in a residential development called Walnut Springs Mountain Reserve (Walnut Springs). Walnut Springs ultimately failed and was abandoned by the developer. Petitioners were owners of lots in Walnut Springs. The circuit court dismissed Petitioners’ claims, concluding, inter alia, that the majority of the claims were time-barred by the two-year statute of limitations. The Supreme Court (1) reversed the circuit court’s dismissal of Plaintiffs’ claims for fraud in the inducement and aiding and abetting fraud in the inducement, negligence, intentional or negligent infliction of emotional distress, breach of fiduciary duty, civil conspiracy, respondent superior, and punitive damages, as the claims were not time-barred; and (2) affirmed the circuit court’s dismissal of Plaintiffs’ remaining claims, holding that the court’s judgment regarding these claims was not in error. View "Evans v. United Bank, Inc." on Justia Law

In the name of controlling litigation costs, a heating and air conditioning contractor, Blue Hen Mechanical, Inc. sued Christian Brothers Risk Pooling Trust as subrogee for the Little Sisters of the Poor for malicious prosecution. In January 2008, the Little Sisters of the Poor contracted with Blue Hen to maintain the heating, ventilation, and air conditioning equipment at its nonprofit residential nursing home facility. Two months later, the nursing home's air conditioner broke, requiring the unit to be replaced at a cost of $168,740. The Little Sisters of the Poor filed suit against Blue Hen, alleging that the unit's failure was due to Blue Hen's negligence in inspecting and maintaining the equipment. After briefing and oral argument, the Superior Court determined that the Little Sisters of the Poor had not produced sufficient evidence of Blue Hen's negligence, and granted Blue Hen's motion for summary judgment. Rather than seek costs in that lawsuit, Blue Hen initiated another suit against the Little Sisters of the Poor, alleging malicious prosecution and abuse of process. Blue Hen conceded that the Little Sisters of the Poor initially had good cause to sue. But it contended that during the course of that litigation, the Little Sisters of the Poor should have realized that its suit lacked probable cause, and should have dismissed its claims against Blue Hen. The Superior Court refused to enlarge the tort of malicious prosecution, which has historically been disfavored by Delaware courts, and determined that under the tort (as Delaware court have defined it), Blue Hen failed to demonstrate that the Little Sisters of the Poor acted maliciously in bringing its action and granted summary judgment to the Little Sisters of the Poor. Blue Hen appealed, and the Supreme Court affirmed: "[w]hatever the original wisdom for sanctioning the tort of malicious prosecution, we refuse to extend it to encompass claims properly brought before the court in the first instance. As important, there is no basis in the summary judgment record to support a rational jury finding that the Little Sisters of the Poor acted maliciously in the original suit, rather than in a good faith belief that Blue Hen was responsible for the serious losses that the Little Sisters of the Poor had suffered." View "Blue Hen Mechanical, Inc. v. Christian Brothers Risk Pooling Trust" on Justia Law

A homeowner sued a general contractor for allegedly shoddy and incomplete work in connection with a major home remodeling contract. The homeowner’s complaint also contained a cause of action against the general contractor’s license bond company, seeking to recover for the contractor’s having “grossly deviated” from the plans and specifications for the job. To support his action, the homeowner explicitly alleged in the complaint that the contractor was licensed at all times. The contractor cross-complained against the homeowner for unpaid work. The cross-complaint included a copy of their written contract which showed the contractor’s license number. To that, the homeowner simply filed a general denial of all allegations. When the case came to trial, the homeowner (contrary to the applicable local rule requiring plaintiffs to identify all controverted issues) did not identify licensure as a controverted issue. The contractor’s attorney did not obtain a verified certificate from the Contractors’ State License Board showing the contractor was licensed at all times during his performance. But when the contractor was about to rest his case on the cross-complaint, the homeowner’s attorney made a motion for nonsuit based on the absence of such a verified certificate as required under Business and Professions Code section 7031, subdivision (d). The trial judge deferred immediate ruling on the homeowner’s nonsuit motion. "As the contractor learned to his chagrin, it [...] takes at least six days to obtain a verified certificate from the License Board even if one drives overnight to Sacramento to pick it up in person." While the contractor was eventually able to obtain a verified certificate of licensure from the License Board, he could not do so until after the close of the trial, in which he prevailed on his claim for unpaid work from the homeowner. Because no certificate of licensure could be produced, the trial judge reluctantly granted the homeowner’s nonsuit motion, by judgment notwithstanding the verdict (JNOV). This appeal followed. After review, the Court of Appeal reversed that judgment in favor of the homeowner, with instructions to the trial judge to grant judgment in favor of the general contractor as against the homeowner. "We conclude this is one of those relatively rare cases where a party can be bound by a judicial admission made in an unverified complaint. Here, the judicial admission that the general contractor was licensed, compounded by the homeowner’s failure to comply with the local rule requiring identification of all controverted issues, rendered the question of licensure assuredly uncontroverted for purposes of section 7031. Because of the judicial admission, the rule of 'Advantec Group, Inc. v. Edwin’s Plumbing Co., Inc.' (153 Cal.App.4th 621 (2007)) does not apply." View "Womack v. Lovell" on Justia Law