Justia Contracts Opinion Summaries

Leonor, a Michigan dentist, suffered an injury that prevented him from performing dental procedures. At the time of his injury, he spent about two-thirds of his time performing dental procedures and approximately one third managing his dental practices and other businesses that he owned. After initially granting coverage, his insurers denied total disability benefits after they discovered the extent of his managerial duties. Leonor sued, alleging contract and fraud claims. The district court granted summary judgment to Leonor on his contract claim, holding that “the important duties” could plausibly be read to mean “most of the important duties” and resolving the ambiguity in favor of Leonor under Michigan law. The Seventh Circuit affirmed, stating that the context of the policy language in this case permits a reading of “the important duties” that is not necessarily “all the important duties.” View "Leonor v. Provident Life & Accident Co." on Justia Law

The Wongs bought a hillside home in San Carlos for $2.35 million from the Stolers. Several months after they moved in, the Wongs discovered that they and 12 of their neighbors were connected to a private sewer system and were not directly serviced by the city’s public system. Believing they had been deceived, they sued the Stolers and the real estate agents who brokered the sale alleging various claims, including rescission. After the Wongs settled their dispute with the real estate agents for $200,000, a trial was held on the rescission claim only. Although the court found that the Stolers, with reckless disregard, made negligent misrepresentations to the Wongs, it declined to effectuate a rescission , but ordered the Stolers to be, for a limited time, indemnifiers to the Wongs for sewer maintenance and repair costs exceeding the $200,000 they obtained in their settlement with the agents. The court of appeal reversed, finding that the trial court declined to effectuate a rescission of the contract based on incorrect justifications and that its alternative remedy failed to provide the Wongs with the complete relief to which they were entitled. View "Wong v. Stoler" on Justia Law

OEpic and ALi agreed to cooperate in developing a power amplifier for use in wireless networking devices and entered into a nondisclosure agreement. Wong signed the agreement on Ali’s behalf. Later, Wong formed Richwave. OEpic continued to transfer intellectual property to Wong’s team based upon assurances that Ali’s rights and obligations under the agreement had been or would be assumed by Richwave. Richwave subsequently disclaimed any need for OEpic’s services; ALi disclaimed any further obligation to OEpic. Epic was formed, became successor to all of OEpic’s interest, and sued ALi, Richwave, and Wong, alleging that ALi had transferred certain of Epic’s intellectual property to Wong and Richwave in violation of the agreements between OEpic and ALi.. The trial court granted Wong and Richwave summary judgment on the ground that a settlement agreement with ALi barred remaining causes of action. The court of appeal reversed, noting that several other provisions of the settlement agreement containing the disputed release clause are not easily reconciled its seemingly broad language. The subsequent conduct of the contracting parties also appears inconsistent with intent to extend the release to unaffiliated third parties. View "Epic Commc'ns, Inc. v. Richwave Tech., Inc." on Justia Law

Following a casino investment venture gone awry, Balagiannis and Mavrakis entered into a settlement agreement: Mavrakis would pay Balagiannis $1.225 million. Balagiannis would dismiss pending federal court litigation with prejudice and withdraw the complaint he had filed against Mavrakis in the Greek legal system no later than September 28, 2012. Mavrakis made three of five agreed payments. In March 2012, Balagiannis sent a letter to a district attorney in Athens. The letter did not reference withdrawal of the complaint against Mavrakis, but requested “completion of the ongoing preliminary investigation.” After Balagiannis refused to confirm that he had withdrawn the Greek complaint, Mavrakis declined to make the final two payments ($925,000). In October 2013, Balagiannis filed suit alleging that Mavrakis breached the settlement agreement. Three months later (19 months after September 28, 2012), Balagiannis filed a declaration with the district court (filed in Greece), which may (or may not) have withdrawn the complaint in Greece. The district court held that Balagiannis failed to allege plausibly his compliance with the settlement agreement, and dismissed the suit. The Seventh Circuit affirmed. View "Reserve Hotels PTY Ltd v. Mavrakis" on Justia Law

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