Justia Contracts Opinion Summaries

In this case, the buyer persuaded the Superior Court to award it $15.1 million in damages when the buyer bought a 65% interest in an investment advisory firm for $25 million. The buyer’s premise was that it would not have paid $25 million but for its expectancy that it would manage seven funds for three or more years. But the majority of the assets under management at the investment advisory firm were attributable to accounts other than the seven funds. Significantly, the contract enabled the seller to terminate the buyer’s right to manage the seven funds for any reason, so long as it paid a termination fee capped at $3.5 million, and to terminate the buyer without any compensation if the seller believed its fiduciary duties required or if the buyer’s performance fell below a contractual standard. After three years, the seller could terminate the buyer as manager of the funds for any reason and owe no compensation at all. The Delaware Supreme Court reversed the Superior Court. The Supreme Court found that instead of giving effect to the parties’ contractual bargain, the Superior Court erred by implying contractual obligations on the part of the seller that were inconsistent with the contract’s express terms. This enabled the buyer to obtain in litigation benefits in excess of those potentially available under the contract, and contractual protections that the buyer had failed to obtain in negotiations. The case was remanded for a determination of what, if any, termination fee is due to the buyer because of the seller’s termination of it as manager of the funds. View "Nationwide Emerging Managers, LLC, et al. v. Northpointe Holdings, LLC, et al." on Justia Law

Atwood Health Properties, LLC contracted with Calson Construction Company to construct a medical office building. Calson engaged Gem Plumbing & Heating Co., Inc. (GEM) as a subcontractor to design and install a heating, ventilation, and air conditioning (HVAC) system. Five years after the project was completed, Atwood sold the building to Atwood Medical Properties, LLC (AMP). When AMP experienced compressor failures in the HVAC system, AMP filed suit against Atwood. Atwood paid for a new HVAC system and initiated arbitration proceedings against Calson to recover its costs. Calson, in turn, initiated an arbitration proceeding against GEM for indemnification under the parties’ contract. The two arbitration proceedings were consolidated. The arbitrator concluded that Calson should pay Atwood $358,223 and that GEM should pay Calson that same amount. The superior court confirmed the arbitration award. GEM appealed. The Supreme Court affirmed, holding that the trial justice properly confirmed the arbitration award. View "Atwood Health Props., LLC v. Calson Constr. Co." on Justia Law

I-CA is a small business owned by Alonis that imports products from Israel to California. Palram, based in Israel, manufactures corrugated panels. I-CA opened the first U.S. warehouse for Palram and started importing its products. In 1997 or 1998, Palram lost the business of selling wood closure strips to Home Depot. While exploring alternatives for Palram, I-CA established a business relationship with Plasgad. Plasgad and I-CA worked together for many years to develop a plastic closure strip specifically for Palram products. Plasgad obtained a patent for the strips in 2002. I-CA became Palram’s sole supplier; Palram was the exclusive distributor of the products. Plasgad began selling the strips directly to Palram in 2007. I-CA sued both companies for tortious interference with contractual relations. Separate awards of $225,137.62 plus prejudgment interest were entered in favor of I-CA against each. A third award of $327,396.96, plus prejudgment interest of $157,778.41 was made in favor of Plasgad and against I-CA for breach of contract, offset against the award in favor of I-CA, resulting in a net recovery to Plasgad of $260,604.48. I-CA was awarded costs against Palram as the prevailing party, but Plasgad was awarded costs against I-CA as the prevailing party. The court of appeal affirmed. View "I-CA Enters., Inc. v. Palram Am., Inc." on Justia Law

Richard M. Gilley sued his former employer, Southern Research Institute ("SRI"), seeking compensation he alleged he was owed as a result of his work leading to SRI's procurement of United States Patent No. 5,407,609. The trial court entered a summary judgment in favor of SRI, and Gilley appealed that judgment to the Supreme Court. After review, the Supreme Court found that because Gilley did not timely assert a claim based on a January 2005 transaction in his complaint and because the money received by SRI in a July 2007 transaction was not intellectual-property income subject to sharing under the SRI awards policy, the summary judgment entered by the trial court was proper and was therefore affirmed. View "Gilley v. Southern Research Institute" on Justia Law

A “viatical” or “life settlement” permits an insured to sell his life insurance policy. Federal tax and some state laws have been amended to accommodate the practice. In 2006, an agent persuaded Close, age 74, to apply for a $5 million life insurance policy. As submitted to PHL, his application falsely stated Close’s net worth and income, and failed to disclose his conviction for receiving illegal kickbacks. Under the agent’s guidance, Close falsely stated his net worth to obtain a two-year, $300,225 premium financing loan from CFC, a PHL-approved funding source. The policy was pledged as collateral; Close personally guaranteed 25 percent of the loan, believing that the policy would be worth $1.3 million in two-years, when it became “incontestable” under Minn. Stat. 61A.03.1(c) and that he would be able to sell it for $500,000. PHL conducted minimal investigation and received premiums of $272,025; CFC received $14,200 in fees; and the agent and a CFC employee split substantial commissions. In 2009, BNC explained Close’s options for repayment: refinancing, selling, or relinquishing the policy to the lender. The secondary market had crashed. Close surrendered the policy. When Close died in 2011, investigation revealed the fraudulent misrepresentations, but rescission was foreclosed by the incontestability statute. PHL sought a declaratory judgment that the policy was void as contrary to public policy for lack of an insurable interest. The district court agreed. The Eighth Circuit reversed, stating that permitting insurers to resist paying based on evidence that an insured used premium financing and planned to sell, is “not a result the Supreme Court of Minnesota would find acceptable in exercising its ‘delicate and undefined power’ to declare a contract void. View "PHL Variable Ins. Co. v. Bank of Utah" on Justia Law

Indiana Restorative Dentistry, P.C. (“IRD”) insured its dentist’s office under a policy issued by ProAssurance Indemnity Company, Inc. (“ProAssurance”) and procured through the Laven Insurance Agency, Inc. (“Laven”). After a fire destroyed the entire IRD office, IRD discovered that the contents coverage of its insurance policy was inadequate to cover its loss. IRD sued ProAssurance and Laven in tort and contract. The trial court granted partial summary judgment for ProAssurance, concluding that Laven had no duty to advise based on a special relationship, that Laven had no contractual duty to procure insurance that would have fully covered the fire losses, and that ProAssurance was not vicariously liable for the alleged acts or omissions of Laven. The Supreme Court affirmed in part and reversed in part, holding (1) genuine issues of material fact remained regarding the existence of a special relationship between IRD and Laven and, consequently, a duty to advise; and (2) Laven had no duty to procure full coverage because there was no evidence showing a “meeting of the minds” on an implied contract requiring Laven to procure a policy that would cover all losses to office contents. View "Ind. Restorative Dentistry, P.C. v. Laven Ins. Agency, Inc." on Justia Law

American Express sent Wise a credit card and “Agreement.” Wise accepted the offer by using the credit card. The Agreement provides that it is governed by the laws of Utah and provides that, upon default: “You agree to pay all reasonable costs, including reasonable attorneys’ fees, incurred by us.” Wise defaulted on the account, and American Express retained a law firm, which filed suit in Ohio state court. Wise filed for bankruptcy, staying that lawsuit, then filed a putative class action lawsuit against the attorneys, seeking to represent consumers from whom they demanded attorney’s fees. Noting that Ohio law bars contracts that would require payment of attorney’s fees on the collection of consumer debt, Wise alleged violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692,and the Ohio Consumer Sales Practices Act (OCSPA), Ohio Rev. Code 1345.02, 1345.03. The district court applied Utah law and determined that: the case fell outside the scope of the arbitration clause; OCSPA did not apply; Utah law allowed for the collection of attorney’s fees: and there was no FDCPA violation. The Sixth Circuit reversed in part. The pleadings do not resolve which law would govern the attorney’s-fee question. On the state law claim, the court affirmed. View "Wise v. Zwicker & Assocs., PC" on Justia Law

Plaintiff obtained a $23 million judgment against a Corporation. Plaintiff sought to secure payment on that judgment by filing suit in federal district court against the Corporation’s president and its corporate parent, alleging that Defendants had looted the Corporation of more than $18 million in assets in order to render it judgment-proof. After Plaintiff learned that one of the Corporation’s corporate parents planned to merge with an Austrian subsidiary, the district court issued a temporary restraining order, later converted into a preliminary injunction, barring the merger. Defendants nevertheless effected the merger. The district court issued civil contempt sanctions on Defendants for violating the court’s preliminary injunction order. Plaintiff subsequently moved for default judgment based on Defendants’ assertion that they had no intention of complying with the contempt order. The district court entered judgment for Plaintiff and awarded $75 million to Plaintiff. The First Circuit affirmed, holding (1) the district court properly exercised personal jurisdiction over Defendants; (2) Plaintiff’s complaint adequately stated valid causes of action for, inter alia, tortious interference with contractual relations and veil piercing; (3) the district court did not abuse its discretion in entering default judgment as a sanction for Defendants’ discovery violations; and (4) the district court did not err when it entered a damage award without an evidentiary hearing. View "AngioDynamics, Inc. v. Biolitec AG" on Justia Law

Bannum protested decisions of the Bureau of Prisons of the U.S. Department of Justice to award two contracts to other bidders, alleging a common defect in the terms of the solicitations and problems in the evaluation of competing bids. Bannum cited a requirement of compliance with Prison Rape Elimination Act of 2003, 42 U.S.C. 15601–15609 and the government’s failure to provide pricing information with respect to the requirement. In each case, the Court of Federal Claims dismissed Bannum’s suit. Finding that Bannum’s proposal, by failing to commit Bannum to a fixed price, was materially out of compliance with the terms of the solicitation, the court concluded that Bannum was not an “interested party” entitled to bring its protest under 28 U.S.C. 1491(b). The Federal Circuit affirmed in consolidated appeals, holding that, because Bannum did not adequately present its objection to the solicitations before the awards, Bannum waived its ability to challenge the solicitations. On appeal, Bannum failed to preserve its separate challenges to the bid evaluations. View "Bannum, Inc. v. United States" on Justia Law

In purchasing a vehicle, Robin Hinkle and her former husband purchased GAP Insurance issued by Safe-Guard Products International, LLC (Safe-Guard). The Hinkles were told that the GAP Insurance would relieve them of payment owed on the vehicle if it was declared a total loss as a result of an accident and more was owed for the vehicle than the value assigned to it at the time it was totaled. Robin was later involved in an accident that resulted in her vehicle being declared a total loss. To pay off the balance owed on the vehicle, Robin submitted a claim to Safe-Guard under the GAP Insurance. Safe-Guard denied coverage. Robin subsequently filed this action against Safe-Guard, alleging breach of contract and bad faith. Robin filed a motion for partial summary judgment on the issue of whether the GAP Insurance constituted insurance under state law for purposes of this litigation. The circuit court granted the motion. Thereafter, Safe-Guard initiated the instant proceeding seeking a writ of prohibition to preclude enforcement of the partial summary judgment order. The Supreme Court denied the writ, holding that Safe-Guard’s GAP Insurance constituted insurance under the laws of West Virginia. View "State ex rel. Safe-Guard Prods. Int’l LLC v. Hon. Miki Thompson" on Justia Law