Justia Contracts Opinion Summaries

The Federal Deposit Insurance Corporation (“FDIC”) was appointed to act as receiver for the assets of First Heritage Bank, N.A. (“Heritage”). Heritage had previously purchased, pursuant to an agreement (“Agreement”), interest in a commercial loan that Professional Business Bank (“PBB”) had made to Al’s Garden Art, Inc. The FDIC subsequently sold Heritage’s interest under the Agreement to Commerce First Financial, Inc. (“CFF”). When Al’s Garden Art defaulted on its loan obligations, PBB sued to collect on the loan. CFF then brought a breach of contract action against PBB. PBB filed a third party complaint against the FDIC, alleging that the FDIC’s failure to satisfy the Agreement’s pre-receivership contractual provisions constituted breach of contract. The FDIC moved to dismiss on the grounds that the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) preempted PBB’s claims. The district court denied the motion and granted summary judgment for PBB. The Ninth Circuit affirmed, holding that the FDIC, in its role of receiver of a closed bank, may not breach underlying asset contractual obligations without consequence. View "Bank of Manhattan, N.A. v. Fed. Deposit Ins. Corp." on Justia Law

In 2012, the Montgomery County Council in Maryland approved plans to tear down the White Flint Shopping Center (the “Mall”) and redevelop the site into a mixed-use, town-center-style development. Lord & Taylor, LLC, which operated a retail store connected with the Mall, filed this action seeking a declaration that the Mall’s owner, White Flint, L.P., was precluded from going forward with the development and seeking a permanent injunction to enjoin White Flint from carrying out the redevelopment. The district court denied Lord & Taylor’s request for injunctive relief, determining that an injunction would be unworkable given the “advanced stage[ ]” of the project. The Fourth Circuit affirmed, holding (1) Maryland law clearly authorized the district court to go beyond the state-law presumption in favor of injunctive relief to consider feasibility and related equitable concerns; and (2) the district court did not err in finding that injunctive relief would be infeasible. View "Lord & Taylor, LLC v. White Flint, L.P." on Justia Law

Plaintiff, Renewable Resources, Inc., purchased the Potter Hill Mill, which was slated for demolition. Plaintiff and the Town of Westerly subsequently entered into a memorandum of agreement (MOA) in which Plaintiff pledged to meet a series of conditions to stave off demolition. Due to Plaintiff’s failure to expeditiously pursue its development plan, the Town began requesting proposals for the mill’s demolition. Plaintiff subsequently filed this action seeking a preliminary injunction and a permanent injunction against the Town barring demolition of the mill. A superior court justice entered a preliminary injunction order. The superior court later vacated the preliminary injunction and permitted the Town to issue a demolition order, concluding that Plaintiff had breached the MOA. In a subsequent judgment, the superior court dismissed the remaining counts of Plaintiff’s complaint. The Supreme Court affirmed, holding that the hearing justice acted within his discretion in vacating the preliminary injunction. View "Renewable Res., Inc. v. Town of Westerly" on Justia Law

Sysdyne Corporation and Xigent Solutions, LLC provide staff augmentation services to companies in the engineering and information industries. When Brian Rousslang, a former employee of Sysdyne Corporation who was subject to a noncompete agreement, obtained employment with Xigent Solutions, LLC, Sysdyne sued Xigent for tortious interference with contract and sued Rousslang for breach of contract. The trial court (1) awarded damages to Sysdyne on its breach of contract claim with respect to certain preexisting customers Rousslang brought with him from Sysdyne to Xigent; but (2) ruled in favor of Xigent on the tortious interference claim, concluding that Xigent was justified in interfering with the contract because Xigent conducted a reasonable inquiry into the enforceability of the noncompete agreement and, based on advice of outside counsel, honestly believed that the agreement was unenforceable. The court of appeals affirmed. The Supreme Court affirmed, holding (1) the justification defense to a claim of tortious interference with a contract may be satisfied by a defendant’s reliance on incorrect advice of outside counsel; and (2) under the facts of this case, the trial court did not err in concluding that Xigent met its burden of proving the justification defense. View "Sysdyne Corp. v. Rousslang" on Justia Law

IPSCO Tubulars contracted for Ajax to provide equipment to heat-treat steel pipe at IPSCO’s Blythesville plant, which produces pipe for use in the oil and gas industry. After installation, the product did not perform properly. Tubing processed through the equipment was badly distorted. IPSCO sued for breach of contract, gross negligence, and punitive damages. The district court found Ajax liable for breach of contract, awarding $5,162,298.55 in damages. The Eighth Circuit reversed and remanded the breach-of-contract damages, holding that there were inadequate findings to support the award, and affirmed in all other respects. The most reasonable interpretation of the contract as a whole obligated Ajaxto provide equipment that could uniformly heat-treat pipe, at 96 fpm, without causing distortion, cracks or inconsistencies that would prevent the pipe's conversion to higher American Petroleum Institute grades; the evidence was sufficient to establish that the defects in the Ajax equipment was the cause of the defects in the pipe. View "IPSCO Tubulars, Inc. v. Ajax TOCCO Magnathermic Corp." on Justia Law

Covol Fuels No. 4, LLC (Covol) and Pinnacle Mining Co., LLC (Pinnacle) were parties to a business agreement - a fully integrated contract - wherein Covol conducted coal fines recovery operations at Pinnacle’s mine in Wyoming County, West Virginia. Covol was authorized to unilaterally terminate the contract if its operations became economically unfeasible. After it became economically unfeasible for Covol to continue in the business, Covol initiated this action, alleging four claims. The district court granted summary judgment in favor of Pinnacle as to all claims. Covol appealed, contending that the district court erred in granting summary judgment on its breach of contract claim and on its tort claims. The Fourth Circuit affirmed in part and vacated in part, holding (1) genuine issues of material fact existed with respect to Covol’s breach of contract claim that a jury must decide; and (2) Covol’s tort claims were barred by the “gist of the action doctrine.” View "Covol Fuels No. 4, LLC v. Pinnacle Mining Co., LLC" on Justia Law

Shaun Trabert purchased a used vehicle from an automobile dealer. Trabert signed a preprinted industry-drafted installment sales contract. The dealer then assigned the contract to Consumer Portfolio Services, Inc. Portfolio later repossessed Trabert's vehicle, and Trabert filed a class action complaint alleging Portfolio's repossession/default notices were defective under consumer statutes. This appeal was the second time the issue of an automobile purchaser who brought consumer claims against the creditor-assignee of the parties' sales contract came before the Court of Appeal. The first appeal involved the enforceability of an arbitration agreement in the contract. In "Trabert I," the Court held the arbitration agreement contained certain unconscionable provisions, and remanded for the court to determine whether these provisions could be severed from the remaining agreement. On remand, the trial court declined to sever the provisions and denied the creditor-assignee's motion to compel arbitration. Portfolio challenged the trial court's last order in this second appeal. After review, the Court of Appeal concluded the trial court erred in denying Portfolio's motion. "The unconscionable provisions concern only exceptions to the finality of the arbitration award, and can be deleted without affecting the core purpose and intent of the arbitration agreement. The deletion of these exceptions creates a binding arbitration award and promotes the fundamental attributes of arbitration, including speed, efficiency, and lower costs." The Court reversed and remanded with directions for the court to sever the unconscionable provisions from the arbitration agreement and granted Portfolio's motion to compel arbitration. View "Trabert v. Consumer Portfolio Services" on Justia Law

Appellee Palm Energy Offshore, L.L.C. owned the mineral rights in an area of the Gulf of Mexico called the West Delta 55 block (“WD55”). Palm also served as the court-appointed manager for appellee H.C. Resources, L.L.C. (“HCR”) and its mineral holdings at another Gulf location, the Chandeleur 37 block (“C37”). Acting as HCR’s manager, Palm asked CM to service one of HCR’s wells at C37. CM agreed and chartered a lift boat, the L/B Nicole Eymard from appellee Offshore Marine Contractors, Inc. to perform maintenance work. The ship worked at C37 from July 18 until July 27. On July 27, Palm, now acting on its own behalf, asked CM to send the Nicole Eymard to WD55. CM dispatched the ship to WD55. After completing the job at WD55, the crew of the Nicole Eymard attempted to retract the ship’s legs from the ocean floor. The crew discovered that one of the legs was stuck. The crew worked to free the leg until August 18, when Offshore ordered the crew to sever the leg and return to port ahead of an approaching storm. In port, Offshore completed repairs on the ship on October 10. Offshore then sued CM and Palm for charter fees that accrued from July 15 to August 18, for “downtime charter” from August 19 to October 10, and for the cost of repairs. CM and Palm then filed various counter- and cross-claims against each other and Offshore. CM and Offshore’s claims against each other are governed in part by the terms of an oral charter agreement. CM and Palm’s claims against each other are governed in part by the terms of a Master Service Agreement (“MSA”), and in part by a specific work order. The MSA contained an indemnity agreement (“Indemnity Agreement”). After a bench trial, the district court held that CM owed Offshore for charter fees that accrued from July 15 to July 27 while the Nicole Eymard was at C37, and for charter fees that accrued from July 28 to August 18 while the ship was at WD55. The court held that CM could recover the same fees from Palm. The court held that neither CM nor Palm owed Offshore for downtime charter fees from August 19 to October 10, or for repairs. CM, Offshore, and Palm filed motions to alter or amend the judgment under Fed. R. Civ. P. 59. The court granted these motions to the extent they sought clarification regarding the court’s order on prejudgment interest. The court determined that the Indemnity Agreement barred CM from seeking repayment for those fees. The court denied the parties’ motions in all other respects. CM appealed from the district court’s judgment and its post-trial order. Finding no reversible error in the district court’s judgment and post-trial order, the Fifth Circuit affirmed. View "Offshore Marine Contractors, et al v. Palm Energy" on Justia Law

Central Southwest Texas Development, LLC and Washington Mutual Bank (WaMu) entered into a lease agreement in November 2007: Central was to construct a WaMu bank branch in Austin, and deliver it to WaMu by January 1, 2008, after which WaMu would owe rent to Central for the twenty-year term of the lease. Central did not yet have fee simple ownership of the property, but had contracted to purchase it and had deposited earnest money in escrow. After a number of extensions of the deadline, Central had not yet closed on the property at the time of WaMu’s collapse in September 2008. WaMu was declared insolvent and the FDIC was appointed as its receiver. JPMorgan Chase Bank acquired most of WaMu’s assets and liabilities under a Purchase and Assumption (P&A) Agreement with the FDIC. If Chase declined, the FDIC would have been authorized to repudiate “burdensome” leases if doing so would “promote the orderly administration of [WaMu’s] affairs.” Having determined that Chase was unlikely to accept the lease based on the proximity of Chase branches to the leased property, a Central executive emailed the FDIC and asked to be “release[d] . . . from the Lease obligation in order to pursue other options.” Central was soon notified by Chase of its rejection of the lease and by the FDIC of its repudiation. Central subsequently closed on the property. Having failed to find a replacement tenant, Central sold the property the same day a little more than it paid. Central later concluded that the lease did not qualify as "Bank Premises" under the P&A Agreement because no banking facilities were occupied (or even built) by the time of WaMu’s failure. With this new understanding of the lease’s status, Central filed this lawsuit against Chase for breach. After Central moved for summary judgment, the district court held that the lease was not a Bank Premises lease, and therefore that Chase could not decline assignment under the P&A Agreement. Consistent with the Fifth Circuit's ruling in "Excel Willowbrook, LLC v. JPMorgan Chase Bank, NA (758 F.3d 592 (2014)), the district court also held that this assignment created privity of estate between Central and Chase, and therefore that Central had standing to assert its interpretation of the P&A Agreement. Chase also moved for summary judgment on the ground that the email communications between the parties constituted a mutual termination of the lease. ROA 2048. The case proceeded to a bench trial, and the district court ruled that Chase’s attempted rejection of the lease was an anticipatory breach, entitling Central to contract damages and excusing it from further performance. Chase and the FDIC appealed. After review, the Fifth Circuit found "no reason to disturb the trial court's finding" that no mutual termination occurred. Accordingly, the Court affirmed the district court. View "Central SW Texas Devel, L.L.C. v. JP Morgan Chase" on Justia Law

Plaintiff-appellant Patricia Clements refinanced a mortgage with Wells Fargo Bank, N.A., which hired LSI Title Agency, Inc. to provide mortgage refinancing services for the transaction. Because Georgia law required all closing services to be performed by a licensed attorney, LSI contracted with the Law Offices of William E. Fair, LLC to provide a closing attorney, and the Law Offices arranged for Sean Rogers to serve in that capacity. After the refinancing, Clements filed a putative class action in a state court against LSI, the Law Offices, Fair, and other unnamed defendants. Clements alleged that LSI routinely had non-attorneys prepare all of the documents for the closing and that the Law Offices and Fair arranged for a licensed attorney, Rogers, to witness the signing of the documents, in violation of Georgia law. This appeal presented three questions to the Eleventh Circuit Court of Appeals for review: (1) whether an allegation that a lender charged a borrower for unearned fees conferred standing on the borrower; (2) whether a mortgage service provider performs only nominal services when it procures a closing attorney; and (3) whether a mortgage service provider "give[s or] . . . accept[s] any portion, split, or percentage of any [settlement] charge" when it marks up the price of a third-party service. Clements alleged two violations of the Real Estate Settlement Procedures Act, and three violations of Georgia law. The district court dismissed the amended complaint for lack of standing. Although the Eleventh Circuit concluded that Clements had standing to sue, the Court affirmed in part the dismissal of her federal claims for failing to state a claim upon which relief could be granted, and vacated in part and remanded for the district court to decide whether to exercise supplemental jurisdiction over her claims under Georgia law. View "Clements v. LSI Title Agency, Inc." on Justia Law