Justia Contracts Opinion Summaries

Plaintiff, a restaurant supply company, leased commercial property from Defendant. The lease provided Plaintiff and the guarantor with the option to purchase the premises during the term of the lease. In a separate provision, the lease required Defendant to perform environmental remediation on the premises. Plaintiff told Defendant that it had elected to exercise the option to purchase the premises but that, before the parties could close on the transaction, Defendant had to fulfill its obligation to complete the environmental remediation. Plaintiff, however, never attempted to tender payment of the purchase price. Plaintiff subsequently filed this action requesting that the trial court order specific performance of the option to purchase provision in the lease. The trial court declined to order specific performance. The Appellate Court affirmed, concluding that Plaintiff had failed to exercise the option to purchase in accordance with its terms. The Supreme Court affirmed, holding (1) because Plaintiff did tender the purchase price as required, it failed to exercise the option to purchase when the option was available; and (2) the doctrine of frustration of purchase did not apply in this case because Defendant’s lack of environmental remediation did not interfere with the purpose of the lease. View "Howard-Arnold, Inc. v. T.N.T. Realty, Inc." on Justia Law

Sherri Light, individually and as personal representative of the estate of Steven Light, appealed a judgment entered after a bench trial determining GRB Financial Corporation held a valid and enforceable security interest in a ring purchased from Royal Jewelers, Inc., and authorizing GRB Financial to foreclose its security interest in the ring. Royal Jewelers was a jewelry store in Fargo operated by three brothers, Richard, Brent and Gregory Olson. The brothers also owned a separate corporation, GRB Financial, which operated as an indirect lender taking assignments of loans from retailers, including Royal Jewelers. Steven Light was a customer of Royal Jewelers for several years. In September 2009, Steven owed about $40,000 on an open credit account with Royal Jewelers. Steven Light purchased a wedding ring for Sherri on his open credit account (for over $50,000). At some point, Steven issued a $25,500 check to Royal Jewelers, which was applied to the oldest purchases on his account. That check was returned for insufficient funds. Royal Jewelers' monthly statements reflected Steven thereafter paid about $65,000 on his account from October 2009 through December 2010. Sherri stated Steven's payments were applied to the invoice number on the charge receipt for the ring and the ring was paid for by December 2010. In December 2010, Royal Jewelers, with Steven's consent, assigned Steven Light's debt with Royal Jewelers and the security for that debt to GRB Financial. Steven Light and GRB Financial executed a note modification agreement changing repayment terms, extending the maturity date of a prior note modification agreement between the parties and pledging nine additional items as security for modification. The exhibit describing the items was not separately signed by Steven Light, but included the ring on a list of nine items. Steven died in February 2012. Royal Jewelers and GRB Financial sued Sherri, individually and as personal representative of Steven Light's estate, for a determination that GRB Financial had a valid security interest in the ring. After a bench trial, the district court found no stated preference or agreement existed between the Lights and Royal Jewelers that Steven's payments would be first applied to the ring. The court found even if an agreement existed, it was unenforceable under the statute of frauds because it was not in writing. The court determined that in the absence of any agreement or designation about how payments would be applied to Steven's debt, Royal Jewelers was entitled to apply his payments to first reduce the amount owed on his oldest purchases. The court also determined the evidence did not establish the Lights detrimentally relied on Royal Jewelers' monthly account statements about application of payments to Steven Light's account. The court further concluded Steven's gift of the ring to Sherri was subject to Royal Jewelers' security interest in the ring and GRB Financial, as an assignee of Royal Jewelers, had a valid and enforceable security interest in the ring. Sherri Light argued on appeal that the district court clearly erred in determining the Lights did not manifest an intent or desire under N.D.C.C. 9-12-07(1) that Steven's payments on his account would be applied first to pay for the ring. She argued her testimony about Steven's assurances that he made arrangements with Royal Jewelers for application of his payments to the ring and about witnessing Steven's manifestation of that intent when the ring was purchased on October 2, 2009, was corroborated by Royal Jewelers' monthly account statements, indicating Steven's payments were applied to pay for the ring and not for his prior purchases. After review, the Supreme Court concluded the district court did not clearly err in finding the Lights did not manifest an intent that payments on an open credit account with Royal Jewelers would be applied first to the purchase price of the ring and in finding the Lights did not detrimentally rely on Royal Jewelers' monthly account statements. Furthermore, the Court concluded the court did not err in determining GRB Financial had a valid and enforceable security interest in the ring. View "Royal Jewelers, Inc. v. Light" on Justia Law

The Forest Service awarded EM Logging a timber sale contract for the Kootenai National Forest in Montana. The contract’s load limit clause states that “[a]ll vehicles shall comply with statutory load limits unless a permit from the Forest Service and any necessary State permits are obtained,” the haul route clause states that “[a]ll products removed from Sale Area shall be transported over the designated routes of haul” and a notification clause requires that “Purchaser shall notify Forest Service when a load of products … will be delayed for more than 12 hours in reaching weighing location.” The provision under which the Forest Service terminated the contract refers to: “a pattern of activity that demonstrates flagrant disregard for the terms of this contract.” The Forest Service issued multiple notifications of breach with respect to the clauses, suspended operations, and terminated the contract. The Federal Circuit reversed, finding that one instance of route deviation necessitated by illness, one load limit violation, and two instances of delayed notifications. None of the alleged violations independently substantiated the finding of flagrant disregard. Even together, the violations were not substantial evidence of a pattern of activity demonstrating that EM’s actions were in flagrant disregard of the contract. View "EM Logging v. Dep't of Agric." on Justia Law

Professional golfing legend Jack Nicklas' participation in a developer's plan to build a luxurious golf course and housing plan allegedly led plaintiffs-appellants Jeffrey and Judee Donner to invest $1.5 million in the development. "Plans went awry:" the developer's parent company went bankrupt, and the project was never built. The Donners settled with the developer's parent company in its bankruptcy proceedings, then sued Jack Nicklaus and Jack Nicklaus Golf Club, LLC for intentional misrepresentation, negligent misrepresentation, and violation of the Interstate Land Sales Full Disclosure Act. The district court dismissed the action, holding in the alternative: (1) the complaint failed to state a valid claim for relief; and (2) defendants were entitled to summary judgment because the Donners elected their remedies by entering into a settlement agreement with other parties. After review, the Tenth Circuit disagreed with the district court with respect to two issues: (1) the dismissal of the claim involving intentional misrepresentation of Mr. Nicklaus's membership status; and (2) the award of summary judgment to Mr. Nicklaus and Nicklaus Golf, finding the settlement agreement did not include defendants, and the Donners neither affirmed nor repudiated a contract. The case was affirmed in all other respects, and remanded for further proceedings. View "Donner v. Nicklaus" on Justia Law

In 2005, Barclays Bank PLC, a major global bank based in the United Kingdom, and BDC Finance LLC, a Connecticut-based hedge fund, entered into a series of transactions that were memorialized in several forms, including a Master Agreement. In 2008, Barclays sent BDC a letter terminating the Agreement due to BDC’s alleged default. BDC filed this action for breach of contract and declaratory judgment. Barclays counterclaimed alleging corresponding causes of action. Both parties moved for summary judgment. The Appellate Division granted BDC’s motion to dismiss, concluding that Barclays breached the agreements and was not entitled to summary judgment on its counterclaims. The Supreme Court modified the judgment of the Appellate Division, holding that material issues of fact existed as to whether Barclays defaulted under the parties’ contract and, thus, neither party was entitled to summary judgment. View "BDC Finance LLC v. Barclays Bank PLC" on Justia Law

Kentucky Spirit Health Care Plan, Inc. brought a declaratory judgment action seeking a ruling that it had a right to terminate its Medicaid managed care contract with the Commonwealth of Kentucky, Finance and Administration Cabinet, without penalty, prior to the contract’s expiration. The circuit court granted partial summary judgment for the Cabinet. Both parties appealed. While the appeals were pending, the circuit court stayed Kentucky’s Spirit’s discovery efforts until the resolution of the appeals. Kentucky Spirit petitioned for a writ prohibiting the circuit court judge from enforcing the order imposing the stay of discovery. The court of appeals granted the writ, determining that the trial court’s suspension of discovery amounted to an indefinite stay on discovery without a pressing need to do so. The Supreme Court vacated the writ and remanded for entry of an order denying Kentucky Spirit’s petition for a writ of prohibition, holding that the circuit court did not abuse its discretion by temporarily staying discovery pending the resolution of matters in the appellate courts pertaining to the partial summary judgment. View "Commonwealth v. Hon. Thomas D. Wingate" on Justia Law

MRI, on behalf of itself and as successor-in-interest to P&L, filed suit against Alliance for, inter alia, tortious interference with business relations and tortious interference with contract. The district court dismissed Superior's tortious interference claims. The district court concluded that Superior failed to establish that it acquired contractual rights from P&L and that Superior lacked prudential standing to enforce P&L's rights. The court agreed, concluding that Superior submitted no evidence that the contracting hospitals at issue consented to any assignment. Even if P&L did attempt to assign its rights to Superior, the district court did not clearly err in finding that the purported assignment took place before Superior existed as a corporation. Accordingly, Superior failed to prove the existence of prudential standing by a preponderance of the evidence and, therefore, the court affirmed the judgment of the district court. View "Superior MRI Serv. v. Alliance Health Serv." on Justia Law

Pearl Seas filed suit against LRNA under various tort theories regarding LRNA's allegedly inadequate performance in certifying a ship and its alleged misdeeds during arbitration. The district court denied LRNA's motion to dismiss on the ground of forum non conveniens (FNC) without written or oral explanation. LRNA petitions for a writ of mandamus to order the district court to vacate its denial and dismiss for FNC. The court granted the petition because the district court clearly abused its discretion and reached a patently erroneous result where it failed to enforce a valid forum-selection clause, and because LRNA has no effective way to vindicate its rights without a writ of mandamus. View "In Re: Lloyd's Register N.A., Inc." on Justia Law

This case stemmed from the largely fraudulent lending operations of First United Funding, LLC (First United). After First United collapsed, a court-appointed Receiver commenced this action under Minnesota’s Uniform Fraudulent Transfer Act (MUFTA) against several financial institutions, including Alliance Bank and certain Respondent Banks, that had participated in First United’s loan-participation scheme. The district court (1) dismissed the claims against the Respondent Banks for failure to bring the action in a timely fashion, and (2) allowed the claim against Alliance Bank, concluding that that the Receiver had pleaded legally sufficient claims based on a “Ponzi-scheme presumption.” The district court then entered judgment against Alliance Bank. The Receiver and Alliance Bank appealed. The court of appeals (1) divided the Ponzi-scheme presumption into three separate components and concluded that the third component was unfounded in the case of Alliance Bank; and (2) concluded that the district court erred when it dismissed the Receiver’s actual-fraud claims against the Respondent Banks. The Supreme Court affirmed as modified, holding (1) all three components of the Ponzi-scheme presumption lack support in MUFTA; and (2) the Receiver failed to adequately plead constructive fraud, but the district court erred when it dismissed the Receiver’s actual fraud claims. Remanded. View "Finn v. Alliance Bank" on Justia Law

The Third Circuit Court of Appeals certified a question of Pennsylvania law to the Pennsylvania Supreme Court. In August 2007, Appellee Wayne Harrison entered into a lease with Appellant Cabot Oil & Gas Corporation, per which Cabot obtained the exclusive right to explore oil-and-gas resources on Harrison's property. In exchange, the company agreed to pay an initial bonus plus a one-eighth royalty on oil or gas successfully produced from the land. Approximately halfway through the primary lease term, Harrison and his wife commenced a civil action against Cabot in a federal district court, seeking a declaration that the lease was invalid. The Harrisons alleged the company had fraudulently induced Mr. Harrison to enter into the lease via an agent's representation that Mr. Harrison would never receive any more than $100 per acre as a threshold bonus payment from a gas producing company. The Harrisons learned of other landowner-lessors receiving higher payments. The Pennsylvania Court accepted certification from the Third Circuit to address whether the primary term of an oil-and-gas lease should have been equitably extended by the courts, where the lessor pursued an unsuccessful lawsuit challenging the validity of the lease. In its counterclaim, Cabot sought a declaratory judgment that, in the event the Harrisons' suit failed, the primary term of the lease would be equitably tolled during the period of time during which the suit was pending, and, concomitantly, the lease would be extended for an equivalent period of time beyond what was provided by its actual terms. The district court awarded summary judgment in Cabot's favor on the suit to invalidate the lease. The court, however, resolved the counterclaim in the Harrisons' favor, concluding that Pennsylvania law does not provide for equitable extensions of oil and gas leases under the circumstances. Cabot appealed, arguing that it would be deprived of the full benefit of the bargained-for terms of its contract with the Harrisons by their "meritless lease challenges." Cabot contended Pennsylvania law provided that a party repudiates a contract, and thus effectuates an essential breach, when he makes an unequivocal statement that he will not perform in accordance with his agreement. The Pennsylvania Supreme Court disagreed with Cabot's contention, holding that the Harrisons' lease challenge was not an anticipatory breach of the lease. "Our reluctance, in this respect, is bolstered by the Harrisons' observation that oil-and-gas-producing companies are free to proceed according to their own devices to negotiate express tolling provisions for inclusion in their leases. [. . .] Certainly, in light of the voluminous decisional law, such companies are on sufficient notice of the prospect for validity challenges to warrant their consideration of such protective measures. [ . . .] Our determination is only that, consistent with the prevailing substantive law of this Commonwealth, the mere pursuit of declaratory relief challenging the validity of a lease does not amount to such." View "Harrison v. Cabot Oil & Gas Corp." on Justia Law