Justia Contracts Opinion Summaries

Siloam Springs Hotel, LLC operated a Hampton Inn hotel in Siloam Springs, Arkansas. It purchased a general liability insurance policy from Century Surety Company covering the Hampton Inn for the period of November 13, 2012, through November 13, 2013. Siloam Springs purchased the Commercial Lines Policy through Century Surety's agent, RCI Insurance Group of Claremore, Oklahoma. On January 21, 2013, several guests at the Hampton Inn suffered bodily injury due to a sudden, accidental leak of carbon monoxide from the heating element of an indoor swimming pool. Siloam Springs sought coverage under the Commercial Lines Policy. Century Surety denied coverage, relying on an exclusion set out in the Commercial Lines Policy. That provision (the "Indoor Air Exclusion") excluded from coverage "[b]odily injury' . . . arising out of, caused by, or alleging to be contributed to in any way by any toxic, hazardous, noxious, irritating, pathogenic or allergen qualities or characteristics of indoor air regardless of cause." After Century Surety removed the case to federal court, the parties filed cross-motions for summary judgment. In its motion, Century Surety asserted that because the insurance contract was to be performed in Arkansas, Oklahoma choice-of-law rules made Arkansas law applicable. It further argued that the Indoor Air Exclusion unambiguously excluded coverage for the carbon-monoxide based injuries to the guests at the Hampton Inn. For its part, Siloam Springs "decline[d] to contest" Century Surety's assertion that Arkansas law applied because, it asserted, "Arkansas law does not differ from Oklahoma law in any way material to [the] coverage dispute." As to the merits, Siloam Springs asserted the Indoor Air Exclusion was ambiguous and, as such, had to be construed in favor of coverage. Without definitively resolving whether Oklahoma or Arkansas law applied, but relying on precedent from Arkansas, the district court granted summary judgment to Century Surety. The issue this case presented for the Tenth Circuit's review called for the Court to determine the citizenship, for purposes of diversity jurisdiction, of a limited liability company ("LLC"). Because the materials before the Court did not demonstrate that complete diversity of citizenship existed at the time of the filing of the complaint, the matter was remanded to the district court for further proceedings. View "Siloam Springs Hotel v. Century Surety Co." on Justia Law

In 2005, a Union Pacific freight train carrying steel injection molds to Plano Molding in Illinois derailed in Oklahoma; the molds broke through the floor of their shipping container, causing that train car and many behind it to derail. The molds had been manufactured in China and shipped to the U.S. before being transferred to the train. Three companies that were involved in the shipment and that sustained losses sued Plano, claiming that a company Plano hired packed the molds improperly, causing the floor of the container to break and ultimately causing the derailment, so that Plano was liable for breach of a warranty found in the “World Bill of Lading,” which provided shipping terms. Plano argued that the molds were properly packed and that they fell through the floor of the container because the container was defective. The district court found in favor of Plano, finding that the derailment was caused by deficiencies in the container. The Seventh Circuit affirmed. Plano had no obligation to explain why the accident occurred. Once the court found that plaintiffs had not met their burden of proving that Plano had breached the warranty, the actual cause of the accident became legally irrelevant. View "Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co." on Justia Law

After a jury trial, Defendant was found guilty of two counts of rape in the third degree, criminal sexual act in the third degree, sexual abuse in the third degree, and endangering the welfare of a child. The Appellate Division affirmed, concluding that the trial court did not abuse its discretion in denying Defendant’s motion for a mistrial or to strike the complainant’s prompt outcry testimony elicited by the People in disregard of the prosecutor’s pre-trial representation that no such testimony would be offered. The Appellate Division affirmed. The Court of Appeals reversed and ordered a new trial, holding that Supreme Court erred by denying Defendant a remedy for the unfair and prejudicial surprise. View "People v. Shaulov" on Justia Law

Plaintiff Ronald Lee Cline was severely injured when his motorcycle collided with a turning car driven by a teenager with a provisional license. He settled with the driver and the driver’s parents for their $100,000 insurance policy limit. Cline executed a release that released the driver and his parents “and any other person, corporation, association, or partnership responsible in any manner or degree” for the accident. Cline subsequently sued defendant Berniece Delores Homuth, the driver’s grandmother and the sole adult in the car with him at the time of the collision, for negligent supervision. Homuth raised the release as an affirmative defense. She moved for summary judgment; the trial court denied the motion. A court trial followed, centering on the validity of the release and whether Homuth was an intended third party beneficiary of the release. Cline appealed the judgment in favor of Homuth, arguing the extrinsic evidence demonstrated that Homuth was not an intended beneficiary of the release. The Court of Appeal affirmed, finding that Cline failed to provide sufficient evidence to counter Homuth’s showing that she was an intended beneficiary of the release. View "Cline v. Homuth" on Justia Law

Service Oil, Inc., appealed and Rory Gjestvang, Brad Bjerke and LaRayne Haakenson cross-appealed a judgment entered after a bench trial dismissing the parties' claims involving their business relationship. Steven Lenthe was the sole owner of Service Oil, which operated convenience stores in North Dakota, and defendants Gjestvang, Bjerke, Haakenson and Don Stetson were employees of Service Oil. Gjestvang started working for Service Oil in 1985, serving as operations manager from 1992 until April 2010. Bjerke was supervisor of eastern North Dakota stores from 1997 until 2010. Haakenson was district supervisor and manager of the Bismarck travel center from 1993 until May 2010. This lawsuit stemmed from a transaction involving the purchase of repossessed wholesale inventory, initially located in a warehouse in Bismarck, and an agreement for the sale of that inventory through Service Oil. In March 2007, American Bank Center in Bismarck contacted Haakenson about purchasing a large volume of repossessed inventory. Gjestvang and Haakenson discussed the matter with Lenthe, and he agreed to provide $700,000 to purchase the inventory. In April 2007, Lenthe, Gjestvang, Haakenson and Bjerke executed a Warehouse Business Agreement to sell the inventory. At about the same time of the agreement, Service Oil finalized the purchase agreement and lease with American Bank Center, resulting in Service Oil purchasing the inventory in Bismarck for its newly established "Merchandise Depot" division for $700,000. In May 2009 Service Oil moved the warehouse operation and remaining inventory to Fargo. In early 2009, Gjestvang created a separate entity called "Prairie Distributing" and, on May 1, 2009, rented a building for its warehouse business. In May 2009, defendants Les Laidlaw and Rodney Demers started an entity under the trade name "Laidlaw Sales." Laidlaw and Demers also were sales representatives of Prairie Distributing. Gjestvang purchased merchandise for Prairie Distributing and used the services of Demers and Laidlaw to sell products to Service Oil, which was done without informing Service Oil. Service Oil sued Gjestvang, Bjerke, Haakenson, Stetson, Demers and Laidlaw. Service Oil alleged the defendants conspired to deceive Service Oil and sought a refund of commission overpayments from Gjestvang, Bjerke and Haakenson. Service Oil also asserted a claim against Gjestvang for conversion of certain brand-name gloves, asserting the gloves were Service Oil's property and were retrieved from Prairie Distributing's garbage. Upon review, the Supreme Court concluded that the district court's underlying findings of fact were not clearly erroneous and the court did not err in dismissing all the parties' claims. Accordingly, the Supreme Court affirmed. View "Service Oil, Inc. v. Gjestvang" on Justia Law

In 2004, Streambend signed agreements to purchase two units in a Minneapolis residential condominium development, Ivy Hotel + Residences. Completion of the units was delayed, two additional floors were added without proper disclosure, and earnest moneys were removed from the trust account to pay construction costs without Streambend’s permission. Mechanics liens were filed in 2008 and not removed. Streambend requested return of its earnest moneys in 2009, but, defendants claimed the deposits were non-refundable. Streambend sued, alleging state law contract, fraud, and statutory claims and violations of the Interstate Land Sales Full Disclosure Act (ILSA), 15 U.S.C. 1703(a)(2). The initial defendants were the developers, their real estate agent, and the title company, as escrow and disbursing agent. The district court dismissed ILSA claims against the developers for failure to plead fraud with the required specificity; granted summary judgment dismissing the ILSA claims against the title company on the merits; and declined supplemental jurisdiction over the state law claims. The Eighth Circuit affirmed, upholding refusals to permit Streambed to re-add a party whose prior dismissal on the merits was not challenged in an earlier appeal and to permit further amendment of the complaint. View "Streambend Props. II, LLC v. Ivy Tower Minneapolis, LLC" on Justia Law

Buyers purchased a building from Seller that had formerly been leased as a dental clinic. Buyers planned to transform the building into their personal residence. After the parties closed on the property, Buyers discovered that the interior doors had been removed. Buyers commenced a small claims action against Seller seeking damages or the return of the property. The county court entered judgment in favor of Buyers. The district court affirmed. The Supreme Court affirmed, holding (1) the doctrine of merger was inapplicable in this case because Seller had a duty to disclose that the interior doors would be removed, and Seller’s nondisclosure amounted to a misrepresentation; (2) the doors were fixtures rather than trade fixtures and thus were not removable by the former tenant; and (3) the county court’s award of damages was supported by competent evidence. View "Griffith v. Drew’s LLC" on Justia Law

Ryan Air entered into a contractual agreement to sublease an airport lot in Kotzebue. The agreement gave Ryan Air an option to purchase the leasehold and apply its rent payments to the final purchase price. But when Ryan Air attempted to complete the purchase, Bruce Andrew Baker d/b/a Baker Leasing, LLC, the other party to the contract, disputed the outstanding balance and sent Ryan Air a notice of breach. Both parties brought their claims to the superior court. After a trial, the court concluded that Ryan Air did not materially breach the contract and ordered the parties to proceed with the transfer. Baker appealed the order, arguing that the court’s factual findings regarding his breach claims were erroneous, that the conveyance documents contained warranties beyond those he was contractually obligated to provide, and that Ryan Air’s attorney’s fees award was unreasonable. After review, the Supreme Court concluded that the trial court’s findings were not clearly erroneous, that the warranties contained in the conveyance documents did not exceed Baker’s contractual requirements, and that Ryan Air’s attorney’s fees were reasonable. The Court therefore affirmed the superior court’s judgment in most respects. However, the parties agreed that the superior court double-counted some of Ryan Air’s rent payments. The case was remanded to allow the superior court to address that issue. View "Baker v. Ryan Air, Inc." on Justia Law

Noatex Corp. and Kohn Law Group, Inc. appealed two district court decisions in an interpleader action brought by Auto Parts Manufacturing Mississippi, Inc. (“APMM”) that named Noatex, King Construction of Houston, L.L.C., and Kohn as claimants. Appellants claimed that the district court erred in discharging APMM from the action, enjoining all parties from filing any proceedings relating to the interpleader fund without a court order, and in denying their motion to compel arbitration. After careful consideration of the trial court record, the Fifth circuit found no reversible error and affirmed the discharge of APMM and its accompanying injunction, the denial of appellants' motion to compel arbitration and to stay proceedings pending arbitration. King Construction was dismissed from these appeals, and appellants' alternative motion to vacate the trial court's rulings was denied. View "Auto Parts Mfg MS, Inc. v. King Const of Houston,LLC" on Justia Law

Under a consent decree in a lawsuit relating to employee retirement benefits, Navistar contributes to a Supplemental Benefit Trust managed by SBC. The size of its contributions is determined by a formula based on Navistar’s economic performance. Navistar must regularly provide data to the SBC to permit it to evaluate whether Navistar is applying the formula correctly. The agreement provides for arbitration before an accounting firm if SBC disputes the “information or calculations” Navistar provides. SBC claimed that Navistar was improperly classifying aspects of its business activities and structuring its business to evade its profit-sharing obligations under the agreement. Navistar claimed that under the accountant arbitration mechanism, which applies to disputes over the “information or calculations” provided by Navistar, SBC’s claims were subject to arbitration. The district court held that the claims were subject to arbitration, but that Navistar’s conduct before and during litigation waived its right to arbitrate the claims. The Sixth Circuit held that the claims were subject to arbitration and that Navistar had not waived its right. While Navistar may bear some responsibility for the long duration of its dispute with the SBC, its behavior with regard to arbitration does not satisfy the particular elements of waiver. View "Supplemental Benefit Comm. v. Navistar, Inc." on Justia Law