Justia Contracts Opinion Summaries

Plaintiffs were four Delaware-domiciled captive insurance companies. The State Insurance Commissioner prosecuted their claims as their receiver in liquidation, alleging fraudulent conduct on the part of the companies’ president, breach of fiduciary duty on the part of the other directors of the corporation, and, as to the companies’ auditors and their administrative management company, aiding and abetting breaches of fiduciary duty, breach of contract, and negligence. The Court of Chancery dismissed in part the claims against the auditors and their company, holding (1) the doctrine of in pari delicto applies in this case and effectively bars the relevant claims against those defendants; (2) Plaintiffs’ claims for breach of contract and negligence are dismissed on grounds of in pari delicto, but the fiduciary duty exception to in pari delicto covers Plaintiffs’ claims for aiding and abetting a breach of fiduciary duty; and (3) Plaintiffs’ motion to dismiss their claims for aiding and abetting against each of the auditors and the administrative management company is denied, except as they relate to the auditor that was retained second. View "Hon. Karen Stewart v. Wilmington Trust SP Servs., Inc." on Justia Law

The Torres own land and a house in Mantoloking, New Jersey, that was covered by a National Flood Insurance Program Dwelling Form Standard Flood Insurance Policy (SFIP) issued by Liberty under the National Flood Insurance Act. The National Flood Insurance Program “is underwritten by the United States Treasury in order to provide flood insurance below actuarial rates.” The Torres’ property sustained substantial damage during Hurricane Sandy, and they submitted claims under the SFIP for that damage to Liberty. Liberty administered a total payment1 to the Torres of $235,751.68, which included the cost of removing debris from their house. The Torres sought an additional payment of $15,520 for the cost of removing sand and other debris deposited on their land in front of and behind their house. Liberty denied that claim on the ground that the SFIP does not cover it. The Third Circuit affirmed judgment in Liberty’s favor. The SFIP provides coverage for structures and other items of property but not for an entire parcel of land; the provision requiring Liberty to pay for removal of non-owned debris that is “on or in insured property” does not apply to expenses incurred in removing non-owned debris from land outside the home. View "Torre v. Liberty Mut. Fire Ins. Co." on Justia Law

Menard operated a store in a building subleased from Wal-Mart. In 2006, Menard entered into a Purchase Agreement (PA) with Dial; Clauff signed as a managing member of Dial. Menard planned to build a store and wanted to be relieved of its obligations under the sublease. Menard and Dial agreed that Dial would assume responsibility for the sublease after Menard opened its new store. With Wal-Mart’s consent, DKC (Chauff's other LLC) and Menard executed an Assignment. Clauff purported to sign as a member of DKC. DKC did not file Articles of Organization until later. Clauff and Menard claim, but neither provided evidence, that DKC adopted the Assignment after the company formed. Menard remained secondarily liable. Menard opened its new store in 2008. When the Sublease expired in 2011, Wal-Mart was owed more than $700,000. Menard paid $350,000 and sued Dial, DKC, and Clauff. The district court granted summary judgment, finding Clauff liable under Nebraska Revised Statute 21-2635: "[a]ll persons who assume to act as a limited liability company without authority to do so shall be jointly and severally liable for all debts and liabilities of the company." The Eighth Circuit reversed for determination of whether common law or section 21-2635 preclude Clauff's argument that his liability may be avoided because DKC adopted the contract and commenced performance. View "Menard, Inc. v. Clauff" on Justia Law

Home Orthopedics Corp. was a medical equipment supplier based in Puerto Rico. Raul Rodriguez, the president of another home medical supplier in Puerto Rico, attempted to collect a consulting fee Home Orthopedics agreed to pay him. Home Orthopedics refused to continue paying the fee when it discovered that the contract upon which it was based was fraudulent. Soon companies in the health insurance field started terminating their contracts with Home Orthopedics. Home Orthopedics filed an amended complaint seeking relief against numerous defendants - some of whom worked with Rodriguez and others of whom worked for the companies that terminated their contacts with Home Orthopedics - for violating, among other laws, the Racketeer Influenced and Corrupt Organizations Act (RICO). Specifically, Home Orthopedics alleged that Defendants conspired to help Rodriguez strong-arm more money from Home Orthopedics. The district court dismissed Home Orthopedics’ claims. The First Circuit affirmed, holding (1) Home Orthopedics failed to sufficiently allege a “pattern of racketeering activity” necessary to sustain its RICO claim; and (2) the district court did not err in denying Home Orthopedics’ motion to conduct limited discovery and then to amend its complaint for a second time. View "Home Orthopedics Corp. v. Rodriguez" on Justia Law

At issue in this appeal was a contract dispute involving a Right-of-Way Easement Option (Agreement) between plaintiff-appellee Angus Chemical Company and defendant-appellant Glendora Plantation, Inc. This appeal stems from the district court’s grant of Angus’s motion for partial summary judgment, denial of Glendora’s motion for partial summary judgment, and denial of Glendora’s motion to compel discovery. Specifically, the issues presented were: (1) whether Angus had authority under the Agreement to abandon the original 12” pipeline in place when it constructed a new 16” pipeline; (2) whether Angus had authority under the Agreement to install fiber optic cables; and (3) whether it was improper for the district court to deny Glendora’s motion to compel discovery. Upon review, the Fifth Circuit concluded: (1) the there was still a material fact issue as to whether the Agreement required removal of the 12" pipeline; (2) the Agreement was sufficiently clear allowing Angus to install fiber optic cables; and (3) because the Fifth Circuit was remanding for consideration of other facts and issues, the Fifth Circuit remanded for the trial court to consider the motion to compel. View "Angus Chemical Company v. Glendora Plantation, Inc" on Justia Law

The Professional Massage Training Center (PMTC) filed suit against the Accreditation Alliance of Career Schools and Colleges (ACCSC) after ACCSC denied PMTC’s application for re-accreditation. The district court entered judgment in favor of PMTC, finding that ACCSC had violated the school’s due process rights. The court awarded the school more than $400,000 in damages and ordered ACCSC to fully reinstate its accreditation. The Supreme Court reversed in part and affirmed in part, holding (1) the district court erred in conducting a de novo approach to the accreditation process; (2) judged by the correct standard of review, the accreditation decision was well supported and not arbitrary or capricious; and (3) the district court correctly dismissed PMTC’s state law claims for breach of contract, negligence, and tortious interference. Remanded. View "Prof’l Massage Training v. Accreditation Alliance of Career Schs." on Justia Law

In 2007, MTB Enterprises, Inc. obtained a $17 million construction loan from financial institution ANB Financial. ANB thereafter failed, and the Federal Deposit Insurance Corporation transferred the construction loan to ADC Venture 2011-2, LLC. In 2012, MTB filed suit in the United States District Court for the District of Idaho against ADC Venture alleging that ADC Venture assumed the obligations of ANB Financial and was therefore liable for breach of contract and damages from MTB’s failed construction venture. The district court dismissed MTB’s claims. The Ninth Circuit dismissed MTB’s appeal for lack of jurisdiction, holding (1) the rule set forth in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 that a claimant must sue in the district court where the failed bank’s principal place of business was located or the United States District Court for the District of Columbia is a jurisdictional limitation on federal court review; and (2) because the United States District Court for the District of Idaho lacked subject-matter jurisdiction over the case from the start, the case must be dismissed. View "MTB Enters., Inc. v. ADC Venture 2011-2, LLC" on Justia Law

Advanced Flexible Circuits (AFC) entered into negotiations with GE Sensing & Inspection Technologies GmbH and GE Sensing, Division of Caribe GE International of Puerto Rico, Inc. (collectively, GE) for AFC to manufacture and supply thermal filaments for GE to use in its production of cardiac catheters. After GE terminated negotiations with AFC, AFC filed suit, alleging that GE was liable for pre contractual damages under the Puerto Rico doctrine of culpa in contrahendo. The district court granted summary judgment for GE. The First Circuit affirmed, holding (1) AFC offered no competent evidence permitting a finding of liability on its culpa in contrahendo claim, as GE’s termination of the negotiations was not arbitrary, unjustified, or otherwise wrongful; and (2) the district court did not abuse its discretion in sanctioning AFC for failing to comply with the court’s local rules. View "Advanced Flexible Circuits v. GE Sensing & Inspection Techs. GmbH" on Justia Law

First State Insurance Company and New England Reinsurance Corporation (collectively, First State) entered into several reinsurance and retrocession agreements with a reinsurer, National Casualty Company (National). First State demanded arbitration under eight of these agreements to resolve disputes about billing disputes and the interpretation of certain contract provisions relating to payment of claims. The arbitrators handed down a contract interpretation award that established a payment protocol under the agreements. First State filed a petition pursuant to the Federal Arbitration Act to confirm the contract interpretation award, and National filed a cross-petition to vacate the award. A federal district court summarily confirmed both the contract interpretation award and the final arbitration award. After noting that “a federal court’s authority to defenestrate an arbitration award is extremely limited,” the First Circuit affirmed, holding that the arbitrators “even arguably” construed the underlying agreements and, thus, acted within the scope of their contractually delineated powers in confirming the contract interpretation award. View "First State Ins. Co. v. Nat’l Cas. Co." on Justia Law

Defendants, Keith McNamara, Shirley Benton, and Jerel Benton, appealed: (1) a jury verdict in favor of the plaintiffs, Richard and Mary Murray, on their claim that the defendants breached the implied warranty of workmanlike quality; (2) a Superior Court order denying their motion to dismiss the plaintiffs' New Hampshire Consumer Protection Act (CPA) claim; and (3) a Superior Court order finding that the defendants violated the CPA when they built the plaintiffs' home with latent structural defects that caused mold growth. Defendants argued that, because plaintiffs' claim was exempt from the CPA, the trial court erred by denying their motion to dismiss. Defendants added that the trial court erred by denying their motion for a judgment notwithstanding the verdict (JNOV) on the plaintiffs breach of implied warranty claim. There is no dispute that the transaction at issue here is the defendants alleged construction of the house with latent structural defects, not any representations that the defendants made to others during or after construction. The New Hampshire Supreme Court affirmed, finding that because the house was completed in 2004 and was purchased by the plaintiffs five years later and the allegedly wrongful transaction occurred more than three years before the plaintiffs "knew or reasonably should have known" of it, the construction of the house was an exempt transaction pursuant to RSA 358-A:3, IV-a and that plaintiffs' CPA claim should have been dismissed. Thus, the Court reversed the trial court's ruling on the CPA claim. However, the Court was not persuaded that defendants were insulated from liability on the breach of the implied warranty of workmanlike quality claim. Because the Court reversed the trial court's judgment on the CPA claim, defendants failed to show that they were prejudiced with respect to the breach of warranty claim. View "Murray v. McNamara" on Justia Law