Justia Contracts Opinion Summaries

Zachary Gage Duncan sustained a serious injury while driving his 2008 Hyundai Tiburon when he struck a tree. The side airbag did not deploy. Plaintiffs, individual and as Duncan’s guardians and conservators, filed suit against Hyundai, claiming breach of implied warranty of merchantability. During trial, Plaintiffs’ designated expert witness Geoffrey Mahon testified that the location of the side airbag sensor rendered the Tiburon unreasonably dangerous. Hyundai appealed from the judgment of the trial court, arguing that there was an insufficient foundation for the expert witness’s opinion. The Supreme Court agreed and reversed, holding (1) Mahon’s opinion was premised upon his unfounded assumption that the side airbag would have deployed if the sensor had been located in a different area; and (2) because Mahon’s opinion supplied the only support for Plaintiffs’ claim that the vehicle was unreasonably dangerous, the inadmissibility of Mahon’s opinion was fatal to Plaintiffs’ claim. View "Hyundai Motor Co. v. Duncan" on Justia Law

North American Rescue Products, Inc. (NARP) brought a declaratory judgment action to determine whether P. J. Richardson had the right to purchase 7.5% of NARP's stock at a discount despite the fact that he had been terminated, the agreement to which purported to end the parties' relationship. A jury's verdict allowed Richardson to purchase the stock, but both parties appealed. The Supreme Court granted review of the appellate court's decision affirming the jury's verdict. After that review, the Supreme Court concluded the termination agreement unambiguously ended any right Richardson had to purchase the stock. The appellate court was reversed and the case remanded for entry of judgment in favor of NARP. View "North American Rescue Products v. Richardson" on Justia Law

Sarun, uninsured when he received emergency services from a hospital owned by Dignity Health, signed an agreement to pay the "full charges, unless other discounts apply.” The agreement explained uninsured patients might qualify for government aid or financial assistance from Dignity. After receiving an invoice for $23,487.90, which reflected a $7,871 “uninsured discount,” and without applying for any other discount or financial assistance, Sarun filed a putative class action, asserting unfair or deceptive business practices (Business and Professions Code 17200) and violation of the Consumers Legal Remedies Act (Civ. Code, 1750). The complaint alleged that: Dignity failed to disclose uninsured patients would be required to pay several times more than others receiving the same services, the charges on the invoice were not readily discernable from the agreement, and the charges exceeded the reasonable value of the services. The trial court dismissed, finding that Sarun had not adequately alleged “actual injury.” The court of appeal reversed. Dignity’s argument Sarun was required to apply for financial assistance to allege injury in fact would be akin to requiring Sarun to mitigate damages as a precondition to suit. Mitigation might diminish recovery, butt does not diminish the party’s interest in proving entitlement to recovery. View "Sarun v. Dignity Health" on Justia Law

Under a 2007 “Purchase Agreement – Public Sale” Eagle agreed to pay $4,812,874.65 to purchase Louisville property owned by the Kentucky Transportation Cabinet. Eagle paid a good faith deposit of $962,574.93 to “KY STATE TREASURER.” The Agreement was assigned by Eagle to Shelbyville Road Shoppes, the debtor. Two days before the expiration of an 18-month extension to close the transaction, the debtor filed a voluntary Chapter 7 petition. The bankruptcy trustee unsuccessfully sought return of the good faith deposit from the Cabinet. The bankruptcy court found that neither the Agreement nor state law granted the debtor the right to have the deposit returned. The district court affirmed, finding: that the debtor had no right to possess or use the deposit prior to filing for relief, so the trustee had no right to request turnover under section 542; that the deposit was not held in escrow; that the transaction was not a contract for deed; and that the debtor did not retain an equitable right to the deposit as a vendee. The Sixth Circuit affirmed. The debtor did not possess either a legal or an equitable property interest in the deposit at the time of the Chapter 7 petition. View "Lawrence v. Kentucky" on Justia Law

Lincoln, a meat-packing company, and Puretz, an investor, formed Hastings, an Illinois LLC, to bid on cattle-processing plants being sold at a bankruptcy auction. Puretz was to contribute 70% of acquisition and start-up capital; Lincoln 30%, plus management and 40,000 head of cattle per year. Additional details about financing and operations were to be negotiated. To bid, Hastings had to deposit $250,000. Puretz contributed $150,000; Lincoln contributed $100,000. Hastings successfully bid at $3,900,000. Negotiations regarding operations and financing deteriorated. Hastings closed the purchase. Lincoln refused to contribute additional funds and dissociated from Hastings. Under Illinois law, if a member dissociates and the LLC does not dissolve, the LLC must purchase the dissociating member’s distributional interest. Lincoln sought a determination of fair value. The district court held that Lincoln and Puretz each held a 50% interest in Hastings, that the value of Hastings on the dissociation date was $3,900,000, and that Lincoln’s only contribution was $100,000, rejecting Lincoln’s assertions that its identification of the opportunity, business plan, and “sweat equity” had “substantial value.” The court concluded that the value of Lincoln’s interest was $1,950,000, less 30% that Lincoln failed to contribute ($1,170,000), plus return of $100,000, and awarded Lincoln $880,000. The Eighth Circuit reversed. Lincoln and Puretz contemplated that any capital contributed to Hastings would be returned in proportion to their contributions before profits or losses generated by operations were divided equally. Because Lincoln did not make its 30% contribution to capital, it was not entitled to a 30% distribution. View "Lincoln Provision, Inc. v. Aron Puretz" on Justia Law

In 2012, the governing board of Avera Marshall Regional Medical Center notified the hospital’s medical staff that it had approved the repeal of the medical staff bylaws and replaced them with revised bylaws. Avera Marshall’s Medical Staff, Chief of Staff, and Chief of Staff-elect commenced an action seeking a declaration that the Medical Staff had standing to sue Avera Marshall and that the former medical staff bylaws constituted a contract between Avera Marshall and the Medical Staff. The district court granted judgment for Avera Marshall and dismissed the case, concluding that the Medical Staff lacked the capacity to sue under Minnesota law and that the medical staff bylaws did not constitute an enforceable contract between Avera Marshall and the Medical Staff. The court of appeals affirmed. The Supreme Court reversed, holding (1) the Medical Staff has the capacity to sue and be sued under Minnesota law; and (2) the medical staff bylaws constitute an enforceable contract between Avera Marshall and the individual members of the Medical Staff. Remanded. View "Medical Staff of Avera Marshall Reg’l Med. Ctr. v. Avera Marshall" on Justia Law

Plaintiff Kathryn Kipling sued State Farm Automobile Insurance Company in Colorado federal district court for breach of contract because it did not pay her benefits under four insurance policies issued in Minnesota. The court determined that she would be entitled to benefits under Colorado law but not under Minnesota law. It then applied tort conflict-of-laws principles to rule that Colorado law governed. After its review, the Tenth Circuit held that the court erred by not applying contract conflict-of-laws principles. The district court was reversed and the matter remanded for further consideration. View "Kipling v. State Farm Mutual Automobile" on Justia Law

Bill Head, who owns and operates the Silver Spur Truck Stop in Pharr, Texas, hired Petroleum Solutions, Inc. to manufacture and install an underground fuel system. After the discovery that a major diesel-fuel release leak had occurred, Head sued Petroleum Solutions for its resulting damages. Petroleum Solutions filed a third-party petition against Titeflex, Inc., the alleged manufacturer of a component part incorporated into the fuel system, claiming indemnity and contribution. Titeflex filed a counterclaim against Petroleum Solutions for statutory indemnity. The trial court rendered judgment in favor of Head and in favor of Titeflex. The court of appeals affirmed. The Supreme Court (1) reversed as to Head’s claims against Petroleum Solutions, holding that the trial court abused its discretion by charging the jury with a spoliation instruction and striking Petroleum Solutions’ defenses, and the abuse of discretion was harmful; and (2) affirmed as to Titeflex’s indemnity claim, holding that Titeflex was entitled to statutory indemnity from Petroleum Solutions and that any error with respect to the indemnity claim was harmless. View "Petroleum Solutions, Inc. v. Head" on Justia Law

When Richmont Holdings, Inc. bought the assets of Superior Recharge Systems, LLC the parties signed an asset Purchase Agreement that contained an arbitration provision. Superior Discharge’s part-owner, Jon Blake, signed an employment contract to continue as general manager of the business. The contract contained a covenant not to compete but not an arbitration provision. After Blake’s employment was terminated, Superior Recharge and Blake (together, Blake) sued Richmont in Denton County for fraud and breach of contract. Richmont then sued Blake individually in Dallas County to enforce the covenant not to compete. The Dallas County suit was subsequently abated. Nineteen months after being sued, Richmont moved to compel arbitration, asserting that Blake’s claims arose out of the Asset Purchase Agreement. The trial court denied the motion, and the court of appeals affirmed. The Supreme Court reversed. On remand, the court of appeals concluded that Richmont had waived arbitration by substantially invoking the judicial process. The Supreme Court reversed, holding that the circumstances of this case did not approach a substantial invocation of the judicial process. Remanded. View "Richmont Holdings, Inc. v. Superior Recharge Sys., LLC" on Justia Law

Electrical problems at a plastic bag manufacturing plant led to an increased number of defective bags being produced. A dispute arose between the manufacturer and its insurer regarding what provision of the policy covered the losses associated with the defective bags and regarding what policy limit should apply to the manufacturer’s property loss. The district court submitted both issues to the jury. The jury awarded the manufacturer damages for breach of the insurance contract. The Supreme Court reversed, holding that the district court erred in sending the two questions to the jury because (1) categorizing the insured’s loss under the policy is a question of law and not a question of fact, and (2) determining which policy limit applies presents a question of law. Remanded. View "Fed. Ins. Co. v. Coast Converters, Inc." on Justia Law