Justia Contracts Opinion Summaries

A shopping center owner challenged provisions in its commercial lease with Ross, conditioning Ross’s obligation to open a store and pay rent on Mervyn’s operating a store in the shopping center on the lease’s commencement date and allowing Ross terminate the lease if Mervyn’s ceased operations and was not replaced by an acceptable retailer within 12 months. Mervyn’s filed for bankruptcy and closed its store. Ross took possession of the space, never opened for business, never paid rent, and terminated the lease after the 12-month cure period. The trial court found the provisions unenforceable. The jury awarded $672,100 for unpaid rent and $3.1 million in other damages. The court of appeal held that there was no procedural unconscionability. The parties were sophisticated and experienced concerning commercial leases. The rent abatement and termination provisions must be examined separately because they involve separate consequences triggered by different conditions. The determination that rent abatement constituted an unreasonable penalty was supported by findings that Ross did not anticipate it would suffer any damages from Mervyn’s not being open on the lease’s commencement date and the rent forfeited was $39,500 per month. There is no reasonable relationship between $0 of anticipated harm and forfeiture of $39,500 in rent per month. View "Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc." on Justia Law

Bellingham Marine hired Major Engineering to construct a travel lift pier at the Channel Islands Harbor. Bellingham hired Moffatt, a civil engineering firm, to prepare the plans, which required that the concrete have a specific air entrainment and that the concrete, when cured, attain a specific compressive strength. Major's contract with Bellingham provided that if the concrete failed to meet the compression strength standard, that it would be removed and replaced at Major's expense. Major hired State, which submitted a concrete mix design. Moffatt, at the request of Major, reviewed and approved the design. It was not part of Moffatt's job duties. State delivered seven truck loads of wet pre-mixed concrete. After the concrete was cast, Major's testing lab took a sample that showed the concrete had inadequate compressive strength. Major demolished and rebuilt the affected portion of the pier. It sued; State filed a cross-complaint for implied equitable indemnity and contribution, alleging that Moffatt failed to use reasonable care in reviewing and approving the mix design. The court dismissed, finding that Moffatt was not in privity of contract with Major or State and that the cross-complaint was barred by the economic loss rule. The court of appeal affirmed. View "State Ready Mix Iv. Moffatt & Nichol" on Justia Law

In 2005, Donald Devine and his wife Nancy Devine acquired ownership of Rock Hall, a 200-year-old house. In 2007, Charles Buki and Kimberly Marsho signed a contract agreeing to purchase Rock Hall. Later that year, Buki and Marsho (together, Plaintiffs) brought suit against Donald and Nancy (together Defendants), alleging that Defendants fraudulently induced them to enter into the real estate contract and to close on Rock Hall by misrepresenting and concealing the true condition of the house. The trial court concluded that Nancy had committed no wrong but nonetheless granted rescission of the real estate contract against both Donald and Nancy, concluding that Nancy should be “responsible jointly and severally with her husband for the payment of the purchase price” of Rock Hall. The Supreme Court reversed, holding that because there was no evidence of any wrongdoing on the part of Nancy, the trial court had no basis for awarding any remedy, including rescission, against Nancy. View "Devine v. Buki" on Justia Law

In 2005, Donald Devine and his wife Nancy Devine acquired ownership of Rock Hall, a 200-year-old house. In 2007, Charles Buki and Kimberly Marsho signed a contract agreeing to purchase Rock Hall. Later that year, Buki and Marsho (together, Plaintiffs) brought suit against Donald and Nancy (together Defendants), alleging that Defendants fraudulently induced them to enter into the real estate contract and to close on Rock Hall by misrepresenting and concealing the true condition of the house. The trial court concluded that Plaintiffs were entitled to rescission of the contract where David, but not Nancy, committed fraud. The court awarded consequential damages and attorney’s fees. The Supreme Court affirmed in part and reversed in part, holding that the trial court (1) did not err in granting rescission of the real estate contract based on Donald’s fraudulent concealment of the true state of the house and did not err in awarding attorney’s fees; (2) did not abuse its discretion in refusing to award punitive damages; and (3) erred in awarding consequential damages and prejudgment interest. View "Devine v. Buki" on Justia Law

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