Justia Contracts Opinion Summaries

America's Home Place, Inc. ("AHP") appealed a Circuit Court order denying AHP's motion to compel arbitration of the claims brought by the plaintiff below, Gregory Rampey. In August 2012, Rampey and AHP entered into a contract, the terms of which provided that AHP would construct a house for Rampey in Chambers County. AHP constructed the house; however, after he took possession of the house, Rampey began to notice "settlement and sinking of the foundation," which, according to Rampey, resulted in significant structural and other damage to the house. AHP attempted to stabilize the foundation and to repair the damage to the house that had occurred as a result of the unstable foundation; those efforts were unsuccessful. Upon review of the parties' arguments on appeal, the Supreme Court concluded the trial court erred in denying AHP's motion to compel arbitration. Therefore, the Court reversed the trial court's order and remanded the case with instructions to vacate the order denying the motion to compel arbitration and to enter an order granting AHP's motion to compel arbitration.View "America's Home Place, Inc. v. Rampey" on Justia Law

This case stemmed from the district court’s approval of the Utah Department of Financial Institutions’ (UDFI) seizure of America West Bank Members, L.C. (Bank) and the appointment of the Federal Deposit Insurance Corporation as receiver of the Bank. The Bank filed a complaint against the State, UDFI, and the director of UDFI (collectively, the State), alleging breach of contract, breach of the covenant of good faith and fair dealing, constitutional takings, and due process violations. The district court dismissed the Bank’s claims for lack of sufficient factual allegations under Utah R. Civ. P. 12(b)(6). The Supreme Court affirmed, holding (1) the district court did not err when it dismissed the Bank’s claims; and (2) the district court did not hold the Bank to a heightened pleading standard.View "America West Bank Members, L.C. v. State" on Justia Law

This interlocutory appeal concerned a preliminary injunction entered against Joshua Powell in litigation resulting from several contracts between the company Powell founded and a new joint venture formed with a non-party. At issue before the First Circuit was whether the district court abused its discretion in issuing the preliminary injunction. The First Circuit left the preliminary injunction temporarily in place and remanded with instructions, directing that the district court review the matter of irreparable injury and vacate the preliminary injunction if it finds irreparable harm to be lacking, and if the court find irreparable harm and an otherwise sufficient basis for injunctive relief, that it hear the parties’ arguments on the appropriate scope and language of the injunction.View "JL Powell Clothing LLC v. Powell" on Justia Law

After Stratton stopped making payments on her credit card, GE “charged off” Stratton’s $2,630.95 debt, as uncollectible. GE stopped charging Stratton interest. By charging off the debt and ceasing to charge interest GE could take a bad-debt tax deduction, I.R.C. 166(a)(2), and avoid the cost of sending Stratton statements. A year later, GE assigned Stratton’s charged-off debt to PRA, a “debt buyer.” Two years later, PRA filed suit in state court, alleging that Stratton owed interest during the 10 months after GE charged off her debt, before GE sold that debt, and that Stratton owed 8% interest rather than the 21.99% rate established in her contract with GE. The 8% rate is the default rate under Kentucky’s usury statute, KRS 360.010. Stratton filed a putative class action, alleging that PRA’s attempt to collect 8% interest for the 10-month period violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, in that the 8% interest was not “expressly authorized by the agreement creating the debt or permitted by law,” that PRA had falsely represented the “character” of Stratton’s debt and the “amount” owed, and that PRA’s suit was a “threat” to take “action that cannot legally be taken.” The district court dismissed. The Sixth Circuit reversed. Under Kentucky law a party has no right to statutory interest if it has waived the right to collect contractual interest; any attempt to collect statutory interest when it is “not permitted by law” violates the FDCPA.View "Stratton v. Portfolio Recovery Assocs., LLC" on Justia Law

In 2010, GM sold its subsidiary Saab to Spyker: Spyker acquired a majority interest in Saab, and GM retained a minority interest through preferred shares. The parties entered into an agreement under which GM granted Saab a license to make certain Saab models using GM intellectual property. It prohibited Saab from assigning or transferring its rights without GM’s prior written consent until 2024. In 2010-2011, Saab faced financial hardship and attempted to enter into investment arrangements with Youngman, a Chinese automobile manufacturer. GM refused to approve any agreements that involved Chinese ownership or control of its licensed technology. Saab filed for voluntary reorganization under Swedish law. Saab and Youngman negotiated an agreement and circulated an unexecuted copy: Youngman would provide Saab an immediate cash infusion as a loan, which would be converted into an equity interest in Saab after Saab ceased using GM technology. A GM spokesperson made statements indicating that the agreement was not materially different than what was previously proposed. Based on GM’s position, Youngman backed out; Saab went into bankruptcy. Saab sued for tortious interference with economic expectancy. The district court dismissed, finding that Plaintiffs failed to establish a valid business expectancy and intentional interference by GM. The Sixth Circuit affirmed.View "Saab Automobile AB v. General Motors Co." on Justia Law

Richard Giesler and Idaho Trust Deeds, LLC appealed a district court's judgment declaring the rights and obligations on a contract. This case arose out of several oral and written agreements between Giesler and Gregory Hull that related to purchasing and subdividing property. After a bench trial, the court found that Hull sold the property to Giesler, but the parties had a later oral contract where Hull promised to pay off Giesler's loans in exchange for half of the subdivision's net profits. The court held that neither party materially breached the contract and ordered Hull to timely pay Giesler's loans and Giesler to complete the subdivision within certain deadlines. On appeal, Giesler argued Hull failed to prove damages and the district court's remedies were erroneous. Upon review, the Supreme Court affirmed the district court in part, vacated in part, and remanded the case for further proceedings. The Supreme Court found that substantial and competent evidence supported the district court's findings of fact, but that the district court erred in its remedies. The Court vacated the portions of the district court's decision regarding: (1) the conversion payment of half the irrigation equipment's value; (2) the deadlines for completing Parcels 2 and 3; and (3) the provisions that order consequences to encourage performance under the contract.View "Hull v. Giesler" on Justia Law

In 2010, Idaho Power entered into two Firm Energy Sales Agreements, one with New Energy Two, LLC, and the other with New Energy Three, LLC, under which Idaho Power agreed to purchase electricity from them that was to be generated by the use of biogas. The agreement with New Energy Two stated that the project would be operational on October 1, 2012, and the agreement with New Energy Three stated that the project would be operational on December 1, 2012. Both contracts were submitted for approval to the Idaho Public Utilities Commission, and were both approved on July 1, 2010. Each of the agreements contained a force majeure clause. By written notice, New Energy Two and New Energy Three informed Idaho Power that they were claiming the occurrence of a force majeure event, which was ongoing proceedings before the Public Utilities Commission. New Energy asserted that until those proceedings were finally resolved "the entire circumstance of continued viability of all renewable energy projects in Idaho is undecided"and that as a consequence "renewable energy project lenders are unwilling to lend in Idaho pending the outcome of these proceedings."Idaho Power filed petitions with the Commission against New Energy Two and New Energy Three seeking declaratory judgments that no force majeure event, as that term was defined in the agreements, had occurred and that Idaho Power could terminate both agreements for the failure of the projects to be operational by the specified dates. New Energy filed a motion to dismiss both petitions on the ground that the Commission lacked subject matter jurisdiction to interpret or enforce contracts. After briefing from both parties, the Commission denied New Energy's motion to dismiss. The Commission's order was an interlocutory order that is not appealable as a matter of right. New Energy filed a motion with the Supreme Court requesting a permissive appeal pursuant to Idaho Appellate Rule 12, and the Court granted the motion. New Energy then appealed. Finding no reversible error, the Supreme Court affirmed the Commission's order.View "Idaho Power v. New Energy Two" on Justia Law

Plaintiff, the named Defendant in this action, and others formed a limited liability company (the LLC) to purchase and redevelop certain property. After the LLC acquired the property, Plaintiff guaranteed the payment of two loans from a Bank. In the meantime, Plaintiff, Defendant, and others entered into backstop guarantee agreements that provided protection to Plaintiff in the event he was required to honor his personal guarantees to the Bank. The Bank later commenced foreclosure proceedings against the LLC and Plaintiff as guarantor. The court rendered a judgment of strict foreclosure, and the Bank sought a deficiency judgment against the Plaintiff. The Bank and Plaintiff entered into a settlement agreement. Thereafter, Plaintiff commenced the present action against Defendants to enforce the backstop guarantee agreements. The trial court concluded that the backstop guarantee agreements were unenforceable. The Appellate Court reversed. Defendant appealed, claiming that Plaintiff’s tax treatment of the debt that Defendant guaranteed effectively divested Plaintiff of his interest in the debt, and therefore, Plaintiff had no standing to enforce the backstop guarantee agreement. The Supreme Court affirmed, holding that Plaintiff had standing to enforce the agreement.View "One Country, LLC v. Johnson" on Justia Law

In 2006, Richard Myers owned the property at issue in this case. At the time, the property was subject to a deed of trust in favor of First Horizon Home Loans. Myers enlisted Michael Horn and his company, Frontier Development Group (FDG) to build a residence on the property, which First Horizon financed. However, in April of 2007, Myers filed for bankruptcy, and First Horizon rescinded the construction loan and instructed FDG to halt construction when the project was only fifty percent complete. The structure was left exposed to the elements for fourteen months. Following Myers' bankruptcy, foreclosure proceedings were initiated, and Myers hired Kathleen Horn (Michael Horn's wife), of Windermere Real Estate/Teton Valley to list the property for sale. The Caravellas, who were Ohio residents, looking for property in the Teton Valley, contacted their real estate agent who put them in touch with Kathleen Horn who provided them with information on the stalled Myers project. Kathleen Horn eventually put the Caravellas in touch with Michael Horn. The Caravellas traveled to Idaho, met with Kathleen Horn, and spent two days inspecting the property. The Caravellas testified that Kathleen Horn minimized issues with the house, telling them that it was "in good shape,""structurally sound,"and a "great house."The Caravellas chose not to have a professional inspection performed and closed on May 5, 2008. After closing, the Caravellas and Michael Horn agreed that Horn would complete construction on the house in accordance with Myers' original plans. In reaching this agreement, the Caravellas testified that they believed they were dealing with Horn as an individual. The total contract price for the first phase of work that the Caravellas authorized was $88,500. However, the Caravellas paid FDG $138,097.24 for the first phase before refusing to pay any more. Much of the money that the Caravellas paid to FDG was for unauthorized work or work that was completed in a nonconforming or substandard manner. The Caravellas hired a second builder to complete the first phase and to remedy the substandard work. FDG initiated this action by filing a complaint to foreclose on a lien for construction services and building materials provided to, but not paid for by, the Caravellas. The Caravellas filed an amended counterclaim alleging that FDG and Horn: (1) breached the parties' contract; (2) breached the duty of good faith and fair dealing; (3) violated the Idaho Consumer Protection Act; (4) breached the implied warranty of habitability; (5) committed slander of title; (6) committed fraud and misrepresentation; (7) engaged in a civil conspiracy; and (8) acted negligently. The district court held that FDG's lien was defective and dismissed it. The district court also held that FDG breached its contract with the Caravellas by: (1) failing to complete agreed upon work in conformity with the plans and in a workmanlike manner; (2) charging the Caravellas for unauthorized and defective work; and (3) substantially overbilling the Caravellas for work and materials that were not authorized and never provided. As to the Caravellas' fraud counterclaim, the district court concluded that the Caravellas failed to establish all nine elements of fraud and dismissed the claim. The district court also concluded that Horn was not personally liable. The district court awarded the Caravellas $113,775.45 in attorney fees, $5,484.83 in costs as a matter of right, and $200.00 in discretionary costs. The Caravellas timely appealed. Upon review, the Supreme Court concluded the district court erred by applying the incorrect evidentiary standard to the Caravellas' fraud counterclaim, but that error was harmless. The Court affirmed that portion of the district court's judgment dismissing the Caravellas' fraud claim, and reversed that portion of the judgment dismissing the Caravellas' claims against Michael Horn personally. In all other respects, the Supreme Court affirmed the district court's decision.View "Frontier Development Grp v. Caravella" on Justia Law

In 2011, Gerald Collins granted Garrett Prestenbach a one-year option to purchase about 150 acres of Collins's farm and pasture land for $500,000. Prestenbach agreed to make a $25,000 down payment on the property and finance the remaining $475,000 through a combination of a $225,000 USDA loan and $250,000 financing agreement with Collins. The option contract included the following details: (1) a recital of $100 consideration; (2) a township-and-range description of the property; (3) a reference to the buyer's intent to obtain a USDA loan; (4) the total purchase price; and (5) a recital that the option was irrevocable for the first three months and, after three months, the option could be revoked by giving ten days' written notice. The parties also agreed that Collins would allow the USDA to inspect the property before closing. About a month after giving Prestenbach the option to purchase his land, another buyer offered to buy Collins's property immediately. Collins attempted to persuade Prestenbach to give up his option so he could sell to the other party, but Prestenbach refused and quickly recorded the option contract to prevent the sale. By early December, relations between Collins and Prestenbach had deteriorated. Collins's attorney sent Prestenbach a letter attempting to terminate the one-year option "upon the latter to occur of December 15th, its date of expiration, or ten (10) days after receipt of this notice." Prestenbach responded by hand-delivering a letter exercising his option to purchase. At that time, the USDA loan process was nearly complete, and on December 22, 2011, the USDA conditionally approved Prestenbach's loan. Prestenbach tried to set a closing date for the loan, but Collins refused to move forward with the closing. Claiming that the option to purchase had been terminated, Collins denied the USDA's request to inspect the property. He then filed a quiet-title action against Prestenbach. Prestenbach filed an answer and a counterclaim for specific performance, stating he was "ready, willing, and able" to close the deal. Both parties filed motions for summary judgment. The chancellor granted Collins's motion for summary judgment and denied Prestenbach's motion, finding that Prestenbach was not entitled to specific performance because, at the time he exercised his option, he could not pay the entire purchase price. Prestenbach appealed. The Supreme Court granted certiorari in this case "to correct a fundamental misunderstanding of the law on option contracts and specific performance." The option holder timely exercised his option to purchase and is entitled to specific performance, so the Court reversed and remanded.View "Prestenbach, Jr. v. Collins" on Justia Law