Justia Contracts Opinion Summaries

Security Plans, a credit insurer, filed suit against CUNA, alleging breaches of contract and of the implied covenant of good faith and fair dealing. The district court granted summary judgment to CUNA and Security Plans appealed. The court concluded that the district court properly declined to rely on parol evidence to reinterpret the contract and rejected Security Plan's argument that the doctrine of promissory estoppel bars CUNA from deducting excess service fees. Therefore, the court affirmed the grant of summary judgment on the service fee claim. The court concluded, however, that the record on appeal presents sufficient evidence to create a triable issue of fact as to CUNA's handling of the earnout calculation. A rational trier of fact could properly conclude that it was arbitrary for CUNA to refuse to revise the earnout calculation in order to correct for the suspect numbers. Accordingly, the court vacated the grant of summary judgment as to the implied covenant claim and remanded for further proceedings.View "Security Plans v. CUNA Mutual" on Justia Law

Neumann Homes was the developer of two Antioch subdivisions. The Village entered into infrastructure agreements with Neumann to make public improvements in the subdivisions; Neumann provided four substantially identical surety bonds issued by Fidelity, totaling $18,128,827. The bonds did not contain specific “payment bond” language. A payment bond generally provides that if the contractor does not pay its subcontractors and material suppliers, the surety will pay them. In contrast, a “completion bond” or “performance bond” provides that if the contractor does not complete a project, the surety will pay for its completion. Lake County Grading (plaintiff) and Neumann entered into agreements for plaintiff to provide labor and materials for the improvements. Plaintiff completed the work, but was not paid in full. Neumann defaulted on its contract with the Village and declared bankruptcy. Plaintiff served Neumann and the Village with notices of a lien claim and ultimately filed suit, alleging breach of contract because the surety bonds did not contain language guaranteeing payment to subcontractors compliant with the first paragraph of section 1 of the Bond Act, 30 ILCS 550/1, and that it became a third-party beneficiary of the contracts between the Village and Neumann because the Act’s requirements are read into every public works contract for the benefit of subcontractors. The circuit court entered summary judgment on those counts. The appellate court affirmed. The Illinois Supreme Court reversed, holding that the bonds were sufficient and did not violate the Act, so that the Village did not breach any contractual obligation.View "Lake Cnty. Grading Co. v. Vill. of Antioch" on Justia Law

The issue this case presented to the Supreme Court centered on the lower courts’ interpretation of portions of a written mineral agreement. The agreement was prepared by a mineral leaseholder and ostensibly conveyed to an exploration company an “exclusive option to sublease” at least 15 percent of the leaseholder’s mineral rights. The lower courts interpreted the agreement as imposing an obligation on the exploration company to execute the sublease rather than simply allowing the exploration company the right to execute the sublease. Because the exploration company did not execute such a sublease, the lower courts awarded damages to the leaseholder for breach of contract. When the Court granted certiorari review, the lower courts had awarded to the leaseholder other damages, related to the exploration company’s obligation to execute a mineral sublease. The Supreme Court determined that the lower courts erred in ruling that the exploration company was obligated by the agreement to sublease mineral rights. Instead, the Court found the agreement afforded the exploration company a non-binding option to sublease (for which the exploration company paid $1.4 million), but that if the exploration company exercised the non-binding option, it was then obligated to sublease at least 15 percent of the leaseholder’s rights described in the agreement. Accordingly, the damage award on the breach of contract claim for failing to sublease at least 15 percent of the leaseholder’s mineral rights was reversed. However, the Court also found the exploration company breached its obligation to complete a seismic survey, and the Court affirmed the corresponding award of damage. Because the record did not support a finding that the exploration company acted in bad faith, we examine the effects of a contractual prohibition against consequential damages that the lower courts refused to apply based on those courts’ findings of bad faith. Because of the court of appeal's error, any meaningful review of the merits of the exploration company’s argument that its reconventional demand for improper use and sharing of its seismic data was improperly dismissed. The case was therefore remanded to the court of appeal the question of the propriety of that dismissal and, as that court then deems necessary, the question of whether the record supports the exploration company’s request for relief, or whether remanding to the district court for the taking of additional evidence is required.View "Olympia Minerals, LLC v. HS Resources, Inc." on Justia Law

In 1998, Jerry Lee Baldwin entered into a written agreement with the Board of Supervisors for the University of Louisiana System to serve as the head football coach at the University of Southwestern Louisiana, now University of Louisiana at Lafayette (UL). The contract provided that Baldwin’s employment with UL would last until January 31, 2003. By letter dated November 27, 2001, Baldwin was “relieved of [his] duties” as UL’s head coach effective November 26, 2001, after winning only six of twenty-seven games (an 18% win record). Baldwin continued to receive his full monthly salary and other employee benefits from UL including health insurance, accrual of leave time, and accrual of retirement credits for the remainder of the contract term. Baldwin sued the Board over the contract. Defendants sought review of the court of appeal’s determination that the coach’s contract had been terminated, which triggered a contractual obligation to provide notice. Interpreting the contract in its entirety, the Supreme Court found that the appellate court erred in finding that the failure of notice constituted a breach of contract under the facts of this case. Accordingly, the Court reversed the appellate court’s decision and reinstated the summary judgment rendered by the trial court, which dismissed the coach’s breach of contract claim against defendants.View "Baldwin v. Board of Supervisors for the University of Louisiana System" on Justia Law

Whirlpool purchased injection-molded plastic knobs and decorative metal stampings from Grigoleit. In 1992 Whirlpool told Grigoleit that it would start using products made by Phillips. Grigoleit believed that Phillips was using a method protected by its patents. Ultimately Grigoleit licensed its patents to Whirlpool and Phillips; instead of royalties Grigoleit got Whirlpool’s business for the “Estate” and “Roper” brand lines and a promise of consideration for other business. The agreement and the patents expired in 2003. An arbitrator concluded that Whirlpool had failed to consider Grigoleit’s parts for some lines of washers and dryers and was liable for payment of money royalties or damages. Grigoleit demanded the profit it would have made had Whirlpool purchased its requirements of knobs exclusively from Grigoleit. The district court concluded that a reasonable royalty fell in the range of 1¢ to 12¢ per part and the parties then agreed that royalties would then be $140,000. The Seventh Circuit affirmed, reasoning that lost profits differ from royalties. The caption on the contract is “LICENSE AGREEMENT” and the heading on paragraph 3 is “Royalties.” The agreement is a patent license; the court was not obliged to treat it as a requirements contract.View "Grigoleit Co. v. Whirlpool Corp." on Justia Law

This case was one of a number of cases which have, in the aftermath of the "Great Recession" that hit Riverside and San Bernadino counties particarly hard. This appeal stemmed from the construction of a Kohl’s department store in Beaumont. The developer of the store was Inland-LCG Beaumont, LLC, and the general contractor was 361 Group Construction Services, Inc. Somewhere in the process of construction, the money dried up and 361 refused to pay its subcontractors for work they had done. Those subcontractors included Cass Construction, TNT Grading Inc., Palomar Grading & Paving and R3 Contractors. These four subcontractors recorded mechanic’s liens and sued to foreclose those liens. With one exception they obtained judgments of foreclosure. The one exception was TNT, who, by the time of the trial to foreclose its mechanic’s lien, was a suspended corporation and thus unable to prosecute an action. The two owners of the property, Kohl’s and Wells Fargo, appealed the judgments obtained by the three successful subcontractors, Cass, R3 and Palomar Grading. The Court of Appeal took a "soup-to-nuts" approach in reviewing the multiple issues presented on appeal, and affirmed in all respects except to the degree that liens of Palomar Grading and Cass should include prejudgment interest. To that degree the Court reversed the judgment and remanded it with instructions to the trial court to recalculate the prejudgment interest at 7 percent. On balance, Cass and R3 were still the prevailing parties in this appeal: Of 10 issues raised, they prevailed, either singly or together, in 9. They recovered their costs on appeal from Kohl’s and Wells Fargo. For Palomar Grading, the only issue on which it has appeared in this appeal was the issue of the proper rate of prejudgment interest, and on that issue it lost. "However, it would be unfair to allow Kohl’s and Wells Fargo to recover all their appellate costs from Palomar Grading because they won on the lone prejudgment interest rate issue. Most of this appeal has concerned their unsuccessful challenges to the foreclosure judgments obtained by Cass and R3."View "Palomar Grading v. Wells Fargo" on Justia Law

Plaintiff-appellant Ron Willemsen, a purchaser of vacant land, sued various parties involved in the sale of the land, including defendant-respondent AppraisalPacific, Inc., the appraisal company hired by Willemsen’s lender. AppraisalPacific, Inc. and its individual appraisers, moved for summary judgment, in which they asserted that Willemsen’s negligent misrepresentation cause of action against them failed as a matter of law. The court granted the motion and Willemsen appealed. After its review, the Court of Appeal affirmed: Willemsen failed to raise a triable issue of material fact to show the AppraisalPacific Defendants intended to supply information to him to influence his decision whether to buy the property. Furthermore, the Court held that the trial court did not abuse its discretion in denying Willemsen’s request for leave to file an amended complaint to assert a cause of action for breach of third party beneficiary contract.View "Willemsen v. Mitrosilis" on Justia Law

Plaintiff sued its Insurer, alleging breach of contract and seeking declaratory relief, after the Insurer refused to defend or indemnify Plaintiff in connection with an environmental dispute. A superior court allowed Plaintiff’s motion for partial summary judgment on the Insurer’s duty to defend. Plaintiff then amended its complaint to assert a claim under Mass. Gen. Laws ch. 93A, 11 arising out of the Insurer’s duty to defend. Thereafter, Plaintiff subsequently accepted reimbursement from the Insurer for its expenses in litigating and resolving the environmental matter. Insurer then sought summary judgment on the chapter 93A claim, arguing that its reimbursement of Plaintiff’s expenses precluded a finding that Plaintiff had suffered a loss of money or property, as required to establish a violation of chapter 93A section 11. The trial court denied summary judgment on the chapter 93A claim. The Supreme Judicial Court affirmed, holding (1) chapter 93A does not require a showing of uncompensated loss or a prior judgment establishing the amount of damages as a prerequisite to recovery; and (2) therefore, neither Plaintiff’s acceptance of full reimbursement of its expenses nor the absence of a judgment establishing contract damages precluded Plaintiff from pursuing a claim under chapter 93A.View "Auto Flat Car Crushers, Inc. v. Hanover Ins. Co." on Justia Law

Kohl’s Illinois, Inc. filed a valuation complaint challenging the tax year 2010 valuation of a Kohl’s store in Marion County. The Board of Revision (BOR) dismissed the case, finding that the complaint was void because the property was subject to a tax-increment-financing (TIF) agreement that contained a covenant prohibiting the filing of a complaint against the value. The Board of Tax Appeals (BTA) affirmed the decision of the BOR. The Supreme Court vacated the decision of the BTA, holding (1) any bar to the complaint that arises from the TIF agreement is not a jurisdictional restriction, and therefore, the complaint was not void; (2) the beneficiaries of the covenant had the burden to assert the covenant as a defense against Kohl’s complaint; and (3) because the beneficiaries did not shoulder the burden to prove their entitlement to a dismissal of Kohl’s complaint, the decision of the BTA must be vacated. Remanded.View "Kohl’s Ill., Inc. v. Bd. of Revision" on Justia Law

After Sining Mao left his employment with Seagate Technology, LLC, Mao joined Seagate’s competitor, Western Digital Corporation. Seagate subsequently commenced a district court action alleging that Mao stole Seagate’s trade secrets and confidential information and provided it to Western Digital. Western Digital invoked an arbitration clause in Mao’s employment agreement with Seagate. Before the arbitration hearing, Seagate brought a motion for sanctions against Western Digital and Mao (Appellants) based on alleged fabrication of evidence. An arbitrator issued an award against Appellants in an amount exceeding $500 million. The district court vacated the award in part, but the court of appeals reinstated the award. On appeal, Appellants argued that the arbitrator’s exceeded his authority by issuing punitive sanctions and prejudiced Appellants by refusing to hear evidence material to the controversy. The Supreme Court affirmed the court of appeals’ decision reinstating and confirming the arbitration award in full, holding that the arbitrator did not exceed his authority or refuse to hear material evidence as required for vacatur.View "Seagate Tech., LLC v. W. Digital Corp." on Justia Law