Justia Contracts Opinion Summaries

In December 2010, Cost-U-Less Insurance assisted plaintiffs by telephone, through an InsZone Insurance Services employee, in obtaining a homeowner’s insurance policy with Fidelity. In 2011, a fire damaged plaintiffs’ home. They made a claim with Fidelity. Fidelity property claims representative Fowler sent a letter advising that Fidelity was investigating coverage for the fire incident, indicating that Fidelity had obtained information suggesting plaintiff did not live in the home and that the property had been used and operated as a residential care facility. After an investigation, Fidelity rescinded the homeowner’s policy on the grounds that plaintiffs’ insurance application contained material misrepresentations about various facts concerning plaintiffs’ and their home. The trial court entered judgment in favor of plaintiffs in the amount of $807,058.10, plus interest and costs of suit. Plaintiffs appealed the trial court’s decision to strike the jury’s $1.9 million punitive damages award. Fidelity appealed that the court committed jury instructional error. The appeals court remanded, holding that the trial court prejudicially erred in refusing to give certain jury instructions concerning whether the application formed an insurance contract.View "Douglas v. Fidelity Nat' Ins.Co." on Justia Law

William Drennan worked as an executive with Exxon Mobil Corporation (ExxonMobil), a Texas-based corporation. During his employment, Drennan received several forms of compensation through the corporation’s executive bonus-compensation Incentive Programs. The Incentive Programs included choice-of-law provisions providing for application of New York Law and allowed forfeiture of an executive’s bonus awards for engaging in “detrimental activity.” After Drennan retired he accepted a position at Hess Corporation, another large energy company. Drennan’s incentive awards were subsequently forfeited on the grounds that “there was a material conflict of interest, constituting detrimental activity” under the Incentive Programs. Drennan sued. The trial court entered judgment for ExxonMobil. The court of appeals reversed, holding that the choice-of-law provisions were unenforceable, that Texas law applied, and that the detrimental-activity provisions, as forfeiture conditions, were unenforceable covenants not to compete under Texas law. The Supreme Court reversed, holding that the New York choice-of-law provisions in the executive compensation plan were enforceable and that the detrimental-activity provisions were enforceable under New York law.View "Exxon Mobil Corp. v. Drennen" on Justia Law

Homeowner lived in a house that she insured with Farmers Insurance Exchange. The policy contained a clause suspending dwelling coverage if the house was vacant for more than sixty days. Homeowner subsequently moved into a retirement community. While the policy was still effective, fire from a neighboring house spread to Homeowner’s house and damaged it. Farmers denied Homeowner’s claim on the basis that the house had been vacant for more than sixty days. Homeowner sued Farmers for breach of contract. The trial court granted summary judgment for Homeowner on the contract claim. The court of appeals reversed and rendered judgment for Farmers, concluding that Farmers was not required to establish that the vacancy contributed to cause the loss in order to assert the vacancy clause as a defense. The Supreme Court affirmed, holding that Farmers was not precluded from relying on language in the vacancy clause in response to Homeowner’s claim, and the vacancy provision must be applied according to its terms.View "Greene v. Farmers Ins. Exch." on Justia Law

Steak n Shake owns and operates 415 restaurants and grants about 100 franchises for the operation of Steak n Shake restaurants by others. The operators of franchises in Missouri, Georgia, and Pennsylvania claim that since 1939, franchisees have set their own menu prices and participated in corporate pricing promotions at their option. After a corporate takeover in 2010, Steak n Shake enacted a new policy that requires them to adhere to company pricing on every menu item and to participate in all promotions. They also must purchase all products from a single distributor at a price negotiated by Steak n Shake. The policy had an adverse effect on revenues. The franchisees sought a declaratory judgment. About a month later, Steak n Shake adopted an arbitration policy requiring the franchisees to engage in nonbinding arbitration at Steak n Shake’s request and moved to stay the federal lawsuits. The district court refused to compel arbitration. Although each franchise agreement (except one) contained a clause in which Steak n Shake “reserve[d] the right to institute at any time a system of nonbinding arbitration or mediation,” the district court concluded that any agreement to arbitrate was illusory. The Seventh Circuit affirmed, agreeing that the arbitration clauses are illusory and unenforceable under Indiana law, and declining to address whether the disputes were within the scope of the arbitration agreements or whether nonbinding arbitration fits within the definition of arbitration under the Federal Arbitration Act.View "Druco Rests., Inc. v. Steak N Shake Enters., Inc." on Justia Law

James Garside acquired shares in South Despain Ditch Company in contravention of corporate restrictions on transferability of South Despain shares. After the sale, South Despain refused to issue certificates in Garside’s name and recognize him as a shareholder, claiming that the sale violated the transfer restrictions and was therefore was void. Garside filed suit, challenging the enforceability of the restrictions and asserting that their enforcement put South Despain in breach of its obligations in contract, fiduciary duty and the Utah Nonprofit Corporation Act. The district court granted summary judgment in favor of South Despain. Garside died during litigation, and Paul Southam proceeded on appeal. The Supreme Court affirmed, holding that the restrictions on the transfer of South Despain shares were enforceable, and thus, Southam acquired no viable rights as a shareholder. Absent a shareholder interest in the corporation, Southam lacked standing to pursue any of his claims.View "Southam v. S. Despain Ditch Co." on Justia Law

William Weber and Dixie Weber irrigated eight tracts of water from the upper Taylor-Ord Canal under contract with North Loup Public Power and Irrigation District. In June 2010, flooding occurred that destroyed a diversion dam that North Loup had utilized to deliver water to irrigators. Due to the extent of the damage, North Loup concluded that water would not be provided to irrigators on the upper Canal during the 2010 irrigation season. At the time of the flooding, the Webers had not yet paid their 2010 irrigation charges. The Webers sued North Loup, alleging breach of contract and negligence and claiming damages resulting from reduced crop yields. The district court granted summary judgment for North Loup, concluding that because the Webers had not paid the 2010 irrigation charges, North Loup had no duty under the contracts to deliver water to the Webers during 2010. The Supreme Court affirmed, holding (1) the Webers’ failure to pay was both a nonfulfillment of a condition and a material breach of contract that relieved North Loup of its duty to perform; and (2) the Webers’ negligence claim failed as a matter of law because North Loup owed no duty to the Webers.View "Weber v. N. Loup River Pub. Power & Irrigation Dist." on Justia Law

Plaintiff filed suit against Kenya in district court for breach of contract based on Kenya's underpayment of rewards owed to him. The court affirmed the district court's conclusion that the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. 1604, barred plaintiff's suit. In this case, Kenya did not waive its immunity in U.S. courts and Kenya's alleged breach of contract lacks the connection to the United States required by the commercial activity exception to the FSIA.View "Odhiambo v. Republic of Kenya, et al." on Justia Law

Dr. Steven Hayne appealed the trial court’s grant of summary judgment in favor of his former medical malpractice insurer, The Doctors Company and The Doctors Company Insurance Services (collectively, “The Doctors”). The Doctors refused to cover Hayne for lawsuits brought by exonerated criminal defendants against whom Hayne had testified as a State’s witness. Kennedy Brewer sued Hayne for malicious prosecution, fraud, and negligent misrepresentation in the Circuit Court of Noxubee County, Mississippi, and later in federal district court. Hayne sought coverage under a medical malpractice insurance policy he had purchased from The Doctors. The Doctors declined to provide coverage, arguing that Brewer was not a "patient" under Hayne’s medical malpractice insurance policy, and that the company therefore was under no obligation to cover Hayne in relation to the suit brought by Brewer. Hayne argued in his suit against The Doctors that The Doctors knew when it issued the policy exactly what kind of medicine he practiced, and that the insurance policy covered him for the types of medical malpractice suits he might face, including the suit filed by Brewer. The Doctors moved for summary judgment, arguing that the policy language was clear and unambiguous in the kind of coverage provided, and that the suit by Brewer did not fall within the policy’s coverage. The Circuit Court agreed, and, despite a lack of in-depth discovery, granted the motion for summary judgment. Finding no reversible error, the Supreme Court affirmed. View "Hayne v. The Doctors Company" on Justia Law

Plaintiff filed suit against Sammy Hagar after he published an autobiography in which he alleged that plaintiff had extorted him by claiming she was pregnant with his child. The district court granted summary judgment for Hagar on all of plaintiff's claims. Applying Iowa law, the court concluded that the district court erred by granting summary judgment on the libel per se claim where Hagar's statements are defamatory as a matter of law, plaintiff has shown the existence of a fact issue regarding whether the challenged statements were "of and concerning" her, and the evidence was sufficient to submit the question of substantial truth to the jury. The court also concluded that the district court erred in granting summary judgment on the false light invasion of privacy claim where questions of fact exist as to whether the challenged statements were sufficiently publicized. The court agreed with the district court's ruling that, with respect to evidence of emotional distress, plaintiff put forth conclusory statements; the court reversed the district court's grant of summary judgment on the breach-of-contract claim where a jury must decide the ultimate issue of breach; and the district court did not err in granting summary judgment on plaintiff's claim for breach of the covenant of good faith and fair dealing because Hagar's statement's did not deprive plaintiff of the benefits under a negotiated agreement between the parties.View "Doe v. Hagar" on Justia Law

Drillers filed a mineral lien on Debtor's well after Drillers performed work on the well and were never paid. The bankruptcy court dismissed Drillers' constructive trust and equitable lien claims and granted summary judgment to Debtors on Drillers' mineral contractor's and subcontractor's lien claims. The district court affirmed. The court affirmed the dismissal of Drillers' constructive trust and equitable lien claims. However, the court reversed and remanded the grant of summary judgment on Drillers' mineral subcontractors' lien claims because Drillers submitted sufficient evidence to survive summary judgment. The court held that it is possible under Texas law for an owner to also be a contractor, and for a laborer to secure liens against both the contracting and non-contracting owners. Viewed in the light most favorable to Drillers, the facts demonstrate that Drillers were subcontractors with regard to Debtors.View "Endeavor Energy Resources, L.P, et al. v. Heritage Consolidated, L.L.C., et al." on Justia Law