Justia Contracts Opinion Summaries

In January 2007, the Bank of Idaho made two construction loans to developers who planned to construct a fourplex on each of two adjoining lots in Idaho Falls. The bank loaned one sum of money to build a fourplex on Lot 1 and another sum for a fourplex on Lot 2. The bank secured a separate policy of title insurance for each lot that was issued by the predecessor of First American Title Insurance Company. Each policy included an endorsement that the parties understood would insure against loss or damage that the bank might sustain by reason of a multifamily residence not being constructed on the lot. After discussion with representatives of the city, the developers changed their original plans and built both fourplexes on Lot 2 and built a parking lot with storm water retention and landscaping on Lot 1. The developers later defaulted on their loans, and the bank foreclosed on both deeds of trust. At the foreclosure sale, the bank acquired each lot by making a full credit bid on all amounts due and owing on the note secured by the deed of trust. In 2010, the bank submitted a claim under the title policy issue with respect to Lot 1 to recover under the endorsement. The insurance company rejected the claim and the bank filed suit to recover under the policy. The district court granted the insurance company’s motion for summary judgment and dismissed this action. The bank then appealed. The Supreme Court concluded after its review that the district court erred in holding that the title insurance company had no liability under the policy. The endorsement provided that "[t]he Company hereby insures the owner of the indebtedness secured by the insured mortgage against loss or damage which the insured shall sustain by reason of the failure of [a multifamily residence to be built on Lot 1]." The endorsement insured against "loss or damage" that the bank argued was the failure of the multifamily residence to be constructed on the lot. It did not define what constituted "loss or damage." Subsections of the pertinent indemnity clause stated limits on the insurance company's liability, but it did not define loss or damage. Accordingly, the district court was reversed and the case remanded for further proceedings. View "Bank of Idaho v. First American Title" on Justia Law

Saint Alphonsus Diversified Care, Inc. (and others) formed a general partnership named MRI Associates. The parties executed a written partnership agreement (effective April 1985). The primary purpose of the partnership was to acquire and operate diagnostic and therapeutic devices, equipment, and accessories, beginning with a magnetic resonance imaging (MRI) scanner. MRI Associates and others formed two limited partnerships. One was named "MRI Limited Partnership," and it owned and operated an MRI scanner located on the hospital campus of Saint Alphonsus; the other limited partnership was named "MRI Mobile Limited Partnership," and it owned and operated mobile MRI scanners. For decades, a group of radiologists known as Gem State Radiologists had interpreted medical images pursuant to a contract that gave them the exclusive right to serve the radiological needs of patients of Saint Alphonsus. After the formation of MRI Associates, they interpreted MRI scans performed at MRI Center. In 1998, the Radiologists began planning to construct and operate an outpatient facility in Boise that was located away from the hospital. There were negotiations among the Radiologists, Saint Alphonsus, and MRI Associates to have one medical imaging entity, but those negotiations were unsuccessful. There was evidence that Saint Alphonsus was negotiating against MRI Associates with the Radiologists. In 1999, the Radiologists formed Intermountain Medical Imaging, LLC, (“IMI”), and a month later opened their facility. In 1998, Saint Alphonsus began negotiating with the Radiologists to partner with them in the imaging center. In 2001, Saint Alphonsus became a member of IMI. In 2002, IMI opened another facility in Meridian. In 2004, Saint Alphonsus gave notice to MRI Associates that it would dissociate from the partnership effective on April 1, 2004. Under the partnership agreement, Saint Alphonsus could not compete with MRI Associates for a period of one year. Saint Alphonsus then filed suit seeking to recover the value of its partnership interest from MRI Associates, and MRI Associates responded by filing a multi-count counterclaim and claims against third parties. The third-party claims were ultimately dismissed. The jury found Saint Alphonsus liable on all causes of action, and MRI Associates was awarded a judgment in the sum of $36.3 million. That judgment was vacated on appeal, and the case was remanded for further proceedings. The case was again tried to a jury. The district court submitted four claims for relief to the jury: breach of contract, intentional interference with a prospective economic advantage, breach of fiduciary duty, and civil conspiracy. The jury found in favor of the MRI Entities on each of the claims. Saint Alphonsus appealed, and the MRI Entities cross-appealed. Finding no reversible error, the Supreme Court affirmed the district court's judgment. View "St. Alphonsus Diversified Care, Inc. v. MRI Associates, LLP" on Justia Law

This appeal arose out of a contract dispute between 3D and MVM. On appeal, 3D argued that the district court had discretion to award prejudgment interest under Virginia law. As an initial matter, the court accepted, without deciding, the parties' assertion that abuse of discretion is the appropriate standard of review. Applying that standard, the court concluded that 3D's argument that the district court had discretion to award prejudgment interest in this instance failed as a matter of law; there was no abuse of discretion in the district court's decision to change its earlier ruling after it had a more fulsome opportunity to consider the relevant Virginia law; and the district court did not err in concluding that the parties did not reach an agreement to submit the issue of prejudgment interest to the court. Accordingly, the court affirmed the judgment of the district court. View "3D Global Solutions, Inc. v. MVM, Inc." on Justia Law

Facing asbestos-related personal injury lawsuits filed in the 1980s, a group of producers of asbestos and asbestos-containing products formed the Center for Claims Resolution to administer such claims on behalf of its Members. About 20 Members negotiated and signed the Producer Agreement, which established and set forth the mechanics of the Center and the obligations of the Members. After G-I failed to pay its contractually-calculated share of personal injury settlements and Center expenses, U.S. Gypsum and Quigley were obligated to pay additional sums to cover G-I’s payment obligations. G-I filed for bankruptcy and the Center, U.S. Gypsum, and Quigley each filed a proof of claim, seeking to recover for G-I’s nonpayment under the Producer Agreement. The Center settled its claim with G-I. The Bankruptcy Court granted summary judgment in G-I’s favor. The district court affirmed. The Third Circuit vacated, holding that the Producer Agreement permits the Former Members to pursue a breach of contract action against G-I for its failure to pay contractually-obligated sums due to the Center, in light of their payment of G-I’s share. View "In re: G-I Holdings, Inc." on Justia Law

On November 14, 2009, sewage entered into and damaged the home of plaintiffs Justin and Brandy Porter. At the time, Plaintiffs' home was insured by defendant Oklahoma Farm Bureau Mutual Insurance Company under a "Homeowners Special Coverage Policy." Plaintiffs filed a claim for their loss, which defendant denied. Subsequently, plaintiffs filed a petition in the district court for breach of contract and breach of the duty of good faith and fair dealing. Plaintiffs argued that the district court should follow "Andres v. Oklahoma Farm Bureau Mutual Insurance Co.," (227 P.3d 1102, cert. denied, (Nov. 23, 2009)) to find that the policy was ambiguous because it contained conflicting provisions on loss caused by water damage and that the doctrine of reasonable expectations required the ambiguity to be construed in favor of coverage. Plaintiffs also argued that defendant committed bad faith when defendant wrote a policy that both includes and excludes a named peril and then denied plaintiffs coverage under the policy. Plaintiffs amended their petition to bring classwide claims on behalf of others similarly situated. Plaintiffs amended their petition a second time to allege "breach of the implied covenant of good faith and fair dealing and/or fraud," individually and classwide. Plaintiffs' motion for leave to file a second amended petition did not address an individual or class-action fraud claim. Defendant moved to dismiss the class-action claims and the fraud claim for failure to state a claim upon which relief can be granted. Defendant subsequently stated that the motion to dismiss "[did] not address any other claims" and that "a dispositive motion challenging the merits of Plaintiffs' individual breach of contract and bad faith claims [would] likely be filed in the future." The district court, however, dismissed all claims. The issue before the Supreme Court on appeal was whether the district court erred in granting defendant's motion to dismiss. The resolution of this issue turned on two questions: (1) whether plaintiffs' homeowners policy was ambiguous when the policy covers loss to personal property "caused by . . . accidental discharge or overflow of water from within a plumbing . . . system" (the accidental-discharge-coverage provision) and excluded coverage for loss to real and personal property "resulting directly or indirectly from . . . water which backs up through sewers or drains" (the sewer-or-drain-backup exclusion); (2) if the policy was ambiguous, whether the doctrine of reasonable expectations required the ambiguity to be construed in favor of coverage. The Supreme Court found the district court erred in dismissing the petition in its entirety when the allegations taken as true stated a claim for breach of contract. View "Porter v. Oklahoma Farm Bureau Mutual Ins. Co." on Justia Law

The issue this case presented to the Delaware Supreme Court centered on the circumstances under which an arbitration award could be vacated where it was argued that the arbitrator manifestly disregarded the law. The parties to a corporate acquisition agreed to arbitrate disputes about the acquired company’s balance sheet on the effective date of the transaction. They retained an arbitrator to decide whether a workers' compensation reserve had been calculated correctly. The arbitrator decided, without any analysis, that there would be no adjustment to the balance sheet. The Court of Chancery vacated the arbitrator's decision, finding that the arbitrator did not follow the relevant provision of the parties’ share purchase agreement. But the test for “manifest disregard for the law” was not whether the arbitrator misconstrued the contract (even if the contract language is clear and unambiguous). "To vacate an arbitration award based on 'manifest disregard of the law,' a court must find that the arbitrator consciously chose to ignore a legal principle, or contract term, that is so clear that it is not subject to reasonable debate." Because the record did not support such a finding, the arbitrator’s award was reinstated. View "SPX Corporation v. Garda USA, Inc., et al." on Justia Law

Plaintiff Thomas P. Whelan, Jr.'s decedent father, Thomas P. Whelan, Sr., was in Plaintiff's parked truck when it was hit by a moving vehicle. The collision allegedly resulted in severe injuries and medical costs in excess of $100,000 and ultimately in the decedent's death a few years later. At the time of the accident, occupants of Plaintiff's truck were insureds under the terms of a $50,000 liability policy issued by State Farm, facially providing no UM/UIM coverage. In the Supreme Court's decision in "Jordan v. Allstate Ins. Co.," the effective rejection of an insured's statutory rights to UM/UIM coverage equal to liability limits had to be made in writing and as part of the insurance policy delivered to the insured. Because the result in "Jordan" was foreshadowed by other precedents, the Supreme Court declined to make Jordan applicable only to cases arising in the future, and held that policies that failed to comply with Jordan's rejection requirements would be judicially reformed to provide full statutory coverage. In 2011, following the 2010 issuance of Jordan, Plaintiff made a demand on his insurer State Farm for reformation of his policy that was in effect at the time of the accident. Relying on a clause in the policy that purported to bar UM/UIM claims made more than six years after the date of the underlying accident, State Farm rejected the claim. Plaintiff then instituted a declaratory judgment action against State Farm for reformation of the policy. Upon review of this matter, the Supreme Court held that a limitations clause based solely on the date of the accident without consideration of the actual accrual of the right to make a UM/UIM claim was unreasonable and unenforceable as a matter of law. But addressing the merits of Plaintiff's action, the Court also held that judicial reformation under Jordan did not extend to historical insurance contracts formed before another precedential opinion was issued in 2004. Because the policy in this case was issued before that date, it was not subject to retroactive reformation of its facial lack of UM/UIM coverage. View "Whelan v. State Farm Mutual Auto Ins. Co." on Justia Law

AutoSource Motors, LLC petitioned the Supreme Court for a writ of mandamus to direct the Montgomery Circuit Court: (1) to vacate its order denying AutoSource's motion to dismiss the action filed against it by Stephanie Chamberlain for lack of personal jurisdiction; and (2) to enter an order granting AutoSource's motion to dismiss for lack of personal jurisdiction. The controversy arose when Chamberlain purchased a vehicle from AutoSource via the Internet. Chamberlain's affidavit did not rebut the prima facie showing made by AutoSource in that her affidavit failed to establish that AutoSource was subject to suit in Alabama pursuant to either general personal jurisdiction or specific personal jurisdiction; consequently, the Supreme Court held that the circuit court erred in denying AutoSource's motion to dismiss Chamberlain's complaint for lack of personal jurisdiction. AutoSource demonstrated a clear legal right to the relief it sought; the Supreme Court granted its petition and issued the writ. View "Chamberlain v. AutoSource Motors, LLC" on Justia Law

Borrower borrowed $696,000 from Lenders. The note was secured by a deed of trust covering real property. Guarantor guaranteed the loan under a guaranty agreement that included a general waiver of defenses. Borrower subsequently defaulted on the loan, and Purchaser purchased the secured property in a nonjudicial foreclosure sale for $487,200. The fair market value of the property was $840,000. Purchaser sued Guarantor to recover the $266,748 balance remaining on the note after applying all credits and the proceeds from the sale. Guarantor argued that under Tex. Prop. Code Ann. 51.003 any deficiency owed should be offset by the difference between the fair market value and the foreclosure price. The trial court granted summary judgment for Guarantor. The court of appeals reversed, holding (1) section 51.003 creates an affirmative defense, and (2) by agreeing to a general waiver of defenses in the guaranty agreement Guarantor waived his right of offset. The Supreme Court affirmed, holding that Guarantor waived his statutory right to an offset. View "Mehrdad v. Interstate 35/Chisam Road, L.P." on Justia Law

Plaintiffs, two groups of cotton farmers, filed suits against the cooperative of which they were members under contract, alleging that they were fraudulently induced to join the cooperative. Plaintiffs’ agreements with the cooperative provided for the arbitration of all disputes under the Federal Arbitration Act (FAA). The cooperative filed a motion to stay the litigation and a motion to compel arbitration. The trial court denied the motions, concluding that the parties’ arbitration agreement was unconscionable. The court of appeals affirmed, reasoning that the agreements were unconscionable because they forced the farmers to “forego substantive rights and remedies afforded by statute.” The Supreme Court reversed, holding that the limitation of statutory remedies was insufficient to defeat arbitration under the FAA. Remanded. View "Venture Cotton Coop. v. Freeman" on Justia Law