Justia Contracts Opinion Summaries

A hospital and a physician entered into a settlement agreement to resolve a dispute over the suspension of the physician's clinical privileges. The agreement required the hospital to submit a report to a regulatory authority using specific language agreed upon by both parties. The hospital, however, selected codes for the report that generated additional text, which the physician claimed contradicted and was inconsistent with the agreed language. The physician sued for breach of the settlement agreement.The Circuit Court for Montgomery County granted summary judgment in favor of the hospital, ruling that the settlement agreement did not restrict the hospital's selection of codes for the report. The Appellate Court of Maryland disagreed, holding that a reasonable person would understand the hospital's obligation to report using specific language to preclude it from including contradictory and materially inconsistent language. The Appellate Court vacated the summary judgment, finding that whether the hospital breached its obligation was a question for the jury.The Supreme Court of Maryland reviewed the case and affirmed the Appellate Court's decision. The court held that the hospital's obligation to report using specific, agreed-upon language precluded it from including additional language that contradicted and was materially inconsistent with the agreed language. The court also affirmed that the physician's claim regarding the hospital's failure to provide a timely hearing was released in the settlement agreement. The case was remanded for further proceedings to determine if the hospital's actions constituted a breach of the settlement agreement. View "Adventist Healthcare v. Behram" on Justia Law

In 2019, Ancor Holdings, L.P. (Ancor) and Landon Capital Partners, L.L.C. (Landon) entered into letters of intent to invest in and acquire a majority interest in ICON EV, L.L.C. (ICON). The deal fell through, and Landon and ICON entered into their own agreement. Ancor sued Landon and ICON for breach of contract and tortious interference, respectively. The trial court dismissed Ancor’s tortious interference claim against ICON as a matter of law and denied Ancor’s declaratory judgment claim. The jury found for Ancor on the breach of contract claim against Landon, awarding $2,112,542 in damages.The United States District Court for the Northern District of Texas initially handled the case. The trial court dismissed Ancor’s tortious interference claim against ICON and denied Ancor’s declaratory judgment claim. The jury found Landon breached the contract and awarded Ancor damages. Ancor appealed the dismissal of its claims, and Landon cross-appealed the jury’s verdict.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court reversed the trial court’s dismissal of Ancor’s declaratory judgment and tortious interference claims, remanding them for a jury trial. The appellate court affirmed the jury’s finding that Landon breached the contract but reversed the trial court’s judgment on the reimbursement amount, instructing it to determine 80% of all third-party costs incurred. The court held that Ancor was entitled to a jury trial on its declaratory judgment claim and that sufficient evidence supported the tortious interference claim against ICON. The court also found that the trial court did not err in submitting the breach of contract claim to the jury, nor did the jury err in its findings. View "Ancor Holdings, L.P. v. Landon Capital Partners, L.L.C." on Justia Law

C.R. Bard, Inc. (Bard), a medical device company, held patents on a vascular graft and entered into a licensing agreement with Atrium Medical Corporation (Atrium) to settle a patent infringement lawsuit. The agreement required Atrium to pay Bard a 15% per-unit royalty on U.S. sales until the U.S. patent expired in 2019 and on Canadian sales until the Canadian patent expired in 2024. Additionally, Atrium was to pay a minimum royalty of $3.75 million per quarter until the FDA approved the iCast stent for vascular use or rescinded its approval for all uses. Atrium ceased minimum royalty payments after the U.S. patent expired, leading Bard to sue for breach of contract.The United States District Court for the District of Arizona held a bench trial and found that the minimum royalty provision was primarily intended to compensate Bard for U.S. sales, thus constituting patent misuse under Brulotte v. Thys Co. The court concluded that the provision violated Brulotte because it effectively extended royalties beyond the patent's expiration based on the parties' motivations during negotiations.The United States Court of Appeals for the Ninth Circuit reversed the district court's judgment. The appellate court clarified that the Brulotte rule requires examining whether a contract explicitly provides for royalties on the use of a patented invention after the patent's expiration. The court held that the licensing agreement did not violate Brulotte because it provided for U.S. royalties only until the U.S. patent expired and Canadian royalties until the Canadian patent expired. The minimum royalty payments were not tied to post-expiration use of the U.S. patent but were instead based on Canadian sales, which continued to be valid under the Canadian patent. The Ninth Circuit concluded that the district court erred by considering the parties' subjective motivations and reversed the judgment for Atrium on Bard’s breach of contract claim. View "C.R. BARD, INC. V. ATRIUM MEDICAL CORPORATION" on Justia Law

Circle of Seven, LLC, left a Dodge Ram truck on a foreclosed property. The new property owner hired Bottoms Towing & Recovery to remove the truck. Bottoms Towing later sought to sell the truck to cover unpaid towing and storage fees. Circle of Seven contested the sale and the lien amount, arguing that the towing company had used the truck without authorization, which should reduce the lien.The Superior Court of Nash County held a hearing where Circle of Seven presented testimony from its managing member and an employee. The court found that Bottoms Towing had driven the truck and made unnecessary alterations, reducing the lien by $1,427.14 for maintenance and $62.50 for unauthorized use. Circle of Seven appealed, claiming the reduction was insufficient.The North Carolina Court of Appeals affirmed the trial court's decision, with a divided opinion. The majority found that the trial court's findings were supported by competent evidence. The dissent argued that Bottoms Towing unlawfully converted the truck for personal use and that the lien should be reduced based on the truck's loss in market value due to this conversion.The North Carolina Supreme Court reviewed the case based on the dissent. The Court held that it could not address the dissent's theory because Circle of Seven had not raised the conversion argument or presented evidence on the truck's value in the lower courts. The Court emphasized that appellate courts should not address issues not raised by the parties. Consequently, the Supreme Court affirmed the decision of the Court of Appeals. View "Bottoms Towing & Recovery, LLC v. Circle of Seven, LLC" on Justia Law

Radiance Capital Receivables Twelve, LLC ("Radiance") appealed a judgment from the Henry Circuit Court in favor of Bondy's Ford, Inc. ("Bondy's"). Radiance had garnished the wages of David Sherrill, who worked for Bondy's. Bondy's stopped paying on the garnishment, claiming Sherrill had left its employment, but continued to pay for Sherrill's services through a company created by Sherrill's wife. Radiance argued that Bondy's should still comply with the garnishment by withdrawing funds owed for Sherrill's services.The Henry Circuit Court had initially entered a garnishment judgment in favor of SE Property Holdings, LLC, which was later substituted by Radiance. Bondy's reported Sherrill's employment termination in September 2019, two months after the required notice period. Radiance filed a motion for judgment against Bondy's, arguing that Sherrill continued to provide services to Bondy's through his wife's company, KDS Aero Services, LLC. Bondy's responded with a motion to dismiss, claiming Sherrill was an independent contractor. The trial court granted Bondy's motion to dismiss and denied Radiance's motion.The Supreme Court of Alabama reviewed the case de novo. The court found that genuine issues of material fact existed regarding whether Bondy's payments to KDS Aero Services were actually owed to Sherrill. The lack of a contract or invoices between Bondy's and KDS Aero Services, coupled with inconsistencies in Sherrill's representations about his employment and residence, suggested potential fraud or misuse of corporate form to hide funds. The court reversed the trial court's judgment and remanded the case for further proceedings, emphasizing that neither party had met the burden for summary judgment. View "Radiance Capital Receivables Twelve, LLC v. Bondy's Ford, Inc." on Justia Law

Michael R. Rattagan, an Argentinian lawyer, was retained by Uber Technologies, Inc. through its Dutch subsidiaries to assist with launching Uber's ridesharing platform in Argentina. Rattagan also agreed to act as the Dutch subsidiaries' legal representative in Argentina, a role that exposed him to personal liability under Argentinian law. Despite warnings about potential personal exposure, Uber allegedly concealed its plans to launch the platform in Buenos Aires, which led to significant legal and reputational harm to Rattagan when the launch was deemed illegal by local authorities.The United States District Court for the Northern District of California dismissed Rattagan’s third amended complaint without leave to amend, ruling that his fraudulent concealment claims were barred by the economic loss rule as interpreted in Robinson Helicopter v. Dana Corp. The court concluded that Robinson provided only a narrow exception to the economic loss rule, which did not apply to Rattagan’s claims of fraudulent concealment. The court also found that Rattagan’s negligence and implied covenant claims were time-barred.The Supreme Court of California, upon request from the Ninth Circuit, addressed whether a plaintiff may assert a tort claim for fraudulent concealment arising from or related to the performance of a contract under California law. The court held that a plaintiff may assert such a claim if the elements of the claim can be established independently of the parties’ contractual rights and obligations, and if the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract. The court clarified that the economic loss rule does not bar tort recovery for fraudulent concealment in these circumstances. View "Rattagan v. Uber Technologies, Inc." on Justia Law

In January 2016, Kenneth McPeek Racing Stable, Inc. (McPeek) entered into an oral agreement with Nancy Polk, owner of Normandy Farm, LLC (Normandy), to train a horse named Daddy’s Lil’ Darling. McPeek was to receive monthly training fees, room and board fees, and 12% of the horse’s winnings. After Polk’s death in August 2018, her heirs decided to sell the horse, which fetched $3,500,000 at auction. McPeek claimed an additional 5% commission on the sale, asserting it was part of his oral agreement with Polk, although this term was not documented in writing.The Fayette Circuit Court granted summary judgment in favor of Normandy, citing KRS 230.357(11), which requires a signed writing for any compensation related to the sale of a horse. The court found that McPeek’s claim for a 5% commission was barred by this statute, as there was no written agreement. The court also dismissed McPeek’s quantum meruit claim, stating that he had already been compensated for his training services and that exceptional circumstances justifying equitable relief were not present.The Kentucky Court of Appeals reversed the trial court’s decision, holding that KRS 230.357(11) only applied to buyers, sellers, and their agents in horse transactions. The court reasoned that McPeek’s commission was for training services, not for the sale of the horse, and thus the statute did not apply.The Supreme Court of Kentucky reversed the Court of Appeals, reinstating the trial court’s summary judgment. The Supreme Court held that KRS 230.357(11) applies broadly to any form of compensation connected with the sale of a horse, including McPeek’s claimed commission. The court emphasized that the statute’s plain language requires a signed writing for such compensation to be enforceable, and McPeek’s lack of a written agreement barred his claims. View "NORMANDY FARM, LLC V. KENNETH MCPEEK RACING STABLE, INC." on Justia Law

Malcolm H. Wiener, the plaintiff, purchased three life insurance policies from AXA Equitable Life Insurance Company in 1986. Over the years, Wiener's policies lapsed multiple times due to insufficient funds, but he managed to reinstate them each time. In 2013, the policies lapsed again, and AXA terminated them after Wiener failed to make the necessary payments within the grace period. Wiener claimed that AXA and his insurance agent, David Hungerford, caused the lapse by not sending premium notices and by changing the mailing address without his authorization. He also alleged that AXA wrongfully denied his application to reinstate the policies.The United States District Court for the Southern District of New York granted summary judgment in favor of AXA and Hungerford on all claims. The court found that AXA was not obligated to send premium notices after the policies lapsed and that Wiener had waived any objection to the address change by acquiescing for nearly five years. The court also concluded that Hungerford had no duty to notify Wiener of the lapse. Regarding the reinstatement claim, the court ruled that AXA's denial was not arbitrary and capricious, as it was based on Wiener’s low serum albumin levels, which were consistent with AXA’s underwriting guidelines.The United States Court of Appeals for the Second Circuit affirmed the district court’s summary judgment on the termination claims, agreeing that Wiener could not show that AXA’s failure to send premium notices caused the policies to lapse and that he had waived any objection to the address change. However, the appellate court vacated the summary judgment on the reinstatement claim, finding that there were genuine disputes of material fact regarding the actual reasons for AXA’s denial and whether those reasons were arbitrary. The case was remanded for further proceedings on the reinstatement claim. View "Wiener v. AXA Equitable Ins. Co." on Justia Law

Payam Mahram used Instacart to purchase groceries from a grocery store and later sued the store, alleging it had cheated him on price. The grocery store, not a party to the Instacart contract, moved to compel arbitration based on the arbitration agreement between Mahram and Instacart. The trial court denied the motion, and the grocery store appealed.The Los Angeles County Superior Court initially reviewed the case and denied the grocery store's motion to compel arbitration without providing a written explanation. The grocery store then appealed this decision to the California Court of Appeal, Second Appellate District.The California Court of Appeal affirmed the lower court's decision. The court held that while Mahram did agree to arbitration with Instacart by signing up for its service, the grocery store was not a third-party beneficiary of that agreement. The court determined that the trial court, rather than an arbitrator, was the proper authority to decide the threshold questions of arbitrability because the contract did not clearly indicate that Mahram had agreed to arbitrate with anyone other than Instacart. Additionally, the court found that the grocery store was not a third-party beneficiary of the Instacart-Mahram arbitration contract, as the contract's motivating purpose was not to benefit the grocery store. Consequently, the grocery store could not compel arbitration based on the Instacart agreement. The order denying the motion to compel arbitration was affirmed, and costs were awarded to the respondent. View "Mahram v. The Kroger Co." on Justia Law

Wilfred L. Doll and Cheri L. Doll (Dolls) were members of Little Big Warm Ranch, LLC (LBWR), a business formed to manage water rights in Phillips County. Dolls negotiated a settlement with Finch/Dements for senior water rights, which devalued LBWR’s property. LBWR members consented to the settlement on the day they closed on the Finch/Dement property. Dolls later filed a complaint seeking dissolution of LBWR or a buy-out of their shares. LBWR amended its operating agreement to expel adverse members and seek attorney fees and costs, excluding Dolls from the meeting where these amendments were ratified.The Seventeenth Judicial District Court, Phillips County, ruled that Dolls dissociated from LBWR on February 2, 2018, when they filed their complaint. The court also granted LBWR summary judgment on its counterclaims for breach of fiduciary duties and the obligation of good faith and fair dealing, applying the eight-year statute of limitation for contracts. A jury awarded LBWR $2.5 million in compensatory and punitive damages. The District Court ordered Dolls to pay LBWR with 11.25% interest and LBWR to pay Dolls $434,000 per share with 7.5% interest.The Supreme Court of the State of Montana affirmed the District Court’s ruling that Dolls dissociated on February 2, 2018, and upheld the calculation of Dolls’ distributional interest. The court determined that the eight-year statute of limitation for contracts applied to LBWR’s counterclaims, as the fiduciary duties arose from the operating agreement. However, the court found that punitive damages were improper because they are not allowed in breach of contract actions under Montana law. The case was remanded to the District Court to modify its judgment to exclude punitive damages. View "Doll v. Little Big Warm Ranch, LLC" on Justia Law