Justia Contracts Opinion Summaries

Borrowers obtained secured loans from InBank. Their promissory notes established that InBank would calculate annual interest rates by adding a predetermined amount, usually one percent, to a variable index rate set by InBank at “its sole discretion,” which could change up to once per day. InBank stated that it would set the rate “at or around the U.S. prime rate.” Borrowers compared loan statements and found that the rate was neither consistent across customers nor close to the prime rate. After borrowers filed suit, the Illinois Department of Financial and Professional Regulation took control of InBank and appointed the Federal Deposit Insurance Corporation as receiver. MB Financial purchased InBank accounts. The borrowers filed an amended class action against MB, claiming violations of the Interest Act, 815 ILCS 205/1, and the Consumer Fraud and Deceptive Practices Act, 815 ILCS 505/1. The court granted a motion to substitute the FDIC as defendant, then dismissed. The Seventh Circuit held that dismissal was proper for failure to exhaust remedies under the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. 1821(d)(3)-(d)(13). The claims relate to InBank’s alleged acts and omissions, not MB’s, and there is no support for an assumption of liability argument.View "Farnik v. Fed. Deposit Ins. Corp" on Justia Law

Through cold calls, defendants sold plaintiffs shares in oil and gas joint ventures in Texas, Alabama and Mississippi. Plaintiffs all signed agreements with forum selection clauses stating that courts in Dallas County, Texas would have exclusive jurisdiction should any disputes arising from the agreements arise. The ventures lost money, and plaintiffs sued in Colorado, raising violations of the Colorado Securities Act (CSA) and various other common-law claims. Defendants moved to dismiss all claims citing the forum selection clause. Plaintiffs argued on appeal that the clauses were void because they were unenforceable on public policy grounds. Upon review, the Supreme Court held that the forum selection clauses were valid, and that they requires the parties to litigate their claims in Texas. View "Cagle v. Mathers Family Trust" on Justia Law

Petitioners sought underinsured motorist coverage (UIM) under a policy issued by Auto-Owners Insurance Company (Owners) as a result of an automobile accident caused by an allegedly negligent driver of a rental vehicle owned by Avis Rent-a-Car (Avis). Avis, as a car rental company, was statutorily required to pay $50,000 as a result of the accident. Owners denied Petitioners' UIM claim, asserting that because Avis was a self-insurer, the rental vehicle was not an underinsured automobile under the terms of the policy. The circuit court ruled in favor of Owners, determining that Avis was unambiguously a self-insurer, and therefore, the Avis vehicle did not fall within the policy definition of underinsured automobile. The court of appeals affirmed. The Supreme Court reversed, holding (1) as applied, the policy term "self-insurer" is ambiguous, and therefore, the policy is interpreted in favor of Petitioners to afford coverage; and (2) even if the term "self-insurer" appears to be unambiguous, interpreting it to exclude self-insured rental vehicles from coverage leads to an absurd result here. Remanded. View "Bethke v. Auto-Owners Ins. Co." on Justia Law

Turbines, Ltd. purchased a replacement part for a helicopter engine from Transupport, Inc., intending to use the part to fill an order Turbines had received from a customer in Singapore to be shipped to Malaysia. Turbines later learned that filling the order could subject it to criminal liability, Turbines attempted to return the part of Transupport and obtain a refund of the purchase price. Transupport refused to refund the payment. Turbines then brought this action seeking rescission of the purchase order. The district court entered default judgment in favor after Transupport failed to appear at a pretrial conference and the trial. The court of appeals reversed the default judgment against Transupport and ordered that Turbines' complaint be dismissed, concluding that the evidence adduced at trial did not support rescission as a matter of law. The Supreme Court affirmed, holding (1) the uncontroverted facts provided no legal basis for rescission; and (2) thus, although Transupport failed to appear for trial, the district court abused its discretion in entering default judgment in favor of Turbines. View "Turbines Ltd. v. Transupport Inc." on Justia Law

Prime Realty, Inc. (Prime) acted as general partner for two limited partnerships (collectively, the Partnerships). Without the Partnerships' limited partners' knowledge, Prime took out two loans from a bank (the Bank) and, by deed of trust, secured the loans with Partnerships' property. The Bank ultimately sold the collateral and applied the proceeds to the loans. The Partnerships sued the Bank for conversion, alleging that the loans were for a nonpartnership purposes and, as such, Prime lacked authority to offer the Partnerships' property as collateral without the limited partners' consent under the Partnership agreements. The district court concluded that the Bank had converted the Partnerships' property and awarded the Partnerships damages and prejudgment interest. The Supreme Court affirmed, holding (1) the Partnerships' complaint was timely; (2) the Bank converted the Partnerships' property; (3) the district court improperly awarded damages in the full amount of the proceeds applied to the loans because a portion of the first loan served a Partnership purpose; and (4) prejudgment interest was proper only in the amount the Bank applied to the second loan. View "Brook Valley Ltd. P'ship v. Mut. of Omaha Bank" on Justia Law

The City of Topeka attempted to purchase a new police helicopter from Schreib-Air, Inc. with financing by Municipal Services Group, Inc. (MSG) After a lease-purchase agreement was signed, the State filed suit seeking a declaratory judgment that the agreement between the City and Schreib-Air was invalid, void ab initio, and ultra vires because the lease-purchase agreement failed to comply with the cash-basis law. Although the helicopter was never actually purchased, the district court held that the transactions with Schreib-Air and MSG violated the cash-basis law and ordered that any money given to MSG or Schreib-Air related to the helicopter purchase was to be returned. The Supreme Court affirmed, holding that Schreib-Air's agreement with the City was void when entered into because the contract was made in violation of the cash-basis law and, consequently, the contract was unenforceable. View "State, ex rel. Hecht v. City of Topeka" on Justia Law

Plaintiffs, farmers, purchased a Farm-Guard insurance policy from First Maxfield Mutual Insurance Association. Grinnell Mutual Reinsurance Company (Grinnell Mutual) reinsured the policy. Two years later, 535 of the hogs Plaintiffs were raising suffocated to death in Plaintiffs' building. Plaintiffs filed a claim with Grinnell Mutual to recover under the policy, but Grinnell Mutual denied the claim. Plaintiffs sued Grinnell Mutual for breach of contract. Both parties filed motions for summary judgment. The district court denied Grinnell Mutual's motion and granted Plaintiffs' motion based on the reasonable expectation doctrine. The court of appeals affirmed on alternative grounds, concluding the insurance policy was ambiguous and construing the ambiguity in favor of Plaintiffs. The Supreme Court reversed, holding (1) the policy was not ambiguous, and as a matter of law, the policy did not provide coverage; and (2) as a matter of law, the doctrine of reasonable expectations did not apply here. Remanded with instructions to enter judgment in favor of Grinnell Mutual. View "Boelman v. Grinnell Mut. Reinsurance Co." on Justia Law

Leisnoi, Inc. retained the law firm of Merdes & Merdes to represent it in litigation against Omar Stratman over its certification of and title to certain lands Leisnoi claimed under the Alaska Native Claims Settlement Act. Leisnoi and Merdes entered a contingency fee agreement under which, if Leisnoi was successful, Merdes would receive an interest in the lands Leisnoi obtained or retained. The case was resolved in 1992 in favor of Leisnoi, although Stratman appealed and the related litigation continued for another decade. In October 2008, the Stratman litigation finally concluded in Leisnoi's favor. The following year, Merdes moved the superior court to issue a writ of execution. Leisnoi opposed the motion, arguing among other things that the judgment was void under 43 U.S.C. 1621(a)'s restrictions on contingency fee contracts involving Alaska Native Claims Settlement Act lands. In January 2010, the Superior Court issued an order denying Leisnoi's motion and granting Merdes's motion to execute. Six months later, Leisnoi paid Merdes the remaining balance. Leisnoi then appealed the superior court's ruling. The issue before the Supreme Court concerned questions of waiver and whether the superior court's judgment was void or voidable. Upon review of the matter, the Court concluded: (1) Leisnoi did not waive its right to appeal by paying Merdes the balance due on the judgment; (2) an Arbitration Panel's fee award and the superior court's 1995 entry of judgment violated 43 U.S.C. 1621(a)'s prohibition against attorney contingency fee contracts based on the value of Native lands that were subject to the Act; (3) the superior court's 2010 order granting Merdes's motion to execute on the 1995 judgment separately violated the Act's prohibition against executing on judgments arising from prohibited attorney contingency fee contracts; (4) notwithstanding the illegality of the Arbitration Panel fee award and the 1995 judgment, Leisnoi was not entitled to relief pursuant to Civil Rule 60(b) (the 1995 order was voidable rather than void for purposes of Civil Rule 60(b), and therefore not subject to attack under Civil Rule 60(b)(4)); and (5) Leisnoi was not entitled to relief under Civil Rule 60(b)(5) or 60(b)(6). Accordingly, Merdes was ordered to return Leisnoi's payment of the balance on the judgment, but Leisnoi was not entitled to recover payments made prior to the issuance of the writ of execution. View "Leisnoi, Inc. v. Merdes & Merdes, P.C." on Justia Law

SM Energy Company appealed a summary judgment declaring that A.G. Golden and other plaintiffs were entitled to a four percent overriding royalty interest in leases and lands covered by a 1970 letter agreement and ordering SM to pay amounts due to Golden and the other plaintiffs for these interests, and an order denying SM's motion to amend or for relief from the judgment. Upon review of the matter, the Supreme Court concluded the district court erred in ruling as a matter of law that SM through its predecessors in interest, expressly assumed an "area of mutual interest" clause in the 1970 letter agreement and in expanding the judgment to include unpled and unlitigated properties within the area of mutual interest. Furthermore, the Court concluded the court correctly ruled as a matter of law that SM owed Golden and the other plaintiffs retroactive royalty payments on production from a certain well located on the subject property. View "Golden v. SM Energy Company" on Justia Law

A Massachusetts corporation and its principals sued their quondam accountant and his firm (collectively, Defendants), alleging that Defendants negligently advised them to file amended corporate and personal tax returns that had the effect of substantially increasing the principals' liability and destabilizing the company. The district court granted summary judgment for Defendants but rejected their request for attorneys' fees. The First Circuit Court of Appeals affirmed, holding that the district court did not err in (1) concluding that a three-year statute of limitations applied to bar the maintenance of Plaintiffs' tort and contract claims; (2) dismissing Plaintiffs' unfair trade practices claim; and (3) denying Defendants' request for attorneys' fees. View "RTR Techs., Inc. v. Helming" on Justia Law