Justia Contracts Opinion Summaries

This appeal arose from a dispute between two neighboring property owners regarding a workshop addition to the home of Appellants, Neil and Seth Milner (Milner). The addition violated the city's setback requirement, and Appellee Gary Olsen reached an agreement with Milner to sell strip of his property so the building would be in compliance. The parties disagreed, however, about the terms of the agreement. Milner filed suit, and the district court rescinded and set aside the agreement. Olsen was ordered to return Milner's money and costs, and Milner was required to deed the land back to Olsen. After Olsen discovered that Milner's addition encroached past the boundary line of his property, Olsen filed suit alleging trespass and nuisance. The district court found in favor of Olsen and ordered Milner to remove the addition. The Supreme Court affirmed, holding that the district court did not err in determining (1) Olsen's claims were not barred by res judicata; (2) Olsen's claims were not barred by equitable estoppel or waiver; and (3) Milner was liable to Olsen for trespass.

This case involved a challenge to certain issuances of preferred units and convertible debt by a start-up medical products company. The founder, former CEO, and current common member of the company challenged the issuances, claiming they were self-interested transactions designed to benefit the company's directors and venture capital sponsors by unfairly diluting its common members. Defendants moved for summary judgment on all counts. The court found that plaintiff failed to adduce sufficient evidence to support a reasonable inference that defendants' actions in approving the challenged issuances were grossly negligent or reckless. Therefore, the court granted summary judgment to defendants on plaintiff's duty of care claims. As for the duty of loyalty claims, the court found that defendants failed to establish that the transactions were not self-interested or that they warranted protection under the safe harbor provisions of the company's operating agreement. Therefore, the court denied summary judgment on these claims. Finally, because the court found the operating agreement ambiguous on the issue of whether defendants were permitted to authorize additional common units or new series of units without approval by a majority of the common members, the court denied summary judgment on plaintiff's breach of contract claim under Count VI.

This was a class action brought on behalf of the common unit holders of a publicly-traded Delaware limited partnership. In March 2011, the partnership agreed to be acquired by an unaffiliated third party at a premium to its common units' trading price. The merger agreement, which governed the transaction, also provided for a separate payment to the general partner to acquire certain partnership interests it held exclusively. The court concluded that defendants' approval of the merger agreement could not constitute a breach of any contractual or fiduciary duty, regardless of whether the conflict committee's approval was effective. The court also found that the disclosures authorized by defendants were not materially misleading. Therefore, plaintiffs could not succeed on their claims under any reasonable conceivable set of circumstances and defendants' motion to dismiss was granted.

This case arose out of an alleged breach of a settlement agreement signed in a franchise dispute. The district court found that it had never dismissed the case and retained jurisdiction to decide the motion to compel compliance with the settlement agreement. The court found that the parties dismissed the case by filing a stipulation in accordance with Rule 41(a)(1)(A)(ii) and that the district court did not retain jurisdiction to enforce the settlement agreement. Therefore, the court was without jurisdiction to consider the motion to compel and remanded the case to the district court for lack of jurisdiction.

Plaintiffs, 64 former employees of DuPont who worked at the company's manufacturing facility in La Porte, Texas, filed suit against DuPont alleging that they were fraudulently induced to terminate their employment with DuPont and accept employment with a wholly owned subsidiary. The district court granted summary judgment dismissing the claims and entered a take-nothing final judgment in favor of DuPont. The court deferred to the Texas appellate courts and concluded that the 60 day termination clause at issue rendered the covered employees' employment with DuPont at-will for the purpose of Texas law. Accordingly, they could not bring fraud claims against DuPont for loss of their employment and therefore, the court affirmed the judgment.

Professional Building Maintenance Corporation (PBM), which provides janitorial and industrial cleaning services, filed an amended complaint against the School Board of the County of Spotsylvania asserting causes of action arising under the Virginia Public Procurement Act. PBM asserted that the School Board violated the Act because it did not award a custodial services contract to PBM, who was the lowest responsive and responsible bidder, and that the School Board's failure to select PMB as the successful bidder was arbitrary and capricious. The circuit court sustained the School Board's demurrer. The Supreme Court reversed, holding that the circuit court erred in sustaining the School Board's demurrer, as the amended complaint (1) adequately alleged that the School Board failed to properly follow the requirements of the Act, and (2) alleged sufficient facts of arbitrary or capricious conduct.

PBM Nutritionals filed a declaratory judgment action against three insurance companies (collectively the Insurers) seeking insurance coverage for its loss resulting from infiltration of filter elements into the infant formula it manufactured between January 22 and January 30, 2009. The Insurers claimed that the insurance policies' "Pollution Exclusion Endorsements" excluded coverage for PBM's infant formula loss because the formula was "contaminated." The circuit court entered judgment for the Insurers. The Supreme Court affirmed, holding that the circuit court did no err in finding that the Insurers were not liable to provide insurance coverage for PBM's loss of infant formula product.

Summit Group Properties, LLC (Summit) sued Orthopedic & Sports Physical Therapy Associates (OSPTA) and its partners for breach of lease and damages. OSPTA filed a counterclaim in which it alleged fraud in the inducement and damages. The jury returned a verdict in favor of Summit against OSPTA in the amount of $187,000. The jury found for Summit on OSPTA's counterclaim. OSPTA appealed, arguing that the trial court erred in granting a jury instruction offered by Summit because it misstated the law by instructing the jury that a limited liability company could not be liable for any fraudulent activity unless the fraud was approved by the members of the LLC. The Supreme Court agreed with OSPTA that the instruction was misleading because it was not a complete statement of the law and held that the trial court erred in giving the instruction. Remanded.

The Mathewses conveyed a parcel of land by deed of trust to a credit union to secure a promissory note. PHH Mortgage Corporation subsequently became the holder of the note and the beneficiary of the deed of trust. After the Mathewses failed to make payments, PHH commenced foreclosure proceedings on the parcel. The Mathewses filed a complaint seeking a declaratory judgment that the foreclosure sale would be void because PHH had not satisfied conditions precedent to foreclosure set forth in the deed of trust. Specifically, they alleged that 24 C.F.R. 203.604 (the Regulation) required PHH to have a meeting with them thirty days before the commencement of foreclosure proceedings. The circuit court dismissed the complaint, concluding that the Regulation was incorporated into the deed of trust as a condition precedent to foreclosure but that, under Virginia common law, the party who breaches a contract first cannot sue to enforce it. The Supreme Court reversed in part, holding (1) borrowers may sue to enforce conditions precedent to foreclosure even if they were the first party to breach the note secured by a deed of trust through non-payment; and (2) the Mathewses pled sufficient facts for the Regulation to apply. Remanded.

A developer contracted with B&R Construction Management (B&R) for the demolition a redevelopment and housing authority facility (hereafter referred to as the Contract). B&R subcontracted some of the demolition work to Beamon Enterprises (Beamon). Beamon, in turn, subcontracted with Environmental Staffing Acquisition Corporation (En-Staff) to provide labor. After Beamon failed to pay En-Staff for the work performed, En-Staff filed a complaint against B&R seeking the amount it was owed under its contract with Beamon. En-Staff asserted it had standing to bring a breach of contract claim against B&R as a third-party beneficiary of the Contract. B&R filed a demurrer disputing En-Staff's status as a third-party beneficiary. The circuit court sustained B&R's demurrer and dismissed En-Staff's claims against B&R with prejudice. The Supreme Court affirmed, holding (1) the trial court erred in finding that the language of the Contract precluded third-party action against B&R, but the error was harmless; and (2) En-Staff was not a third-party beneficiary of the Contract because it benefitted only incidentally from the Contract.