Justia Contracts Opinion Summaries

In two civil actions, Plaintiffs in the underlying action alleged that Cheaters, Inc. and Cheaters Holding Corporation negligently and/or recklessly served alcoholic beverages to William Powers, who afterwards drove a vehicle off the premises and collided with other vehicles, resulting in one death and injuries to others. Before the accident, United National Insurance Corporation had issued an insurance policy to Cheaters and the Holding Corporation. Based on the policy's on-premises endorsement and liquor liability exclusion, United National disclaimed any responsibility for the defense and/or indemnification of the Holding Corporation. Plaintiff corporations then filed a complaint seeking a declaratory judgment as to their rights under the terms of the policy. The superior court hearing justice granted United National's motion for summary judgment on the grounds that the on-premises endorsement, which limited coverage to on-premises losses only, applied. The Supreme Court affirmed, holding that coverage was barred by the on-premises endorsement.

Lake Cabin Development entered into two separate written agreements with the Robert Hurly and John Hurly families to purchase their respective properties. Pursuant to an agreement, Lake Cabin provided Robert Hurly with a $250,000 option payment. After public opposition to Lake Cabin's proposed development on the land forced Lake Cabin to extend the deadline on the closing date of its agreement with the Hurlys, Lake Cabin declared the contract to be null and void and demanded return of its option payment. Both Hurly families brought separate breach of contract actions. The district court concluded that Robert Hurly was required to refund the $250,000 option payment to Lake Cabin because there was never an enforceable contract between the parties. The Supreme Court reversed, holding (1) the district court erred in determining that the parties had not entered into a binding agreement, and (2) Lake Cabin was not entitled to a refund of the option payment. Remanded.

Appellants David and Barbara Moore defaulted on the Note to their mortgage in 2008. U.S. Bank, National Association, commenced foreclosure proceedings later that year, not in its individual capacity, but solely as trustee on behalf of GSAA Home Equity Trust 2006-6 (Appellee). According to the verified petition, the Appellee was "the present holder of said Note and Mortgage having received due assignment through mesne assignments of record or conveyance via mortgaging servicing transfer." The original petition did not attach a copy of the note in question sued upon. Appellants answered, pro se in 2009, disputing all allegations and requesting that the Appellee "submit additional documentation to prove [its] claims including the representation that they were the "present holder of said Note." Appellee subsequently filed an amended petition and a second amended petition to add additional defendants. Neither of these amendments included a copy of the note. Appellee submitted its Motion for Summary Judgment to the court, again representing that it was the holder of the Note. Documentation attached to the Motion attempted to support this representation: including the Mortgage, the Note, an Assignment of Mortgage, and an Affidavit in Support of Appellee's Motion for Summary Judgment. For the first time, Appellee submitted the Note and Mortgage to the trial court. The note was indorsed in blank and contained no date for the indorsement. Appellants did not respond to Appellee's Motion, and the trial court entered a default judgment against them. The trial court entered a final judgment in favor of the Appellee. Upon review, the Supreme Court found no evidence in the record establishing that Appellee had standing to commence its foreclosure action: “[t]he trial court's granting of a default judgment in favor of Appellee could not have been rationally based upon the evidence or Oklahoma law.” The Court vacated the trial court’s judgment and remanded the case for further proceedings.

Sisters of Mary of the Presentation Long Term Care, d/b/a Ave Maria Village ("Sisters of Mary"), appealed, and Northern Excavating Co., Inc. ("Northern") cross-appealed a trial court's judgment awarding Northern $81,694.23 plus interest at 1.5 percent and costs at $743.33, and awarding Sisters of Mary $3,231.00 in attorney's fees. In October of 2009, Sisters of Mary and Northern executed a contract wherein Northern agreed to repair a water main break on Sisters of Mary's property for the cost of its "[t]ime and [m]aterials[.]" The contract did not contain a specific price. Following completion of the repairs, Northern submitted a bill for $103,244.11 to Sisters of Mary. Sisters of Mary found the bill excessive and refused to pay, asserting the repairs only had a value of approximately $40,000. Northern filed a construction lien covering the repaired property and sued Sisters of Mary seeking $98,806.98 for breach of contract and foreclosure of the lien. Sisters of Mary answered and counterclaimed alleging breach of contract, unlawful sales practices, and invalid construction lien/slander of title. Sisters of Mary also sought a jury trial. By stipulation, issues relating to the foreclosure of the construction lien were reserved and not submitted to the jury. The jury returned a verdict awarding Northern $81,694.23 plus interest at 1.5 percent for time and materials provided under the contract. After the verdict was rendered, Sisters of Mary applied for its costs and attorney's fees. In its post-trial brief, Sisters of Mary claimed it successfully challenged Northern's lien and argued the court was required to award it all of its attorney's fees and costs associated with the action. In its own post-trial brief, Northern argued it was unreasonable to require lienholders to pay costs and attorney's fees when a lienholder does not recover the precise amount claimed in a lien. The trial court ultimately awarded Sisters of Mary a portion of its attorney's fees, explaining it was a reasonable award given Sisters of Mary failed to specify "any fees that were directly related to the construction lien issue[.]" The trial court also found Northern was the prevailing party and awarded its costs. Upon review, the Supreme Court concluded the Legislature intended to award an owner literally all of the costs and attorney's fees arising out of a lawsuit when challenging a lien was not the only disputed cause of action: "[t]here is nothing in the statute or the legislative history to support that conclusion. We recognize that Sisters of Mary must provide the court with an itemization of its attorney's fees and costs in order for the trial court to determine those related to the successful contest of the accuracy of the lien." The Court reversed the award of attorney's fees and costs and remanded that issue to the trial court. Because the district court misconstrued the fees and costs statute, the Court reversed in part and remanded for the district court to determine the reasonable amount of attorney's fees associated with contesting the accuracy of the construction lien.

Plaintiff appealed from the district court's order dismissing his complaint against Target and Virginia Winn. Plaintiff, a Hispanic male, alleged that Winn, a white Target cashier, refused to serve him based on his race and publicly humiliated him when she turned him away from her register. Plaintiff brought suit against Winn for intentional infliction of emotional distress (IIED); against Target for vicarious liability and for negligent training, supervision, and retention; and against both defendants for violating his right to make contracts under 42 U.S.C. 1981. The district court dismissed the case, explaining that plaintiff could not maintain a section 1981 claim because he was ultimately able to complete his purchase, and that Winn's alleged actions did not rise to the level of outrageousness required to state an IIED claim under controlling Florida law. After thorough review and having had the benefit of oral argument, the court agreed and affirmed the judgment of the district court.

GMG contracted with Amicas to develop and license computer programs to accept information from a radiology patient management system established by Sage and send information to a billing system established by Sage. The warranty excluded any failure resulting from databases of GMG or third parties and warned that Amicas did not warrant that the software would meet GMG’s requirements. Amicas worked with Sage on the interfaces. GMG began using the programs and reported problems, eventually returning to its old method of manual processing, but did not inform Amicas of that decision or of persistent problems with the interface. GMG began negotiating with Sage to develop substitute software. When Amicas became aware of problems with the interface, it worked with Sage to resolve the concerns, but GMG sent Amicas a termination notice, citing failure to deliver a functional product. The district court found for Amicas on its breach of contract claim, rejected counterclaims, and awarded $778,889 in damages, $324,805 in attorneys’ fees, plus costs and interest. The Third Circuit affirmed, finding that Amicas satisfied its burden of proving performance and that GMG offered only conclusory allegations of noncompliance.

Ford provides a warranty, entitling buyers of new vehicles to have Ford repair or replace defective components at any Ford dealer, regardless of where they purchased the vehicle. Ford reimburses dealers, providing a mark-up of 40% over cost for most parts. However, under the New Jersey Franchise Protection Act, Ford must reimburse dealers for parts at the "prevailing retail rate," charged customers for non-warranty work. Ford implemented a Dealer Parity Surcharge to recoup the increased cost. Ford calculated, for each New Jersey dealer, the cost of increased warranty reimbursements and divided by the number of vehicles purchased by that same dealer. That amount constituted the surcharge added to the wholesale price of every vehicle. The Third Circuit affirmed summary judgment that DPS violated the NJFPA. Ford devised a new system, NJCS, under which Ford calculated its total cost of complying with the NJFPA and divided by the number of wholesale vehicles sold in the state. A dealer’s total NJCS increased in proportion to the number of vehicles it purchased, regardless of how many warranty repairs it submitted. The district court found that NJCS violated NJFPA. The Third Circuit reversed in part, holding that the scheme does not violate the statute.

Fred and Nancy Eagerton appealed a summary judgment granted in favor of Vision Bank in the bank's action seeking to enforce the Eagertons' obligations under certain guaranty contracts. "Dotson 10s, LLC" was organized to operate a tennis club in Fairhope. Dotson 10s executed a note and security agreement with Vision Bank, and the bank obtained in exchange, unlimited personal guarantees from John and Elizabeth Dotson, and limited guarantees from the Eagertons. The Dotsons executed a second loan to which the Eagertons were not a party. The Dotsons defaulted on both loans, and the bank sued the Dotsons as the primary obligors, and the Eagertons as personal guarantors. Dotson 10s then filed for bankruptcy protection. Part of the reorganization plan provided in part that the two loans would be combined and paid in full. Dotson 10s subsequently defaulted on the bankruptcy plan. The properties were foreclosed and sold, with the proceeds applied to the consolidated loan. The circuit court then entered a partial summary judgment in favor of the bank against Dotson 10s, but denied the motion as to the Eagertons. The bank argued that the Eagertons were still responsible under their guaranty contracts for the deficiency remaining on the consolidated loan. The Eagertons argued that the creation of the consolidated loan without their knowledge or consent, operated to discharge them from any further obligations under their guaranty contracts. Upon review, the Supreme Court agreed, and reversed the circuit court's judgment in favor of the bank, and remanded the case for further proceedings.

This case involved a dispute between a surface owner and a timber estate owner. In the first appeal, the Supreme Court reversed a judgment on the pleadings in favor of the surface owner and remanded for proceedings to examine the facts and circumstances surrounding the timber estate owner's predecessor in interest's (Union Pacific) reservations of timber in deeds from the early 1900s in order to determine the parties' intent with regard to the duration of the timber estates. The district granted judgment in favor of the surface owner, concluding (1) Union Pacific intended to reserve only those trees in existence at the time of the grant and of sufficient size to be suitable for use in construction, and (2) Union Pacific's timber reservations had expired. The Supreme Court affirmed, holding (1) the district court properly ruled, on the evidence before it, that Union Pacific intended its reservation of timber to include only trees of a suitable size which existed on the subject properties at the time of the deeds; and (2) the evidence presented at trial clearly established that such timber no longer existed on the properties.

Penske provided transportation services for a newspaper, its only customer, 1999 to 2009, but lost the bid for the contract and informed the union that it would cease operations. The collective bargaining agreement expired two days after operations shut down. Penske and the union engaged in "effects bargaining." Penske agreed to give workers extended recall rights, preferential treatment should they apply for employment at other firms within the Penske group, pay for unused vacation time, severance pay of one week's wages, and assistance in preparing resumes and securing letters of recommendation. Employees filed claims they characterized as a "hybrid" breach of contract and Labor-Management Relations Act, 29 U.S.C. 185 suit. The Seventh Circuit agreed with the district court that the suit was "doomed" because the plaintiffs did not even contend that Penske failed to implement the collective bargaining agreement. The court also dismissed a claim that the union did not bargain hard enough.