Justia Contracts Opinion Summaries

Plaintiffs purchased a house from Defendant, who built the house. Plaintiffs later discovered mold in some of the windows and walls and sued Defendant. The jury found in favor of Plaintiffs on their negligence claim but found in favor of Defendant on Plaintiffs' negligent misrepresentation claim. The jury also found that Plaintiffs failed to perform all, or substantially all, of the things the contract required them to do and therefore the jury did not reach the question of whether Defendant breached the contract. The Supreme Court held (1) the economic loss rule prevented recovery of economic damages within the scope of the parties' contract but allowed for recovery of damages to other property or for bodily injury; (2) the trial court did not err when it permitted Dr. Eugene Cole to testify as an expert witness; (3) because Defendant prevailed in his claims under the contract, which provided the only basis for awarding attorney fees, he was entitled to recover attorney fees for the breach of contract suit; and (4) the trial court did not err when it denied Plaintiffs' motion for judgment notwithstanding the verdict. Remanded.

Sea Hawk Seafoods, Inc. sued the City of Valdez for damages after Valdez applied for a grant from the State of Alaska for funding to convert Sea Hawk's seafood processing facility into a fish meal plant but then declined to accept the $600,000 grant that the State conditionally awarded to Valdez. On pre-trial motions, the superior court dismissed Sea Hawk's claims for breach of contract, breach of an agreement to negotiate, and breach of a duty to negotiate in good faith. Valdez and Sea Hawk filed cross-motions for summary judgment on Sea Hawk's remaining claim for promissory estoppel, which the court denied. Shortly before trial, the court dismissed Sea Hawk's promissory estoppel claim as a discovery sanction. Sea Hawk and Valdez both appealed. Upon review, the Supreme Court affirmed: Sea Hawk's claims were based on statements made and a letter sent by the Valdez City Manager to the owner of Sea Hawk. Because these communications, even when viewed in the light most favorable to Sea Hawk, were insufficient as a matter of law to support Sea Hawk's claims. The Court reversed the lower court's ruling denying Valdez summary judgment on Sea Hawk's promissory estoppel claim.

AECOM, Inc. hired Centennial Archaeology, Inc. to perform cultural resources survey work in connection with a wind-energy project. When AECOM refused to pay Centennial for some of its work, Centennial brought suit against AECOM in the United States District Court for the District of Wyoming. Centennial prevailed on several claims and the parties ultimately settled on appeal the issues raised with respect to the merits of the litigation. This appeal concerned the parties' dispute about the district court's postjudgment order requiring AECOM to pay Centennial $58,361.51 in attorney fees for misconduct in the course of discovery. Upon review, the Tenth Circuit affirmed: the magistrate judge and district court reasonably found that AECOM had frustrated the discovery process and stalled the resolution of this case. And the amount of the fee award was proper. In particular, Centennial was entitled to an award under Fed. R. Civ. P. 37 even though its attorneys were working for a fixed fee.

Art Etc., LLC sought a declaratory judgment that the sale of inventory purchased from Angel Gifts, Inc. and Donald Schmit would amount to copyright infringement in violation of the United States Copyright Act. Angel Gifts and Donald Schmit moved to stay the proceedings pending arbitration, invoking an arbitration provision in an agreement between the parties. The district court denied the motion. The Eighth Circuit Court of Appeals affirmed, holding (1) the parties intended for the arbitration provision to apply only under certain circumstances; and (2) Art. Etc.'s claims did not fall within the scope of the arbitration provision. Thus, arbitration in this case was not required.

This appeal arose from a dispute between two competing creditors, DAFCO, LLC, and New Phase Investments, LLC. DAFCO appealed the district court's determination on summary judgment that DAFCO's deed of trust, although first recorded, was void under I.C. 32-912 because it encumbered community real property but was not signed by both spouses. Because I.C. 32-912 was enacted for the protection of the community rather than third-party creditors, the Supreme Court found that New Phase could not invoke that statute to void DAFCO's competing encumbrance. Accordingly, the Court reversed: the district court erred in declaring DAFCO's trust deed void under that statute at New Phase's request.

The issue in this case arose from a judgment which held that a "Designated Project or Premises" endorsement of a commercial general liability insurance policy purchased by a sporting goods store excluded coverage for a claim arising out of the sale of improperly reloaded ammunition. Petitioner Tom Erekson purchased a used .500 revolver from a sporting goods store, along with three boxes of handloaded ammunition, all of which the store purchased from the gun's previous owner. Erekson and his sons took the revolver to a shooting range, loaded five chambers with the reloaded ammunition, and fired. The one cartridge discharged, but two others detonated simultaneously. When the cartridge under the loading gate detonated, it sheared off the gate, a portion of the cartridge rocketed rearward, and struck Erekson in the forehead, lodging three inches into his brain. He also lost a portion of his thumb. The store held a general liability policy through Markel International Insurance Company. The store brought suit for a court order to declare Erekson's injuries were covered under the policy. The district court held that the injury was excluded; Erekson unsuccessfully moved for reconsideration. Upon review of the policy, the Supreme Court affirmed, finding coverage was excluded under the endorsement.

Defendants Jay and Theresa Knowlton appealed the grant of summary judgment in favor of Plaintiffs-Appellants Tapadeera, LLC and Cary Hamilton (d/b/a C&J Construction) on their claim that Defendants prevented Plaintiffs from performing a settlement agreement to resolve a lawsuit between the parties. Tapadeera owned a parcel of property that had been platted as one lot. Tapadeera sold the property as two parcels -a two-acre parcel and a six-acre parcel purchased apparently under a real estate contract. The purchasers had a modular home placed on the two-acre parcel, but they failed to make the payments due in both transactions. As a result, the lender foreclosed on the two-acre parcel, and Tapadeera regained title to the six-acre parcel. Defendants desired both parcels to construct a home. They purchased the two-acre parcel from the bank, and contracted with Tapadeera to purchase the six-acre parcel. After making several payments under the contract, Mr. Knowlton contacted Cary Hamilton, Tapadeera's president, to determine the amount necessary to pay the contract in full. Mrs. Knowlton recorded the deed, and the Knowltons stopped payment on the check when they discovered that they could not obtain a building permit for the six-acre parcel because it had been wrongly divided from the two-acre parcel. For over four years, neither party took any action regarding this transaction. Eventually the parties sought to finish the deal, and it headed to court. Mr. Hamilton agreed to fix the subdivision problem and the Knowltons agreed to pay the balance owing. However, when notice of the subdivision was mailed to adjacent and affected property owners, the Knowltons were omitted from the notice. They learned of the hearing regarding the subdivision after it was over; they gave notice that they were withdrawing their subdivision application. The court held that the county's approval of the subdivision application was a condition precedent to the Knowltons' obligation to pay the balance, but that they had wrongfully prevented performance of that condition by withdrawing the subdivision application. The Knowltons moved for reconsideration which was denied. Upon review, the Supreme Court affirmed: "This case illustrates the time and expense that can be wasted when the parties fail to exercise common sense to resolve an issue. Clearly, Tapadeera should have had the lot subdivided in connection with the first sale. When the issue arose after the sale of the six-acre parcel to the Knowltons, the parties should have met and agreed to the resolution they reached six years later. Once they did so, they both should have been reasonable in doing whatever was necessary to effectuate the replatting of the lot."

Patrick McGinness, driving a vehicle owned by his adult daughter, negligently struck and injured Marie DeMeo. DeMeo obtained a $350,000 state-court judgment against McGinness. McGinness's daughter's insurer, American Family Insurance Company, paid its $100,000 policy limit under an owner's liability policy that covered McGinness as a permitted driver. State Farm insured McGinness under four liability policies issued for the cars he owed. Each policy provided coverage to McGinness when operating a non-owned vehicle such as his daughter's. Invoking the policies' "anti-stacking" provisions, State Farm paid the per-person limit of one policy, $50,000. De Meo filed this action to recover an additional $150,000, the combined limits of the other three policies. The district court held that the anti-stacking provisions did not conflict with Missouri's Motor Vehicle Financial Responsibility Act (MVFRL) requirements, which mandate that motor vehicle owners and operates maintain minimum levels of financial responsibility for damages arising out of their ownership or use of a motor vehicle, and granted summary judgment in State Farm's favor. The Eighth Circuit Court of Appeals affirmed, holding that there was no basis to conclude that the MVFRL demands stacking when there are multiple policies.

CS manufactures and sells X-ray and metal detection devices for use in public facilities around the world. Tecapro is a private, state-owned company that was formed by the Vietnamese government to advanced technologies into the Vietnamese market. In 2010, Tecapro purchased 28 customized AutoClear X-ray machines from CS for $1,021,156. The contract provides that disputes shall be settled at International Arbitration Center of European countries for claim in the suing party’s country under the rule of the Center. Tecapro initiated arbitration proceedings in Belgium in November 2010. In December 2010, CS notified Tecapro of its intention to commence arbitration proceedings in New Jersey. In January 2011, CS filed its petition to compel arbitration in New Jersey and enjoin Tecapro from proceeding with arbitration in Belgium. The district court concluded that it had subject matter jurisdiction under the U.N.Convention on the Recognition and Enforcement of Foreign Arbitral Awards, that it had personal jurisdiction over Tecapro, and that Tecapro could have sought to arbitrate in Vietnam and CS in New Jersey. The latter is what happened, so “the arbitration shall proceed in New Jersey.” After determining that it had jurisdiction under the Federal Arbitration Act, 9 U.S.C. 1, the Third Circuit affirmed.

Joseph purchased the BP franchise in 2006 for $400,000. In 2009, Sasafrasnet purchased BP’s interests in the land and a Dealer Lease and Supply Agreement, becoming lessor and franchisor. The DLSA authorizes Sasafrasnet to terminate if Joseph fails to make payment according to EFT policy, causing a draft to be dishonored as NSF more than once in 12 months; Sasafrasnet is not obligated to extend credit, but did deliver fuel before collecting payment. There were several instances of NSF EFTs; Sasafrasnet began to require payment in advance. Later, Sasafrasnet allowed Joseph to resume paying by EFT within three days of delivery, but established a $2,500 penalty for any NSF and stated that pre-pay would resume if he incurred two more NSFs. There were additional NSFs, so that Joseph had incurred nine for amounts over $20,000 and three for amounts over $45,000. Sasafrasnet gave Joseph 90 days’ notice that it was terminating his franchise, listing the NSFs and failing scores on a mystery shopper inspection as bases for termination. Joseph sued under the Petroleum Marketing Practices Act, 15 U.S.C. 2801. The district court denied a preliminary injunction to prevent the termination. The Seventh Circuit reversed, holding that the statute requires additional findings.