Justia Contracts Opinion Summaries

Plaintiff-Appellant Randy Kramer initiated a breach of contract action against Mike D. Murphy and the William F. Murphy Self-Declaration of Trust (Trust). Tri-State Ethanol, LLC owned an ethanol plant in Rosholt, South Dakota. Kramer was one of the members and managers of Tri-State Ethanol. Kramer was also a member of White Rock Pipeline, LLC, which owned a pipeline that supplied natural gas to Tri-State Ethanol. In order to comply with various federal regulations, Tri-State Ethanol determined it was necessary to purchase the membership interests of Kramer, Murphy, Woods, and the Trust. To accomplish this, Tri-State Ethanol entered into a loan agreement (Loan Agreement) with Murphy and the Trust. Tri-State Ethanol was unable to meet its financial obligations and eventually filed for Chapter 11 bankruptcy. During the course of the bankruptcy proceedings, Murphy and the Trust reached a settlement agreement regarding payment of the Loan Agreement and the Disbursement Agreement. Murphy and the Trust, through its trustee, represented to the bankruptcy court that they would use the settlement proceeds to pay Kramer the amounts owed under the Disbursement Agreement. The bankruptcy court approved the settlement agreement. After the settlement proceeds from Tri-State Ethanol’s bankruptcy estate were distributed, Murphy and the Trust refused to pay Kramer the full amount listed in the Disbursement Agreement. Kramer then filed a complaint against Murphy and the Trust for breach of the Disbursement Agreement. Murphy filed a motion to dismiss on the grounds of improper venue. He claimed that the forum-selection clauses contained in the Loan Agreement, the Balloon Note, and the Promissory Note controlled for any suit brought on the Disbursement Agreement. The circuit court agreed and dismissed the case. It found that while the Disbursement Agreement itself had no forum-selection clause, the other three agreements contained forum-selection clauses providing that the Fourteenth Judicial District in Rock Island County, Illinois was the proper forum. The circuit court reasoned that the agreements must be considered as a whole. After examining each of documents collectively as one contract, the Supreme Court held that the trial court did not err in finding that the parties intended the venue for any suit on the Disbursement Agreement to be the Fourteenth (14th) Judicial District in Rock Island County, Illinois. The circuit court’s dismissal of this case was affirmed.

The Cumberland Teachers Association (union), appealed to the Supreme Court that confirmed an arbitrator's award in favor of the Cumberland School Committee (school committee). After protracted contract negotiations, the school committee and the union agreed on a three-year collective bargaining agreement (CBA) that would govern their relations for the 2006-2007, 2007-2008 and 2008-2009 academic years. "However, the parties soon discovered that they had left the negotiating table with two very different understandings of how a key component of their agreement would be implemented." An arbitrator was selected and the parties agreed that the issue to be decided by the arbitrator was whether “the Cumberland School Committee place[d] the aggrieved teachers at the correct salary level for the 2007-08 school year?” On appeal to the Supreme Court, the union argued that the arbitrator manifestly disregarded a contract provision when he found that there was no written agreement about how the new salary schedule would be implemented for the 2007-2008 year. Upon review, the Supreme Court concluded that the union did not demonstrate that the arbitrator manifestly disregarded the contract or that he was completely irrational in arriving at his decision and award.

The dispute at the center of this case arose from a business relationship that "rapidly turned sour." Plaintiffs Charles and Marguerite Takian and Defendants Ralph and Lucia Rafaelian together purchased property in South Kingstown that included a motel, restaurant and trailer park. The couples formed a business to manage the property and Plaintiffs agreed to run the businesses. In 2002, the relationship between the parties deteriorated when Defendants alleged Plaintiffs were mismanaging the businesses. Defendants decided to sell their interest to Plaintiffs' son Randolph. As part of the sale, Defendants signed a release absolving Plaintiffs from "any and all claims arising out of the ownership of the property and operation of the business." After the sale, Defendants continued to feel "unsettled" about how the business had been operated. They investigated further and alleged to have discovered facts that suggested far more serious misdeeds in management. Plaintiffs filed an action for declaratory relief, in which they sought a ruling that the release that had been executed by Defendants contemporaneous with the sale barred any further claims. Defendants counterclaimed, both on behalf of themselves and derivatively on behalf of the corporation, alleging embezzlement, misrepresentation, misappropriation, and loss of corporate opportunity. A justice of the Superior Court granted summary judgment in favor of Plaintiffs, after he found that the release was both valid and effective against both defendants and the corporation. Defendants appealed. Upon review, the Supreme Court affirmed in part, and reversed in part. The Court found triable issues of fact that were inappropriate for resolution by summary judgment. The case was remanded for further proceedings with respect to those remaining issues.

The questions before the Supreme Court in this case stemmed from damages sustained because of food contaminated by E. coli pathogens at two Sizzler Steak House restaurants. The plaintiffs in the underlying actions settled years ago, and the claims before the Court related to the apportionment of liability and costs among those who were defendants in the underlying actions. The defendants included Sizzler and Excel corporation, which processed and distributed the contaminated meat that was source of the E. coli pathogens. Among the plaintiffs was the estate of Brianna Kreifall, who died from the contaminated food. The court of appeals affirmed in part and reversed in part the circuit court. The Supreme Court affirmed on all issues, holding, inter alia, that (1) Sizzler was entitled to recover consequential damages for Excel's breach of implied warranties in the parties' meat supply contract; (2) Sizzler was entitled to indemnity from Excel for the entirety of Sizzler's advance partial payment to the Kriefall family; and (3) notwithstanding the jury's determination that Sizzler was zero percent responsible for the E. coli contaminated food, Sizzler may not recover attorney fees from Excel because the exception to the American Rule did not apply here.

Petitioner Jones & Trevor Marketing appealed the dismissal of its suit against the owners of Financial Development Services, Jonathan Lowry and Nathan Kinsella, alleging various contract and tort claims based on an alter ego theory of liability. The district court held that Petitioner had not demonstrated sufficient facts to support its alter ego theory and therefore granted summary judgment against Petitioner on its tort and contract claims that rested on its alter ego theory. The court of appeals affirmed. The Supreme Court affirmed, holding that Petitioner failed to provide affirmative evidence establishing a genuine material dispute on its alter ego theory.

This dispute centered around two roads owned by the Maceys, their company Family Link, and the remaining defendants (Defendants). Petitioner Nadine Gillmor previously brought suit against the Maceys seeking to interpret and enforce the terms of a settlement agreement purporting to give the Gillmors a limited private easement over one road and limited access over the other road. The court of appeals held that Gillmor had a limited private easement over the roads but that the easement would not pass on to her children from a prior marriage. Gillmor later brought two claims for access over the roads, asserting that the roads were subject to condemnation for a public access easement and that the roads had been continuously used as public thoroughfares for a period of ten years and were thus dedicated to public use as a "highway by use" under Utah Code 72-5-104. The district court dismissed the complaint based on res judicata and imposed sanctions on Gillmor's attorney for filing a claim without a basis in law. The Supreme Court (1) held that Gillmor's claims were not barred by res judiciata; and (2) vacated the imposition of sanctions. Remanded for adjudication of Gillmor's suit on the merits.

At issue in this appeal was whether to judicially invalidate an insurance contract requirement that the insured file her lawsuit for underinsured motorist coverage (UIM) within two years of her auto accident. Plaintiff argued the deadline was unenforceable because, although she was still experiencing pain two years after the accident, only later did she discover the full extent of her injuries and realize her claim exceeded the other driver's liability limits. Plaintiff filed this UIM action against her insurer (Defendant) nearly six years after the accident. The district court granted Defendant's motion for summary judgment enforcing the contractual deadline as reasonable. The court of appeals reversed, holding the two-year limitation period was unreasonable under the circumstances. The Supreme Court vacated the court of appeals and affirmed the district court, holding that the two-year UIM insurance policy deadline was enforceable as a matter of law because it matched the two-year statute of limitations in Iowa Code 614.1(2) for personal injury actions.

Plaintiff corporation filed an action against Defendant, a resident of Nebraska, for damages related to the termination of an apartment lease in Iowa where Defendant formerly resided. Plaintiff attempted to serve notice under Iowa's long-arm statute by certified mail at a forwarding address provided by Defendant upon the termination of his tenancy in the apartment. The notice, however, was returned by postal authorities. Plaintiff took no further action to achieve service, and the district court entered a default judgment against Defendant. Based on the default judgment, Plaintiff sought to garnish Defendant's wages at his Nebraska employer. Defendant sought to quash the garnishment on the ground that Plaintiff failed to comply with the requirements of Iowa Code 617.3 in connection with the underlying action. The district court denied Defendant relief. The Supreme Court reversed, holding that the underlying default judgment that gave rise to the garnishment in this case was void for lack of personal jurisdiction over Defendant as provided in section 617.3. Remanded with instructions to grant the motion to quash.

In this action, a real estate company that prepared due diligence reports for a developer in connection with the potential purchase of commercial properties alleged that a rival brokerage firm was unjustly enriched when it acquired the material from the developer and later obtained a commission on the ultimate sale of the properties. Supreme Court dismissed the unjust enrichment claim against the rival brokerage firm, and the appellate division affirmed. At issue before the Court of Appeals was whether a sufficient relationship existed between the two real estate firms to provide a basis for an unjust enrichment cause of action. Based on the allegations presented in the complaint, the Court of Appeals held that the relationship between the two parties was too attenuated and affirmed.

After a school district (District) approved the conversion of an existing public school into a charter school, a union (UTLA) claimed that the District failed to comply with collective bargaining agreement provisions (CBPs) concerning charter school conversion. UTLA petitioned to compel arbitration pursuant to the collective bargaining agreement. The trial court denied the petition, finding that the collective bargaining provisions (CBPs) regulating charter school conversion were unlawful because they conflicted with the Education Code, and therefore, arbitration of those unlawful provisions should not be compelled. The court of appeals reversed, holding that the court's function in adjudicating a petition to compel arbitration was limited to determining whether there was a valid arbitration agreement that had not been waived. The Supreme Court reversed, holding (1) a court faced with a petition to compel arbitration to enforce CBPs between a union and a school district should deny the petition if the CBPs at issue directly conflict with provisions of the Education Code; and (2) because UTLA had not identified with sufficient specificity which CBPs the District allegedly violated, the case was remanded for identification of those specific provisions and to address whether the provisions conflicted with the Education Code.