Justia Contracts Opinion Summaries

A national flooring retailer contracted with a Louisiana-based construction management company for the construction of a retail store in Metairie, Louisiana. The relationship soured after the retailer terminated the agreement, allegedly due to delays. Shortly after termination, the construction company disputed that it had breached the contract and demanded payment for work performed. The retailer did not respond to the payment demand.The construction company filed suit in the United States District Court for the Middle District of Louisiana under the Louisiana Private Works Act, seeking recovery for the work performed. The retailer moved to compel arbitration based on the agreement’s dispute resolution provision and also sought to transfer the case. The district court granted the transfer to the United States District Court for the Eastern District of Louisiana and denied the motion to compel arbitration without prejudice. When the motion to compel arbitration was renewed in the new court, the district court denied it again, concluding the retailer had not followed the prerequisite steps outlined in the contract’s dispute resolution process.On appeal, the United States Court of Appeals for the Fifth Circuit conducted de novo review. The appellate court determined that the arbitration clause in the contract, which gave the retailer sole discretion to elect arbitration, was a contract of adhesion under Louisiana law. Applying state contract principles and relevant Louisiana Supreme Court precedent, the court found that the lack of mutuality and the imbalance in bargaining power rendered the clause unenforceable. The court held that the arbitration provision was adhesionary and thus invalid, and affirmed the district court’s denial of the motion to compel arbitration. View "MAPP v. Floor and Decor" on Justia Law

The plaintiff leased a new vehicle from the defendant, but soon experienced persistent defects that could not be repaired despite multiple attempts. After the defendant failed to promptly replace the vehicle or provide restitution under the Song-Beverly Consumer Warranty Act, the plaintiff filed suit for breach of warranty, seeking damages and attorney fees. During litigation, the defendant made a statutory settlement offer pursuant to Code of Civil Procedure section 998, presenting two alternative sets of terms: a lump-sum payment or a reimbursement option requiring proof of damages, both accompanied by provisions for attorney fees and costs.In the Los Angeles County Superior Court, the jury awarded the plaintiff damages totaling $76,155.27, less than the lump-sum alternative in the defendant’s 998 offer. The trial court found the offer valid, imposed section 998’s cost-shifting penalty, limited plaintiff’s postoffer costs and attorney fees, and awarded defendant its postoffer costs. The plaintiff appealed, contesting the validity of the alternative-choice offer. The California Court of Appeal upheld the trial court’s awards, finding the lump-sum alternative sufficiently certain but deemed alternative-choice offers categorically invalid for cost-shifting purposes.The Supreme Court of California reviewed whether an offer under section 998 that presents two independent, alternative sets of terms for acceptance is categorically invalid due to uncertainty. The Court held that such an alternative-choice offer can be valid if it clearly presents the alternatives and at least one alternative is sufficiently certain to permit accurate valuation at the time the offer is made. If the judgment or award does not exceed the highest valued, valid alternative, cost-shifting under section 998 is permitted. The Court affirmed the trial court’s award, but rejected the Court of Appeal’s categorical prohibition of alternative-choice offers under section 998. View "Gorobets v. Jaguar Land Rover North America, LLC" on Justia Law

Michael Ball agreed to sell a residential property in Washington, D.C. to David Hubbard for $665,000. Hubbard failed to pay the sale price by the settlement date, after which Ball sold the property to another buyer. Ball then sued Hubbard for breach of contract, seeking damages representing the difference between the original contract price and the subsequent sale. The contract listed “221 35th LLC (To Be Formed)” as the buyer, but Hubbard signed and initialed the contract himself. The contract included an integration clause and a provision requiring Ball to comply with the Tenant Opportunity to Purchase Act (TOPA), granting Hubbard a right to void the contract if compliance was not achieved after specific notice and cure periods.The Superior Court of the District of Columbia first denied Hubbard’s motion to dismiss, finding the contract was enforceable and Hubbard could be personally liable as a promoter of the unformed LLC. Later, after Ball ceased participating in the proceedings, Hubbard filed an unopposed motion for summary judgment. The Superior Court granted summary judgment in Hubbard’s favor, concluding that the contract was unenforceable because two conditions precedent—the formation of the LLC and delivery of TOPA documents—were not met. The court also found Hubbard not personally liable as an agent of a disclosed principal and ordered Ball to return Hubbard’s $10,000 deposit and pay attorney’s fees.The District of Columbia Court of Appeals reviewed the case de novo. It held that neither the formation of the LLC nor the delivery of TOPA documents constituted conditions precedent to performance under the contract. Furthermore, the court concluded that Hubbard could potentially be held personally liable for breach, as the LLC was not formed and no evidence established that Ball agreed to bind only the LLC. The appellate court reversed the grant of summary judgment and remanded for further proceedings. View "Ball v. Hubbard" on Justia Law

The dispute involved four law firms that jointly represented Wye Oak Technology, Inc. in litigation against the Republic of Iraq. After a federal district court awarded Wye Oak over $120 million, Wye Oak’s board approved paying a forty-six percent contingency fee to the law firms, with the specific allocation among them to be determined later. The firms executed an Agreement Concerning Attorneys’ Fees (ACAF), which included an arbitration clause. Quinn, Racusin & Gazzola Chartered (QRG) later claimed that it was excluded from a prior side agreement between two other firms and alleged it was pressured into accepting the arbitration provision under duress.Following disputes over fee allocation and related tort claims, Pavich Law Group and Whiteford, Taylor & Preston initiated arbitration. The arbitrator awarded QRG zero percent of the contingency fee, while the other firms received varying portions. QRG challenged the award in the Superior Court of the District of Columbia, arguing that the ACAF was invalid due to fraudulent inducement and duress, and that the arbitrator had exceeded his authority by ruling on issues outside the scope of the arbitration clause. The Superior Court rejected QRG’s arguments, determined that the arbitration clause was broad enough to cover the disputes, and confirmed the arbitrator’s award.On appeal, the District of Columbia Court of Appeals affirmed the Superior Court’s judgment. The Court held that QRG failed to demonstrate fraudulent inducement or duress regarding the agreement to arbitrate. It also found that the arbitrator acted within the scope of the ACAF’s arbitration clause, which covered both fee allocation and related tort claims. The Court further concluded that the vacatur of the underlying federal judgment did not void the ACAF, as some monetization of the judgment had occurred. The judgment confirming the arbitration award was affirmed. View "Quinn, Racusin & Gazzola Chartered v. Pavich Law Group, P.C." on Justia Law

A man was injured while driving his employer’s vehicle, which was insured under a commercial policy issued by Zurich American Insurance Company. The policy had a general bodily injury liability limit of $2,000,000 but included an endorsement limiting underinsured motorist (UIM) coverage to $15,000 per person. The at-fault driver had a liability policy with a $100,000 limit. After settling with the at-fault driver’s insurer for $100,000, the injured employee sought UIM coverage from Zurich. Zurich denied the claim, stating that the at-fault driver’s coverage exceeded the policy’s UIM limit.The employee filed suit, requesting reformation of the policy to provide $2,000,000 in UIM coverage, arguing that the policy’s UIM limits violated New Jersey statutory requirements and public policy. The action was initially filed in the Superior Court of New Jersey but was removed to the United States District Court for the District of New Jersey. That court granted summary judgment in favor of Zurich, finding the policy did not violate the relevant statute or public policy. The plaintiff appealed to the United States Court of Appeals for the Third Circuit, which then certified two questions to the Supreme Court of New Jersey about the interpretation of N.J.S.A. 17:28-1.1(f).The Supreme Court of New Jersey held that, under N.J.S.A. 17:28-1.1(f), the maximum UIM coverage “available under the policy” for an employee is the limit actually selected for the named insured under the policy, not the general liability policy limit. The Court also held that endorsements limiting UIM coverage to less than the general liability limit do not violate the statute or public policy, provided employees and named insureds are afforded the same UIM limits and minimum statutory requirements are met. View "Chiaccheri v. Zurich American Insurance Company" on Justia Law

The case centers on a 2016 traffic accident in Will County, Illinois, involving a semi-tractor operated by Midvest Transport Corporation, pulling a chassis managed by two companies. The driver of the car involved sued multiple defendants: Midvest, its driver, and the chassis companies. All defendants were insured by Northland Insurance Company. Northland appointed separate counsel for its insureds, but the chassis companies (Consolidated) preferred their own attorneys and sought reimbursement from Northland for those legal expenses, also seeking statutory penalties under Illinois law.In the United States District Court for the Northern District of Illinois, Consolidated sued Northland for declaratory and compensatory relief, alleging breach of contract and seeking penalties under § 155 of the Illinois Insurance Code. The district court initially ruled for Northland, finding no conflict of interest that would entitle Consolidated to independent counsel at Northland's expense. On reconsideration, however, the court found a conflict existed, granted summary judgment for Consolidated on the breach of contract and declaratory relief claims, and awarded $115,000. The district court rejected Consolidated’s claim for penalties, finding Northland did not act vexatiously or unreasonably.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s rulings de novo. It held that Illinois law only creates a narrow exception to an insurer’s right to control the defense where a serious, actual conflict exists between the insurer and the insured. The court found no such conflict here, as Northland’s interests were not at odds with Consolidated’s, and any adversity between insured codefendants did not trigger the right to independent counsel. Accordingly, the Seventh Circuit reversed the judgment in favor of Consolidated on its breach of contract and declaratory relief claims, and affirmed the judgment in favor of Northland on the § 155 claim. View "Consolidated Chassis Management LLC v Northland Insurance Co." on Justia Law

The case concerns two individuals who owned a car loan business in Virginia. Their business, Total Auto Financing, LLC, borrowed significant sums from American Credit Acceptance, LLC, with the loans personally guaranteed by the owners. After a series of renewals and a final short-term extension with restrictive terms, Total Auto defaulted on its debt. Following the default, American Credit replaced Total Auto as the servicer of its loan portfolio with Peritus Portfolio Services II, LLC. The new servicer’s management coincided with a sharp decline in the value and performance of the loan portfolio. The business was eventually forced into bankruptcy, and its main asset was sold at auction for much less than its previous value, leaving the owners personally liable for a large deficiency due to their guarantees.After the bankruptcy filing, the owners, acting in their personal capacities, filed complaints against American Credit and the new servicer (and related parties), alleging a range of claims including breach of fiduciary duty, negligence, unjust enrichment, conspiracy, and others. The United States Bankruptcy Court for the Eastern District of Virginia dismissed both complaints, finding that the claims belonged to the LLC, not the individual owners. The United States District Court for the Eastern District of Virginia affirmed the dismissals.The United States Court of Appeals for the Fourth Circuit reviewed the case de novo. It held that the principle determining who owns a claim—whether the business or its equity holders—means that owners cannot personally sue for injuries suffered by the business, even if they are financially harmed as a result. The court concluded that all claims asserted were either direct claims belonging to the LLC or failed to allege a personal injury distinct from the LLC’s injury. The Fourth Circuit affirmed the district court’s judgment, holding that the individual owners could not bring these claims in their own names. View "Bayramov v. American Credit Acceptance" on Justia Law

This case involves a dispute among business partners regarding the calculation and distribution of administrative fees earned from the sale of shares in a jointly managed investment fund. Prospect Capital Management L.P. (“Prospect”) acted as the fund administrator, while Stratera Holdings, LLC (“Stratera”) and Destra Capital Managers LLC (“Destra”) were entitled to share in fees depending on how fund shares were issued, including through a dividend reinvestment program (“DRIP”). After a change in sub-wholesaler, ambiguity arose in the contract language about whether certain DRIP shares—specifically, those issued by Stratera’s predecessor, Provasi—should be included in fee calculations. Prospect excluded these shares, reducing the amount paid to Stratera and Destra.Stratera and Destra initiated arbitration under the contract’s dispute resolution clause. The arbitration panel’s initial “Interim Award” found that Prospect had breached the contract by excluding DRIP shares for which Destra served as sub-wholesaler, but the award’s language left unclear whether this ruling applied to DRIP shares issued earlier by Provasi. When the parties could not agree on the scope of the award, the panel issued a revised interim award clarifying that fees were owed for DRIP shares issued by both Provasi and Destra. Prospect then petitioned the United States District Court for the District of Delaware to vacate the revised award, arguing that the arbitrators had unlawfully revisited a final decision in violation of the functus officio doctrine. The District Court rejected this claim, finding that the ambiguity exception to functus officio permitted the arbitrators’ clarification.On appeal, the United States Court of Appeals for the Third Circuit affirmed the District Court’s order. The court held that the ambiguity exception to the functus officio doctrine applied because the interim award was susceptible to more than one reasonable interpretation. Therefore, the panel acted within its authority in clarifying its award. View "Prospect Capital Management LP v. Stratera Holdings LLC" on Justia Law

A driver insured by a reciprocal insurance exchange rear-ended another individual while stopped at a red light, causing injuries. The injured party, represented by counsel, made a prelitigation offer to settle her bodily injury claim against the insured driver for the “total available policy limit of $100,000, or less,” requiring acceptance in writing by a specified date and a copy of the policy declarations. The insurer responded within the deadline, accepting the offer and providing the requested documentation, confirming the policy’s bodily injury liability limit was $15,000 per person. The injured party refused to execute the settlement documents and instead pursued litigation against the insured driver.The insurer then filed a separate action against the injured party for breach of contract, declaratory relief, and specific performance, resulting in consolidation of the two cases in the Superior Court for the County of San Bernardino. The insurer moved for summary judgment or summary adjudication on its declaratory relief claim, arguing that a binding settlement agreement had been formed when it accepted the settlement offer according to its terms. The Superior Court denied this motion.The California Court of Appeal, Fourth Appellate District, Division Two, reviewed the case on a petition for writ of mandate. The appellate court held that the insurer’s timely acceptance of the offer, along with provision of the policy declarations, satisfied all conditions of the injured party’s settlement demand and created a binding settlement agreement. The court rejected arguments that the settlement was contingent on an asset declaration or that subsequent events nullified the agreement. The appellate court granted the petition, directing the trial court to vacate its denial and instead grant summary adjudication for the insurer on the declaratory relief claim. The insurer was also awarded its costs. View "Farmers Ins. Exchange v. Superior Court" on Justia Law

In 2018, BAPTKO, Inc., wholly owned by Robert Kupper, agreed to sell two car dealerships in North Dakota to Foundation Automotive Corp. The agreement included provisions regarding inventory management prior to closing, contingent earnout payments based on dealership performance, and an attorney’s fees clause for prevailing parties in disputes. Foundation Automotive Corp. later assigned its interests to two LLCs connected to each dealership. After the sale, relations deteriorated: the LLCs sued Kupper and related entities for breach of non-compete and tortious interference, while BAPTKO counterclaimed for unpaid earnout payments, asserting the performance targets had been met.The United States District Court for the District of North Dakota consolidated the actions. It granted partial summary judgment for the Kupper parties, holding that the Foundation parties were obligated to make the earnout payments. The district court denied summary judgment on the amount of damages, finding factual disputes. The Foundation parties conceded nonpayment but argued they were excused due to BAPTKO’s alleged prior breaches, particularly regarding inventory management. The district court rejected this argument, determining that any such breaches did not excuse performance but might affect the damages offset. At trial, the jury found BAPTKO had not breached the agreement. The district court also awarded attorney’s fees to BAPTKO, including amounts spent defending Kupper personally, and denied the Foundation parties’ post-trial motions.The United States Court of Appeals for the Eighth Circuit affirmed the district court’s rulings. The appellate court held that the district court properly granted partial summary judgment, concluding that no reasonable jury could find BAPTKO’s alleged breaches defeated the object of the agreement. The appellate court also held that limitations on expert testimony and jury instructions were not abuses of discretion, and that the attorney’s fee award, including amounts for Kupper’s defense, was supported by the agreement and not an abuse of discretion. View "FA ND Chev, LLC v. BAPTKO, Inc." on Justia Law