Justia Contracts Opinion Summaries

In this appeal the Supreme Court was asked to determine whether the parties' indemnity agreement clearly and unequivocally indemnified the Snohomish County Public Transportation Benefit Area Corporation (doing business as Community Transit) for losses resulting from its own negligence. Upon review, the Court concluded that the language of the agreement, and in particular language providing that indemnity would not be triggered if losses resulted from the sole negligence of Community Transit, clearly and unequivocally evidenced the parties' intent that the indemnitor, FirstGroup America, Inc. (doing business as First Transit) indemnify Community Transit for losses that resulted from Community Transit's own negligence. The Court reversed the Court of Appeals' decision to the contrary and remanded the case to the trial court for further proceedings.

Following published stories about an investigation of their business practices, principals of a waste-management company improved their chances of winning a bid for a contract to refurbish garbage carts for the City of Chicago by slashing their bid. They encouraged other companies to bid in hopes of being hired as a subcontractor if another company won the bid. Each bidder had to certify that it had not entered into any agreement with any other bidder or prospective bidder relating to the price, nor any agreement restraining free competition among bidders. The company won the bid, and after a Justice Department investigation for antitrust violations, the principals were convicted of mail and wire fraud. The Seventh Circuit reversed, reasoning that the purpose of "colluding" with other potential bidders had not been to prevent them from underbidding but to provide insurance against the bid being rejected based on the earlier investigation. There was no harm as a result of the company encouraging additional bidders.

Defendant Junior's Pizza, Inc. appealed a superior court decision that confirmed an arbitration award and awarded attorney's fees to Plaintiff UniFirst Corporation. The Superior Court held that Junior's waived its right to object to arbitration by failing to challenge the award within thirty days of receiving notice. In June 2009, pursuant to the arbitration clause in the parties' contracts, UniFirst filed a demand for final and binding arbitration. Junior's declined to submit to arbitration, stating that it would reconsider if UniFirst produced a valid agreement. UniFirst subsequently provided copies of the contract provision to both Junior's and the arbitrator. In July 2009, the arbitrator notified the parties that UniFirst had met all filing requirements and arbitration would proceed absent a court order staying the matter. Junior's never sought a court order staying arbitration. UniFirst did not seek a court order compelling Junior's to participate. Notice of the arbitration hearing was provided to both parties, and the hearing took place. Junior's did not participate. UniFirst was awarded damages and attorney's fees, and Junior's was ordered to reimburse UniFirst in administrative fees associated with conducting the arbitration. The next day, the arbitrator notified Junior's of the award by email and certified mail. On appeal to the Supreme Court, Junior's argued (1) it did not waive its right to object to the arbitration award, (2) UniFirst was required to petition to compel arbitration prior to engaging in arbitration without Junior’s participation, and (3) the arbitration was not conducted in strict accordance with the terms of the contracts. Finding no error, the Supreme Court affirmed the arbitration award.

Robert Laux and Cynthia Moran-Laux (collectively Laux) appealed, and Ralph Harrington cross-appealed, from a judgment of the superior court declaring the continued existence and location of a road easement in favor of Harrington over Laux's property and awarding Harrington nominal damages for Laux's interference with the use of the easement. Laux asserted that a 1990 quitclaim deed given by Harrington's predecessor-in-title to Laux's predecessor-in-title extinguished the easement, or, alternatively, that construction on the site of its original entry point resulted in its abandonment. Harrington contended that the court erred in excluding certain evidence at trial, resulting in its miscalculation of his damages and failure to award punitive damages. The Supreme Court affirmed the judgment, holding, inter alia, that the superior court did not err in (1) finding that the 1990 quitclaim deed was not intended to release Harrington's easement over the land now owned by the Lauxes; (2) concluding that Harrington did not abandon his easement; (3) calculating damages; and (4) finding that Laux's conduct did not rise to the level of actual ill will or outrageousness required to award punitive damages.

The issue before the Supreme Court in this case concerned whether Section 514(a) of the Employee Retirement Income Security Act of 1974 (ERISA), preempted the breach of contract claim asserted by Appellees Lawrence J. Barnett, Christine Cookenback, James M. Defeo, and Madlin Laurent against Appellant SKF USA, Inc. under Pennsylvania law. Appellees were salaried, non-unionized, employees of SKF, working in its Philadelphia plant. The Company also employed hourly unionized employees at the plant. In 1991, SKF announced its decision to shut down the plant and terminate all workers. Over the course of the next year, the effect of the closing on employee retirement rights and benefits became a matter of discussion between Appellees and their supervisors. Appellees' retirement and pension rights were set forth in the an ERISA plan which SKF maintained and administered. Appellees became aware that, as a result of collectively bargaining the effects of plant closing, SKF agreed that any union worker with 20 years of service and 45 years of age, as of March 10, 1993, the date on which the collective bargaining agreement then in effect expired, would be entitled to receive an immediate and full pension (the creep provision). Two years after their employment with SKF was terminated, and prior to the submission of pension applications, Appellees commenced a breach of contract action against SKF alleging that throughout the course of their employment with the Company, they were employed under the same or better terms and conditions, including "pension eligibility," as SKF’s union workers. Upon review of the trial court record, the Supreme Court found that Appellees' claim was preempted, and accordingly reversed the Superior Court's order that affirmed the trial court's denial of summary judgment in favor of SKF.

The Supreme Court granted this appeal to consider whether a trial court could refuse to award contractual interest to the prevailing party in a contract dispute based on a finding of dilatory conduct by the prevailing party. Appellee Morgan's Tool & Supply (MTS) became delinquent on two accounts it had with TruServ, and after the parties were unable to agree on a payment plan to bring the accounts current, TruServ advised MTS by letter that it was terminating its Retail Member Agreement with MTS. TruServ filed a complaint against MTS alleging breach of contract and unjust enrichment. The trial court concluded MTS had breached its agreement with TruServ by failing to pay for the merchandise it had ordered and received. The court awarded TruServ damages plus costs and counsel fees. The court concluded however that "the decision of whether to award prejudgment interest is at the discretion of the court," and declined to award interest on the basis that TruServ was dilatory in prosecuting its claim. Upon review, the Supreme Court held that a trial court may not refuse to award interest to the prevailing party when the right to interest has been expressly reserved under the terms of the contract. Thus, the Court remanded this matter to the trial court for recalculation of its award in favor of TruServ.

Insurer commenced the instant suit against insureds, alleging eight causes of action and requesting a declaration that the insurer's policy provided no coverage or duty to indemnify any amount paid or payable by insured and the plan in an underlying class action suit. At issue was whether the disputed language in an insurance policy extended coverage to alleged violations of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq., by insureds. The court reaffirmed fundamental principles of insurance contract interpretation and held that the plain language of the policy did not cover such acts and, therefore, the Appellate Division correctly held that insurer was entitled to summary judgment and a declaration that was not required to indemnify insured in the manner requested.

Plaintiff, a nontenured teacher, commenced this action against defendants asserting causes of action for prima facie tort and tortious interference with prospective contractual relations. The complaint alleged, inter alia, that plaintiff was not granted tenure because of the continuous pressure and influence exerted upon school officials by defendants. At issue was whether defendants' course of conduct in instigating complaints to school authorities against plaintiff was entitled to an absolute privilege under Brandt v. Winchell that would warrant dismissal of plaintiff's cause of actions with prospective contractual rights. Assuming the truth of the allegations in the complaint, the court must at this early stage of the litigation, conclude that defendants' conduct was not immunized by Brandt.

Best Buy sued various commercial landlords and the landlords' property manager, DDRC, alleging that DDRC impermissibly charged Best Buy for insurance-related costs under various lease agreements. The court held that the district court did not err in deciding that the landlords breached their various lease agreements by charging Best Buy for the First Dollar Program in an attempt to meet its insurance obligations under the leases. Based on the unambiguous language of the leases, the court found the landlords' interpretation of the leases to be unreasonable. Because the landlords breached the leases, the court found that the district court did not err in determining that the landlords breached their contracts with Best Buy. Therefore, the court affirmed the district court's order granting summary judgment to Best Buy on its breach of contract claims for 2005-2009. Because the court found that the district court erred in granting summary judgment to Best Buy, the court need not address the applicable pre-judgment interest rate until after the resolution of Best Buy's breach of contract claims for the 1999-2004 lease years. Finally, the district court did not abuse its discretion by dismissing Best Buy's remaining fraud claims with prejudice. Accordingly, the court affirmed in part, reversed in part, remanding for further proceedings.

In 2008 the district court calculated damages for the government's partial breach of the Standard Contract for disposal of spent nuclear fuel using the 1991 Annual Capacity Report and the duty of good faith and fair dealing. The Federal Circuit, having set the 1987 ACR as the appropriate acceptance rate for a causation analysis under the Standard Contract, remanded. On remand, the district court set the amount of damages at $89,004,415. The Federal Circuit affirmed, holding that the new judgment accounts for the proper causation times and principle.