Justia Contracts Opinion Summaries

Defendant-Appellant Nodak Mutual Insurance Company appealed from a judgment awarding Plaintiff-Appellee Barry Myaer $34,933.24 plus interest in his breach of contract action against Nodak. Upon review, the Supreme Court concluded the district court did not err in ruling Plaintiff was entitled to deferred commissions payable to him in December 2009, but did err in ruling those commissions could exceed 10 percent under the terms of the parties' contract.

Plaintiff Josephine Lamprey appealed a superior court order that dismissed her against Defendants, Britton Construction, Inc. (Britton), DeStefano Architects, PLLC f/k/a Lisa B. DeStefano (DeStefano) and Dave Sherwood, pursuant to the statutes of limitations and repose. Plaintiff hired the defendants to design and build her home. DeStefano was the architect; Britton was the general contractor; and Sherwood was the mason who installed the home’s extensive stonework, including a stone veneer, terrace and stone chimneys. Plaintiff began living in the house in November 2001, but never obtained a certificate of occupancy. Within one year, water damage appeared on the wood floors. In 2006, Plaintiff hired Sherwood to repair loose stones on her terrace. In 2010, when Plaintiff replaced her stone terrace with granite, the mason in charge of the replacement noticed problems with the home’s stonework requiring significant repairs. As a result, Plaintiff sued the defendants, alleging negligence and breaches of warranty in her home’s construction. Britton requested dismissal pursuant to the statute of limitations for personal actions. Sherwood moved to dismiss, arguing that the construction statute of repose also barred Plaintiff’s claims. Plaintiff responded by arguing, among other things, that the statutes should be tolled because Sherwood had fraudulently concealed her home’s masonry problems. Upon review, the Supreme Court affirmed in part, and reversed in part. The trial court properly dismissed all claims against Destefano. Although the trial court properly dismissed the claims against Britton and Sherwood initially, "it unsustainably exercised its discretion by not permitting Plaintiff to amend her writ to add fraudulent concealment allegations related to the bent masonry ties that concealed defects in her home’s stone veneer. Plaintiff’s amended claims against Britton and Sherwood related to the stone veneer were allowed. The Court remanded the case for further proceedings.

This case arose when defendant agreed in three separate contracts to sell three properties to plaintiffs. At issue was whether a buyer in a damages suit like this one must show that it was ready, willing, and able to close the transaction i.e., that but for the seller's repudiation, the transaction could and would have closed. The court held that in a case alleging that a seller has repudiated a contract to sell real property, the buyers must prove that they were ready, willing, and able to close the transaction. Here, the buyers did submit evidence of their financial condition, but that evidence was not conclusive of the issue. Therefore, whether the buyers were ready, willing, and able to close presented an issue of fact and the buyers' motion for summary judgment should have been denied. The court also held that the courts below erred in deciding as a matter of law that the seller repudiated the contracts by transferring the properties in question. The court held, however, that the courts below were correct in denying the seller's cross-motion for summary judgment.

The Department petitioned for review of a decision of the Authority that adopted a new standard to determine when a negotiated contract provision was an "appropriate arrangement" under 5 U.S.C. 7106(b)(3) and an agency head's disapproval thereof would therefore be set aside. Because the Department failed to move for reconsideration objecting to the Authority's use of the abrogation standard to review the agency head's disapproval of the negotiated agreement, the court dismissed the Department's petition for lack of subject matter jurisdiction pursuant to section 7123(c).

In this case, the district court found that plaintiff's claims against defendant were preempted by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., because they arose under defendant's Pension Plan (Plan) and not separately and independently out of plaintiff's written employment agreement (Agreement). On appeal, plaintiff argued that the additional benefits he sought were based on a promise separate and independent from the Plan. The court held that the district court properly denied plaintiff's motion to remand the case to state court because plaintiff's state law claims were preempted by ERISA where the Agreement merely described the benefits plaintiff would receive as a Plan member and it made no promises of benefits separate and independent from the benefits under the Plan. The suit was properly removed to federal court, the district court had federal jurisdiction over the case, and remand to state court was not warranted. The district court properly dismissed plaintiff's action for failure to state a plausible claim. Finally, the court considered plaintiff's remaining arguments and concluded that they were without merit. Accordingly, the court affirmed the judgment of the district court.

The Supreme Court consolidated "Matsyuk v. State Farm Fire & Casualty Company" and "Weismann v. Safeco Insurance Company of Illinois" for the purpose of clarifying the pro rata sharing rule announced in several precedential cases, including "Mahler v. Szucs" (957 P.2d 632). The rule is based on the "common fund" exception to the "American rule" on attorney fees. The rule requires personal injury protection (PIP) insurers to share pro rata in the attorney fees incurred by injured persons when the PIP insurer wins at trial. Plaintiffs in these cases recovered PIP funds as insureds under policies held by the tortfeasors. They incurred attorney fees arising from the recovery of the liability insurance. The insurance companies attempted to offset the funds expended under PIP policies by reducing plaintiffs' award under the tortfeasors' liability insurance. The Court of Appeals held that neither plaintiff was entitled to recoup a pro rata share of attorney fees. Upon review, the Supreme Court reversed the appellate court, holding that the pro rata fee sharing rule applied in this context.

Lila Clavin (Lila) and Robert Gilbert founded Pastimes and executed an operating agreement (Agreement) that provided that Pastimes would terminate upon the death of a member unless at least two members remained who agreed to continue the business. After Lila died in 2000, Gilbert and Tim Clavin, Lila's son, could not agree on the value of Lila's share of Pastimes at the time of her death. This disagreement led Tim and Gilbert to conclude that Gilbert should continue to operate Pastimes. Gilbert filed a complaint for declaratory relief on behalf of Pastimes in 2005, requesting a date-of-death valuation for Lila's interest in 2005. The district court valued the Estate's interest at the date of trial rather than at the time of Lila's death. The Supreme Court affirmed in relevant part, holding that the district court properly valued the Estate's interest at the date of trial rather than at the time of Lila's death because Gilbert's and Tim's agreement and Gilbert's continued operation of Pastimes constituted a fully executed oral agreement that modified the dissolution provision of the Agreement.

Plaintiff sued the President of Valdosta State University, claiming that under the Due Process Clause, he was due notice of the charges, and a hearing to answer them, prior to his removal from campus. Plaintiff, a student, was removed on the ground that he presented a "clear and present danger" to the campus. Plaintiff joined the Board of Regents of the University System of Georgia as a defendant, claiming against the Board a state-law breach of contract claim for damages. Plaintiff claimed that the student handbook and contracts for student housing established binding agreements between the Board and the university students and the Board breached these agreements by failing to afford plaintiff the due process prior to his removal from campus. The court held that the district court properly denied the President's motion for summary judgment based on qualified immunity where plaintiff had a constitutional right to process before he was removed from the university and plaintiff's constitutional rights were clearly established. The court held, however, that the district court erred in failing to dismiss plaintiff's breach of contract claim against the Board as barred by the Eleventh Amendment where Georgia had not waived its Eleventh Amendment immunity for breach of contract actions.

In 2006, plaintiff was a citizen of California and agreed to relocate to Illinois to work for defendant. When he quit about five months after moving, his family was still in California. He filed suit in state court, seeking relocation benefits the company allegedly promised. The company, which has its principal place of business in California removed to federal court, asserting that plaintiff was a citizen of Massachusetts. Plaintiff had a home in Massachusetts when the case was removed, was registered to vote there, and had a Massachusetts driver's license. The district court ordered arbitration under one of the contracts between the parties. The Seventh Circuit affirmed dismissal and denied sanctions. Relocation benefits are "employment related" and subject to arbitration under the agreement. The court noted that the company also failed to follow the rules. The company "should be able to tell the difference between residence and domicile, and should not have any difficulty complying with Rule 38."

In 2005, Plaintiff Marlene Harris purchased a car from Defendant David Stanley Chevrolet. Her purchase agreement contained an arbitration provision that applied to any "controversy, claim or dispute between the Purchaser and the Dealer arising out of, or related to this sale or transaction, including but not limited to, any and all issues or disputes arising as a result of this sale or transaction whether said issues arise prior to, during or subsequent to the sale or attempted sale of a vehicle." A few days after executing the purchase agreement, Plaintiff entered into a GAP insurance contract sold to her by an employee of the dealership (acting as an agent of the insurance company). In 2009, the car was a total loss. The GAP insurance company refused to pay the total difference between the insurance proceeds and the amount owed on the car, and Plaintiff sued to compel the GAP coverage. Plaintiff maintained that the purchase of the vehicle and the purchase of the policy were separate transactions, and that the arbitration clause of the purchase contract was inapplicable to the underpayment of coverage (GAP coverage). She argued no claim was brought against the GAP insurance company which was related to the sale or financing of the vehicle, conceding the arbitration clause would have applied to claims related to the sale or financing issues. After reviewing the motions of the parties, the trial court denied Defendant's Motion to Compel arbitration without an evidentiary hearing. Upon review, the Supreme Court concluded that the two contracts involved two separate subjects, executed on different dates, and the arbitration clause in the purchase agreement did not mention or reference GAP insurance or any relationship between the two contracts. The trial court did not abuse its discretion in denying the evidentiary hearing and ruling that the arbitration clause did not apply as a matter of law.