Justia Contracts Opinion Summaries

In 2006, plaintiffs contracted with defendant to purchase a condominium for $395,900. They made cash deposits of $11,877 and executed a note for $19,795. When notified of a closing date in 2009, plaintiffs' counsel sent defendant a letter rescinding the agreement and requesting return of the deposits. Defendant declined. Plaintiffs' complaint alleged violation of the Interstate Land Sales Full Disclosure Act, 15 U.S.C. 1701, for failing to provide a printed property report, and failure to include a provision notifying plaintiffs that if defendant failed to furnish a property report before execution of the purchase agreement, they had the right to revoke the purchase agreement within two years of its signing. They also asserted a claim under the Michigan Condominium Act, Mich. Comp. Laws 559.184. The district court held that the claim for rescission was untimely, stating that a purchaser must notify the seller of rescission within two years after the signing, but a has an additional third year to bring suit if the seller refused to honor the rescission. The Sixth Circuit affirmed that the claim for automatic rescission was untimely, but reversed dismissal of the state law claim and remanded. Equitable rescission may be available under 15 U.S.C. 1709.

Plaintiff, the former in-house counsel for Toyota Motor Corp. (TMS), presented TMS with a claim asserting, inter alia, constructive wrongful discharge related to TMS's alleged unethical discovery practices. TMS and plaintiff settled the claims and entered into a Severance Agreement. TMS subsequently sued in state superior court seeking a temporary restraining order (TRO) and permanent injunctive relieve to prevent plaintiff from violating the attorney-client privilege and plaintiff filed a cross complaint for a TRO and a permanent injunction prohibiting TMS from interfering with his business practices and those of his consulting business. The court held that the Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq., governed the Severance Agreement; the FAA authorized limited review of the Final Award; and the arbitrator did not manifestly disregard the law governing the Severance Agreement where the arbitrator's writing was sufficient under the terms of the Severance Agreement and the arbitrator did not manifestly disregard California law in addressing plaintiff's affirmative defenses. The court also held that the district court did not err in denying plaintiff's contempt motion. Accordingly, the judgment was affirmed.

St. Paul appealed from the district court's grant of a petition by Scandinavian to vacate an arbitral award in St. Paul's favor and denying a cross-petition by St. Paul to confirm the same award. St. Paul had initiated the arbitration to resolve a dispute concerning the interpretation of the parties' reinsurance contract. The principal issue on appeal was whether the failure of two arbitrators to disclose their concurrent service as arbitrators in another, arguably similar, arbitration constituted "evident partiality" within the meaning of the Federal Arbitration Act (FAA), 9 U.S.C. 10(a)(2). The court concluded, under the circumstances, that the fact of the arbitrators' overlapping service in both the Platinum Arbitration and the St. Paul Arbitration did not, in itself, suggest that they were predisposed to rule in any particular way in the St. Paul Arbitration. As a result, their failure to disclose that concurrent service was not indicative of evident partiality. Therefore, the court reversed and remanded with instruction to the district court to affirm the award.

This case involved a dispute between the parties when Auto-Owners issued a performance bond in connection with the work of Southeast pursuant to a contract which provided that Southeast would build a floating dock for Rivermar. The certified question at issue was whether Florida's offer of judgment statute, section 768.79, Florida Statutes, constituted substantive law and therefore was inapplicable in instances where parties to a contract have agreed to be bound by the substantive law of another forum. The court held that section 768.79 created a substantive right to costs and attorney's fees upon the satisfaction of certain conditions. Accordingly, under a conflict of law analysis, when parties have agreed to be bound by the substantive law of another jurisdiction, section 768.79 simply did not apply. As a result, the court answered the certified question and by doing so, the two remaining certified questions were rendered moot.

Rudolph Slater was killed while operating a Yanmar tractor he purchased from Chris Elder Enterprises. The tractor had been manfactured by Yanmar Japan and later sold to Chris Elder Enterprises. Slater's wife, Wanda, filed a wrongful-death action against, among others, Yanmar Japan and Yanmar America, alleging claims for, inter alia, fraud, strict liability, breach of implied and express warranties, and negligence. The circuit court entered judgment in favor of Wanda, awarding her damages in the amount of $2.5 million. The Yanmar defendants appealed. The Supreme Court reversed and dismissed the case, holding (1) the circuit court lacked personal jurisdiction over Yanmar Japan, as there was no evidence to establish that Yanmar Japan had the requisite minimum contacts with the forum to warrant the exercise of general jurisdiction, and there was insufficient proof to show that personal jurisdiction could be predicated on the relationship between Yanmar Japan and its subsidiary, Yanmar America; and (2) the jury's finding that Yanmar America was negligent was not supported by substantial evidence, as Yanmar America owed no duty of care to Rudolph.

In 2008, Rehab Solutions, PLLC (Rehab) received notice of tax liens assessed against its property. Thereafter, Chad Willis and Renee Willis (collectively, the Owners) employed the Nail McKinney Accounting firm to assess the financial viability of their business. As a result, numerous financial shortcomings of Rehab’s in-house accountant became apparent. When the inspection of Rehab’s finances began, the accountant left work and did not return. Rehab eventually sued the accountant in tort and in contract, seeking the return of one-half of his wages while employed by Rehab, as well as punitive damages. The jury returned a verdict in favor of Rehab and awarded Rehab $133,543.17 in compensatory damages and $50,000 in punitive damages. The accountant appealed the jury’s award, asserting that it was not supported by the evidence and that unjust enrichment was not the proper measure of damages. Additionally, the accountant contended that the trial court erred in finding that Rehab’s claims were not barred by the statute of limitations and for submitting the issue of punitive damages to the jury. After a thorough review of the record, the Supreme Court determined that there was not a viable cause of action against the accountant in this matter. Accordingly, the Court reversed the trial court and remanded the case for further proceedings.

Defendant, a school district, leased portable classrooms from plaintiff under contracts including penalties for early cancellation or default. Under the Downstate School Finance Authority for Elementary Districts Law (105 ILCS 5/1F-1) the state later created the Authority to manage the District's finances. The Authority canceled the leases before expiration, but did not authorize payment of the cancellation fees. The trial court granted summary judgment, finding it was legally impossible for the District to pay the cancellation fees, but also finding that the Authority had to comply with the cancellation terms of the leasing contracts. The appellate court affirmed the judgment in favor of the District on the cancellation fees and vacated as moot the declaratory judgment in favor of plaintiff. The Illinois Supreme Court concluded that the legislature intended the Act to permit the Authority to cancel a school district's contract with a third party, but that cancellation must be consistent with the contractual terms agreed to by the school district and the third party. The Authority can cancel the leasing contracts, but must pay the contractual fees for early cancellation.

An associate, dismissed from the law firm after five years, sought bonuses and fees with respect to cases on which he worked that settled after his departure. He filed attorney's liens in Illinois state courts. When that strategy failed, he filed in federal court. The district court granted the defendants summary judgment. The Seventh Circuit reversed with respect to contract claims and claims under the Illinois Wage Payment and Collection Act (820 ILCS 115/2), but otherwise affirmed. No court has ever decided whether plaintiff's employment agreement entitled him to compensation for work he did on the cases at issue and he made a plausible case that the agreement entitles him to some portion of the revenues. His contract required the firm to give him 30 days' notice before terminating his employment, but it failed to do so.

In 2006, Defendants Tristan Vaughan and Grace Zambon purchased all outstanding shares of defendant Northland Specialties, Inc., from Plaintiffs Philip and Patricia Pierce.  Under the terms of the promissory note, Defendants would repay $30,000 in three installments, due annually on the first day of April. In 2007, Plaintiffs filed suit against Defendants.  The complaint alleged that Defendants had entered into two verbal agreements following the sale of the business whereby Defendants allegedly agreed to buy a specified list of materials and hardware for $20,000, with payments to be made over time as the materials were used.  The suit alleged Defendants had failed to make any payments under either of these verbal agreements and therefore owed Plaintiffs for breach of contract and damages.  The first payment of $10,000 came due on the promissory note.  Defendants were not able to make this payment on time, nor did they communicate with Plaintiffs regarding when the payment would be made. Three days later, Plaintiffs filed a motion for default judgment.  Grace Zambon prepared a response which was received by Plaintiffs' attorney but was not filed with the court. Plaintiffs' attorney allegedly "interpreted this documents [sic] as an offer to settle."  Despite the response, he moved forward with a motion for default judgment, which the superior court granted. Two months later, Plaintiffs filed a second suit against Vaughan and Zambon, this time to recover the balance of the purchase price under the original stock purchase agreement.  After exchanging settlement offers, the parties reached a settlement agreement.  Roughly three years later, Plaintiffs filed a motion for trustee process in order to collect on the default judgment entered in the first lawsuit.  Defendants filed a Rule 60(b) motion seeking relief from the default judgment.  In 2010, the superior court held a hearing on this motion and granted the relief from judgment as sought by Defendants.  In early 2011, the Supreme Court granted Plaintiffs permission to take an interlocutory appeal on the issue of whether the superior court erred in granting the 60(b) motion. More specifically, the issue was whether the court could grant the motion beyond the one-year limitations period for mistake or inadvertence when the parties had reached an agreement after the default judgment entered. The Supreme Court concluded that the superior court's grant of Defendants' 60(b) motion was in error, and reversed the lower court's decision.

Insureds, Minnesota residents, filed class action complaints against their automobile insurers alleging violations of a Minnesota statute, Minn. Stat. 65B.285, requiring insurers to provide a discount for cars which have antitheft devices and breach of contract claims based on the failure to apply the statutory discount. The court affirmed the district court's dismissal of the insureds' amended complaints, rejecting their attempts here, particularly in the absence of any indication that Minnesota's administrative remedies were inadequate, to circumvent Minnesota's administrative remedies in order to create a private right of action.