Justia Contracts Opinion Summaries

n 2007, Plaintiff-Respondent Leslie Benz entered into a contract to purchase a townhouse that was to be constructed. The contract required her to make three nonrefundable payments of earnest money, which were to be applied to the purchase price. The property's seller sought a construction loan from Defendant-Appellant D.L. Evans Bank. As security for the loan, the seller executed a deed of trust granting the Bank a lien in the property upon which the townhouse would be constructed. The townhouse was substantially completed when Plaintiff was notified that the seller had filed for bankruptcy. The seller failed to pay construction expenses, and as a result, the closing did not occur as scheduled. Numerous mechanics' and materialmen's liens were filed against the property. Plaintiff negotiated with the seller in an attempt to clear the title and purchase the townhouse. Negotiations broke down, Plaintiff notified the seller that she was rescinding the contract, and demanded the return of the earnest money she paid. When the earnest money was not refunded, Plaintiff sued. The trial court held that Plaintiff's lien which was created in connection with the rescinded contract had priority over a deed of trust that the Bank had in the property. The Supreme Court reversed part of the trial court's judgment that awarded accrued interest from the earnest money, but affirmed the trial court's judgment in favor of Plaintiff.

The issue presented in this case arose in connection with a motion to rank creditors in a suit for executory process. DDS Construction, LLC developed a subdivision in Reserve. To fund that development, DDS obtained various loans from First National Bank. To secure its repayment of those loans, DDS granted First National a "Multiple Indebtedness Mortgage" over individual lots located in the subdivision. One property, Lot 8 Square A, was at the center of this controversy. The district court held a notarial act which cancelled the lot's mortgage could be corrected by an act of correction under La. R.S. 35:2.1 and First National, the lender which erroneously cancelled the mortgage, maintained its rank relative to a subsequent mortgage under the statute's provisions. The court of appeal disagreed, holding that under these facts the subsequent mortgage primed the mortgage by the First National, which must be ranked as of the time of the act of correction. After review, the Supreme Court held that the court of appeal erred and reversed, reinstating the ruling of the district court.

In 2006, Plaintiff Laurie Jenkins entered into a contract with Chet Medlock for the sale, transfer and delivery of a metal building. The purchase price was to be paid in three equal installments. After the building was completed, issues arose regarding the quality of work. Plaintiff contacted Defendant Larry Starns who wrote a letter to Medlock on her behalf, pointing out several complaints Plaintiff had with the building. Medlock sued Plaintiff for breach of contract; she was personally served. Defendant was in contact with Medlock's attorney, and believed there was an informal agreement for an extension of time to file responsive pleadings. When no answer was filed, Medlock obtained a default judgment against Plaintiff. Plaintiff notified Defendant of the judgment, to which he filed a petition to annul the judgment. Medlock responded arguing insufficiency of service and improper venue. Neither Plaintiff nor Defendant made an appearance at court. The trial court subsequently dismissed Plaintiff's suit. Ultimately the court issued a judgment of garnishment against Plaintiff's bank account. Plaintiff filed suit against her attorney alleging legal malpractice, which she lost. Upon review of the record, the Supreme Court concluded that the trial court and court of appeal erred in applying the "continuous representation rule" to suspend the commencement of the one-year peremptive period in La. R.S. 9:5605 until Defendant's efforts to remedy his negligence had concluded. The court of appeal's judgment was reversed.

Plaintiffs William and Donna Judson secured a default judgment against Wheeler RV Las Vegas on a complaint asserting breach of contract and misrepresentation claims arising out of the Judsons' purchase of a recreational vehicle from Wheeler. Wheeler sought to set aside the default judgment, asserting surprise or excusable neglect in its failure to answer the complaint, suggesting that Wheeler was the wrong party because its predecessor was the entity that sold the Judsons their RV, and questioning their district court's jurisdiction over Wheeler. The district court denied Wheeler's motion. The court of appeals affirmed, concluding that Wheeler failed to make a "clear and specific proffer" of a meritorious defense required as a predicate for setting aside a default judgment under Utah R. Civ. P. 60(b). The Supreme Court reversed, holding that, under the simple pleading standard set forth under Rule 60(b), Wheeler's meritorious defense allegations were sufficient. Remanded to resolve the issue of whether Wheeler established the "surprise and excusable neglect" predicate for setting aside the default judgment.

James Whealon was employed by the Anaconda School District pursuant to a series of employment contracts. Upon retirement, Whealon filed a formal grievance, asserting that, under the terms of his contract, he was entitled to payment of his health insurance premiums by the District until he reached the age of sixty-five. The District denied his claim. The County Superintendent granted summary judgment to the District, holding that the language of the contract was unambiguous and that Whealon was not entitled to the claimed benefits beyond the date of his retirement. The State Superintendent of Public Instruction reversed and remanded for an evidentiary hearing, holding that the language of the contract was ambiguous. The district court reversed and reinstated the County Superintendent's ruling. The Supreme Court affirmed the district court, holding (1) the district court did not err in holding that a county superintendent has authority to grant summary judgment; and (2) the district court did not err in reinstating summary judgment in favor of the district where the language of the agreement was unambiguous and the District was entitled to judgment.

The claims in these consolidated cases were largely identical in that they shared similar allegations of violations of the Maryland Secondary Mortgage Loan Law (SMLL), the Maryland Consumer Protection Act (CPA), and common law breach of contract. Appellees in these cases were mortgage companies, who were assignees of the original lenders, and Appellants were individual borrowers. The Supreme Court affirmed the dismissals of each of the cases by the circuit courts, holding (1) the SMLL does not restrict a lender to a single loan origination fee, as long as the aggregate fees charged and collected do not exceed the statutory maximum; (2) Appellees were not required by the SMLL to provide borrowers, who did not intend to use the proceeds of their secondary mortgage loans for commercial purposes, a disclosure form designed expressly to advise commercial borrowers only under the SMLL; and (3) certain Appellants failed to support sufficiently their allegations of breach of contract, CPA violations, and claims in accounting with specific facts.

Mark Cookson purchased two homeowner's insurance policies from Liberty Mutual, one to cover his primary residence in West Newfield and another to cover property in Acton, where he was constructing a house. Cookson would drive his tractor along public roads between the properties. Cookson's tractor was subsequently destroyed by fire. Cookson filed a claim for loss of the tractor, which Liberty Mutual denied based on a personal property exclusion in both policies. Cookson filed a complaint seeking, in part, a declaratory judgment that the Liberty Mutual policies provided coverage for his tractor. The superior court granted summary judgment in favor of Liberty Mutual, concluding that Cookson's policies excluded the tractor from loss coverage. The Supreme Court affirmed, holding (1) Cookson's tractor was not the type of vehicle that fell within the limited exception for "vehicles not subject to motor vehicle registration" to the otherwise broad personal property exclusion of all "motor vehicles or all other motorized land conveyances," and (2) Cookson's tractor was not the type a homeowner would commonly purchase and employ simply to service his or her residence.

This appeal involved six siblings and their mother. The parties participated in mediation that resulted in an agreement, which, among other things, divided Mother's real property. After disputes arose over the agreement, the probate court ordered arbitration pursuant to the agreement's arbitration clause. The arbitrator concluded that the agreement was enforceable and ordered the transfer of land necessary to effectuate it. Four of the sisters (Appellants) and the remaining siblings and mother (Appellees) then filed a series of motions. The superior court confirmed the arbitration award, denied a motion to vacate the award, denied a motion for judgment on the pleadings, and granted a motion to dismiss a complaint for declaratory judgment. The Supreme Court affirmed, holding that the superior court did not err in affirming the arbitrator's award and in concluding that the arbitrator and that the settlement agreement gave the arbitrator the authority to determine whether the agreement was valid and enforceable.

The district court affirmed a bankruptcy court's confirmation of a Chapter 11 plan of reorganization under 11 U.S.C. 524(g), a special provision for the reorganization of companies facing substantial asbestos-related liability. Appellants were several insurance companies that did not reach settlements with Thorpe and Pacific, together with Debtors in bankruptcy court, and who were denied standing to challenge the reorganization plan. The court affirmed the district court's conclusion that the plan preempted appellants' state law contract rights; disagreed with the position of Debtors that the appeal was equitably moot; and in reaching the merits, reversed the district court's conclusion that appellants lacked standing. The court remanded to the district court with instructions that it return the case to the bankruptcy court to give appellants the opportunity to present their proof and argument.

Plaintiff, certified by the city as a minority-owned business eligible for favored treatment, sells a variety of products. The city is virtually its only customer. Early in 2005 the city began to suspect that plaintiff was a broker rather than a wholesaler, which would make it ineligible to bid for contracts as an MBE. Plaintiff had only six employees, though it claimed to have a warehouse. The city never completed its investigation, so plaintiff retains its certification. The city also believed that the company had shorted it on a shipment of aluminum sign blanks, and ultimately debarred it from dealing with the city. The company sued immediately and obtained a temporary restraining order; debarment was in effect for only eight days. The city abandoned its attempt to debar the company. The district court then ruled in favor of defendants. The Seventh Circuit affirmed. Claims by the principals in the company were frivolous, given that they continued to be employed by the company. The temporary diminution in business did not amount to destruction of the company nor did it constitute retaliation. Plaintiff did not prove breach of contract.