Justia Contracts Opinion Summaries

Now defucnt Galt Industries, its former president, his wife, and a former employees sued Aegis Strategic Investment Corporation and its sole shareholder Mark Heisz, alleging Aegis failed to fulfill certain terms of an asset-purchase agreement. Following a jury trial, the trial court entered a judgment awarding Galt $824,000 in damages, and held Aegis jointly and severally liable for those damages. Aegis appealed. Finding that the evidence presented at trial did not support the trial court's decision, the Supreme Court reversed the decision and remanded the case for further proceedings.

Jim Walter Resources, Inc. (JWR) sought a petition for a writ of mandamus to direct the Tuscaloosa County Probate Court to record certain filings without the payment of a recording tax. Walter Energy, JWR's parent company, acquired Western Coal Corporation of Canada. As part of the acquisition, Walter entered into a credit agreement with Morgan Stanley, which required Walter's subsidiaries to execute contingent guaranties of Walter's financing debt in the event Walter defaulted. JWR secured its guaranty of Walter Energy's financing debt by executing mortgages on its real and leasehold properties. Also as part of the credit agreement, JWR was required to record the mortgages in the probate offices in the counties in which the properties were located. When JWR sought to record the mortgages and related UCC filings in Tuscaloosa, the Tuscaloosa County Probate Court refused to record the documents unless JWR paid the recordation tax. The probate judge maintained that there was no statutory requirement that under Alabama law that the debt being secured be the mortgagor's debt, and as such, because JWR was recording its financing statements for Walter's debt, JWR was still responsible for paying the tax. Upon review, the Supreme Court found that JWR's liability was contingent on Walter's default, and JWR's contingent guaranty did not constitute an unqualified promise to pay Walter's indebtedness under the credit agreement. The Court found the contingent guaranty was not within the scope of the applicable statute, and accordingly, the Court granted JWR's petition and issued the writ.

Crescent appealed the district court's grant of summary judgment in favor of Volvo where the district court held that the contract between Crescent and Volvo compelled the parties to arbitrate their dispute. The court vacated and remanded to the district court with instructions to dismiss where the district court erred in holding that Volvo's request for a declaratory judgment as to the applicability of 15 U.S.C. 1226 was properly before the court. Because the district court lacked jurisdiction to entertain Volvo's declaratory judgment action, the presence of this action in Volvo's complaint before the district court could not alter the court's holding that there was no subject matter jurisdiction to hear Volvo's petition to compel arbitration.

SSW Holding filed a complaint against BDO Seidman and other defendants, asserting several causes of action and seeking damages arising from a tax-advantaged investment strategy involving investments in distressed debt that SSW entered into and utilized on its federal tax returns for the 2001-2005 tax years. BDO filed an amended motion to compel arbitration and stay the motion, asserting that it and SSW entered into two consulting agreements that provided for arbitration before the American Arbitration Association. The circuit court denied the motion. The Supreme Court reversed, holding (1) SSW's claims fell within the scope of the arbitration provisions; and (2) the circuit court erred in finding that the arbitration provisions were unenforceable and invalid due to fraud and procedural and substantive unconscionability. Remanded.

Plaintiff Minor Miracle Productions, LLC (MMP) was a film company for whom Third-Party Respondent David Richards worked. MMP provided a film location and funding for a film written and directed by Defendant Randy Starkey. After the film was completed, Starkey refused to turn over possession of the film and various pieces of equipment from the film. MMP brought suit against Starkey alleging breach of the duty of loyalty, breach of contract, and conversion. After initially appearing via counsel in the case, Starkey proceeded pro se. When Starkey failed to appear at motion hearings and disregarded the district court’s orders regarding discovery, the court sanctioned Starkey, striking his defenses and precluding him from using any evidence not previously disclosed. MMP then moved for judgment on the pleadings, and the district court granted the motion. The court ordered Starkey to pay Richards over one million dollars in damages and interest for the costs of the film’s production, to return the film and to release the copyrights to the film and its website to Richards, and enjoined Starkey from selling the film and from using any of the equipment related to the film. Starkey timely appealed. Upon review, the Supreme Court affirmed the district court's grant of judgment on the pleadings.

The issue before the Supreme Court concerned a dispute between Petitioners Donia Townsend and several other home purchasers and Defendant Quadrant Corporation and its parent companies over an arbitration clause in the home purchasers' individual purchase contracts. Several years after the home purchases, Townsend and the other purchasers jointly filed suit in superior court against Quadrant alleging outrage, fraud, unfair business practices, negligence, negligent misrepresentation, rescission and breach of warranty. In support of these allegations, they claimed that Quadrant knowingly engaged in shoddy workmanship in building the homes, and that this resulted in serious construction defects that caused personal injuries relating to mold, pests, and poisonous gases. They claimed that the arbitration clause in their purchase agreements was unenforceable. The superior court denied Quadrant's motion to compel arbitration. The Court of Appeals reversed. Upon review, the Supreme Court affirmed the appellate court's holding that the homeowners’ procedural unconscionability claim that pertained to the entire purchase contract, including the arbitration clause, was to be decided by an arbitrator.

A fire destroyed a cotton-picking machine owned by Arcadia Farms Partnership. Though insurance coverage initially was denied, Audubon Insurance Company eventually paid Arcadia for the loss. Arcadia then filed suit against Audubon, asserting that Audubon's failure to submit prompt payment constituted a "bad faith breach of the policy terms." Audubon filed a motion for summary judgment. Audubon asserted that, since Arcadia had been paid on its claim prior to filing suit, Arcadia's only potential form of compensatory damages would be prejudgment interest. Yet according to Audubon, Section 75-17-7 of the Mississippi Code prohibited Arcadia from recovering prejudgment interest prior to the filing of the complaint. The trial court granted summary judgment for Audubon and denied Arcadia's motion for reconsideration or in the alternative, motion to amend its complaint to plead specifically for prejudgment interest. The Court of Appeals reversed, holding that Arcadia could seek prejudgment interest from the date of breach, prior to the filing of the complaint, and that the trial court had abused its discretion in denying Arcadia's motion to amend. Upon review, the Supreme Court agreed with the Court of Appeals, but granted certiorari to address some uncertainty in the law surrounding Section 75-17-7. The Supreme Court clarified that in contract cases, Section 75-17-7 does not restrict prejudgment interest to the post-complaint period; prevailing parties in a breach-of-contract suit may seek interest from the date of breach.

In this consolidated appeal, three sets of landowners asserted claims against Arrington for breach of contract, promissory estoppel, and unjust enrichment relating to Arrington's failure to pay cash bonuses under oil and gas leases. The district court granted summary judgment to the landowners on the breach of contract claims and thereafter dismissed the landowners' other claims with prejudice on the landowners' motions. The court rejected the landowners' assertion that the lease agreements could be construed without considering the language of the bank drafts; the drafts' no-liability clause did not prevent enforcement of the lease agreements; Arrington entered into a binding contract with each respective landowner despite the drafts' no-liability clause; the lease approval language of the drafts was satisfied by Arrington's acceptance of the lease agreements in exchange for the signed bank drafts and as such, did not bar enforcement of the contracts; Arrington's admitted renunciation of the lease agreement for reasons unrelated to title precluded its defense to the enforceability of its contracts; Arrington's admission that it decided to dishonor all lease agreements in Phillips County for unrelated business reasons entitled the landowners to summary judgment; there was no genuine issue of material fact as to whether Arrington disapproved of the landowner's titles in good faith. Accordingly, the district court did not err in granting summary judgment on the breach of contract claims.

The company, which issues preprinted travelers' checks, challenged 2010 N.J. Laws Chapter 25, amending New Jersey's unclaimed property statute, N.J. Stat. 46:30B, to retroactively reduce the period after which travelers checks are presumed abandoned from 15 years to three years, after which the funds must be turned over to the state. The district court denied an injunction. The Third Circuit affirmed, rejecting arguments under the Due Process Clause, the Contract Clause, the Takings Clause, and the Commerce Clause. The law has a rational basis. It does not substantially impairment contractual relationships; while the company has the right to use and invest TC funds until the date the TC is cashed or sold, the duration of use is further subject to the lawful abandonment period set by unclaimed property laws. The company has no investment-backed expectation with respect to the longer period of investment.The law does not directly regulate sales in other states.

Merchants challenged 2010 N.J. Laws Chapter 25, amending the unclaimed property statute, N.J. Stat. 46:30B, to provide for escheat of stored value cards (gift cards). Chapter 25 presumes cards to be abandoned after two years of inactivity and requires issuers to transfer remaining value to the state. Issuers must obtain name and address of the purchaser or owner of each card. If the issuer's state exempts cards from its unclaimed property statute, unredeemed balances of cards previously-issued in New Jersey, where information was not recorded, must be reported to New Jersey. The address where the card issued or sold is presumed to be the owner's domicile. The district court enjoined retroactive application of Chapter 25 and prospective enforcement of the place-of-purchase presumption, but declined to enjoin data collection and two-year abandonment provisions. The Third Circuit affirmed. Chapter 25 substantially impaired contractual relationships by imposing unexpected obligations and did not reasonably accommodate the rights of the parties in light of the public purpose. The abandonment period is not preempted by the Credit CARD Act, 15 U.S.C. 1693l-1(c). The place-of-purchase presumption is preempted by federal common law, under which the first opportunity to escheat belongs to the state of the last known address of the creditor, shown by the debtor's records. If the primary rule does not apply, the right to escheat is with the state in which the debtor is incorporated.