Justia Contracts Opinion Summaries

Two appeals between MPQ, Inc. (d/b/a Freedom Enterprises) and Birmingham Realty Company were consolidated by the Supreme Court for the purposes of this opinion. The parties entered into a commercial lease agreement. Birmingham Realty filed suit against MPQ for unpaid rent in circuit court. MPQ filed a counterclaim. Birmingham Realty filed a separate unlawful-detainer action against MPQ in district court. The district court dismissed the detainer action, reasoning that the simultaneous actions in the district and circuit courts violated Alabama's abatement statute. Birmingham Realty appealed the district court's dismissal to the circuit court and filed a motion to dismiss MPQ's counterclaim. The circuit court conducted a hearing on all pending motions. It then entered an order affirming the district court's dismissal of the unlawful-detainer action and dismissed MPQ's counterclaims in the rent action. The court suggested that Birmingham Realty move to dismiss the rent action without prejudice so it could refile its unlawful-detainer action in the district court and then later refile an action in circuit court to seek the unpaid rent. Birmingham Realty took the court's advice and filed the suggested motions. MPQ filed a motion to alter, amend or vacate the court's decision in its counterclaim. The circuit court did not rule on either motion. The parties appealed to the Supreme Court. Upon review, the Supreme Court found Birmingham Realty's appeal from the district court to the circuit court was not timely, and as such, the court did not have jurisdiction over the appeal. The Supreme Court dismissed the appeal and cross-appeal with regard to the unlawful-detainer action and remanded the remaining issues for further proceedings.

RCH IV-WB, LLC (RCH) appealed a circuit court's order that set aside its mortgage foreclosure sale. At a bench trial, RCH offered as evidence a copy of a document allegedly assigning the mortgage at issue from Wachovia Bank to RCH. Defendant Wolf Bay Partners, LLC objected to the admission of the assignment documents, arguing that RCH failed to show that the individual who signed the assignment had authority to act, and that the form of the assignment failed to conform to Alabama law. The trial court sustained the objection and eventually set aside the foreclosure sale of the subject property. RCH unsuccessfully filed a motion for new trial and appealed to the Supreme Court. Upon review of the trial court record, the evidence submitted and the applicable legal authority, the Supreme Court concluded that the trial court erred in holding that the mortgage assignment was not admissible. The Court reversed the lower court's judgement and remanded the case for further proceedings.

Auto Owners Insurance Company (Auto Owners) appealed an order granting summary judgment in favor of appellee and awarding her $124,500, the face value of the insurance policy sold to her by Auto Owners. Because Schubert owned a one-half interest in the dwelling covered by the policy, which was completely destroyed by fire, Auto Owners offered to pay her half of the policy value. Auto Owners cited a provision within the policy which limited recovery to "[no] more than the insurable interest the insured had in the covered property at the time of the loss." The district court declared this provision void as contrary to the public policy expressed in the Missouri valued policy statute, Mo. Rev. Stat. 379.140, and alternatively found its language ambiguous so as to allow appellee to recover the face value of the insurance policy. The court agreed with the district court's conclusions as to both points and affirmed the judgment. The court also held that, after initially questioning its jurisdiction over the matter, the case satisfied the $75,000 amount-in-controversy requirement and jurisdiction was proper.

This case arose when the U.S. Customs and Border Protection (CBP), division of the Department of Homeland Security, changed local work assignments for its inspectors without first negotiating with their union. CBP petitioned for review of the Federal Labor Relations Authority's (Authority) affirmance of an arbitrator's conclusion that this was an unfair labor practice. The court denied the petition for review and rejected CBP's argument that it had no duty to bargain over the disputed changes in work assignment policies because the changes were "covered by" the Revised National Inspectional Assignment Policy (RNIAP) and that, in the alternative, that CBP had no duty to bargain over the changes it made pursuant to the RNIAP because they did not alter inspectors' "conditions" of employment. Accordingly, the court deferred to the Authority's reasonable determination that the RNIAP was not a collective bargaining agreement subject to the "covered by" doctrine and the Authority's reasonable conclusion that the cases CBP cited did not govern the dispute here. Therefore, the court held that the Authority adequately explained its conclusion.

A developer was required to make public improvements to be turned over to the city and, in 2006, obtained bonds to ensure performance, as required by ordinance. Work began, but the subdivision failed and subcontractors filed mechanics' liens. The developer notified the city that three foreclosures were pending and recommended that it redeem the bonds. The insurer refused to pay. The city did not follow up, but a subcontractor sued, purporting to bring its case in the name of the city for its own benefit. The subcontractor contends that it should be paid out of the proceeds of the bonds. The case was removed to federal court. The district court dismissed, finding that the subcontractor did not have standing to assert claims on the bonds because it was not a third-party beneficiary to the bonds. The Seventh Circuit affirmed, based on the language of the contract.

This case arose when Robert Morrison, Jr. pleaded guilty to, among other things, four counts of assault and battery on a public employee (the arresting police officer) and the officer consequently brought a civil suit against Morrison for his injuries. Morrison and Metropolitan Property and Casualty Insurance Company (Metropolitan) subsequently applied for direct appellate review on the issue of whether Metropolitan had a duty to defend and indemnify Morrisson in the civil suit. The court held that an exclusion in a liability policy for "intentional and criminal acts" applied where the insured intended to commit the conduct that caused injury and where the conduct was criminal. The court also held that a guilty plea did not negate an insurer's duty to defend, even where the duty to defend would be negated by a criminal conviction after trial, because a guilty plea was not given preclusive effect and was simply evidence that the insured's acts were intentional and criminal. The court further held that one of the consequences of such a breach of its duty to an insured by failing to provide a defense was that, in determining whether the insurer owed a duty to indemnify the insured for the default judgment, the insurer was bound by the factual allegations in the complaint as to liability. The court finally held that, because the judge based her conclusion that Metropolitan had no duty to indemnify in large part on Morrison's guilty pleas and because the judge determined that Metropolitan had no duty to indemnify without first determining whether it owed a duty to defend at the time of the default judgment, the court vacated the declaratory judgment and set aside the allowance of Metropolitan's motion for summary judgment as well as the denial of Morrison's motion for partial summary judgment. Accordingly, the court remanded for further proceedings.

Defendant and her husband (Duckworths) purchased two automobile policies and one motorcycle insurance policy from plaintiff (State Farm) where all three insurance contracts contained "anti-stacking" provisions that precluded recovery of uninsured motorist benefits under any policy other than that covering the damaged vehicles. The Duckworths subsequently moved to Florida, where the husband was struck and killed by an uninsured motorist while driving the motorcycle covered under the Maryland policy. State Farm consequently brought this action in the district court, seeking a declaratory judgment that it had satisfied its contractual obligations to the husband's estate. At issue before the district court was the applicability of the public policy exception to Florida's choice of law rule in disputes over contract terms. The district court declared that State Farm had satisfied its contractual obligations to the husband's estate and dismissed defendant's counterclaims. Taking into account all of the undisputed facts, and assuming that defendant informed a State Farm representative that the Duckworths' move from Maryland to Florida would be "permanent," the court held that State Farm still did not receive reasonable notice sufficient to trigger the public policy exception. The court held that, even if defendant informed the representative as alleged, her later actions overwhelmingly indicated to State Farm that the Duckworths' move was not necessarily permanent and that, consequently Maryland law would continue to govern the Duckworths' policies. Therefore, the issue of fact upon which defendant's appeal rested was immaterial and, as State Farm was deprived of reasonable notice, judgment as a matter of law was proper.

Plaintiff designs, manufactures, and sells computer mice and, in 1995, contracted with defendant to manufacture the products in bulk. The agreement identifies the "Product" as inventions, designs, methods and related information concerning computer mouse products and precludes defendant from disclosing, using, or copying "Confidential Information," or manufacturing, or otherwise commercially exploiting the Product, or developing other products derived from the Product. In 2009, defendant began to make near copies using plaintiff's production tooling, Plaintiff claimed violation of the New Hampshire Uniform Trade Secrets Act, N.H. Rev. Stat. 350-B:1 to -B:9 and breach of contract. The district court entered a preliminary injunction, ordering defendant to stop production of the copies. The First Circuit affirmed, holding that the relief was appropriate, based on the record.

Plaintiff Yvette Bouffard appealed a trial court's denial of her request for a declaratory judgment that she was entitled to uninsured motorist (UM) insurance coverage under her umbrella insurance policy issued by Defendant State Farm Fire & Casualty Company. Plaintiff was injured in 2006 from a car accident. She recovered $250,000 from the other party's insurer and her UM coverage under her personal automobile policy. Because her damages exceeded this sum, Plaintiff sought UM coverage under her umbrella policy. State Farm denied the claim because UM coverage was rejected on her original insurance application. The trial court found that Plaintiff authorized her husband to go to the insurance agency to purchase insurance for both of them, and that because the husband did not elect UM coverage, Plaintiff ratified his decision when she failed to object after reviewing the application in the car or after the policy arrived in the mail. Upon review, the Supreme Court found that the record supported the trial court's conclusion that the husband acted as Plaintiff's agent in rejecting UM coverage and affirmed the court's decision to deny Plaintiff declaratory relief.

Defendant Linus Poitra appealed a default judgment entered by the district court regarding a lease between Plaintiff Darrel Gustafson as lessee and Leon and Linus Poitra as lessors. Linus Poitra argued the district court did not have subject matter jurisdiction to enter the default judgment because the Poitras were members of the Turtle Mountain Band of Chippewa Indians, and the land subject to the lease is Indian-owned fee land located within the boundaries of the Turtle Mountain Indian Reservation. Linus Poitra argued the default judgment infringed upon tribal sovereignty because of cases pending in the Turtle Mountain Tribal Court. Upon review of the applicable legal authority and the evidence presented at trial, the Supreme Court vacated the default judgment finding that the district court did not have subject matter jurisdiction over the lease.