Justia Contracts Opinion Summaries

The parents of a child who suffered an injury during an adult softball game sued the United States Specialty Association (USSSA) and several other defendants. At the time of the accident, USSSA was insured by United States Fidelity and Guarantee Co. (USF&G). USF&G assumed the defense of USSSA, and a jury entered a verdict against USSSA. USF&G posted a bond of $4 million to secure the remainder of the judgment and, simultaneously, filed an action in federal court seeking a judicial declaration that it could not be compelled to pay more than the $2 million policy limit. USSSA later moved for partial summary judgment, contending that USF&G had no right to restitution against its insured for the amounts paid in excess of policy limits. The Supreme Court accepted certification to answer questions of law that controlled the parties' motions, answering (1) an insurer may not seek restitution based on the theory of unjust enrichment where there is an express contract governing the subject matter of the dispute; and (2) an insurer's right to reimbursement from an insured affects the parties' risk relationship and therefore may only arise under the express terms of their insurance contract.

Thomas & Thomas Court Reporters sued Douglas Switzer, an attorney, and his law firm, Hathaway & Switzer (Hathaway Switzer), for failure to pay for court reporting services. The district court entered judgment for Thomas & Thomas. At issue on appeal was whether Hathaway Switzer was liable to Thomas & Thomas for its fees or whether Hathaway Switzer's clients were. The Supreme Court (1) affirmed the district court's judgment to the extent that it held Hathaway Switzer rather than Hathaway Switzer's clients liable, as Hathaway Switzer had not disclaimed liability for those fees; and (2) reversed the court's judgment to the extent that it held Switzer personally liable. Remanded with directions to dismiss Thomas & Thomas' claim against Switzer as an individual.

In 2005, plaintiff began consulting for defendant and signed an agreement prohibiting disclosure of proprietary information to third parties, and a non- competition covenant effective during his employment and for two years thereafter. In July, 2006, he left the company. In January 2007, he began consulting for another company. Defendant sued under the agreement. The company filed for bankruptcy. A purchaser moved to substitute itself as plaintiff, but the state court dismissed without prejudice for failure to prosecute. After the court reinstated the case, plaintiff filed in federal court, alleging that the state court suit constituted abuse of process under Massachusetts law and seeking to enjoin the proceedings. He alleged that the amount in controversy was "at least $1,000,000," based on "emotional distress" and harm to his reputation, emotional tranquility, and privacy. The district court dismissed. The First Circuit affirmed. Plaintiff failed to allege damages with substantial particularity to establish jurisdiction. He provided no substantiation for or valuation of any of the alleged economic, emotional or physical damages and could not meet the "good faith" requirement with respect to his assertions.

Plaintiff alleged infringement of patents covering systems and devices for testing blood samples against a competitor in the diagnostic field. The patents at issue name defendant as the assignee. Plaintiff claimed ownership based on confidentiality and non-competition clauses in employment and consulting contracts between its predecessor and an employee, the inventor. The district court dismissed, finding that plaintiff lacked standing because the 1999 Consulting Agreement did not continue the 1984 Agreement’s Disclosure and Assignment Covenant. The Federal Circuit affirmed, holding that the company lacked standing with respect to rights assigned long after the inventor resigned from the company.

Plaintiff, a professional limousine driver, was injured when he was struck by a car while unloading luggage from a limousine at an airport. Plaintiff reached settlements with his employer's insurance company and the driver whose car struck him but remained less-than-fully compensated for his injuries. Plaintiff subsequently filed an underinsured-motorist claim with his Insurer under the terms of his personal automobile policy. Insurer denied the claim, citing two exclusions from the policy's provisions for uninsured-motorist coverage. Plaintiff filed suit, and the superior court ruled that the exclusions were void on grounds of public policy. The Supreme Court vacated the judgment of the superior court, holding that Insurer's denial of coverage was both lawful and not inconsistent with public policy. Remanded.

The Faigins owned a lot in the Diamante subdivision. Diamante asserted a lien on the Faigins' lot for failure to pay monthly membership dues and thereafter filed a complaint in foreclosure on the lot. The Faigins filed a motion for class certification so that they could be sued as representative parties on behalf of all lot owners in the Diamante subdivisions. The circuit court denied the motion. The Supreme Court affirmed, holding (1) although the circuit court abused its discretion by basing part of its decision on the question of commonality upon the ability of the proposed class to withstand a Ark. R. Civ. P. 12(b)(6) motion, (2) the element of commonality was lacking in this case where there were only seven lot owners who were in foreclosure and the Faigins' defenses to the complaint were not common to the overwhelming majority of the proposed class, and (3) because Ark. R. Civ. P. 23 requires that all elements be present before class certification is appropriate, and at least one element was lacking here, class certification was appropriately denied.

Petitioner-Appellant Lyle Hollingsworth, as personal representative of the Estate of Audrey Hollingsworth, appeals from a district court judgment determining the distribution of insurance proceeds. Jerry Hollingsworth, Petitioner's brother had lived in a house he shared with their mother Audrey and continued to live there after her death. The house was insured under a farm and ranch policy issued by Nodak Mutual Insurance Company (Nodak) which listed Jerry Hollingsworth as the primary insured, with Audrey Hollingsworth listed as an additional insured. After Audrey Hollingsworth's death, the Estate was listed as the additional insured. The house was destroyed by fire in 2006. Nodak issued several checks made payable to Jerry Hollingsworth and the Estate for the loss. Disputes arose over the various heirs' rights in the insurance proceeds, and Lyle Hollingsworth, as personal representative of the Estate, began proceedings in the informal probate requesting that the district court order a division of the insurance proceeds. Following an evidentiary hearing, the district court issued its findings of fact, conclusions of law, and order for judgment directing division of various components of the insurance proceeds between Jerry Hollingsworth and the Estate. The court concluded that the portion of the insurance proceeds paid for loss of the dwelling should be divided on the basis of the relative percentage value of Jerry Hollingsworth's life estate and the Estate's remainder interest, as calculated by actuarial tables. Finding that there was an "unsupervised probate" of the case, it could not be appealed without a Rule 54(b) certification. Because the district court's judgment resolved some but not all of the disputed between the parties in this case, the disbursement of the insurance proceeds was not a final, appealable judgment. The Supreme Court determined it did not have jurisdiction to hear the case further, and dismissed the appeal.

Patricia Shelton filed suit alleging breach of contract a legal malpractice against her former attorneys Defendants-Appellants R. Bruce Owens, Jeffrey Crandall, and Owens and Crandall, PLLC (Owens). During the pendency of her action, Ms. Shelton passed away. Plaintiff-Appellee Lois Bishop sought to assert Ms. Shelton's claims as her personal representative. Owens unsuccessfully argued that the legal malpractice claim abated upon Ms. Shelton's death, and that her breach of contract claim did not state a claim. Owens appealed. Because Patricia Shelton’s legal malpractice claim sounds in tort and abated upon her death, and her breach of contract claim fails to state a claim, the Supreme Court concluded the district court erred in denying Owens’s motion for summary judgment and in granting Bishop’s motion to substitute as plaintiff.

Defendant, a Russian citizen, attended graduate school and owns real property, vehicles, and bank accounts in Ohio. He spends some time in Ohio each year, ranging from 40 days in 2007 to a total of 17 days in 2008–2009. He visits under a tourist visa and does not have an Ohio driver's license. After going to Russia to take part in a business venture with defendant, plaintiff filed suit in Ohio. The contract had no connection to the state. The trial court dismissed for lack of personal jurisdiction, noting that defendant was not served with process in a manner that automatically confers personal jurisdiction. The Sixth Circuit affirmed, finding that notions of fair play and substantial justice weigh against jurisdiction in Ohio. The court quoted a Russian proverb, “If you’re afraid of wolves, don’t go into the forest” that could be read, “If you’re afraid of the Russian legal system, don't do business in Russia.”

Fore LLC, a Maine entity, purchased a Maine business from a New Hampshire client of William Benoit, a Massachusetts-based accountant. Fore sued Benoit, alleging that Benoit fraudulently misrepresented that the tax returns he prepared for the Maine business were accurate. The superior court granted Benoit's motion to dismiss for lack of personal jurisdiction. The Supreme Court vacated the superior court's judgment, concluding that Fore made the requisite prima facie showing that Benoit's contacts with Maine were related to the claims in this case and that they were sufficient for the exercise of personal jurisdiction. Remanded to determine whether it was reasonable to require Benoit to defend this action in Maine.