Justia Contracts Opinion Summaries

Deutsche Bank National Trust Company, as trustee in trust for the registered holders of Ameriquest Mortgage Securities, Inc., appealed from a summary judgment entered in the district court in favor of Donald and Kim Pelletier on the bank's complaint for foreclosure. The district court concluded that Deutsche Bank had failed to dispute facts asserted by the Pelletiers demonstrating that they had asserted a right of rescission. On appeal, the Supreme Court affirmed the grant of summary judgment, but because the district court's order reached only the point of determining that the Pelletiers were entitled to rescission, the Court remanded for further proceedings to effectuate the rescission.

3M Company sued Inspired Technologies, Inc. (ITI) for allegedly unfair and false advertising, in violation of the Lanham Act, 15 U.S.C. 1051, et seq., and the Minnesota Uniform Deceptive Trade Practices Act (MDPTA), Minnesota Statutes 325D.43-325D.48, alleging that ITI engaged in an advertising campaign for its Frog Tape product that depicted 3M Tape as performing poorly in certain respects. ITI tendered a defense of the lawsuit to its liability-insurance carrier, AMCO Insurance Company (AMCO), and the lawsuit ultimately settled. Following the settlement, AMCO filed the instant declaratory judgment action against ITI, seeking a declaration that it did not owe ITI any duty to defend or indemnify because the insurance policy's knowledge-of-false exclusion excluded the 3M suit from coverage. The court found that the two interrogatory answers upon which the district court relied did not reflect that 3M alleged ITI's knowledge of falsity as to all the purportedly unfair advertising. Consequently, the court held that AMCO failed to satisfy its burden of demonstrating, as a matter of law, that every claim in 3M's complaint fell clearly outside the policy's coverage. Accordingly, because 3M alleged at least one arguably coverable claim, AMCO owed ITI a duty under Minnesota law to defend the entire suit and therefore, the district court's grant of summary judgment was reversed and remanded.

Plaintiff, the Chapter 7 trustee, appealed the bankruptcy court's entry of a judgment in favor of defendants on his complaint seeking turnover under 11 U.S.C. 542 of money allegedly owed to the bankruptcy estate. The court held that while there was no clear error in the bankruptcy court's determination that defendants were not unjustly enriched and therefore, defendants were not indebted to the bankruptcy estate, the court affirmed on the more fundamental ground that the relief sought by the trustee was beyond the scope of 11 U.S.C. 542.

This case arose when plaintiffs filed a nationwide consumer class action against Life of the South Insurance Company (Life of the South). At issue was whether Life of the South had a right to enforce against plaintiffs the arbitration clause in the loan agreement, between plaintiffs and the car dealership where they purchased their vehicle, where the loan agreement lead plaintiffs to enter into a separate credit life insurance contract with Life of the South. The court held that the loan agreement did not show, on its face or elsewhere, an intent to allow anyone other than plaintiffs, the car dealership, and Chase Manhattan, and the assignees of the dealership of Chase Manhattan, to compel arbitration of a dispute and Life of the South was none of those. The court also held that because the only claims plaintiffs asserted were based on the terms of their credit life insurance policy with Life of the South, which did not contain an arbitration clause, equitable estoppel did not allow Life of the South to compel plaintiffs to arbitrate. Accordingly, the court affirmed the district court's denial of Life of the South's motion to compel arbitration.

This bankruptcy appeal involved parties that have a business history extending from at least April 27, 2005 where appellee and the Secretary of Lothian Oil signed two agreements which would lead to proofs of claim 164 and 171. At issue was whether the bankruptcy court could recharacterize a claim as equity rather than debt. The court held that because Texas law would not have recognized appellee's claims as asserting a debt interest, the bankruptcy court correctly disallowed them as debt and recharacterized the claims as equity interests. Moreover, because insiders and non-insiders alike could mischaracterize their claims in contravention of state law, the court declined to limit recharacterization to insider claims. The court further held that the other assertions of error were without merit.

Appellants challenged the denial of their claim for benefits arising from an underinsured motorists (UIM) policy issued by appellee. Appellants appealed the adverse grant of summary judgment and the denial of their request for certification of a question of law to the North Dakota Supreme Court. The court held that the negligent driver's excess-liability policy was relevant to determining the underinsured status of his vehicle. Thus, as a matter of law, the negligent driver's vehicle was not underinsured and appellants were not entitled to coverage under the UIM endorsement. The court also declined to certify the question where the case had been decided by summary judgment. Accordingly, the court affirmed the judgment of the district court.

Appellants sued appellee seeking insurance coverage for damages resulting from a pipe rupture in appellants' refrigerated warehouse. Appellants appealed the district court's grant of appellee's motion for summary judgment on appellants' first coverage theory and the dismissal of appellants' vexatious refusal to pay claim. Appellants also raised several claims of error with respect to the second theory of coverage submitted to the jury, including a claim of instructional error. The court held that the district court erred in adopting the restrictive definition of "collapse" discussed by the Missouri Court of Appeals in Williams v. State Farm Fire & Cas. Co., Eaglestein v. Pac. Nat'l Fire Ins. Co., and Heintz v. U.S. Fid. & Guar. Co., because none of those cases addressed the meaning of the term "collapse" when used in conjunction with the expansive definition of the term "buildings" used in this policy. As a result, the district court erred in granting appellee's motion for summary judgment. The court also held that the district court erred when it determined the weight of ice on the refrigerated pipes did not constitute a specified cause of loss under the terms of the policy. The court further held that it was unnecessary to address the claims appellants appealed with respect to alleged trial errors because the only theory of coverage submitted to the jury was appellants' "weight of ice" coverage claim and appellants were entitled to partial summary judgment on the issue of liability under that theory. The court finally affirmed the district court's grant of summary judgment on the vexatious refusal to pay claim where the district court correctly determined that appellee could insist upon a judicial determination of certain questions without being penalized for a vexatious refusal to pay claim.

Plaintiff filed a class action complaint in Nevada state court against his employer, alleging that the employer failed to pay him and other similarly situated employees overtime and minimum wages, listing causes of action under the Fair Labor Standards Act (FLSA), 29 U.S.C. 216(b), under Nevada labor laws, and for breach of contract. At issue was whether a rejected offer of judgment for the full amount of a putative class representative's individual claim mooted a class action complaint where the offer preceded the filing of a motion for class certification. The court held that where a defendant made an unacceptable Federal Rule of Civil Procedure 68 offer of judgment that fully satisfied a named plaintiff's individual claim before the named plaintiff filed a motion for class certification, the offer did not moot the case so long as the named plaintiff could still file a timely motion for class certification. Once filed, a timely motion for class certification related back to the time of the filing of the complaint. The court further held that the district court abused its discretion in finding that plaintiff could no longer file a timely motion of class certification; that it erred in refusing to allow plaintiff to abandon his FLSA claims; and that it erred in holding that Nev. Rev. Stat. 608.100 abrogated plaintiff's breach of contract claims. Accordingly, the court reversed and remanded.

The company sued, in New Jersey, for breach of contract, conversion, and embezzlement, based on defendant's retention of checks worth $587,775.05. Defendant asserted counterclaims based on termination of an employment contract. While the lawsuit was pending, the company brought an identical action in South Korea. In 2005, a South Korean court entered judgment for the company in an amount equivalent to $587,755.05 plus post-judgment interest. In 2006, the U.S. district court entered judgment for the company, $587,755.05 on the conversion claim, and for defendant, $910,000 on the counterclaim. The U.S. district court declined the company's request that a turnover order include a setoff, reasoning that setoff would result in double recovery. The Third Circuit affirmed, but remanded pending enforcement of the Korean judgment. Defendant paid the Korean judgment. The district court rejected an argument that the Korean judgment should be equalized with the American judgment in the amount of $205,540.05, the difference between the American judgment ($587,755.05) and actual payments adjusted by currency devaluation ($382,215). The Third Circuit affirmed, characterizing the claim as an attempt to satisfy the Korean judgment for a second time.

This case arose when Shoe Show, Inc. (Shoe Show) entered into a lease as lessee of a store space in a shopping mall in Houston, Texas. The lease expressly prohibited Shoe Show from operating another business under the name "The SHOE DEPT." or any "substantially similar trade-name," within two miles of the leased premises. Shoe Show subsequently opened a retail footwear store under the name "SHOE SHOW" in a commercial center located less than a quarter mile from the mall in which the leased premises was located. At issue was whether the two trade names were substantially similar. The court held that, under the uncontested facts of the case and the discrete provisions of the lease, the trade name SHOE SHOW was not substantially similar to The SHOE DEPT. Therefore, the court reversed the district court's order of summary judgment and remanded for further proceedings.