Justia Contracts Opinion Summaries

Developer refused to pay nearly $6.5 million under the prime contract ($5 million was due subcontractors) claiming deficient work. General contractor declined to pay a subcontractor, who sued on the surety bond. The surety asserted that term 6.f conditioned subcontractor's right to payment on contractor's receipt of payment. In the meantime, contractor settled with developer for $1 million--all it was able to pay--and subcontractor declined a pro rata share in return for a release of claims. The district court granted partial summary judgments in favor of subcontractor for an amount $91,790 less than the claimed $1,074,260. The Third Circuit reversed interpretation of the subcontract and rejection of surety's claim for proportional offset for legal fees incurred in the suit against developer, but affirmed denial of subcontractor's waiver claim, and remanded. The parties intended to share the risk of non-payment. Under 6f developer's payment to contractor is a condition precedent to contractor's obligation to pay subcontractor, yielding after six months to provide a mechanism that specifies when and for how much subcontractor may sue contractor. The contract created a mechanism for passing through subcontractor's remaining claims and pegging recovery to the amount that contractor received from developer for subcontractor's work.

This suit arose out of a dispute between a ship repair contractor, barge owner, and insurance company over the terms of a ship repair service contract and a maritime insurance policy. The contractor appealed from the district court's ruling that that the contractor breached its contractual obligation to procure insurance coverage for the barge owner and that it was contractually obligated to defend and indemnify the barge owner against damages ensuing from a workplace injury that occurred while the barge was being repaired. The barge owner cross-appealed from the district court's ruling that it was not entitled to additional insured coverage under the contractor's insurance policy. The court affirmed the district court's holding that there was a written agreement between the contractor and the barge owner which obligated the contractor to defend, indemnify, and procure insurance for the barge owner. The court also affirmed the district court's holding that the barge owner, which was not named in the policy, was not an additional insured under the policy. The court held, however, that the district court made no ruling regarding attorney's fees and therefore, the court remanded to the district court for a determination of the barge owner's entitlement, if any, to attorney's fees.

Respondent Charles Gant possessed a letter of intent to purchase property. He offered to sell the property to Grant Legacy, LLP once he completed the purchase. Grand responded to the offer by agreeing to purchase the property through an unnamed partnership entity with Respondent to be formed at a later date. The new partnership was called "Grand Legacy of Mississippi, LP (Grand-MS). After the purchase, Grand and Grand-MS claimed that Respondent stated he would not profit from the purchase and resale. The two Grands argued that Respondent had a duty to disclose his intent to profit on the original property sale, and that in failing to disclose that information, Respondent committed fraud. The trial court concluded that the Grand-MS partnership agreement contained no clause prohibiting Respondent from making a profit on the land-purchase-transaction. The trial court granted summary judgment in favor of Respondent, finding he had no duty to disclose any profit made to the newly formed partnership. Upon review, the Supreme Court concluded that the essence of this case centered around the duties limited partners owe one another and the allegation of fraud stemming from an alleged breach of those duties. The Court found no basis by which it would disturb the trial court's findings. The Court affirmed the grant of summary judgment in favor of Respondent.

Defendant Four Rivers Packing Company operated an onion packing plant and hired Plaintiff Stuart Mackay as the company's "field man." Plaintiff had been in the onion business for decades and knew many onion farmers. Four Rivers through its general manager Randy Smith (Smith) offered Plaintiff a job that involved purchasing enough onions to keep Four Rivers' packing shed stocked at a price that Smith would set. Plaintiff contended that Smith offered him a long-term employment contract. From 2000 to 2002, financial and managerial setbacks made it difficult for Four Rivers to operate its business, and for Plaintiff to acquire onions at prices set by Smith in order to keep the sheds stocked. In 2003, Four Rivers laid Plaintiff off. Plaintiff filed suit in 2004 alleging breach of the employment contract. At trial following a remand, Four Rivers contended that the parties had not entered into an employment contract for any specified term. A jury would return a verdict in favor of Plaintiff. In a special verdict form, the jury found that the parties had entered into a long term contract of "up to ten years, or such time as the Plaintiff retired." Four Rivers timely appealed, challenging jury instructions given at trial and the sufficiency of the evidence. Upon review of the trial record, the Supreme Court found that the trial court properly instructed the jury and that the evidence presented was sufficient to support the verdict. The Court affirmed the trial court's judgment against Four Rivers.

Appellants appealed from the dismissal of their first amended complaint, which asserted claims against Morgan Stanley under Section 10(b) of the Securities and Exchange Act of 1934 (Act), 15 U.S.C. 78a et seq., and New York common law. Appellants contended that Morgan Stanley, in oral and email communications with appellants' treasurer, materially misrepresented the liquidity of certain auction rate securities (ARS) and thereby fraudulently induced appellants to purchase and hold these securities at a time when Morgan Stanley knew that the market for ARS was collapsing. The court affirmed the district court's dismissal on the ground that sophisticated investors like appellants could not plead reasonable reliance on Morgan Stanley's alleged misrepresentations in light of Morgan Stanley's publicly-filed statement explicitly disclosing the very liquidity risks about which appellants claimed to have been misled.

This case arose when plaintiff filed a complaint asserting causes of action related to defendant's failure to repay certain loans. Defendant appealed from an amended judgment of the district court denying in part defendant's Federal Rule of Civil Procedure 60 motion to amend the court's August 28, 2008 judgment (original judgment), which, inter alia, requested that the court strike defendant as a party subject to the judgment because plaintiff had not moved for summary judgment against it. The court held that because plaintiff did not move for summary judgment against defendant, the district court erred in granting summary judgment against it. The court also held that the district court's determination that defendant defaulted in failing to file a timely answer to the complaint did not otherwise provide a valid basis for maintaining defendant as a party liable on the amended judgment. Therefore, the court reversed the decision of the district court insofar as it granted summary judgment against defendant and remanded with instructions to strike defendant as a party subject to the amended judgment.

BAC Home Loans Servicing, LP (formerly known as Countrywide Home Loans Servicing, LP); Countrywide Home Loans of Texas, Incorporated; and Countrywide Home Loans, Incorporated appealed an order for remand where the district court dismissed the lone federal claim under the Truth in Lending Act (TILA), 15 U.S.C. 1601-1667f, and declined to exercise supplemental jurisdiction over the remaining state law claims. Defendants argued that this was an abuse of discretion because Countrywide Home Loans of Texas was improperly joined and thus the district court had diversity jurisdiction over the state law claims. Plaintiffs argued that there was no improper joinder and that defendants waived any right to argue improper joinder or the existence of diversity jurisdiction when they failed to remove the action to federal court within 30 days of service of the original complaint that listed Countrywide Home Loans of Texas. The court held that defendants carried their burden of proving improper joinder; the district court had jurisdiction over the state law claims at the time of remand; and the exercise of that jurisdiction was mandatory. Accordingly, the court reversed the district court's decision to remand the state law claims to Texas state court and remanded for further proceedings.

Landlord Downtown Barre Development appealed a trial court's denial of its request for declaratory relief. Landlord argued that Tenant GU Markets of Barre, LLC established a corporate structure that entitled it to terminate the parties' commercial lease.  Landlord claimed the trial court erred by not considering Tenant's conduct when deciding whether tenancy under the terms of their agreement could be terminated.  Upon review of the lease and the applicable legal authority, the Supreme Court concluded that the essence of Landlord's claim was for "anticipatory repudiation." Even assuming Landlord could rely on this common law principle, Tenant had not indicated to Landlord an intent to breach, nor did Tenant commit an act to render it "unable to perform." Accordingly, because the language of the lease was clear and unambiguous and Tenant's conduct did not constitute notice as required by the plain language of the lease, the Court affirmed the trial court's ruling that landlord was not entitled to terminate the agreement on this ground.

In one of Plaintiff Leprino Foods Company's warehouses, flavoring compounds derived from nearby-stored fruit products contaminated a large quantity of cheese. Leprino's "all-risk" insurance policy with Defendant Factory Mutual Insurance Company excluded contamination unless with was caused by "other physical damage." When Factory Mutual refused coverage on the basis of the contamination exclusion, Leprino sued. A jury determined that the contamination was caused by other physical damage and therefore was covered by the Factory Mutual insurance policy. On appeal, Factory Mutual contended the verdict was not supported by the evidence presented at trial. Specifically, Factory mutual argued that: (1) expert testimony was not presented to prove causation; (2) the jury instructions pertaining to Leprino's cold-storage guidelines were given in error; and (3) Leprino's damages should have been reduced by its settlement with the warehouse. Upon review of the trial record and applicable legal authority, the Tenth Circuit found that Leprino presented sufficient evidence with regard to expert testimony to prove causation. The Court did not find jury instructions to be erroneous. The Court did agree that Leprino's damages should be reduced by the amount of the settlement received from the warehouse. The Court therefore affirmed part and reversed part of the lower court's decisions and remanded the case for recalculation of damages.

Appellant sued Prudential Financial, Inc., for breach of contract, contending that Prudential, which issued a group long-term disability insurance policy to his employer, breached the policy by denying his claim for disability benefits. At issue was whether the district court properly granted Prudential's motion for summary judgment. The court affirmed summary judgment and held that Prudential's prompt subsequent request for raw data in lieu of an independent medical examination was reasonable as a matter of law.