Justia Contracts Opinion Summaries

Kurt R. Ward, Attorney at Law, LLC, appealed the district court's order denying its motion for judgment on the pleadings and granting the Plan Parties' (the Bert Bell/Pete Rozelle NFL Player Retirement Plan, the Retirement Board of the Plan, and the Bank of New York Mellon Corporation) cross-motion for judgment on the pleadings. Both parties' motions sought a declaration about whether the Plan Parties had to pay the disability benefits of two of the Ward Firm's retired NFL player clients into the firm's client trust account pursuant to state court jurisdiction for unpaid attorney's fees despite a provision in the Plan prohibiting any "benefit under the Plan" from being assigned or reached by creditors through legal process. The court held that its prior panel precedent held that bargained-for provisions barring assignments in ERISA welfare benefits were valid and enforceable and that the Ward Firm had not directed the court's attention to any such intervening en banc or Supreme Court decision. Accordingly, the court affirmed the judgment and held that the district court did not err in declaring that the spendthrift provision in the Plan prevented the Plan Parties from depositing the disability benefits owned by two retired NFL players into the Ward Firm's trust account.

This case stemmed from an asset purchase transaction where defendants and plaintiff entered into an allocation agreement that included an arbitration clause. Defendants appealed from the district court's order enjoining arbitration and denying their motion to stay judicial proceedings under section 3 of the Federal Arbitration Act ("FAA"), 9 U.S.C. 3. Defendants contended that the arbitration clause reserved the question of arbitrability for the arbitrators, and that the district court erred in determining that the dispute was not subject to arbitration. The court held that the arbitration clause in the agreement clearly and unmistakably expressed the parties' intent that the arbitrators determine questions of arbitrability, and that the district court therefore erred in permanently enjoining the arbitration and failing to stay judicial proceedings under section 3 of the FAA. Accordingly, the court reversed and remanded with instructions to grant the motion to stay proceedings under section 3 and dissolve the permanent injunction.

Ohio State University entered into an agreement for construction-management services with Turner Construction Company for a construction project. Later, Ohio State selected Turner to serve as construction manager at risk through a qualifications-based selection process rather than going through a traditional competitive bidding process. Ohio State did not require Turner to furnish a surety bond to secure the performance of Turner and its subcontractors. Three trade associations, two that advance the interests of subcontractors (ASA and ASA-Ohio) and one that advances the interests of sureties (SFAA), filed an action for a writ of mandamus to compel Ohio State to require that Turner furnish a bond as construction manager at risk. The Supreme Court dismissed the claims of ASA and ASA-Ohio and denied SFAA's mandamus claim, holding that (1) because ASA and ASA-Ohio did not establish that any of their members had been injured by Ohio State's decision, they lacked standing to raise their mandamus claim; and (2) because the applicable legislation does not require a bonding requirement, SFAA was not entitled to the requested relief in mandamus.

The Board of County Commissioners of Cecil County voted to grant a water services and wastewater franchise to two related companies, after which it approved an agreement providing for the sale and transfer to the companies of county-owned water and wastewater facilities. County residents filed petitions for judicial review of the decisions. The circuit court granted the Board's motion for summary judgment on the issue of its right to award the franchise agreements and ultimately concluded that the Board had a right to sell the county-owned property. The residents appealed, arguing that Md. Code Ann. art. 25, 8(a) prohibits the Board from conveying the property. At issue was whether Md. Code Ann. art. 25, 8(a) prohibited the Board from selling facilities that will continue to provide essential services to county citizens. The Court of Appeals affirmed, holding that the Board was not prohibited from entering into the asset purchase agreements at issue.

Plaintiffs Michael Ashby and Randy O'Brien, inmates at the state department of correction, asserted professional malpractice complaints against attorney C. Bruce Davidson to The Bar Plan Mutual Insurance Company, Davidson's professional liability carrier. Bar Plan then intervened in consolidated actions for damages filed on behalf of plaintiffs against Davidson, asserting a cross-claim that it was not obligated to indemnify Davidson for the claims of plaintiffs because Davidson had failed to notify Bar Plan of any claims against him pursuant to Bar Plan's policy. The trial court granted summary judgment to Bar Plan. The Supreme Court held that Davidson's failure to comply with Bar Plan's policy was not dispositive because plaintiffs opposed summary judgment on grounds of waiver and estoppel. The Court then reversed summary judgment, holding that genuine issues of fact remained regarding whether Bar Plan's misrepresentation of valid coverage resulted in plaintiffs sustaining actual detriment. Remanded.

BancInsure, Inc. appealed a declaratory judgment in favor of Columbian Financial Corporation and a former director, Carl McCaffree (collectively the Insureds). The insurance policy at issue here was a "claims-made" policy covered any claim made to BancInsure against any Columbian officer or director for a "Wrongful Act" as defined by the policy. A disputed provision of the policy pertained to the scope of coverage if Columbian was placed in receivership or otherwise ceased to engage in active banking business. The parties interpreted the provision differently. The Insureds contended that if Columbian went into receivership, the policy covered all claims made through the end of the original policy period, although only for Wrongful Acts committed before the receivership. BancInsure contended that the policy covered only claims made before the receivership. The operation of the disputed provision became relevant in August 2008 when the Kansas State Bank Commissioner declared Columbian insolvent and appointed the FDIC as its receiver. Soon thereafter, Columbianâs management sent BancInsure a letter to notify it of potential claims by the FDIC and others. The parties disputed many of the claims against Columbian which led to Columbian filing suit to the district court to determine which claims were covered under the policy. The sole issue on appeal to the Tenth Circuit was whether the district court had jurisdiction. Though no party disputed jurisdiction, the Tenth Circuit found that there was no actual controversy between the parties when the district court below rendered its judgment. The court therefore lacked jurisdiction. The Tenth Circuit reversed the lower courtâs decision and remanded to case with instructions to the court to vacate its judgment.

Petitioner Brady Farr appealed a circuit court judgment in favor of Respondents The Gulf Agency, Orange Beach Insurance Agency and Lexington Insurance Company. Mr. Farr finished renovating his house in 2003. In 2004, he decided to sell his property to a developer who wished to turn the property into condominiums. In anticipation of the sale, Mr. Farr obtained a $1 million loan, secured by a mortgage. As part of the loan process, the mortgage company ordered an appraisal of the property. The property was appraised at $1.3 million and the improvements were valued at $313,000. In 2004, Mr. Farr contacted Orange Beach to insure the property against "total loss." Lexington, acting as Orange Beach's agent, submitted an insurance application for policy limits based on the appraisal to The Gulf Agency, who ultimately served as underwriter for the policy. In the fall of 2004, Mr. Farr was concerned that the policy limits were not sufficient to adequately cover a total loss of the property. In September, Mr. Farr's concerns were realized when Hurricane Ivan destroyed the property. He filed a claim with Orange Beach. In November, Mr. Farr sold his property for $1.18 million. The sales agreement was amended to reflect the total loss he suffered as a result of the hurricane. Lexington's adjuster visited the property to determine the cause of Mr. Farr's loss. The adjuster found the hurricane was the "proximate cause". Lexington subsequently paid Mr. Farr $50,000 for the damage. Alleging that the policy did not provide adequate coverage and that Lexington failed to pay the proper benefits under the policy, Mr. Farr sued the insurance companies for breach of contract, fraud, misrepresentation, negligence, conspiracy, and bad-faith failure to pay an insurance claim. The trial court granted the companies' motion for summary judgment, finding that some of Mr. Farr's claims were barred by a two-year statute of limitations. Upon review of the trial court record, the Supreme Court affirmed the lower court's judgment pertaining to Mr. Farr's tort claims. The Court found that those claims were indeed barred by a statute of limitations. The Court however found that the breach of contract and bad faith claims should not have been dismissed through summary judgment. The Court affirmed part and reversed part of the lower court's order and remanded the case for further proceedings.

Nationwide Mutual Insurance Company (Nationwide) appealed a trial courtâs order that denied its "renewed motion for a judgment as a matter of law" in its case against J-Mar Machine & Pump. J-Mar is a repair shop that held a commercial liability and property insurance policy with Nationwide. In 2004, in anticipation of its policy renewal, Nationwide sent an inspector to the shop. In his report, the inspector noted several safety hazards and a messy shop. The insurance policy was renewed in March but several months later Nationwide cancelled the policy. Nationwide cited the inspectorâs report as reason for the cancellation. J-Mar management was not aware of the cancellation until late that year when shop property was stolen. When it tried to file a claim, Nationwide declined J-Marâs claim. A jury trial was held on the disputed policy cancellation and coverage. At the close of J-Marâs case, Nationwide moved the court for a "judgment as a matter of law" which was denied. Nationwide unsuccessfully motioned again at the close of all evidence. Upon review of the trial court record, the Supreme Court found that the evidence J-Mar presented at trial was insufficient to support the jury verdict in its favor. Accordingly, the Court reversed the trial courtâs judgment denying Nationwideâs motion and rendered a judgment in Nationwideâs favor.

Petitioner Willard Ryals appealed a trial court's order enforcing a creditor's judgment against him in favor of Respondent Lathan Company, Inc. (Lathan). In 2004, Lathan sued Ryals Construction Company for breach of a construction sub-contract. The contract called for Ryals to obtain workers' compensation insurance for the project. Lathan claimed it made an advance payment for the insurance. When Ryals failed to get the insurance, Lathan sued. No one appeared on behalf of Ryals on the trial date. A default judgment was entered on behalf of Lathan. Two years later, Lathan tried to collect on its default judgment by serving a post-judgment discovery request on Ryals Construction. The request went unanswered. Lathan filed a motion for sanctions, naming "Ryals Real Estate," Willard Ryals and Ryals Construction Company. Through counsel, Willard Ryals moved to strike the motion for sanctions which the trial court granted. Lathan then amended its complaint to substitute Willard Ryals with fictitious parties. Rather than re-allege the allegations of its first complaint, Lathan sought to hold Ryals Real Estate and Willard Ryals liable as alter egos for the judgment it held against Ryals Construction Company. After a bench trial, the trial court determined that Lathan's amended complaint did not technically substitute Willard Ryals and Ryals Real Estate for fictitiously named parties in the original complaint; it added them and asserted a new cause of action. The court found that Willard Ryals and Ryals Construction were liable for the creditor judgment. Willard Ryals appealed, arguing that the trial court lacked jurisdiction over Lathan's amended complaint. Upon careful consideration of the trial court record and the applicable legal authority, the Supreme Court dismissed the case as void: "The trial court's attempt to treat Lathan's amended complaint as a new action was in words only and was not sufficient to commence a new action." Accordingly, the trial court did not have jurisdiction to enter its judgment against Willard Ryals and Ryals Real Estate.

After lobbying for legislation authorizing collective bargaining for its members, the Maryland Transportation Authority Police Lodge #34 of the Fraternal Order of Police, Inc. (FOP) struck a written memorandum agreement with the Maryland Transportation Authority (MTA), in which the MTA agreed to fund a multi-million take-home vehicle (THV) program provided the bills were withdrawn and no collective bargaining legislation covering the MTA was passed that session. When a new governor took office, he declined to continue funding for the THV program. The FOP sued on theories of breach of contract and promissory estoppel. The circuit court granted MTA's motion to dismiss, finding that the agreement was unenforceable and violated the state's collective bargaining laws. The court of special appeals reversed. The Court of Appeals reversed the judgment of the appellate court and remanded the case with instructions to affirm the judgment of the circuit court, holding that because the legislature did not expressly authorize the MTA and its employees to bargain collectively at the time the agreement was executed, the agreement was unenforceable.