Justia Contracts Opinion Summaries

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.

The National Treasury Employees' Union (Union) sought review of an adverse ruling by the Federal Labor Relations Authority (Authority) where the Union filed a grievance alleging that the IRS was processing its members' dues revocation forms without following contractually-mandated procedures. After the parties filed exceptions to the arbitrator's award with the Authority, the Authority denied the parties' exceptions and confirmed the award in its entirety. The Union petitioned the court for review. The court held that because the Authority's decision upholding the arbitrator's award was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, the court had no warrant to disturb the Authority's decision.

Plaintiff filed a complaint against defendant, seeking indemnity and/or contribution based on the damage defendant allegedly caused through gross negligence in removing plaintiff's vessel from a coral reef. At issue was whether the district court properly denied defendant's motion to compel arbitration of the dispute under the Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq., where defendant alleged that the district court erred in refusing to apply English arbitrability law. The court held that based on the Supreme Court's reasoning in First Options of Chicago, Inc. v. Kaplan, courts should apply non-federal arbitrability law only if there was clear and unmistakable evidence that the parties intended to apply such non-federal law. Because there was no clear and unmistakable evidence in this case, federal arbitrability law applied. Under federal arbitrability law, the court's decisions in Mediterranean Enterprises, Inc. v. Ssangyong Construction Co. and Tracer Research Corp. v. National Environmental Services, Co., mandated a narrow interpretation of a clause providing for arbitration of all disputes "arising under" an agreement. Under this narrow interpretation, the present dispute was not arbitrable. Therefore, the court affirmed the district court's judgment.

The district court dismissed a complaint asserting breach of contract, breach of a covenant of good faith and fair dealing, breach of a settlement agreement, promissory estoppel, equitable estoppel, quantum meruit, unjust enrichment, constructive trust, accounting, reformation of contract, and several types of fraud in connection with agreements for "street furniture." After extensive discussion of whether the plaintiff, a sociedad anónima formed in Uruguay, was the equivalent of a corporation formed in the U.S., and the fact that the contract called for application of the law of Spain, the Seventh Circuit affirmed. The court concluded that, while the defendant did not treat plaintiff well, no rule of law entitles every business to a profit on every deal.

TradeComet brought this action against Google for alleged violations of the Sherman Act, 15 U.S.C. 1, 2, arising out of TradeComet's use of Google's "AdWords" search engine advertising platform. Google filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(3) for lack of subject matter jurisdiction and improper venue because TradeComet had accepted the terms and conditions associated with participation in its AdWords program, which included a forum selection clause requiring TradeComet to file suit in state or federal court in Santa Clara County, California, not in New York. At issue was whether a district court called upon to enforce a forum selection clause was required to enforce it pursuant to 28 U.S.C. 1404(a) whenever the clause permitted suit in an alternative forum. The court held that a defendant could also seek enforcement of a forum selection clause in these circumstances through a Rule 12(b) motion to dismiss. Therefore, in an accompanying summary order, the court affirmed the district court's dismissal of TradeComet's complaint.

Sheet Metal Workers Local 33 et al. appealed from a judgment of the district court dismissing their putative securities class action complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. At issue was whether the securities issuer made false statements and omissions of material facts in the registration documents accompanying its initial public offering, in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, 15 U.S.C. 77a et seq. The court held that the alleged misstatements were not material because the value of the transactions composed an immaterial portion of the issuer's total assets. Accordingly, the court affirmed the district court's motion to dismiss on the ground of immateriality.

The qui tam suit, brought by a former contractor for one of the defendants, alleges that defendants violated the False Claims Act, 31 U.S.C. 3729(a)(1) in connection with a sale of F-16 fighter jets to Greece, which paid for the jets with money borrowed from the United States. The district court granted summary judgment in favor of defendants. The Seventh Circuit affirmed. An FCA claim requires proof of an objective falsehood. There was no evidence to support allegations: that defendant lied about use of funds loaned by the U.S. to capitalize a Greek business development company; that defendant failed to disclose promptly its decision to delete a price adjustment clause from the draft contract; that defendant made misrepresentations relating to provisions concerning spare part purchases and an ill-fated "depot program;" and concerning a number of misrepresentations in two amendments to the contract.

XMH sought Chapter 11 bankruptcy relief and obtained permission to sell a subsidiary's assets (11 U.S.C. 363), indicating that a contract between the subsidiary and WG would be assigned to purchasers. WG objected, claiming that the contract was a sublicense of a trademark and could not be assigned without permission. The bankruptcy judge agreed with WG, but allowed XMH to renegotiate so that the subsidiary would retain title to the contract but the purchasers would assume all duties and receive all fees. The district court granted a motion substituting the purchasers for XMH and ruled that the order barring assignment was erroneous. First holding that the order was appealable and that it should exercise jurisdiction despite the absence of the bankruptcy trustee as a party, the Seventh Circuit affirmed. If WG had wanted to prevent assignment, it could have identified the contract as a trademark sublicense to trigger a default rule that trademark licenses are assumed to be not assignable. The contract was not simply a sublicense: WG retained control over "all other aspects of the production and sale of the Trademarked Apparel." Such a designation would have been more effective than a clause forbidding assignment because it would have survived bankruptcy.

Plaintiff filed suit against Liberty Mutual, both personally and on behalf of a putative class of similarly situated individuals, alleging that the company's failure to disburse "medical payments" coverage (MedPay) benefits to her constituted a breach of contract, a breach of implied covenant of good faith and fair dealing, and a violation of G.L.c. 93A, 2. At issue was whether a claimant could seek medical expense benefits under the MedPay of a standard Massachusetts automobile insurance policy where she had already recovered for those expenses under a separate policy of health insurance. The court held that plaintiff's complaint and the extrinsic materials submitted by Liberty Mutual contained alleged facts sufficient to "raise a right to relief above the speculative level." The court also held that Liberty Mutual had not demonstrated as a matter of law that plaintiff could not receive MedPay benefits when she already had received medical expense benefits under her policy of health insurance. Accordingly, the order allowing Liberty Mutual's motion to dismiss was reversed and the matter remanded.

This case involved two related oil and gas mineral lease disputes that were jointly tried. At issue was whether limitations barred the Marshalls' (respondents and lessors) fraud claim against BP America Production Co., et al. (the lessee and operator), and whether Vaquillas Ranch Co., Ltd., et al. (lessors) lost title by adverse possession after Wagner Oil Co. (successors-in-interest) succeeded to BP's interests, took over the operations, and produced and paid Vaquillas royalties for nearly twenty years. The court held that because the Marshalls' injury was not inherently undiscoverable and BP's fraudulent representations about its good faith efforts to develop the well could have been discovered with reasonable diligence before limitations expired, neither the discovery rule nor fraudulent concealment extended limitations. Accordingly, the Marshalls' fraud claims against BP were time-barred. The court further held that by paying a clearly labeled royalty to Vaquillas, Wagner sufficiently asserted its intent to oust Vaquillas to acquire the lease by adverse possession.