Justia Contracts Opinion Summaries

In June 2009, defendant filed an arbitration demand against plaintiff alleging claims for wrongful termination and breach of contract based on plaintiff's failure to pay a performance bonus. Defendant subsequently filed a new demand for arbitration in October 2010, which included his original claims plus claims of fraud and breach of contract, after the arbitrator denied his motion to amend the original arbitration demand when he discovered evidence suggesting that plaintiff had padded estimated revenues for defendant's companies by $17 million. Plaintiff argued on appeal that the district court erred by not granting its motion for a preliminary injunction and temporary restraining order; that defendant's withdrawal from the first arbitration waived his right to a second arbitration; and that the first arbitration's October Order, denying defendant leave to amend, was an enforceable arbitration award. The court held that the Federal Arbitration Act, 9 U.S.C. 16(b)(4), precluded the court's review of the district court's order refusing to enjoin the arbitration. The court also held that a final decision with respect to an arbitration required an official dismissal of all claims and thus, where the district court stayed proceedings in lieu of dismissal, the decision was not final. The court further concluded that an arbitration award was a final adjudication of a claim on the merits and a procedural ruling that denied leave to amend was not an award since the decision had no effect on the merits of the proposed claims. Accordingly, the court dismissed the appeal for lack of jurisdiction.

The State brought a complaint against BNSF Railway Co. ("BNSF") in November 2009 seeking a declaratory judgment requiring BNSF to abide by the terms of a 1984 agreement between them and a declaration that BNSF was in violation of that agreement; specific performance by BNSF of the agreement, and damages for BNSF's alleged breach of the agreement. The State subsequently filed an application for a preliminary injunction in June 2010 to prohibit BNSF from terminating the payment to the State and its short line operator per loaded car for each car handled in interchanges as required by Section 9 of the agreement. At issue was whether the district court's order granting the preliminary injunction was an abuse of discretion. The court held that the district court manifestly abused its discretion in issuing the preliminary injunction where it went beyond the State's requested relief and effectively ordered specific performance on the agreement under new terms substantially different than the prior agreed upon terms which severely limited termination of the new interchange agreement and was never part of the 1984 or 1986 agreements. Accordingly, the court reversed the order and resolved the injunction, remanding for further proceedings.

Plaintiff-Appellee Spiska Engineering, Inc. (Spiska) sued Defendant-Appellee SPM Thermo-Shield, Inc. (Thermo-Shield) for breach of contract. Following a number of proceedings and appeals relating to the arbitration of the dispute, an arbitration award was confirmed, and Spiska obtained a money judgment against Thermo-Shield. A receiver was appointed to satisfy the judgment by liquidating Thermo-Shield's assets. Appellant Joseph Raver was Thermo-Shield's president, CEO and sole shareholder. Mr. Raver was not a party to the arbitration proceedings. The receiver mailed Mr. Raver a motion and notice of its intent to sell Thermo-Shield's assets. Mr. Raver appeared at a hearing at the circuit court, and objected to the sale. The court denied Mr. Raver's objection, and approved the sale. Though injunctive relief was not an issue at the hearing, the receiver included language in his proposed findings and conclusions that permanently enjoined Mr. Raver from competing with Thermo-Shield. The court adopted the receiver's findings in its final order. Mr. Raver appealed the award of injunctive relief, arguing that the court lacked jurisdiction over Mr. Raver to enjoin him. Upon review, the Supreme Court concluded that the circuit court lacked jurisdiction to enjoin Mr. Raver from competing with Thermo-Shield. The Court remanded the case for further proceedings.

Plaintiff-Appellee Steven Johnson wanted to purchase a tract of commercial real estate from Defendant-Appellant Harrell Sellers and his wife Sandra Green. The purchase agreement, dated May 2009, was prepared by Mr. Johnson's attorney and incorrectly indicated that Mr. Sellers was a single person. Mr. Sellers was married at the time, but in the process of obtaining a divorce from Ms. Green. Ms. Green moved out in October 2008, and divorce proceedings started in January 2009. Sometime after signing the purchase agreement, Mr. Sellers told his attorney about the mistake in the agreement. Mr. Sellers' counsel advised him that Ms. Green would need to give her permission to sell the property. In June 2009, Ms. Green would not authorize the sale. The parties tried to work out agreements as to the closing and problems with the title, but could not resolve their problems. Mr. Sellers tried to rescind the original purchase agreement, arguing that issues with his divorce made closing on the property impossible. Mr. Johnson sued for specific performance. The trial court ruled that Mr. Sellers waived his rights pertaining to certain terms of the original purchase agreement. The Supreme Court concluded that the impediments to closing were resolved within a reasonable time, and because of this, the court could award specific performance of the contract. The Court affirmed the decision of the circuit court.

Plaintiff purchased a credit disability insurance policy from defendant in connection with credit union financing of an automobile. Following an injury on the job, he received benefits in the form of credit union payments on the auto loan for about three years. The defendant then notified plaintiff that it would not continue to pay because he no longer met the definition of Total Disability under the policy. The district court certified a class action, found the definition of the term âTotal Disabilityâ ambiguous and construed it in favor the insured, entered an injunction that set up a claims review process for class members, then decertified the class. The Third Circuit affirmed with respect to the definition. The court vacated and remanded the rest of the judgment, holding that the court abused its discretion in issuing an injunction in which it retained jurisdiction over the class members' claims throughout the claims procedure process after the class was decertified.

Petitioner entered into a contract with respondent for the construction of a hotel. After seventeen months of work on the project, petitioner terminated the contract with respondent and respondent subsequently filed a lien against the hotel property for amounts it claimed remained owing. Petitioner filed a petition to strike the lien pursuant to Wyo. Stat. Ann. 29-1-311(b), which the district court denied on the ground that petitioner failed to prove respondent knew, when it filed its claim of lien, that the lien was groundless or contained a material misstatement or false claim. Petitioner appealed, claiming that the district court improperly placed the burden of proof on petitioner and that the district court's factual findings were clearly erroneous. The court affirmed and held that, although it agreed that the burden of proof under the statute was on the lien claimant, the court found that the district court's ruling was properly based on the evidence presented by the lien claimant, respondent, and on the failure of petitioner to allege proper grounds for relief under the statute.

This case involved a residential construction scheme, which required the investor, the mortgage broker, the builder, and the bank providing the builder with the funds to construct the house to enter into certain independent contractual arrangements. Petitioners, investors whose builders went under and left them with unfinished houses or vacant lots, sought a writ of mandamus asking the court to order the district court to require respondent, the bank's executive vice-president for mortgage lending, to make a restitution in an amount equivalent to one point of their construction loans. The court held that the cause of petitioners' loss was not respondent, but the fact that the builders became insolvent and were unable or unwilling to complete their work. Therefore, the writ of mandamus was denied where petitioners assumed the risk that the builder might walk off the job; that if it did, the bank would declare the construction loan in default; and that, as the bank's borrower, they would be liable for the draws the builders had received plus interest.

Plaintiff makes glucose monitors and other diabetes-related products that incorporate software written by defendant, under a contract that entitles it to use the software for two years after the contractâs initial term, 2006-2010, and any extension. It also gives plaintiff a right of first refusal should defendant agree to sell its stock or assets to one of plaintiffâs competitors "during the term of this Agreement." Defendant would not extend the contract after the original expiration date. Plaintiff learned that investors in defendant were negotiating to sell stock to a company that plaintiff considers a competitor. Defendant asserted that, because the transaction would not close until 2011, the right of first refusal did not apply. Plaintiff sought an injunction pending arbitration. Based on concerns about irreparable harm to each party, the district court entered an injunction to allow the sale to proceed, subject to a requirement that plaintiff be allowed to use the software through 2012; the injunction expires when the arbitrator renders a decision. The Seventh Circuit affirmed, modifying to add conditions to ensure that defendant remains a separate firm so that the transaction can be undone if the arbitrator rules in plaintiffâs favor.

The City of Torrington ("city") filed suit against Strong Construction, Inc. ("Strong") alleging breach of contract claims based on Strong's failure to supply and install water pump motors that conformed to contract specifications. At issue was whether the district court's judgment in favor of the city was supported by the record. The court affirmed and held that the district court's determination was not clearly erroneous where there was ample evidence to support the district court's decision that the Centripro Guidelines were provided to Baker & Associates, the city's engineer, prior to approval of the project submittals; where Strong breached the agreement with the city by failing to provide motors that conformed to the specifications in the parties' agreement; where section 13.07 of the General Conditions did not preclude the city's breach of contract claim and the repair obligation, by its terms, was not limited to one year; and where the court found no basis in common law to extend apportionment of damages to breach of contract claims and the comparative fault statute was not applicable to the breach of contract action.

After petitioners fell behind schedule in developing a stealth aircraft (A-12) for the Navy, the contracting officer terminated their $4.8 billion fixed-price contract for default and ordered petitioners to repay approximately $1.35 billion in progress payments for work the Government never accepted. Petitioners filed suit in the Court of Federal Claims ("CFC"), challenging the termination decision under the Contract Disputes Act of 1978, 41 U.S.C. 609(a)(1). The CFC held that, since invocation of the state-secrets privilege obscured too many of the facts relevant to the superior-knowledge defense, the issue of that defense was nonjusticiable, even though petitioners had brought forward enough unprivileged evidence for a prima facie showing. Accordingly, at issue was what remedy was proper when, to protect state secrets, a court dismissed a Government contractor's prima facie valid affirmative defense to the Government's allegations of contractual breach. The Court concluded that it must exercise its common-law authority in this situation to fashion contractual remedies in Government-contracting disputes and held that the proper remedy was to leave the parties where they were on the day they filed suit.