Justia Contracts Opinion Summaries

Chilkoot Lumber Company, a commercial landlord (Chilkoot) and its tenant, Rainbow Glacier Seafood (Rainbow) resolved their lease dispute by settlement and entered the terms of the settlement on the record at trial. Rainbow did not follow through with its duties under the settlement agreement. After the time for performance by Rainbow had expired, Chilkoot moved the court to enforce the agreement. The superior court denied the motion to enforce. On reconsideration, the parties tentatively agreed to reinstate the settlement agreement with new deadlines for performance. When they could not agree on new deadlines, the superior court entered an order that enforced the settlement agreement as modified by Rainbowâs proposed deadlines. Chilkoot subsequently violated the order, and the superior court ordered it to pay $1,000 per day it violated the agreement. Chilkoot appealed to the Supreme Court, arguing that the superior court erred by imposing its own deadlines and sanctioning Chilkoot $1,000 per day. Upon review of the record, the Supreme Court reversed the superior courtâs order. The Court held it was an error for the lower court to conclude that the parties had not reached a settlement agreement and to deny Chilkootâs motion to enforce the agreement. Furthermore, the Court found that the courtâs sanctions against Chilkoot were "coercive and remedial, rather than punitive." The Court reversed the superior courtâs order and remanded the case for further proceedings.

In 2006, appellantâs vehicle was stolen from respondent hotelâs valet parking lot. Appellantâs insurer issued a check to appellant for the cost of the vehicle but not including the cost of customizations. Appellant filed a lawsuit in district court against respondent, alleging negligence and breach of a bailment contract and seeking damages exceeding $10,000. The district court determined that Nev. Rev. Stat. 651.101(1) shielded respondent from liability and entered summary judgment in favor of respondent. Appellant appealed, and the Supreme Court reversed. The Court found as a threshold matter appellant to be a real party in interest with standing to sue because appellant was not fully compensated by his insurer for his losses and thus the principle of total subrogation did not apply. The Court also held that Nev. Rev. Stat. 651.101(1) did not protect respondent against liability arising out of the theft of appellantâs vehicle because the statute, which limits the liability of hotels for the theft or destruction of any property brought by a patron upon the premises or "left in a motor vehicle upon the premises," unambiguously places motor vehicles outside of its scope.

The decedent, killed in a motorcycle accident in 2008, was covered by a life insurance policy, subject to the Employee Retirement Income Security Act, 29 U.S.C. 1101. The insurance company denied a claim by the decedent's widow, claiming that the decedent's anti-coagulant medications contributed to his death so that it fell within an exclusion for medical conditions. The district court concluded that the policy gave the company discretionary authority to determine eligibility and entered summary judgment in the company's favor. The Third Circuit reversed in part and remanded. Deferential review was not appropriate, given the language of the policy. The words "proof of loss satisfactory to Us," surrounded by procedural requirements, do not notify participants that the company has the power to re-define the entire concept of a covered loss on a case-by-case basis. The district court's interpretation of the medical exclusion, in favor of the company, was correct; the clause was not ambiguous.

In 2005, Southwest Emergency Physicians, Inc. (SWEP) and Alldredge entered into a contract under which SWEP's physician-employees staffed Lewis-Gale's emergency department. The contract provided that it could be terminated by either party without cause. In 2008, Alldredge became involved with some signatories to a letter addressed to the Lewis-Gale administration voicing work-related concerns. Certain Lewis-Gale administrators expressed concern that Alldredge had become involved in the hospital's personnel matters, and SWEP later terminated Alldredge's employment. Alldredge sued Lewis-Gale for tortious interference with her employment contract with SWEP, and the circuit court found in favor of Alldredge. The Supreme Court reversed, holding that the administrators' statements of intimidation and animus toward Allredge did not rise as a matter of law to the level of "improper methods"- such as fraud, deceit, or defamation - necessary to establish a cause of action for tortious interference with contract expectancy when a contract is terminable at will.

Brenda Britt obtained a new car from a car dealership after completing and signing, among other documents, a buyer's order and a retail installment sales contract. After failing to obtain financing for the sale of the car, the dealership repossessed and disposed of the vehicle without providing prior notice to Britt. Britt filed a warrant in debt against the dealership in the city general district court, alleging the dealership violated Article Nine of the UCC, which requires a secured party, after repossessing collateral, to provide the debtor with notice before disposing of the collateral. The district court and trial court both found in favor of Britt. The Supreme Court affirmed, holding that the dealership was a secured creditor and Britt a debtor under Article Nine. Therefore, the dealership failed to provide Britt the required notice of disposition following repossession required by Article Nine.

Robert Bennett signed a one-year employment agreement with Sage. That summer, Bennett communicated to Sage that he would require an increase of almost triple his salary or he would transition out of the company. When Sage did not meet his demands, Bennett continued working for Sage but pursued other employment opportunities. Bennett's employment was terminated that fall. Bennett filed a complaint against Sage seeking severance payments. During trial, the circuit court granted Sage's motion to amend its pleadings to include a defense of repudiation and submitted the issue of repudiation to the jury. The jury ruled against Bennett, and Bennett appealed. At issue was whether a party may repudiate his contractual duties after performance has commenced. The Supreme Court held that (1) repudiation may apply to a contract that has been partially performed when future obligations under the contract are repudiated, and (2) the circuit court properly rejected Bennett's argument that he did not repudiate the contract as a matter of law. Based on the evidence, the jury was entitled to conclude that Bennett's communications while he attempted to transition out of the company constituted a repudiation of his future obligations under the contract.

Sunoco, the owner and operator of several petroleum-refining facilities, purchased electric service from Toledo Edison. The contract between the two companies permitted arrangements that differed from the standard rate schedules. BP Oil Company, which owns a competing refined located next to Sunoco's refinery, also had a contract with Toledo Edison. Both contracts contained 'most favored nation' clauses, which allowed Sunoco and BP to utilize any "arrangement, rates or charges" for their facilities that Toledo Edison had given to the other. At issue was whether Sunoco could invoke the clause to extend the duration of its contract with Toledo Edison to match the duration of BP's contract with Toledo Edison, which would result in a $13 million savings for Sunoco. The commission found the clause did not allow Sunoco to extend the duration of its contract. The Supreme Court reversed, holding that under the plain language of the clause, the word "arrangement" encompasses all non-price terms of a competitor's contract. Because duration is a non-price term of contract, it is subject to the clause.

Defendant appealed the district court's award to plaintiff of prejudgment interest at the statutory rate of five percent to the date of its final judgment where plaintiff initially sued defendant for fraud and breach of contract in connection with the sale of securities. At issue was whether defendant's deposit of plaintiff's damages into the registry of the district court should prevent the accrual of prejudgment interest at the statutory rate after that date. Because such a result would be inconsistent with the purpose of prejudgment interest and would undermine the rule applied to awards of prejudgment interest by the Supreme Court of Texas, the court affirmed the judgment of the district court.

The union contracts state that a cost-of-living allowance will be applied to offset health insurance costs for hourly-rated employees and not be applied to hourly wage rates. The contracts state that the COLA will be equal to 1¢ per hour for each full 0.3 of a point change in the Consumer Price Index calculation. An employer was calculating the COLA on a weekly basis and maintained that the adjustment was only $0.08 per week; the union argued that the adjustment should be calculated at $3.20 per week ($0.08 x 40 hours per week). In November 2008, an arbitrator rejected management's argument that the contracts included a scrivener's error and that the COLA should be calculated on a weekly, rather than hourly basis.The district court entered summary judgment in favor of the unions. The Eleventh Circuit affirmed. The Labor Management Relations Act, 29 U.S.C. 185, preempts employers' state law fraud counterclaims. An attempt to assert a federal common law "fraudulent procurement" defense was barred by the three-month limitations period for challenging the arbitrator's award.

The Department of Justice issued a request for quotations for an automated recruiting and staffing system, providing that conflicting provisions would be considered as exceptions to the terms of the RFQ, and noting that any exceptions could adversely impact the evaluation rating. Plaintiff's bid included exceptions relating to confidentiality of data and how payments would be made, among other matters. Plaintiff's program obtained a higher score on a performance test. The DOJ disqualified plaintiff's bid and accepted intervenor's bid, stating that plaintiff's slight technical advantage did not justify the higher price and that plaintiff's exceptions were unacceptable. The government accountability office, claims court, and Federal Circuit upheld the decision. The contracting officer was not required to engage in discussions about the exceptions before disqualifying the bid and acted rationally in disqualifying the bid. The officer was entitled to rely on a certification of compliance with RFQ terms for the bid that was accepted and rationally accepted that bid.