Justia Contracts Opinion Summaries

A suit by a school district employee, terminated after absence under the Family and Medical Leave Act, was dismissed. The Seventh Circuit remanded claims under the FMLA and for breach of contract. The parties entered a settlement agreement. After the superintendent for the district took his own life, the employee challenged the agreement and refused to sign the agreement. The district court dismissed the entire case and a motion for sanctions against the employee is pending. The Seventh Circuit affirmed. The oral settlement, agreed-to in the presence of a magistrate, is valid; the fact that the employee was unaware that the superintendent was under investigation for child molestation does not amount to concealment of a fact material to this case. The employee's refusal to comply with court orders to sign the agreement left the court with little choice but to dismiss her claims, causing forfeiture of a substantial settlement.

When the plaintiff left the company, the parties entered an agreement about how the company would handle requests for references. In a suit alleging breach, the district court entered summary judgment in favor of the company and awarded $173,232 in attorney fees. On remand a jury returned a general verdict that the company did not breach the agreement and the court awarded $522,527 attorney fees and costs and expenses in the amount of $40,493.64. On a second appeal, the Seventh Circuit affirmed. The trial court properly allowed the company to argue waiver. Jury instructions concerning waiver, agency, breach, and damages were within the court's discretion. The award of fees was commercially reasonable and not inequitable.

Plaintiff, who was employed as the City of McDonough's ("city") chief building inspector, brought suit against the city when the city refused to pay him severance under an employment agreement contract. At issue was whether the contract was binding to a successor municipal council in violation of OCGA 36-30-3(a). The court held that the contract was ultra vires and void because the contract was renewed automatically and the severance package required the city to pay plaintiff his salary and benefits for an entire year after the year in which the contract was terminated.

New York Marine & General Insurance Company ("NYMAGIC") and Union Fire Insurance Company of Pittsburgh, Pennsylvania ("NUFIC-PA") were both insuring Bayou Steel Corporation ("Bayou") when an employee of Bayou's Illinois stevedoring contractor, Kindra Marine Terminal ("Kindra"), was injured during Kindra's unloading of Bayou's steel bundles from a vessel belonging to Memco Barge Lines ("Memco"). Memco had contracted with Bayou to haul the cargo for Bayou by barge from Louisiana to Illinois. At issue was whether Kindra was Bayou's contractor or subcontractor for purposes of the provision in NYMAGIC's policy that excluded coverage of Bayou's liability for bodily injury incurred by employees of Bayou's subcontractors but did not exclude coverage of such injuries incurred by Bayou's contractors. The court held that, because Bayou was the principal party, paying party, and not the prime contractor, performance party, under both its barge transportation agreement with Memco and its offloading agreement with Kindra, there was no way for Kindra to have been a subcontractor of Bayou within the intendment of NYMAGIC's policy's exclusion of coverage. Kindra contracted directly with Bayou, not with some contractor of Bayou, to offload Bayou's cargo, so Kindra was Bayou's contractor. Accordingly, NYMAGIC's coverage exclusion did not apply to the employee's injuries because he was the employee of a contractor of Bayou.

Petitioner Lucht's Concrete Pumping sought to enforce a non-compete agreement signed by Respondent Tracy Horner, a former at-will employee. Because Mr. Horner was an at-will employee at the time he signed the agreement, Lucht's argued that its forbearance from terminating Mr. Horner constituted adequate consideration for the non-compete agreement. The appellate court held that continued employment did not constitute adequate consideration once an employee started working for an employer because the employee is in the same position as he was before he signed the agreement. Upon careful consideration of the arguments and the applicable legal authority, the Supreme Court reversed the appellate court's decision. The Court found that an employer that forbears from terminating an existing at-will employee forbears from exercising a legal right, and that constitutes adequate consideration. The Court remanded the case for further proceedings.

A $15,000 insurance policy covering the decedent named his brother as beneficiary. The brother was killed in the same accident that killed the decedent. Although the insurer received notice that the decedent's mother (estate administrator) had assigned the policy to pay for the funeral, the company obtained an order from the state court and paid the benefit to decedent's children, applying a "facility-of-payment" clause, which provided: "if the beneficiary he or she named is not alive at the Employeeâs death, the payment will be made at Our option, to any one or more of the following: Your spouse; Your children; Your parents; Your brothers and sisters; or Your estate." The assignee (finance company) filed suit. The federal district court entered judgment in favor of the insurer. The Seventh Circuit affirmed, exercising jurisdiction under the Employee Retirement Income Security Act, 29 U.S.C. 1132. Insurance companies have broad discretion under facility-of-payment clauses and the insurer's decision was not arbitrary. The court declined to award attorney fees.

Appellant Essie Simmons and Respondent Rubin Simmons divorced in 1990. The parties entered into a settlement agreement that was approved by the family court. Central to the agreement was the requirement that Mr. Simmons give Ms. Simmons a half or third of his Social Security benefits, depending on his age when he retired. When he retired, Mr. Simmons did not pay his ex-wife. She sued, but the family court declined to hear the complaint, finding that it could not hear a case that primarily dealt with Social Security benefits. Mr. Simmons appealed the dismissal, and the appellate court reversed. The court voided the division of Mr. Simmons' benefits, holding that the Social Security Act specifically precluded parties from dividing benefits under the settlement agreement. Because the agreement was partly voided by the court, Ms. Simmons sought to reopen the matter entirely. The family court dismissed again, holding that it lacked jurisdiction to revisit the agreement. On appeal, the Supreme Court was presented with the question of whether the family court could revisit the now partially voided agreement. Upon careful review of the arguments and applicable legal authority, the Court held that "basic principles of equity suggest[ed] that all issues should be revisited by the family court." The Court recognized the practical difficulties confronting the family court, but the Court noted, "that challenge pales in comparison to [Mr. Simmons'] suggestion that we simply end this matter with the remnant of the agreement remaining valid." The Court reversed the decision of the lower court and remanded the case to the family court for further proceedings.

This case involves the State's "working retiree program," and the propriety of its withholding retirement contributions from eligible members who returned to work with the state prior to July, 2005. Before that time, the program allowed employees to retire, then after a break, be re-hired and receive retirement benefits and a salary of up to $50,000 per year without having to pay into the pension plan. The State was ordered to refund any contributions made since July, 2005 by program members. In 2005, the State Retirement System Preservation and Investment Reform Act amended the program to require retired members pay the employee contribution as if they were active members but without accruing additional service credit. The State appealed the circuit court's order to refund the contributions. The retirees challenged the change in the program, arguing that it was unlawful for the State to change the terms of the working retiree program after the retirees "irreversibly retired" with the understanding that contributions to the pension plan would not be required. Upon careful consideration of the arguments and legal authority, the Supreme Court reversed the circuit court's holding with respect to the State's return of contributions since 2005. The Court found that the Legislature enabled the State to take the contributions when it amended the program by Act in 2005. The Court dismissed the Retirees' challenge to the State Retirement System Preservation and Investment Reform Act, finding no merit in their argument.

In 1992, Appellant Wendell Baugh, III acquired Precision Services, Inc. from Ronald and Gayla Miller. The Millers agreed to finance the transaction. Mr. Baugh and his wife personally guaranteed a note executed by the corporation that purchased Precision's assets and the right to use its name. Appellee Herman Novak and his wife were friends and neighbors of the Baughs. In 1995, Messrs. Baugh and Novak bought a company together (Penske Plastics, Inc.), and by contract, were jointly and severally liable for the company's debts and obligations. Both gentlemen agreed to share equally in the company's profits. Mr. Baugh offered to sell one-half of Precision to Mr. Novak. Before he could sell any interest in Precision, Mr. Baugh had to obtain permission from the Millers. Because Mr. Baugh found the Millers difficult to deal with, he asked his attorney to draft an arrangement so that Mr. Novak could purchase an interest in Precision without the Millers' involvement. The document drafted by the attorney included an indemnity agreement by which the Novaks would agree to indemnify the Baughs for fifty percent of any payments they were required to make on the Millers' note and Precision's other debts. Mr. Baugh kept an office at Penske Plastics. Fire destroyed Penske's building in 2003. Of import, a banker-box that contained the original signed copies of the Baugh-Novak 1995 purchase agreement was consumed in the fire. The companies' insurance policies were not enough to cover all the damage caused by the fire. In 2005, Messrs. Baugh and Novak sold Penske Plastics to Alcan Baltec. Up until the time of the closing, Precision's loan obligations were paid from the revenue of Penske Plastics. In late 2005, Mr. Novak sent Mr. Baugh a note essentially "washing his hands" of Precision. In 2006, Mr. Baugh began paying Precision's obligation to the Millers from his personal funds. Mr. Baugh filed suit against the Novaks to enforce the terms of the 1995 agreement, arguing that he was entitled to indemnification and reimbursement for Precision's obligations. The trial court ruled in favor of Mr. Baugh. Mr. Novak appealed, arguing that the trial court erred in several of its evidentiary rulings at trial. The appellate court, on its own motion, reversed the trial court, holding that the purchase agreement and indemnity agreements were contrary to public policy and state law. The Supreme Court found that the evidence did not support the appellate court's holding. The Court reinstated the trial court's decision, and dismissed the Novak's appeal.

Husband and wife executed a will in 1980, which was expressly identified as being "joint and mutual," bequeathing all of their property to each other as the survivor in fee simple and at the death of the survivor, the residue of the estate was to be divided equally among husband's two children, David and Darrell, and wife's two children, Deana and Diane. After husband died in 2005, wife probated the 1980 will, became the executor, and conveyed husband's estate to herself. In November 2005, wife executed another will which could, at her death, leave 20% of the estate to appellant, Deana, and the residue to the children of Deana and Diane. Deana then obtained wife's power of attorney and conveyed all of her mother's real estate to her two children and to appellee, Diane's child. When wife died in 2008, Deana offered the 2005 will for probate and Diane filed a caveat and also sought to petition the 1980 will as the last will and testament. The court held that the trial court did not err when it applied the law in place before the 1998 probate code was adopted to determine whether husband and wife had a contract not to revoke the 1980 will; when it concluded that the 1980 will was joint and mutual and that husband and wife had an enforceable contract not to revoke the 1980 will; when it did not in fact find that the fee simple conveyance to wife was a marital trust; when it made no rulings as to whether wife's 2005 will was a contract, and as such, that issue could not be raised on appeal; and when the 1980 will specifically provided that the residue of the survivor's estate was to be divided equally among the four children. Accordingly, the court affirmed the trial court's order that the 1980 will would be specifically enforced by equity.