Justia Contracts Opinion Summaries

The case revolves around a dispute between Sanofi-Aventis U.S. LLC and Mallinckrodt PLC. Sanofi sold its rights in a drug to Mallinckrodt for $100,000 and a perpetual annual royalty. The drug was successful, but Mallinckrodt filed for bankruptcy and sought to convert Sanofi's right to royalties into an unsecured claim. Mallinckrodt aimed to discharge all future royalty payments and continue selling the drug without paying royalties, leaving Sanofi with only an unsecured claim.The bankruptcy court approved Mallinckrodt's discharge, ruling that since Sanofi had fully transferred ownership years ago, the contract was not executory. It also held that Sanofi's remaining contractual right to future royalties was an unsecured, contingent claim, which Mallinckrodt could discharge. The District Court affirmed these rulings.The United States Court of Appeals for the Third Circuit reviewed these rulings de novo. The court held that Sanofi's right to payment arose before Mallinckrodt filed for bankruptcy, making its royalties dischargeable in bankruptcy. The court rejected Sanofi's argument that the future royalties were too indefinite to be a claim, stating that the Bankruptcy Code allows for claims that are both contingent and unliquidated. The court also disagreed with Sanofi's assertion that bankruptcy cannot resolve its royalties claim because it will not exist until Mallinckrodt hits the sales trigger each year. The court ruled that a claim can arise before it is triggered, and most contract claims arise when the parties sign the contract. The court affirmed the lower courts' decisions, ruling that Sanofi's contingent claim arose before Mallinckrodt went bankrupt and is therefore dischargeable in bankruptcy. View "In re Mallinckrodt PLC" on Justia Law

This case involves a dispute between two neighboring landowners, David W. Axelrod, as Trustee of the David W. Axelrod Family Trust, and Reid Limited Partnership (RLP), over real property and easement rights. Axelrod purchased a property in Teton County in 2003, which was not accessible by road. Michael Reid, who owned and operated an organic dairy farm on land owned by RLP, leased land adjacent to Axelrod's property. Axelrod built an access road through the RLP property, which led to a series of disputes between the parties. In 2017, Axelrod filed a lawsuit seeking clarification about his easement rights. The parties reached a settlement agreement, which required Axelrod to build a new road along a different easement and Reid to pay for the installation of a cattle guard. However, disagreements arose over the placement and cost of the cattle guard, leading to further litigation.The district court granted Axelrod's motion for summary judgment, concluding that Axelrod did not have an express easement for use of the RLP Easement, but he did have an easement by estoppel. The court also found that Reid had breached the settlement agreement by failing to pay for the cattle guard. Reid appealed the decision.The Supreme Court of the State of Idaho affirmed the district court's decision in part and vacated it in part. The court affirmed the grant of summary judgment against Reid and the dismissal of RLP's counterclaims for conversion and violation of the implied covenant of good faith and fair dealing. The court also affirmed the judgment on Axelrod's breach of contract claim and the refusal to allow amendment of the pleadings to add Reid Family Limited Partnership as a party. However, the court vacated the dismissal of RLP's trespass claim and the award of attorney fees to Axelrod against RLP, remanding for further proceedings. View "Axelrod v. Reid Limited Partnership" on Justia Law

The case involves Scotlynn Transport, LLC and Plains Towing and Recovery, LLC, disputing the ownership of a semi-tractor. The semi-tractor, owned by Scotlynn, was involved in an accident and subsequently towed by Plains Towing to its impound lot. After Scotlynn paid for the towing services and took possession of the trailer, the semi-tractor remained at the impound lot. Plains Towing, considered a "removal agency" under South Dakota law, sent a notice to Scotlynn and later acquired the title to the semi-tractor using the statutory procedure outlined in SDCL 32-36-8 and 32-36-9. Scotlynn initiated a lawsuit against Plains Towing, alleging several claims related to the disputed ownership of the semi-tractor.The Circuit Court of the Fourth Judicial Circuit, Meade County, South Dakota, granted Plains Towing's motion for summary judgment, concluding that Plains Towing had complied with SDCL 32-36-8 and lawfully obtained the title to the semi-tractor. Scotlynn appealed, arguing that there were genuine issues of material fact relating to claims raised in Scotlynn’s complaint that were not addressed by the court.The Supreme Court of the State of South Dakota partially reversed and affirmed the lower court's decision. The court found that there were genuine issues of material fact concerning the existence of an implied contract between the parties regarding the storage of the tractor. However, the court agreed with the lower court that the "drafting errors" Scotlynn alleged were contained in the notice would not, themselves, preclude obtaining the title under SDCL 32-36-9. The case was remanded for further proceedings consistent with the court's holdings. View "Scotlynn Transport, LLC v. Plains Towing and Recovery, LLC" on Justia Law

A real estate developer, Audthan LLC, and property owner, Nick & Duke, LLC (N & D), entered into a 40-year lease agreement in 2013 to replace a Single Room Occupancy (SRO) hotel with a mixed-use residential and commercial building. The agreement required approval from the New York City Department of Housing Preservation and Development (HPD) due to a previous harassment finding against the property. The lease required Audthan to obtain a "cure" agreement from HPD and develop low-income housing on the site. However, disagreements arose over the terms of the cure agreement and the parties disputed who was at fault for the termination of the ground lease.The Supreme Court dismissed parts of Audthan's complaint, including a claim for anticipatory repudiation based on N & D's refusal to sign any cure agreement, and rejected N & D's motion to dismiss the remaining portions of the complaint. The Appellate Division affirmed the Supreme Court's decision, holding that Audthan could not seek separate redress for anticipatory repudiation based on the same conduct that allegedly breached the contract in 2015.The Court of Appeals of New York disagreed with the lower courts' dismissal of Audthan's claim for anticipatory repudiation. The court held that a claim for breach and a claim for anticipatory repudiation could both be stated based on the facts at the pleading stage. The court found that N & D's refusal to sign the 2015 cure agreement could be seen as falling short of its contractual requirements without amounting to a total breach. However, N & D's 2021 statement that it would never sign any agreement could be seen as a clear and unequivocal statement that N & D would never perform its obligations, constituting a repudiation of the contract. The court modified the Appellate Division's order by denying N & D's motion to dismiss in part, affirmed the order as modified, and answered the certified question in the negative. View "Audthan LLC v Nick & Duke, LLC" on Justia Law

The Ute Indian Tribe of the Uintah and Ouray Indian Reservation brought a suit against the United States, alleging various claims concerning water rights and water-related infrastructure. The Tribe claimed that the United States breached duties of trust by mismanaging water rights and infrastructure held by the United States and operated for the Tribe, breached contracts with the Tribe, and effected unconstitutional takings of the Tribe’s property. The Claims Court dismissed all the breach of trust claims, held that one breach of contract claim was barred by a 2012 settlement agreement, and found the remaining breach of contract and takings claims time barred.The United States Court of Appeals for the Federal Circuit affirmed in part and vacated and remanded in part the Claims Court's decision. The Court of Appeals held that the Winters doctrine and the 1899 Act did not sufficiently establish trust duties to support Indian Tucker Act jurisdiction with respect to the Tribe’s claims that the United States has a duty to construct new infrastructure and secure new water for the Tribe. However, the Court found that the 1906 Act imposes trust duties on the United States sufficient to support a claim at least with respect to management of existing water infrastructure. The Court also affirmed the dismissal of one breach of contract claim, vacated and remanded another, and affirmed the dismissal of the takings claims. View "UTE INDIAN TRIBE OF THE UINTAH & OURAY INDIAN RESERVATION v. US" on Justia Law

This case revolves around a series of maritime accidents caused by the breakaway of a drillship, the DPDS1, owned by Paragon Asset Company, during Hurricane Harvey in Port Aransas, Texas. Paragon had hired two tugboats owned by Signet Maritime Corporation to keep the vessel moored to the dock during the storm. However, the DPDS1 broke from its moorings, collided with both Signet tugs, and ran aground in the Corpus Christi ship channel. It later refloated and collided with a research pier owned by the University of Texas.The district court found Paragon solely liable for the breakaway, applying maritime negligence law. It concluded that Paragon had unreasonably relied on inaccurate reports about the strength of its mooring system and failed to call for an evacuation when it was the prudent course of action. The court also found that Signet and Paragon were equally liable for the damages suffered by the University of Texas due to the failure of a third tug, supplied by Signet, to prevent the vessel's collision with the pier.Paragon appealed, arguing that the court should have applied a "towage law" standard of duty to Signet's services and contested the district court's rejection of a force majeure defense. Paragon also disputed the court's determination regarding which contract between the parties governed Signet's services.The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision. It found no error in the application of maritime negligence law, rejected Paragon's force majeure defense, and agreed with the lower court's determination that Signet's Tariff governed the services provided during Hurricane Harvey. View "Paragon Asset v. American Steamship" on Justia Law

Vandercar, L.L.C. entered into a $36 million purchase contract for the Millennium Hotel in Cincinnati and then assigned its interest in the hotel to the Port of Greater Cincinnati Development Authority. The agreement stipulated that the Port would pay Vandercar a $5 million redevelopment fee if the Port issued bonds to redevelop the hotel within a year of its acquisition. The Port acquired the hotel and issued acquisition bonds, but it denied that the bonds were for redevelopment of the hotel, so it refused to pay the redevelopment fee. Vandercar sued the Port for breach of contract for failing to pay the redevelopment fee and also moved for prejudgment interest.The trial court found that Vandercar was entitled to the redevelopment fee and granted Vandercar’s motion for summary judgment on that issue. However, the trial court denied Vandercar’s motion for prejudgment interest, concluding that prejudgment interest could not be imposed on the Port since it was “an arm/instrumentality of the state.” Both parties appealed to the First District Court of Appeals, which affirmed the trial court’s decisions.The Supreme Court of Ohio reversed the judgment of the First District Court of Appeals. The court held that the Port, a port authority created under R.C. 4582.22(A), is not exempt from the application of R.C. 1343.03(A), which entitles a creditor to prejudgment interest when the creditor receives a judgment for the payment of money due under a contract. Therefore, the Port may be held liable to pay prejudgment interest. The court remanded the case to the trial court to evaluate Vandercar’s motion for prejudgment interest under the correct standard. View "Vandercar, L.L.C. v. Port of Greater Cincinnati Development Authority" on Justia Law

The case revolves around a dispute between Private Jet Services Group, LLC (PJS), a private aircraft booking agent, and Tauck, Inc., a provider of domestic and international guided tours. The parties had entered into an "Air Charter Services Blanket Purchase Agreement" (BPA) in January 2018, which established the terms under which Tauck would book and pay for air transportation for the New Zealand portion of its Australia and New Zealand tours. In May 2018, they executed a Statement of Work (SOW) that required Tauck to guarantee a minimum of fifty tours per year and to pay PJS an agreed-upon sum for each "missed" tour. The SOW also included a force majeure clause that protected PJS from delays, losses, or damages caused in whole or in part by force majeure events, including epidemics and acts of civil or military authority.The dispute arose when the COVID-19 pandemic prevented Tauck from conducting tours in New Zealand. After Tauck cancelled its remaining 2020 tours, PJS sued Tauck in the New Hampshire federal court alleging a breach of contract. Tauck responded by invoking the doctrines of impossibility and frustration of purpose to excuse performance of its obligations under the contracts. Both parties moved for summary judgment on the count relating to the 2020 tour season, which the district court denied without prejudice. The district court then certified a question to the Supreme Court of New Hampshire regarding the interpretation of the force majeure clause and its impact on the common law defenses of impossibility, impracticability, and frustration of commercial purpose.The Supreme Court of New Hampshire held that the common law contract defenses of impossibility, impracticability, and frustration of commercial purpose are so fundamentally related to contract formation and purpose that they remain viable unless expressly waived. Therefore, a force majeure clause that protects only one party to a contract should not be deemed, in and of itself, a relinquishment of the other party’s right to interpose those common law defenses. The case was remanded back to the lower court for further proceedings. View "Private Jet Services Group, LLC v. Tauck, Inc." on Justia Law

The case involves a dispute between Mercedes-Benz Financial and 1188 Stratford Avenue, LLC, and its principal, Aniello Dizenzo. The plaintiff, Mercedes-Benz Financial, alleged that the defendants breached a motor vehicle lease agreement by failing to make payments. After the defendants failed to appear, the trial court granted the plaintiff's motion for judgment and rendered a default judgment in favor of the plaintiff. The defendants later moved to open and set aside the default judgment, arguing that the vehicle had serious defects, making it dangerous to operate, and that they had returned the vehicle to the dealership. They also claimed that they mistakenly thought the case had been resolved.The trial court denied the defendants' motion to open the judgment, concluding that the motion was untimely and had no basis. The defendants appealed to the Appellate Court, which acknowledged that the trial court incorrectly determined that the motion was untimely but upheld the trial court's decision, concluding that it had not abused its discretion in denying the motion on the ground that it had no basis.The defendants then appealed to the Connecticut Supreme Court. The Supreme Court held that the Appellate Court incorrectly concluded that the trial court had not abused its discretion in denying the defendants’ motion to open. The Supreme Court found that the trial court's determination that the motion was untimely was incorrect, and this error likely affected the trial court's decision on the merits of the motion. The Supreme Court reversed the Appellate Court’s judgment and remanded the case for further proceedings, directing the lower court to reverse its judgment and conduct an evidentiary hearing on the defendants' motion to open the judgment. View "Mercedes-Benz Financial v. 1188 Stratford Avenue, LLC" on Justia Law

The case revolves around a dispute between Sharon Ann Koch, a member of the Buffalo Trail Ranch subdivision, and Melissa R. Gray, who was purchasing a tract in the subdivision. Koch, along with other members and the developer of the subdivision, Rocky Mountain Timberlands, Inc. (RMT), sued Gray for allegedly violating the subdivision's restrictive covenants by placing garbage, junk, and other prohibited items on her property. The covenants, filed by RMT in 2008, also required the formation of a road maintenance association, which was never established.The District Court of Albany County dismissed all claims against Gray, applying the contractual "first to breach" doctrine. The court reasoned that RMT, by failing to form the road maintenance association, was the first to breach the covenants. Therefore, it was impossible to hold Gray to the covenants. Koch appealed this decision, arguing that she had no contractual relationship with Gray, and thus the "first to breach" doctrine should not apply to her claim.The Supreme Court of Wyoming agreed with Koch. It found that the "first to breach" doctrine, which is based on a contractual relationship, could not be applied as there was no contract between Koch and Gray. The court also rejected the lower court's conclusion that RMT's breach of the covenants rendered them inapplicable to Gray. The court found no legal basis for applying the "first to breach" doctrine to a third party's enforcement of covenants. Consequently, the Supreme Court reversed the lower court's decision and remanded the case for further proceedings. View "Koch v. Gray" on Justia Law