Articles Posted in Contracts

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From 2009 until 2012, Debbi Potts worked as the campus director of the Cheyenne, Wyoming campus of CollegeAmerica Denver, Inc. (CollegeAmerica), a predecessor of the Center for Excellence in Higher Education, Inc. (the Center). Potts alleged she resigned because CollegeAmerica’s business practices were unethical. In particular, she alleges that CollegeAmerica violated its accreditation standards and “actively deceiv[ed]” its accreditor to maintain accreditation. In September 2012, Potts and CollegeAmerica entered a written agreement by which CollegeAmerica agreed to pay Potts $7,000 and support her unemployment claim, and Potts agreed to (1) “refrain from personally (or through the use of any third party) contacting any governmental or regulatory agency with the purpose of filing any complaint or grievance,” (2) “direct any complaints or issues against CollegeAmerica . . . to CollegeAmerica’s toll free compliant [sic] number,” and (3) “not intentionally with malicious intent (publicly or privately) disparage the reputation of CollegeAmerica.” Despite the agreement, Potts disparaged the Center in an e-mail she sent to another former employee. After learning of this, the Center sued Potts in Colorado state court for violating the agreement, seeking the $7,000 it had paid to Potts under the agreement. In February 2013, Potts sent a written complaint to the Center’s accreditor, the Accrediting Commission of Career Schools and Colleges (ACCSC), concerning the Center’s alleged deceptions in maintaining its accreditation. After learning this, the Center amended its state-court complaint to add breach of contract. In response, Potts sued the Center in federal district court, alleging that the Center’s state claim violated the False Claims Act’s anti-retaliation provision. The Tenth Circuit considered whether this anti-retaliation statute applied when no retaliatory discrimination occurred until after employment ends. The Court concluded that it did not, and affirmed the district court’s dismissal of Potts’s retaliation claim. View "Potts v. Center for Excellence" on Justia Law

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Au pairs and former au pairs filed a class action lawsuit against AuPairCare, Inc. (“APC”) and other au pair sponsoring companies alleging violations of antitrust laws, the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Fair Labor Standards Act (“FLSA”), federal and state minimum wage laws, and other state laws. Eventually, the au pairs amended their complaint and added two former au pairs, Juliane Harning and Laura Mejia Jimenez, who were sponsored by APC. In response, APC filed a motion to compel arbitration, which the district court denied. The district court found the arbitration provision between the parties both procedurally and substantively unconscionable and declined to enforce it. Because the arbitration provision contained only one substantively unconscionable clause, the Tenth Circuit concluded the district court abused its discretion by refusing to sever the offending clause and otherwise enforce the agreement to arbitrate. The Court therefore reversed the district court’s ruling and remanded for further proceedings. View "Beltran v. Interexchange, Inc." on Justia Law

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In 2013, while the disputed insurance policy was in effect, several guests at the Siloam Springs Hotel allegedly sustained injuries due to carbon monoxide poisoning stemming from an indoor-swimming-pool heater that had recently been serviced. The hotel sought coverage under the policy, and the insurer denied coverage based on the exclusion for “qualities or characteristics of indoor air.” This case made it back to the Tenth Circuit following a remand in which the district court was directed to determine whether there was complete diversity of citizenship between the parties, which was an essential jurisdictional issue that needed to be decided before it could properly address the merits of this case. On remand, the district court received evidence on this question and determined that diversity jurisdiction was indeed proper. The district court also certified a policy question to the Oklahoma Supreme Court, which held that the exclusion at issue in this case - however interpreted -should not be voided based on public policy concerns. Following the Oklahoma Supreme Court’s resolution of the certified question, the insurer asked the district court to administratively close the case, arguing that “no further activity in this case . . . remains necessary to render the [district c]ourt’s adjudication of the coverage issue which the case concerns a final judgment.” The hotel asked the court to reopen the case to either reconsider its previous order or to enter a final, appealable judgment against the hotel. The district court held that the case had already been administratively closed and it had no need to reopen the case, since “both its finding of diversity jurisdiction and the Oklahoma Supreme Court’s answer to the certified question did not alter in any way” the court’s summary judgment decision on the merits of the coverage dispute. The hotel appealed. The Tenth Circuit determined the hotel was entitled to coverage under the policy at issue, and reversed the district court's denial. The case was remanded for further proceedings on the question of damages. View "Siloam Springs Hotel v. Century Surety Company" on Justia Law

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The plaintiffs were two wholly owned subsidiaries of First American Financial Corporation: First American Title Insurance Company (FA Company) and First American Title Company, LLC (FA LLC) (collectively Plaintiffs). The defendants, who appealed a judgment against them (Defendants) were Michael Smith, Kristi Carrell, and Northwest Title Insurance Agency, LLC. Jeffrey Williams was also a defendant, but is not a party to the appeal. Defendants raised numerous grounds on appeal of a large jury award based on breaches of contractual and fiduciary duties, many of which the Tenth Circuit concluded were not adequately preserved or presented. Therefore, the Tenth Circuit affirmed the district court's judgment, "[w]e may not have awarded the same amount, but we see no abuse of discretion." View "First American Title Insurance v. Northwest Title Insurance" on Justia Law

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The Oklahoma Department of Rehabilitation Services (“ODRS”) appealed a district court’s affirmance of an arbitration decision rendered under the Randolph-Sheppard Act (the “RSA”). The statute authorized designated state agencies such as ODRS to license and assign blind vendors to operate vending facilities on federal property; it also established an arbitration scheme to resolve disputes arising from this program. In accordance with the statute, the Department of Education (“DOE”) convened an arbitration panel (the “Panel”) to hear the grievances of David Altstatt, a blind vendor, challenging ODRS’s selection of another blind vendor, Robert Brown, for a particular vending assignment. Both Mr. Altstatt and Mr. Brown had applied for the assignment. The Panel found for Altstatt and ordered ODRS to remove Brown from the disputed assignment, appoint Altstatt in Brown’s place, and pay damages and attorney fees to Altstatt. ODRS brought suit to vacate the Panel’s decision, which the Randolph-Sheppard Act subjectd to judicial review as a final agency action under the Administrative Procedure Act (the “APA”). Altstatt intervened as a defendant and counterclaimant, requesting that the court affirm the arbitration decision. DOE participated in the litigation only to the extent of filing the administrative record of the Panel proceedings. The district court entered judgment in favor of Altstatt and ordered ODRS to comply with the Panel’s decision. ODRS then appealed. After review, the Tenth Circuit affirmed the district court’s decision with respect to the Panel’s award of injunctive relief in the form of Brown’s removal and Altstatt’s appointment to the disputed assignment, but reversed as to the Panel’s award of damages and attorney fees. View "Tyler v. United States Dept. of Educ." on Justia Law

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Belsen Getty, LLC, a registered investment adviser owned by Terry Deru, obtained a claims-made financial-services-liability policy (the Policy) from XL Specialty Insurance Company covering Belsen Getty and its advisers for the period for one year. Under the policy, XL had no duty to defend. During the policy period James, Jenalyn, and Wade Morden brought claims against Belsen Getty and Deru alleging improper and misleading investment advice. XL denied coverage, asserting the Mordens’ claims and claims brought by the Securities and Exchange Commission (SEC) before the policy period concerned “Interrelated Wrongful Acts,” as defined by the Policy, and that the Policy therefore required treating the two claims as one claim made before the policy period. Belsen Getty and Deru then settled with the Mordens, assigning their rights against XL; and the Mordens sued XL in federal district court, raising the assigned claims that XL breached its covenant of good faith and fair dealing and its fiduciary duties to Belsen Getty and Deru in denying coverage under the Policy. XL counterclaimed that the Policy’s Interrelated Wrongful Acts provision precluded coverage. The Mordens moved for partial summary judgment on the counterclaim and on several of XL's affirmative defenses. XL moved for summary judgment based on the policy and for failure to prove bad faith or breach of fiduciary duty. The district court denied XL's counterclaim, but granted summary judgment on the bad-faith and fiduciary-duty claims. The Mordens appealed summary judgment against them on their bad-faith and fiduciary-duty claims and on the denial of their motion to amend their complaint to add a breach-of-contract claim. XL cross-appealed the summary judgment against it on its counterclaim that the Policy’s Interrelated Wrongful Acts provision barred all the Mordens’ claims. The Tenth Circuit reversed the denial of XL’s motion for summary judgment on its counterclaim: this reversal undermined the Mordens’ challenges to the summary judgment against them and the denial of their motion to amend. The Court therefore affirmed summary judgment against the Mordens on their claims and the denial of their motion to amend. View "Morden v. XL Specialty Insurance" on Justia Law

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Auto-Owners Insurance Company provided automobile insurance to Frank and Nancy Csaszar and their daughter, Jennifer. But when that policy’s term came to a close, Auto-Owners informed Mr. and Mrs. Csaszar that, because of their daughter’s driving record, it would only renew their policy if it excluded her from coverage. The Csaszars agreed. The policy accordingly included an “excluded-driver” provision that stated the policy “shall provide no coverages” for “claims arising out of [Jennifer Csaszar’s] operation or use of any automobile. While this new policy was operative, an uninsured motorist rear-ended Jennifer while she was driving a vehicle not scheduled under her parents’ Auto-Owners policy. Jennifer filed a claim with Auto-Owners, requesting it pay her $500,000 in uninsured and underinsured motorist (UM/UIM) coverage. Auto-Owners denied the claim because it believed the excluded-driver provision barred Jennifer from such coverage. It then sought a declaratory judgment that Jennifer was not entitled to any coverage, including UM/UIM coverage, under her parents’ policy. In response, Jennifer filed a counterclaim seeking a declaration she was, in fact, entitled to this coverage. The district court granted Auto-Owners’ motion for summary judgment. Finding no reversible error in that judgment, the Tenth Circuit affirmed the district court. View "Auto-Owners Insurance Company v. Csaszar" on Justia Law

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This case centered on an agreement between the City of Rawlins, Wyoming, and Dirty Boyz Sanitation Services (Dirty Boyz) for local garbage collection and disposal. About two years after the parties executed the agreement, the State of Wyoming required Rawlins to close its landfill. Soon after, Rawlins opened a transfer station to process garbage for transport to a landfill elsewhere. Later, Rawlins adopted a flow-control ordinance requiring that all locally licensed garbage haulers take collected garbage to Rawlins’ transfer station. Dirty Boyz argued the ordinance violated the Contract Clause of the United States Constitution, and was preempted by the Federal Aviation Administration and Authorization Act (FAAAA). The district court granted summary judgment in favor of Rawlins. Finding no reversible error, the Tenth Circuit affirmed the grant of summary judgment in Rawlins' favor. View "Dirty Boyz Sanitation Service v. City of Rawlins" on Justia Law

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Plaintiffs Spring Creek Exploration & Production Company, LLC and Gold Coast Energy, LLC appealed four separate district court orders dismissing contract and tort claims against Defendants Hess Bakken Investments II, LLC and Statoil Oil & Gas, LP. Around January 2009, Statoil entered into two agreements with a Hess affiliate. One of those agreements, the “Rough Rider Agreement,” prohibited Hess for one year from acquiring any oil or gas interests in the Rough Rider Prospect (land in North Dakota’s McKenzie and Williams Counties) in exchange for Hess’s affiliate receiving certain proprietary information from Statoil. In October 2009, still within the one-year non-compete period, Hess entered into a series of agreements (collectively, the “Tomahawk Agreement”) with Spring Creek, Gold Coast, and non-party Coachman Energy relating to the Tomahawk Prospect, a collection of land lying entirely within the much larger Rough Rider Prospect. As one part of the Agreement, Spring Creek and Gold Coast sold all of their oil and gas leasehold interests in the Tomahawk Prospect to Hess in exchange for an overriding royalty interest (“ORRI”) in the hydrocarbons produced under the terms of the leases (the “First Assignment”). Hess’s plan for these leases was to drill enough exploratory wells to prove their value and then sell them to larger operators. In another part of the Tomahawk Agreement, Spring Creek, Gold Coast and Hess executed an “Area of Mutual Interest Agreement” ("AMI"). In 2010, Statoil alleged Hess breached the Rough Rider Agreement by acquiring leases in the Rough Rider Prospect during the non-compete period. That led to a settlement agreement in which Hess sold most of its Tomahawk Prospect leases to Statoil at a discount. Hess further agreed that any leases it acquired in the Tomahawk Prospect in the next three months would be offered to Statoil at cost. In connection with Statoil’s due diligence in executing the settlement agreement, Hess disclosed to Statoil the terms of the AMI Agreement. Neither Spring Creek nor Gold Coast was privy to the Hess-Statoil negotiations. After the agreement was finalized, Statoil publicly announced that it had acquired about 10,000 net acres in the Rough Rider Prospect. The underlying litigation was filed in 2013, when Spring Creek brought suit against Hess and Statoil in Colorado state court. After careful consideration, the Tenth Circuit determined summary judgment in favor of Hess and Statoil was proper, and affirmed the district court's judgment. View "Spring Creek Exploration v. Hess Bakken Investment" on Justia Law

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At issue in this case was whether Aspen Insurance (UK) Ltd. And Lloyd’s Syndicate 2003 (collectively, “Aspen”) had to reimburse Black & Veatch Corporation (“B&V”) for costs B&V incurred due to damaged equipment a subcontractor made for power plants in Ohio and Indiana. The district court held Aspen did not have to pay B&V’s claim under its commercial general liability (“CGL”) insurance policy because B&V’s expenses arose from property damages that were not covered “occurrences” under the Policy. Because the only damages involved here were to B&V’s own work product arising from its subcontractor’s faulty workmanship, the court concluded that the Policy did not provide coverage and granted Aspen’s motion for partial summary judgment. B&V appealed. The Tenth Circuit found that the Policy contained a choice-of-law clause, making the Policy subject to New York law. The Court also found a trend among state supreme courts that supported the contention that construction defects could constitute “occurrences” under CGL policies, and that contractors have coverage for the unexpected damage caused by defective workmanship done by subcontractors. The Tenth Circuit predicted the New York Court of Appeals would decide that the damages here constituted an “occurrence” under the Policy, and as such, vacated the district court’s summary judgment decision and remand for further proceedings. View "Black & Veatch Corp. v. Aspen Insurance" on Justia Law