Justia U.S. 2nd Circuit Court of Appeals Opinion SummariesArticles Posted in Contracts
Lehman XS Trust v. Greenpoint Mortgage Funding, Inc.
US Bank appealed the district court's dismissal of its second amended consolidated complaint as untimely. The Second Circuit affirmed and held that ACE Secs. Corp. v. DB Structured Prods., Inc., 25 N.Y.3d 581 (2015), and Deutsche Bank Nat'l Tr. Co. v. Quicken Loans Inc., 810 F.3d 861, 868 n.8 (2d Cir. 2015), governed U.S. Bank's contractual claims in this case. The court held that the district court properly granted summary judgment to GreenPoint where the first two causes of action for breach of contract were untimely under settled New York law, because they were filed over six years after the statute of limitations began running. The court also held that the district court properly dismissed the third cause of action for indemnification under section 9 of the Flow Mortgage Loan Purchase and Warranties Agreement, because U.S. Bank's claim was in reality a repackaged version of its breach of contract claims. Finally, the court held that the fourth cause of action for breach of the indemnification agreements did relate back to the original filing for claims based on any of the Trusts, and was therefore untimely asserted. View "Lehman XS Trust v. Greenpoint Mortgage Funding, Inc." on Justia Law
Richards v. Direct Energy Servs., LLC
The Second Circuit affirmed the district court's judgment in an action against Direct Energy, alleging breach of contract, deceptive and unfair trade practices, and unjust enrichment. Plaintiff had entered into a consumer electricity contract with Direct Energy which initially guaranteed a fixed electricity rate. Consistent with the terms of the contract, the fixed‐rate plan was converted into a variable rate plan after the first twelve months. The court affirmed the district court's grant of summary judgment in favor of Direct Energy and held that, by the contract's plain terms, Direct Energy promised that the variable rate would be set in its discretion and that it would reflect "business and market conditions," a phrase which encompasses more than just procurement costs. Because plaintiff's claims under the Connecticut Unfair Trade Practices Act were entirely duplicative of his contract claim, they also failed. Finally, the court affirmed the district court's dismissal of plaintiff's unjust enrichment and Massachusetts unfair trade practices claims. View "Richards v. Direct Energy Servs., LLC" on Justia Law
Starke v. SquareTrade, Inc.
The Second Circuit affirmed the district court's denial of SquareTrade's motion to compel arbitration in a putative class action seeking to hold SquareTrade accountable for alleged violations of consumer protection laws. The court agreed with the district court and held that the arbitration provision did not become part of the contract because plaintiff did not have reasonable notice of and manifest his assent to it. In this case, the consumer was presented with several documents including the Pre-Sale T&C, the body of the subsequent email, and the Post-Sale T&C, none of them specifically identified as the "Service Contract" governing the purchase, and all containing different sets of terms. Furthermore, the prior course of dealing between the parties did not convince the court that plaintiff was on inquiry notice of the arbitration provision. View "Starke v. SquareTrade, Inc." on Justia Law
M.E.S., Inc. v. Safeco Insurance Co. of America
The Second Circuit affirmed the district court's summary judgment dismissal of all claims in the Second Amended Complaint against defendants in an action stemming from construction projects with the U.S. Army Corps of Engineers. The court held that MES's claims failed to articulate any support for its accusations that Safeco breached its contractual obligations or engaged in bad faith or tortious conduct. The court noted that the claim that Safeco acted inappropriately by attending the cure meetings was particularly frivolous. In this case, MES failed to identify any good faith basis, in law or on the basis of the agreements at issue, for its assertion that Safeco had no right to take steps to meet its obligations under the surety bonds. The court sua sponte awarded Safeco double costs. View "M.E.S., Inc. v. Safeco Insurance Co. of America" on Justia Law
Sleepy’s LLC v. Select Comfort Wholesale Corp.
Sleepyʹs purchased beds from the Select Comfort for resale in Sleepyʹs stores and suspected that Select Comfort was disparaging Sleepyʹs stores and the particular line of Select Comfort beds it sold. Sleepy’s sued, alleging slander per se, breach of contract, unfair competition, breach of the implied covenant of good faith and fair dealing, and the Lanham Act. After a bench trial, the district court dismissed. On remand, a different district judge entered a judgment for Select Comfort on the merits and concluded that attorneyʹs fees were warranted because the case was ʺexceptionalʺ under the Lanham Act. The Second Circuit vacated the dismissal of Sleepyʹs slander claims. That dismissal had been on the ground that the publication element cannot be met under New York law when the statement in question is only made to the plaintiffʹs representatives--”secret shoppers” sent into Select Comfort stores by Sleepy’s. The Second Circuit remanded for a determination of whether the plaintiff consented to the slanderous statements by engaging the secret shoppers. The district court was directed to apply the “Octane Fitness” standard for evaluating whether a Lanham Act claim is ʺexceptional.ʺ The district court erred by not sufficiently explaining or justifying the amount of the defendantsʹ attorneyʹs fees. View "Sleepy's LLC v. Select Comfort Wholesale Corp." on Justia Law
Ronnie Van Zant, Inc. v. Cleopatra Records, Inc.
A 1988 consent order settled a suit brought by plaintiff against past and then present members of the rock band known as Lynyrd Skynyrd, seeking to clarify each party's rights with respect to the use of the name "Lynyrd Skynyrd" and their rights to make films about the band and their own lives. In this case, the Second Circuit vacated the district court's judgment and vacated its permanent injunction prohibiting distribution of a film about the band and other related activities, holding that the terms of the consent order were inconsistent, or at lease insufficiently precise, to support an injunction. The court reasoned that, even though the injunction has allegedly been imposed as a result of private contract rather than government censorship, it nonetheless restrained the viewing of an expressive work prior to its public availability, and courts should always be hesitant to approve such an injunction. The court held that the injunction restricted the actions of an entity that was not a party to the contract that was alleged to be the source of the restriction; Cleopatra in this case. Furthermore, the film told a story about the history of the band, as well as the experience of Artimus Pyle with the band. The court held that provisions of a consent decree that both prohibit a movie about such a history and also permit a movie about such an experience were sufficiently inconsistent, or at least insufficiently specific, to support an injunction. View "Ronnie Van Zant, Inc. v. Cleopatra Records, Inc." on Justia Law
Paysys International, Inc. v. Atos IT Servs. Ltd.
Paysys Atos non‐exclusive rights to use Paysys software and to grant licenses for that software within a specified territory. The agreement provided that in litigation with respect to a territorial violation, the prevailing party would be entitled to an award of its reasonable attorneys’ fees. Paysys sued Atos for breach, alleging multiple violations of those territorial restrictions. Three years later, 12 of Paysys’s 13 claims had been dismissed. Paysys sought a dismissal with prejudice of its remaining breach of contract claim, offering to provide Atos a perpetual, global software license. Atos asserted that it would consent if the court recognized Atos as the “prevailing party.” Paysys argued that if such a condition were imposed, it should be entitled to withdraw its motion. The district court granted Paysys’s motion on the condition that it pay Atos’s attorney’s fees, finding that Atos had succeeded in getting most of Paysys’s claims dismissed. The court held that Paysys was not entitled to withdraw its motion because the fee‐shifting obligation was a contractual one. The Second Circuit vacated. Paysys was entitled to an opportunity to withdraw its motion rather than acquiesce to the court’s terms. When a plaintiff files a motion for dismissal under Rule 41(a)(2), it takes on the risk is that its motion will be denied, not that the motion will carry additional consequences to which the plaintiff does not consent. View "Paysys International, Inc. v. Atos IT Servs. Ltd." on Justia Law
Conte v. Emmons
The Second Circuit reversed the district court's denial of Defendant Emmons and Wallace's post-trial motion for judgment as a matter of law, and the corresponding entry of judgment following a jury verdict in favor of plaintiff on his claims against defendants for tortious interference with contract under New York law. The court held that there was insufficient evidence for a reasonable juror to have found at least two elements of plaintiffs claims where the jury's intent finding that defendants purposefully targeted particular contracts was wholly without support, and there was no evidence that anyone stopped performing under a specific contract because of anything said or done by defendants. Accordingly, the court remanded with directions to enter judgment for defendants. View "Conte v. Emmons" on Justia Law
Posted in: Contracts
ING Bank N.V. v. M/V TEMARA
A maritime lien may be asserted by an entity when that entity contracts with a vessel's owner, charterer, or other statutorily-authorized person for the provision of necessaries and the necessaries are supplied pursuant to that agreement even if by another party. This appeal arose from competing maritime lien claims arising from the delivery of fuel to a vessel between the assignee of a maritime fuel contract supplier and the physical supplier. The district court denied both maritime liens sua sponte and entered summary judgment for the vessel. At issue was which parties were entitled to the maritime lien under the Commercial Instruments and Maritime Liens Act (CIMLA), 46 U.S.C. 31301 et seq. The Second Circuit held that an entity such as O.W. Denmark, which agreed to supply necessaries and then contracts with one or more intermediaries to supply them, can itself be deemed to have "provided" necessaries under CIMLA. Therefore, ING, as O.W. Denmark's purported assignee, was entitled to assert a maritime lien against the vessel because O.W. Denmark could assert such a lien. The court also held that an unsecured entity such as CEPSA was not entitled to a maritime lien for the bunkers it supplied, or in the alternative, a recovery based upon equitable principles. Finally, the district court erred when it sua sponte granted summary judgment for the vessel. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "ING Bank N.V. v. M/V TEMARA" on Justia Law
Global Reinsurance Corporation of America v. Century Indemnity Co.
The Second Circuit held that the district court erred in its interpretation of the contracts under the court's prior precedent and therefore, the court vacated the original judgment and remanded to the district court for reconsideration of the contracts employing standard principles of contract interpretation. The appeal stemmed from a dispute between Century and Global over the extent to which Global was obligated to reinsure Century pursuant to certain reinsurance certificates. The court held that the district court's determination that the contract was unambiguous was premised on an erroneous interpretation of New York state law. The court explained that the district court should construe each reinsurance policy solely in light of its language and, to the extent helpful, specific context. View "Global Reinsurance Corporation of America v. Century Indemnity Co." on Justia Law