Articles Posted in Contracts

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At issue was whether a former employee’s (Employee) delay in returning his employer’s (Employer) property excused Employer from paying a commission otherwise due to Employee. The district court concluded that a return-of-property clause in the parties’ employment contract was a condition precedent to Employer’s contractual obligation to pay the residual commission, and therefore, Employer was excused from its obligation to pay that commission. The court of appeals applied Restatement (Second) of Contracts 229 and reversed, determining that a loss of the commission would cause a “disproportionate forfeiture." Therefore, the court held that Employee’s failure immediately to return Employer’s property was excused as a matter of law. The Supreme Court affirmed in part and reversed in part, holding (1) because section 229 reflects this Court’s reluctance to enforce forfeitures, the court of appeals properly looked to it for guidance in resolving this case; but (2) on this record, the materiality and proportionality analysis contemplated by section 229 should not be resolved as a matter of law on appeal, and therefore, a remand is necessary. View "Capistrant v. Lifetouch National School Studios, Inc." on Justia Law

Posted in: Contracts

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In a complaint seeking an injunction for breach of contract, the district court was not required to find irreparable harm based solely on the language of a private agreement and did not abuse its discretion by declining to grant an injunction in light of the absence of evidence of irreparable harm. St. Jude Medical sued Heath Carter and Boston Scientific Corporation after Carter left his job at St. Jude to work for Boston Scientific, alleging that Carter had violated his employment agreement with St. Jude. The agreement stated that if Carter breached its terms, St. Judge would suffer irreparable injury, and St. Jude would be entitled to an injunction against Carter and his new employer because St. Jude’s remedy at law for damages would be inadequate. The district court concluded that St. Jude was not entitled to an injunction because, although Carter breached the agreement, St. Jude failed to demonstrate that it would suffer irreparable harm from that breach. The court of appeals reversed, ruling that the district court erred by failing to consider the terms of the agreement when deciding whether to enjoin Carter. The Supreme Court reversed, holding that the district court was not required to exercise its equitable authority simply by reason of the contract language. View "St. Jude Medical, Inc. v. Carter" on Justia Law

Posted in: Contracts

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The Supreme Court has applied the rule of contra proferentem - “a doctrine that ambiguities in a contract are to be construed unfavorably against the drafter” - only after an attempt is made to determine the parties’ intent behind an ambiguous term, and only if a preponderance of the evidence does not prove the parties’ intent should the jury construe ambiguous terms against the drafter. In this breach of contract case, the district court instructed the jury to determine whether two contracts were ambiguous and, if so, to both determine the intent of the parties and construe ambiguous terms against the drafter. The court of appeals reversed and remanded for a new trial, determining that the canon of contra proferentem was to be applied only after the evidence failed to reveal the mutual intent of the parties. The Supreme Court held that the jury instruction in this case materially misstated the law twice by directing the jury to (1) determine whether the contracts at issue were ambiguous, rather than instructing the jury that the contracts were ambiguous; and (2) both determine the intent of the parties and construe ambiguous terms against the drafter without specifying which task must be completed first. View "Staffing Specifix, Inc. v. TempWorks Management Services, Inc." on Justia Law

Posted in: Contracts

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At issue was the proper method for calculating the quantum meruit value of an attorney’s services when a client terminates the contingent-fee agreement before a matter concludes. Respondent retained Appellant-law firm under a contingent-fee agreement to assist with asbestos litigation. Two months before settling a claim upon which Appellant had worked for about ten years, Respondent discharged Appellant. The district court dismissed Appellant’s attempt to recover a portion of the settlement funds, concluding that Appellant failed to prove the value of the services that it had provided. The court of appeals reversed, holding that the district court applied the incorrect test for determining quantum meruit. The Supreme Court affirmed as modified, holding (1) district courts should use eight factors to determine the quantum meruit value of a discharged contingent-fee attorney’s services; and (2) a remand was necessary so that the district court may consider the contingent-fee argument between the parties, in addition to the other relevant factors identified herein. View "Faricy Law Firm, P.A. v. API, Inc. Asbestos Settlement Trust" on Justia Law

Posted in: Contracts

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The Supreme Court reversed the judgment of the court of appeals affirming the decision of the district court concluding that a grain-handling contract between the parties in this case that was to “continue indefinitely” was perpetual in duration, not indefinite, and therefore not terminable at will. Chippewa Valley Ethanol Company, LLLP (CVEC) sought to end its contract with Glacial Plains Cooperative on the ground that it was a contract of indefinite duration, terminable at will be either party. The district court ruled in favor of Glacial Plains, finding that CVEC had wrongfully terminated the grain-handling contract. The court of appeals affirmed, ruling that the intent of the parties should prevail over the general rule that contract without definite duration are terminable at will upon reasonable notice. The Supreme Court reversed and remanded for further proceedings, holding (1) the parties’ contract was one of indefinite duration and was therefore terminable at will by either party upon reasonable notice after a reasonable time as passed; and (2) it is for the district court to weigh the evidence and apply the law to determine whether a reasonable time has passed such that the contract may be terminated at will with reasonable notice. View "Glacial Plains Cooperative v. Chippewa Valley Ethanol Co." on Justia Law

Posted in: Contracts

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The common law governs provisions of an antenuptial agreement that do not fall within the safe harbor of Minn. Stat. 519.11(1), and the multifactor Kinney test is the common-law test applicable to antenuptial agreements. See In re Estate of Kinney, 733 N.W.2d 118 (Minn. 2007). Wife petitioned for dissolution and moved to set aside the antenuptial agreement she signed just before her marriage. The district court invalidated the agreement, concluding that it was procedurally unfair because Wife did not have an adequate opportunity to meet with legal counsel of her own choice and that it was substantively unfair and the time it was made and executed. The court of appeals affirmed on different grounds, concluding (1) to the extent the district court relied on Minn. Stat. 519.11 for evaluating procedural fairness, the court erred; (2) agreements that purport to distribute marital property, such as the agreement in this case, must be evaluated under the common law; and (3) the agreement was procedurally unfair. The Supreme Court affirmed after applying the Kinney factors to the entire agreement, holding that this agreement did not satisfy the common law test for procedurally fairness, and therefore, the agreement was invalid and unenforceable. View "Kremer v. Kremer" on Justia Law

Posted in: Contracts, Family Law

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The clear-and-convincing standard applies when determining the existence of an oral contract for the conveyance of farmland when only money damages are sought for the claimed breach of that contract. Plaintiff argued that the Estates of his parents were obligated under an oral contract for the sale of land to convey farm property to him. After a second trial, the jury found by a preponderance of the evidence that an oral contract existed between Plaintiff and his parents and awarded Plaintiff damages for the breach of that contract. The Estates moved for judgment as a matter of law and a new trial, arguing that the district court instructed the jury on the incorrect standard of proof. The district court denied the motion. The court of appeals affirmed. The Supreme Court reversed and remanded the matter to the district court for a new trial, holding (1) the clear and convincing evidence is required to prove that an oral contract for the sale of land existed, regardless of whether the party seeks damages or specific performance; and (2) therefore, the district abused its discretion in denying Plaintiff’s motion for a new trial. View "Christie v. Estate of Dilman Christie" on Justia Law

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Claims brought against the manufacturer of a component part of an improvement to real property fell under an exception to the ten-year statute of repose because the improvement was “machinery installed upon real property.” See Minn. Stat. 541.051. Appellant manufactured the motor in a home’s heat-recovery ventilator. Sixteen years after the ventilator was installed, a fire started in the ventilator, causing property damage to the home. Respondent, the insurer of the homeowners, brought this subrogation action against Appellant. The district court granted summary judgment for Appellant, concluding that the ten-year statute of response for improvements to real property barred every claim except the claim alleging a post-sale duty to warn, which claim it dismissed upon summary judgment. The court of appeals reversed. The Supreme Court affirmed in part and reversed and remanded in part, holding (1) under the plain language of section 541.051, the ventilator containing Appellant’s motor was “machinery installed upon real property,” and therefore, the court of appeals properly reinstated Respondent’s breach of warranty, negligence, and product liability claims; and (2) Appellant did not have a duty to warn consumers of its product’s alleged defect after the time of sale. View "Great Northern Insurance Co. v. Honeywell International, Inc." on Justia Law

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Claims brought against the manufacturer of a component part of an improvement to real property fell under an exception to the ten-year statute of repose because the improvement was “machinery installed upon real property.” See Minn. Stat. 541.051. Appellant manufactured the motor in a home’s heat-recovery ventilator. Sixteen years after the ventilator was installed, a fire started in the ventilator, causing property damage to the home. Respondent, the insurer of the homeowners, brought this subrogation action against Appellant. The district court granted summary judgment for Appellant, concluding that the ten-year statute of response for improvements to real property barred every claim except the claim alleging a post-sale duty to warn, which claim it dismissed upon summary judgment. The court of appeals reversed. The Supreme Court affirmed in part and reversed and remanded in part, holding (1) under the plain language of section 541.051, the ventilator containing Appellant’s motor was “machinery installed upon real property,” and therefore, the court of appeals properly reinstated Respondent’s breach of warranty, negligence, and product liability claims; and (2) Appellant did not have a duty to warn consumers of its product’s alleged defect after the time of sale. View "Great Northern Insurance Co. v. Honeywell International, Inc." on Justia Law

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At issue was whether an indemnity clause in a rental agreement required the renter to indemnify the rental company for the rental company’s negligence. The Tower Tap & Restaurant entered into an agreement to rent folding picnic tables from London Road Rental Center, Inc. for an event. Plaintiff injured his hip at Tower Tap’s event after one of the rented tables collapsed on him. Plaintiff sued Tower Tap and London Road. London Road filed a cross-claim against Tower Tap, seeking contractual indemnity based on the indemnity clause in the rental agreement. The district court granted summary judgment to London Road, concluding that the clause unequivocally covered liability for London Road’s own negligence. The court of appeals affirmed. The Supreme Court reversed, holding that the indemnity clause did not include express language that clearly and unequivocally showed the parties’ intent to transfer such liability to Tower Tap. View "Dewitt v. London Road Rental Center, Inc." on Justia Law