Articles Posted in Contracts

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The Supreme Court affirmed in part and reversed in part the judgment of the circuit court in this action, holding that the circuit court properly denied a motion to dismiss based on the doctrine of forum non conveniens but erred in dismissing the case based on forum selection clauses. RMBS Recovery Holdings I, LLC and others (collectively, Funds) filed suit against HSBC Bank USA, National Association (HSBC) asserting that HSBC served as an indenture trustee of three trusts in which the Funds had invested and that the trusts were filled with defective mortgage loans. Based on HSBC's failure to act to have sponsors of the trusts repurchase the deficient loans or to file suit against the sponsors, the Funds claimed breach of contract, breach of fiduciary duty, and other causes of action. The circuit court denied HSBC's motion to dismiss for forum non conveniens but granted HSBC's motion to dismiss based upon forum selection clauses in confidentiality and indemnification agreements between the parties. The Supreme Court reversed in part, holding that HSBC's delay in asserting the forum selection clauses, while actively continuing litigation, resulted in a waiver of the right to rely upon that contractual provision. View "RMBS Recovery Holdings I, LLC v. HSBC Bank USA, N.A." on Justia Law

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The Supreme Court accepted certification of a question of law in a proceeding pending before the United States District Court for the District of Connecticut and answered that Virginia law recognizes that the collateral source rule can apply to breach of contract cases. Specifically at issue was whether Virginia law applies the collateral source rule to a breach of contract action where the plaintiff has been reimbursed by an insurer for the full amount it seeks in damages from the defendant. The Supreme Court answered that the same rationales supporting the recognition of the collateral source rule in tort cases also supports the rule's application in certain breach of contract actions. The Court further explained that whether the rule applies to a given case requires a case by case analysis as to whether the parties' expectations, in light of those rationales, support the rule's application. View "Dominion Resources, Inc. v. Alstom Power, Inc." on Justia Law

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The Supreme Court reversed the decision of the circuit court denying Defendant’s motion to compel arbitration, holding that the circuit court erred in denying the motion for arbitration because the parties’ disagreements were controversies arising out of or relating to their contract, and therefore, pursuant to the contract, an arbitrator must resolve them. Plaintiffs sued Defendant, alleging that the home Defendant constructed for Plaintiffs suffered from defects that caused damage to the home. Defendant filed a motion to compel arbitration under the arbitration clause of the parties’ contract. The circuit court denied the motion, concluding that the arbitration clause was unenforceable. The supreme Court reversed, holding that the parties’ disagreement over the interpretation of the arbitration clause, as well as the application of the doctrine of impossibility to the arbitration clause, were “controvers[ies] arising out of or relating to the contract,” and therefore, the circuit court erred in refusing to compel arbitration. View "Brush Arbor Home Construction, LLC v. Alexander" on Justia Law

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The Supreme Court affirmed the decision of the circuit court dismissing on demurrer Sweely Holdings, LLC’s suit against SunTrust Bank alleging breach of contract, fraud in the inducement, and constructive fraud, holding that an agreement between the parties defeated Sweely’s breach of contract claim and that Sweely failed to state a claim for fraud. SunTrust loaned Sweely $18.3 million and later sought to recover collateral when Sweely defaulted and threatened bankruptcy. SunTrust and Sweely negotiated an agreement that provided Sweely with another opportunity to pay its debt, but when Sweely failed to do so, SunTrust took action against the collateral. Thereafter, Sweely filed this lawsuit. The circuit court sustained SunTrust’s demurrer to the complaint and dismissed all counts with prejudice. The Supreme Court affirmed, holding that the circuit court did not err in (1) interpreting the agreement to preclude Sweely’s breach of contract claim, and (2) ruling that the fraud claims failed because Sweely had not alleged any justifiable reliance on SunTrust’s alleged misrepresentation. View "Sweely Holdings, LLC v. SunTrust Bank" on Justia Law

Posted in: Contracts

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The Supreme Court reversed the circuit court’s judgment against Defendants as to Plaintiff’s claims for tortious interference and statutory business conspiracy, holding that the circuit court erred in ruling that Defendants were liable for tortiously interfering with their own contract and in therefore finding that their tortious interference could serve as the predicate unlawful act for statutory business conspiracy. Plaintiff, Read Properties, LLC, filed a complaint against Defendants, Francis Hospitality, Inc. and Delta Educational Systems, Inc., alleging breach of contract, intentional interference with contract, and statutory business conspiracy. The circuit court found in favor of Plaintiff on all claims. The Supreme Court affirmed as to the breach of contract claim and otherwise reversed, holding (1) Defendants could not tortiously interfere with their own contract; and (2) because Plaintiff’s underlying claims of tortious interference with a contract against Defendants failed, its claims of statutory business conspiracy must also fail. View "Francis Hospitality, Inc. v. Read Properties, LLC" on Justia Law

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The Supreme Court affirmed the decision of the circuit court dismissing Plaintiff’s suit alleging breach of contract claims against Wells Fargo Bank, N.A. pursuant to the applicable statute of limitations, holding that because Plaintiff did not file his suit within five years of the date of accrual, the statute of limitations barred his claims. After a foreclosure sale of the property at issue, Plaintiff filed this complaint alleging that Wells Fargo breached a mortgage loan agreement by failing to give him a contractually required opportunity to cure his default and by improperly accelerating the balance due after his default. The circuit court concluded that the debt acceleration had triggered the accrual of the breach of contract claims and that this breach had occurred more than five years before Plaintiff filed suit. The Supreme Court affirmed, holding that Plaintiff’s breach of contract claims were barred by the statute of limitations. View "Kerns v. Wells Fargo Bank, N.A." on Justia Law

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At issue was whether the circuit court abused its discretion when it dismissed a complaint with prejudice upon sustaining a plea in bar for failure to comply with a contractual condition precedent before filing suit. Plaintiff filed a complaint against Defendant alleging breach of contract. Plaintiff had filed a similar breach of contract action against Defendant, which he nonsuited. In the current action, Plaintiff alleged that he entered into an employment agreement with Defendant that Defendant later breached. Defendant filed a plea in bar to the complaint alleging that a written request to mediate was a condition precedent to initiating legal action. The circuit court found that the mediation provision was a condition precedent to filing suit, that Plaintiff did not satisfy this condition, and that the appropriate remedy was dismissal of the complaint with prejudice. The Supreme Court affirmed, holding that, under the circumstances of this case, the circuit court did not abuse its discretion in dismissing the complaint due to Plaintiff’s failure to comply with a mandatory condition precedent to filing suit. View "Primov v. Serco, Inc." on Justia Law

Posted in: Contracts

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The Supreme Court affirmed the judgment of the trial court entering an order enforcing a merger agreement between two churches, holding that the trial court had subject matter jurisdiction to adjudicate this dispute. The two churches in this case entered into a merger agreement memorializing a merger between the churches. When one of the churches (Defendant) decided it wished to withdraw from the “proposed” merger, the other church (Plaintiff), instituted this action. The jury returned a special verdict in favor of Plaintiff, finding that the parties had reached a merger agreement and that Plaintiff had performed its obligations under the merger agreement. The trial court entered a final order in accord with the merger agreement and the jury’s verdict. Defendant sought to vacate the trial court’s order, arguing that the trial court lacked subject matter jurisdiction to enter it. The Supreme Court disagreed, holding that the trial court had subject matter jurisdiction either to adjudicate a breach of contract claim or to issue a declaratory judgment on the merger contract, and a pending bankruptcy did not foreclose the trial court’s adjudication of the merger contract. View "Pure Presbyterian Church v. Grace of God Presbyterian Church" on Justia Law

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The Supreme Court vacated in part and reversed in part the decision of the circuit court reducing the amount due on a deed of trust note (note) and entering a confessed judgment for the reduced amount without the agreement of Catjen, LLC. Hunter Mill West, L.C. (HMW) executed the note payable to the predecessor in interest to Catjen. HMW failed to repay the note in full by the date of maturity and filed for Chapter 11 bankruptcy protection. Catjen’s predecessor filed a claim for the amount it asserted was due on the note. The bankruptcy court sustained HMW’s objections to the claims and accepted HMW’s calculations. Catjen subsequently foreclosed on the property that was used as collateral for the note. The attorney in fact then confessed judgment against HMW in favor of Catjen. Citing Va. Code 8.01-433, HMW moved to set aside the confessed judgment. The trial court modified the confessed judgment, awarding Catjen the amount based on HMW’s calculations despite Catjen not agreeing to the amount due. The trial court denied the motion. The Supreme Court vacated the confessed judgment and reversed the trial court’s judgment on the amount due, holding that the trial court erred by failing to place this case on the docket for a trial on the merits. View "Catjen, LLC v. Hunter Mill West, L.C." on Justia Law

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The Supreme Court affirmed the the judgment of the circuit court setting aside the jury’s verdict awarding CGI Federal Inc. $12 million in damages for its fraudulent inducement and breach of contract claims against FCi Federal, Inc., holding that the circuit court did not commit reversible error in its judgment. This lawsuit related to a teaming agreement entered between the parties to obtain a federal government contract. After the jury rendered its verdict, the circuit court set it aside on the grounds that the teaming agreement did not obligate FCi to extend a subcontract to CGI and that CGI did not prove fraud damages. The court further granted FCi’s motion for summary judgment on CGI’s alternative claim for unjust enrichment. The Supreme Court affirmed, holding that the circuit court did not err in (1) overturning the jury’s verdict on the breach of contract claim; (2) vacating the jury’s award of damages for the fraudulent inducement claim because CGI cannot recover any lost profits on this claim; and (3) entering summary judgment for FCi on the unjust enrichment claim because CGI may not recover on a quasi-contractual claim that is otherwise precluded by a contract which CGI has affirmed. View "CGI Federal Inc. v. FCi Federal, Inc." on Justia Law

Posted in: Contracts