Articles Posted in Contracts

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Bob Hensley (Buyer) purchased real estate by contract for deed. He sued the insurer of the property's previous owner, State Farm Fire & Casualty, alleging breach of the implied-in-law duty of good faith. Insurer filed a motion for summary judgment and argued buyer was a stranger to the insurance contract and could not bring an action against insurer. The trial court granted the insurer's motion for summary judgment. The judgment was appealed and affirmed by the Court of Civil Appeals. After review, the Oklahoma Supreme Court held the buyer's action in this case for breach of the implied-in-law duty of good faith by an insurer was based upon his status as an insured or third party beneficiary; and buyer's equitable title to property arising from a contract for deed is insufficient by itself to confer upon him the status of an insured. The Court also held the buyer presented facts on the issue whether he was an intended third party beneficiary, and these facts and their inferences were disputed by insurer. Whether buyer was a third party beneficiary and an insured under the policy based upon disputed facts and inferences was a matter for the trier of fact, and summary judgment for insurer was improvidently granted. View "Hensley v. State Farm Fire & Casualty Co." on Justia Law

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Defendant Century Surety Company (Century) issued a Commercial Lines Policy to Plaintiff Siloam Springs Hotel, L.L.C. (Siloam). This policy included general liability insurance coverage of Siloam's hotel in Siloam Springs, Arkansas, for the policy period from November 13, 2012, through November 13, 2013. The insuring agreement of the general liability coverage form provided that Century would pay sums the insured was legally obligated to pay as damages because of bodily injury to which the insurance applies and that Century would have the right and duty to defend the insured against any suit seeking such damages. On January 17, 2013, several guests inside of the hotel allegedly suffered bodily injury due to carbon monoxide poisoning. The carbon monoxide allegedly escaped into the air due to leakage from the hotel's indoor swimming pool heater. Siloam sought coverage under its policy from Century, which Century denied based on an Indoor Air Exclusion at issue. The United States District Court for the Western District of Oklahoma certified a single question of Oklahoma law to the Oklahoma Supreme Court under the Revised Uniform Certification of Questions of Law Act, 20 O.S. 2011 sections 1601-1611: “Does the public policy of the State of Oklahoma prohibit enforcement of the Indoor Air Exclusion, which provides that the insurance afforded by the policy does not apply to ‘Bodily injury', 'property damage', or 'personal and advertising injury' arising out of, caused by, or alleging to be contributed to in any way by any toxic, hazardous, noxious, irritating pathogenic or allergen qualities or characteristics of indoor air regardless of cause?” The Oklahoma Supreme Court answered the question in the negative. View "Siloam Springs Hotel, LLC v. Century Surety Co." on Justia Law

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Prior to filing condemnation proceedings the Appellee Oklahoma Department of Transportation (ODOT) offered Appellants, Cedars Group, L.L.C., A. Sam Coury and Bush, Ltd. d/b/a Deer Creek Texaco, (collectively, Coury Defendants), $562,500.00 for the acquisition of certain real property. The offer was not accepted and ODOT commenced two condemnation proceedings. In one, a commissioners' report estimated the value of just compensation for the property to be $285,000.00. In the second proceeding, the value of just compensation was estimated as $177,500.00. The combined value of the two commissioners' awards totaled $462,500.00. The Coury Defendants hired Gregg Renegar's law firm to provide representation in the condemnation proceedings. Pursuant to the firm’s attorney-client agreement, the Coury Defendants agreed to pay forty percent of the difference between an award and jury verdict, plus any attorney’s fees allowed by the court. A jury trial was held, and the jury awarded just compensation of $525,000 for the two tracts. Defendants applied for attorney fees. The trial court determined Defendants were not entitled to an award of fees because they never actually incurred any. In the end, the trial court awarded appraisal fees but denied reasonable attorney, engineering and expert witness fees, costs and expenses of Defendants. The Supreme Court affirmed in part and reversed in part; the case was remanded for a determination of reasonable attorney fees, engineering and expert witness fees, and costs. View "Oklahoma ex rel. Dept. of Trans. v. Cedars Group, LLC" on Justia Law

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Insured Kourtni Martin suffered serious injuries from an automobile collision in Oklahoma City with Nicholas Gray. At the time of the collision, Insured had UM coverage with Goodville Mutual Casualty Company. The policy was purchased by her parents while they lived in Kansas. She was, however, a listed/rated driver in the policy. Before the collision, Martin's parents notified the Kansas agent that she was moving to Oklahoma to live with her grandmother and that her vehicle would be garaged in Oklahoma. After the collision, the claim was reported to the agent in Kansas who then transmitted the claim to Insurer which was located principally in Pennsylvania. The claim was adjusted out of Pennsylvania. Martin was unable to locate Gray. Her attempts to serve Gray, or his insurer, in Oklahoma and Texas failed. Martin filed this lawsuit against Gray alleging negligence (later adding breach of contract and bad faith against her Insurer). After service by publication, Gray answered asserting a general denial. Martin sought compensation from the Insurer pursuant to her UM policy and negotiations began between Insured and Insurer regarding medical bills and projected future medical bills substantially in excess of $100,000. Insurer offered $27,000 for medical expenses under the "Kansas No Fault Benefits" and $10,000 in UM coverage. The trial court, after reviewing the policy at issue here, applied Kansas law to this case and dismissed Martin's bad faith claim against the Insurer (with prejudice). After review, however, the Oklahoma Supreme Court concluded the trial court erred in applying Kansas law, finding that the actions by Insurer related to the bad-faith claim appear to have occurred primarily in Oklahoma and Pennsylvania: (1) any injury from the alleged bad faith occurred in Oklahoma where Insured is located; (2) the alleged conduct causing injury from bad faith occurred in Oklahoma or Pennsylvania, where the claim was handled; (3) the domicile of Insurer and Insured are Pennsylvania and Oklahoma, respectively, and (4) the place where the relationship between the parties occurred had yet to be determined. However, because the trial court did not apply the "most significant relationship test," there was no evaluation of these factors according to their relative importance. Despite the parties' voluntary settlement of this case, the Supreme Court nevertheless remanded this case for the trial court to make findings with respect to the "most significant relationship test," and then to dismiss. View "Martin v. Gray" on Justia Law

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In 2012, Lacey & Associates, LLC, contracted with Everest Homes, LLC, to purchase a commercial building. In addition, Lacey and Everest executed an escrow agreement for the release of additional funds to Everest if the roof was replaced after title had transferred to Lacey. After title passed to Lacey, Everest entered into a contract with the Williams Group, a contractor, to replace the roof. The Williams Group then hired Andrea Pizano to remove the old roof and HVAC units, which service she performed. In early 2013, Pizano sued alleging the Williams Group did not pay the contractual amount of $11,085, as agreed by the two parties. She filed a mechanic's lien on Lacey's building one day before she filed her petition. The lawsuit sought judgment against the Williams Group in the amount of $11,085, plus interest. The Williams Group never filed an answer. The trial court thereafter entered a default judgment against the Williams Group, awarding Pizano $11,085, an attorney's fee of $2,500.00 and court costs of $461.81. Pizano then sought to foreclose her lien against Lacey and be awarded court costs and attorney fees. She requested that the property be sold to satisfy the judgment. Lacey answered and included a "Cross-motion for Summary Judgment," contending that the new roof leaked so badly that large barrels had to be placed inside the building to catch the water. Therefore, no party was entitled to be paid for the roof. Lacey also asserted that Pizano's motion should be denied because Lacey had no contract with Pizano, and also that the plaintiff failed to file the required pre-lien notice. The trial court granted Pizano's summary judgment motion in part, and denied Lacey's counter-motion for summary judgment. Lacey appealed and Pizano counter-appealed. The Court of Civil Appeals held that Pizano successfully preserved her subcontractor's lien, but found that genuine disputes of fact remained as to the amount owed to Pizano and the enforceability of the lien. The Supreme Court found that the Legislature intended amounts less than $10,000 to be exempt from pre-lien notice. Having provided such an exception, the wording of the applicable statute persuaded the Court that "if a claimant filed a claim of $10,085 without a pre-claim notice, the claim would be enforceable up to $9,999. We do not believe that the claim would be completely unenforceable if it exceeded that legislatively-approved amount by a mere $86." The trial court's order entitling Pizano to a reduced judgment amount of $9,999.00 and an award of attorneys' fees and costs was affirmed. This case was remanded to the trial court to issue a judgment consistent with the law as expressed in the Supreme Court's opinion. View "Pizano v. Lacey & Assoc., LLC" on Justia Law

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Parties to an agreement regarding an area of mutual interest for the purposes of oil and gas exploration sought to determine their respective rights under the agreement. The agreement gave the respondents in this case the right to participate in wells in futuro. The petitioners urged that the provision violated the rule against perpetuities. The district court agreed and granted judgment to the petitioners. The Court of Civil Appeals affirmed in part and reversed in part remanded the matter for further proceedings. The issues this case presented for the Supreme Court's review centered on whether a clause in an agreement giving a limited liability company the right to participate in all future wells on unleased property violated Article II, Section 32 of the Oklahoma Constitution prohibiting perpetuities, and whether a limited liability company was a "life in being." The Court answered the first question in the affirmative and the second question in the negative, finding that the district court did not err in granting a motion to dismiss based on these two questions. View "American Natural Resources, LLC v. Eagle Rock Energy Partners, L.P." on Justia Law

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This legal battle began in 2006 when American Biomedical Group, Inc. (ABGI) and ABG Cattletraq, LLC (Cattletraq) filed a petition in the district court against Techtrol, Inc. and William Ardrey (Defendants); Defendants then filed a counterclaim. ABGI and Cattletraq dismissed their claims and causes of action against Defendants (without prejudice), leaving Defendants' counterclaim pending. Two years later, Defendants filed a petition in the same court against ABGI, Cattletraq, and James Burgess, their sole shareholder and CEO (Plaintiffs). In 2009, Plaintiffs filed another petition alleging that Defendants "wrongfully exercised dominion and control over plaintiffs' personal and intellectual property" and "willfully, deliberately and maliciously converted plaintiffs' personal and intellectual property" for their own benefit. Plaintiffs sought damages based on Defendants' unjust enrichment from the conversion. The district court consolidated the three cases. When the cases were consolidated, Defendants' counterclaim, Defendants' petition alleging abuse of process, and Plaintiffs' petition alleging causes of action for conversion and unjust enrichment remained pending before the district court. In 2014, Defendants moved for summary judgment on Plaintiffs' claim for conversion, asserting that Oklahoma did not recognize a tort for conversion of intangible property, and for unjust enrichment, asserting Plaintiffs' claim was precluded because they had an adequate remedy at law for breach of contract. The question this appeal presented for the Supreme Court's review was whether Defendants supported their motion for summary judgment with undisputed, material facts sufficient to warrant the district court granting partial summary adjudication in their favor. After that review, the Court answered in the negative. "Defendants failed to show that they were entitled to summary judgment. Throughout their arguments before the district court and this Court, Defendants rely on allegations which they have failed to allege as undisputed in their motion for summary judgment, which have no supporting evidentiary materials, and which Plaintiffs contest or which Plaintiffs have not admitted." View "American Biomedical Group, Inc. v. Techtrol, Inc." on Justia Law

Posted in: Business Law, Contracts

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This appeal was one of many concerning natural gas wells operated from 1978 to 1998 in Beckham County, Oklahoma. In the immediately preceding appeal, the Oklahoma Supreme Court affirmed a jury verdict for damages for breach of drilling leases for $3,650,000, but reversed two other jury awards in the amounts of $4,055,000.00 and $6,845,000.00. The trial court denied prejudgment interest and the royalty owners appealed. After review, the Supreme Court held that: (1) review of the issue of prejudgment interest is not precluded by the settled-law-of-the-case doctrine; (2) the Production Revenue Standards Act, 52 O.S. 2011 sec. 570 et seq., was inapplicable to the facts presented; and (3) because the plaintiff's claims were unliquidated, prejudgment interest was not recoverable pursuant to 23 O.S. 2011 sec. 6. View "Krug v. Helmerich & Payne, Inc." on Justia Law

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The Tenth Circuit Court of Appeals certified a question of Oklahoma law to the Oklahoma Supreme Court. In April 2008, plaintiffs Shannon and Eric Walker requested several samples of hardwood flooring from BuildDirect.com Technologies, Inc., a Canadian corporation, through BuildDirect's website. The next month they arranged, over the telephone, to purchase 113 boxes of flooring from BuildDirect. BuildDirect emailed a two-page written Contract entitled "Quotation" to Ms. Walker, who signed and dated the Contract and returned it to BuildDirect via fax. The Contract described the type, amount, and price of the flooring purchased by the Walkers. And, it included 14 bullet points setting forth additional terms. The sixth bullet point stated: "All orders are subject to BuildDirect's 'Terms of Sale.'" The Walkers alleged that after they installed the flooring, they discovered that their home was infested with nonindigenous wood-boring insects. According to the Walkers, the insects severely damaged the home, and caused the home to be subject to quarantine and possible destruction by the United States Department of Agriculture. The question the federal appeals court posed to the Oklahoma Supreme Court was whether a written consumer contract for the sale of goods incorporated by reference a separate document entitled "Terms of Sale" available on the seller's website, when the contract stated that it was "subject to" the seller's "Terms of Sale" but did not specifically reference the website. In response, the Oklahoma Court held that Oklahoma law did not recognize a "vague attempt at incorporation by reference" as demonstrated in this case. Under the Oklahoma law of contracts, parties may incorporate by reference separate writings, or portions thereof, together into one agreement where: (1) the underlying contract makes clear reference to the extrinsic document; (2) the identity and location of the extrinsic document may be ascertained beyond doubt; and (3) the parties to the agreement had knowledge of and assented to its incorporation. View "Walker v. BuildDirect.com Technologies, Inc." on Justia Law

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The City of Oklahoma City charged Christopher Tucker with municipal misdemeanor offenses of interfering with official process, obstructing an officer, and failing to obey lawful commands of an officer. Tucker signed an agreement for the Cochran Firm-Criminal Defense, Birmingham, L.L.C. to provide him with legal representation for his scheduled trial in October of 2010. Tucker was found guilty of a municipal charge. Tucker alleged that the firm's Case Manager informed him that the law firm would engage in a four to five-day trial to defend him, the law firm would provide an experienced trial lawyer with twenty to thirty years of experience to represent him at trial, and that the law firm "had attorneys who were licensed to practice in Oklahoma and who would in fact defend the Plaintiff in trial . . . ." He alleged that these statements were untrue and were made to fraudulently induce him to enter into an agreement for legal services and to pay "outrageous fees." From Tucker's complaint, he alleged: (1) the firm required a non-refundable retainer of $13,690.00 for legal representation for the trial; (2) after he signed the agreement, the Cochran Firm informed him that a specific attorney would represent him but that another showed up at trial; (3) the morning of his trial was the first time he met the attorney who actually represented him at his trial; and (4) the firm failed to properly represent him. After filing an amended motion to dismiss, the trial court determined that the forum-selection clause in the retainer agreement should be judicially enforced. The trial court also determined that enforcement of a forum-selection clause would not be unfair or unreasonable under the circumstances. The trial court dismissed the action for improper venue. Tucker appealed, and the Court of Civil Appeals concluded that the forum-selection clause should not have been enforced, reversed the trial court's order dismissing his claims, and remanded the matter for further proceedings in the District Court. The law firm petitioned for certiorari. After review, the Supreme Court concluded: (1) when a parties' agreement has an interstate forum-selection clause and a party seeks its judicial enforcement in an Oklahoma District Court by seeking dismissal of the Oklahoma proceeding, then the procedure for its enforcement is by a motion pursuant to 12 O.S. section 2012(B)(6), or Rule 13 motion for summary judgment; and (2) an interstate forum-selection clause is separable from the contract in which it appears, and its validity like any other provision in a contract is subject to the requirements of a valid contract. The appellate court's decision was vacated and the case remanded for further proceedings. View "Tucker v. Cochran Firm-Criminal Defense Birmingham, LLC" on Justia Law

Posted in: Contracts