ContractsProf Blog

Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

A Member of the Law Professor Blogs Network

Wednesday, May 16, 2012

New in Print

Pile of Books
George A. Bermann, The Supreme Court Trilogy and Its Impact on U.S. Arbitration Law, 22 Am. Rev. Int'l Arb. 551 (2011)

John J. Chung, Customary International Law As Explained by Status Instead of Contract, 37 N.C. J. Int'l L. & Com. Reg. 609 (2012) 

Claudia DiMarzo, Medical Malpractice: the Italian Experience. 87 Chi.-Kent. L. Rev. 53 (2012)

William V. III Dorsaneo and C. Paul Rogers III, The Flawed Nexus between Contract Law and the Rules of Procedure: Why Rules 8 and 9 Must Be Changed, 31 Rev. Litig. 233 (2012).

Zev J. Eigen and David Sherwyn, A Moral/Contractual Approach to Labor Law Reform, 63 Hastings L.J. 695 (2012)

Gregory Klass, To Perform or Pay Damages. 98 Va. L. Rev. 143 (2012)

Florencia Marotta-Wurgler, Some Realities of Online Contracting, 19 Sup. Ct. Econ. Rev. 11 (2011)

Scott R. Peppet, Freedom of Contract in an Augmented Reality: the Case of Consumer Contracts. 59 UCLA L. Rev. 676 (2012)

Alan Scott Rau, Arbitral Power and the Limits of Contract: the New Trilogy, 22 Am. Rev. Int'l Arb. 435-550 (2011)

Daniel Schwarcz, Reevaluating Standardized Insurance Policies. 78 U. Chi. L. Rev. 1263 (2011)

Seana Valentine Shiffrin, Must I Mean What You Think I Should Have Said? 98 Va. L. Rev. 159 (2012)

Thomas J. Stipanowich, The Third Arbitration Trilogy: Stolt-Nielsen, Rent-A-Center, Concepcion and the Future of American Arbitration, 22 Am. Rev. Int'l Arb. 323 (2011)

[JT]

May 16, 2012 in Recent Scholarship | Permalink | TrackBack (0)

Tuesday, May 15, 2012

Eleventh Circuit Affirms Dismissal of Suit Seeking to Force Modification of Home Loan

11thCircuitSealOn April 19th, the Eleventh Circuit Court of Appeals decided Miller v. Chase Home Finance, LLC, a case in which a residential mortgage borrower sought to sue a lender for refusing to agree to a permanent modification of the terms of his home loan. 

The lender, Chase, had agreed to a temporary loan modification in 2009, but in 2010, Chase informed Mr. Miller that the modification would not be extended.  Mr. Miller brought suit under the federal Home Affordable Modification Program (HAMP) alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and promissory estoppel.  The District Court granted Chase's motion to dismiss finding that HAMP provides no private right of action and that Mr. Miller would have no claim even if it did. 

The Eleventh Circuit agreed with the District Court in full.  It noted the standards for a court's recognition for an implied private right of action and found that they were not met with respect to HAMP.  In addition, it agreed with the District Court that Mr. Miller had no claim against Chase indpendent of obligations arising from HAMP.  He had effectively abandaned his breach of contract claim, and Georgia law does not recognize an independent cause of action for breach of the duty of good faith and fair dealing.  Mr. Miller's promissory estoppel claim was doomed because he apparently never alleged that Chase had promised that it would agree to modify his loan permanently.

[JT]

May 15, 2012 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Weekly Top Tens from the Social Science Research Network

SSRNRECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 

March 16, 2012 to May 15, 2012

RankDownloadsPaper Title
1 392 The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice 
Michael S. FinkeThomas Patrick Langdon
Texas Tech University, Unaffiliated Authors - affiliation not provided to SSRN
2 188 The Perils of Social Reading 
Neil M. Richards
Washington University in Saint Louis - School of Law,
3 168 Zotero - A Manual for Electronic Legal Referencing 
John PrebbleJulia Caldwell
Victoria University of Wellington, Victoria University of Wellington
4 152 Does the Constitution Protect Economic Liberty? 
Randy E. Barnett
Georgetown University Law Center
5 117 Transaction Simplicity 
Stephen J. Lubben
Seton Hall University - School of Law
6 110 The Common European Sales Law (CESL) Beyond Party Choice 
Jan M. Smits
Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI)
7 97 Forcing Forgetfulness: Data Privacy, Free Speech, and the 'Right to Be Forgotten' 
Robert Kirk Walker
University of California - UC Hastings College of the Law
8 97 'Offer to Sell' as a Policy Tool 
Lucas Osborn
Campbell University Law School
9 84 Arbitration of Trust Disputes: Two Bodies of Law Collide 
S.I. Strong
University of Missouri School of Law
10 83 The Private Equity Contract 
Steven M. Davidoff
Ohio State University (OSU) - Michael E. Moritz College of Law

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  

March 16, 2012 to May 15, 2012

RankDownloadsPaper Title
1 188 The Perils of Social Reading 
Neil M. Richards
Washington University in Saint Louis - School of Law
2 152 Does the Constitution Protect Economic Liberty? 
Randy E. Barnett
Georgetown University Law Center
3 147 The Questionable Basis of the Common European Sales Law: The Role of an Optional Instrument in Jurisdictional Competition 
Eric A. Posner
University of Chicago - Law School
4 134 Modern Chinese Real Estate Law: Property Development in an Evolving Legal System (Chapter 1) 
Gregory M. Stein
University of Tennessee College of Law
5 109 The Common European Sales Law (CESL) Beyond Party Choice 
Jan M. Smits
Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI)
6 94 Errors of Fact and Law: Race, Space, and Hockey in Christie v. York 
Eric M. Adams
University of Alberta - Faculty of Law
7 60 Instructing Juries on Noneconomic Contract Damages 
David A. HoffmanAlexander Radus
Temple University - James E. Beasley School of Law, Temple University James E. Beasley School of Law
8 56 Remedial Consilience 
Marco Jimenez
Stetson University College of Law
9 55 From Lord Coke to Internet Privacy: The Past, Present, and Future of the Law of Electronic Contracting 
Juliet M. MoringielloWilliam L. Reynolds
Widener University - School of Law, University of Maryland - Francis King Carey School of Law
10 53 Europe-Building Through Private Law: Lessons from Constitutional Theory 
Chantal Mak
University of Amsterdam - Centre for the Study of European Contract Law (CSECL)

[JT]

May 15, 2012 in Recent Scholarship | Permalink | TrackBack (0)

Monday, May 14, 2012

UC Davis Sues US Bank (As a Negotiating Tactic)

Law suits can often be sources of information for parts of the economy that are usually hidden.  The suit that the University of California at Davis (UC Davis) just filed against U.S. Bank is an eye-opening example.  According to this report in The Chicago Tribune, U.S. Bank and UC Davis entered into a ten-yeat contract in 2009 that permitted the Bank to open the first-ever on-campus bank branch in return for annual payments ranging from $130,000 to $780,000, depending on how many new accounts the branch activtated. 

But on-campus protests disrupted the branch's operations in January and February and so now it wants out of the agreement.  We're not sure what the disturbances in January and February were about, since the infamous pepper spray incident (below) occurred in November.

 

In any case, US Bank is claiming that the occupy movement's conduct qualifies as a "constructive eviction" from its campus branch, because employees were held prisoner inside the branch and customers could not get in.   The bank closed its branch in March saying it refused to put its customers and employeees at risk."  Apparently, twelve people (eleven students and a professor) blocked the entrance to the bank and are now facing charges for that act.  It is not clear what risk they posed to the bank's employees or customers.

US Bank and the university were in discusisons that were designed to wind down the branch's operations in a manner that was as smooth as possible.  According to the university, the purpose of the lawsuit it to "simply nudge the bank to return to the table and continue talking. If it's going to be a wind-down, we'd like to wind it down cordially, amiably and with the least amount of friction."  The Bank claims to be surprised by the lawsuit and will fight it.  The university, for its part, claims that the suit is part of its effort to look out for the interests of UC Davis and the taxpayers who fund it.  The university claims that it stands to lose up to $3 million in expected revenues over the course of the ten-year agreemetn with US Bank.

[JT]

May 14, 2012 in In the News | Permalink | Comments (1) | TrackBack (0)

Wednesday, May 9, 2012

Uninsured Sue Major Indiana Hopsital System for Overcharging

As reported in the Indianapolis Star here, the Indiana Supreme Court is set to hear arguments on May 10th in a case invovling two uninsured patients who have sued Indiana's largest hospital group, IU Health, for overbilling.  This is a tip-of-the-iceberg case, since the amount in controversy is small on these particular claims but could become massive if plaintiffs succeed and other plaintiffs bring similar claims (which they undoubtedly would).

Medical FilesThe basis for the suit is that uninsured patients pay far higher prices for the same treatment, tests and services that insured patients get.  The case also provides a peek into the mindset of class action plaintiffs' attorneys, a subject related to a recent post.  Plaintiffs' attorney Scott Weathers is quoted in the Indianapolis Star as saying that he hopes to target other Indiana hospitals with similar lawsuits: "If we win, I'm afraid the other hospitals are going to hear from us. We have clients in the wings . . . ." and he expects the damages claims to get into the millions. 

The core of the case is the common law doctrine that when a contract does not specify a price, the price must be reasonable.  A good test of reasonableness is what other patients get charged for similar services.  Relying on that doctrine, Indiana's Court of Appeals reversed the trial court's dismissal of the case.  Twenty states introduced legislation requiring that uninsured be charged at the same rates as the insured, and now federal law requires that as well.  So the issue has been resolved legislatively, but that does not deprive plaintiffs of their right to sue over past overcharges. 

Given that this seems like low-hanging fruit, one might wonder why class-action plaintiffs' attorneys have not already filed class actions across the country.  As is clear from the Corut of Appeals opinion cited above, some states have sustained dismissals of similar suits based on (slightly) more specific contractual language related to the prices the hospitals would charge.  An additional sticking point seems to be the need to show commonality among the members of the purported plaintiff class.  Medical bills are individuated and hospitals claim that class litigation is impracticable.  That may be persuasive, but we understand that medical bills are now created by "coding experts," with each examination, test, procedure, etc. assigned a specific code and attendant pricing.  It seems likely that a court, provided with the coding system, could easily come up with a reasonable approximation of the extent to which the uninsured have been overcharged.  Since IU Health spokesperson affirms that the hospital system discounted charges to uninsured patients  by 40% in January 2011 in order to comply with federal law, 40% seems like a reasonable approximation of the extent of the overcharges. 

[JT]

May 9, 2012 in In the News, Recent Cases | Permalink | Comments (1) | TrackBack (0)

iTunes in-app purchases: Parents' Relational Contract or Kids' Separate, Voidable Contracts?

2_itunes_10_iconBack in March (I am behind in my blogging), the U.S. District Court for the Northern District of California denied Apple’s motion to dismiss a class action brought by parents and guardians “who (a) downloaded or permitted their minor children to download a supposedly free app from Apple and (b) then incurred charges for game-related purchases made by their minor children, without the parents' and guardians' knowledge or permission.”  The court held that children who used their parents' iTunes accounts to rack up unauthorized charges for supplies for “free” games during a 15-minute window that the account automatically remained open after password authentication may have entered into separate contracts with Apple that are voidable by their parents.

There are games in Apple's iTunes store that are free to download but let companies charge users for products and services when the application is launched, so-called "in-app purchases."  The parents allege that each in-app purchase constitutes a separate and voidable contract between Apple and their minor children, which may be disaffirmed by a parent or guardian on behalf of the minors.  Apple argued for dismissal on the pleadings because the relevant contractual relationship governing the in-app purchases is between Apple and the parents and is based on the original Terms & Conditions signed by parents, making the purchases non-refundable.  Apple contends that the Terms & Conditions governs all subsequent purchases made using the iTunes account.

The court noted that, on a motion to dismiss, it is required to construe the complaint in the light most favorable to the plaintiffs/parents.  In light of that standard, the court held:

Apple argues that Plaintiffs' First Cause of Action should be dismissed as a matter of law, and yet offers no case law to support its contention that the Terms & Conditions constitute a relational contract and that each subsequent transaction between a minor child and Defendant is governed by the terms of the relational contract.

The parents seek reimbursement for the charges (which can run into the hundreds, even thousands).  If the parents are reimbursed, do the kids have to return the $25 buckets of smurfberries they purchased in Smurf Village?  What if the berries are already eaten?

Here's an idea for the parents: disable in-app purchases on the device:

In re Apple In-App Purchase Litigation, No. 5-11-cv-1758 (N.D. Cal. Mar. 31, 2012).

[Meredith R. Miller]

 

May 9, 2012 in In the News, Recent Cases | Permalink | Comments (1) | TrackBack (0)

Tuesday, May 8, 2012

Weekly Top Tens from the Social Science Research Network

SSRNRECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 

March 9, 2012 to May 8, 2012

RankDownloadsPaper Title
1 377 The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice 
Michael S. FinkeThomas Patrick Langdon
Texas Tech University, Unaffiliated Authors - affiliation not provided to SSRN
2 196 The Effect of Bargaining Power on Contract Design 
Albert H. ChoiGeorge G. Triantis
University of Virginia School of Law, Stanford University - Law School
3 156 Zotero - A Manual for Electronic Legal Referencing 
John PrebbleJulia Caldwell
Victoria University of Wellington, Victoria University of Wellington
4 146 Does the Constitution Protect Economic Liberty? 
Randy E. Barnett
Georgetown University Law Center
5 131 The Perils of Social Reading 
Neil M. Richards
Washington University in Saint Louis - School of Law,
6 123 Controlling Financial Chaos: The Power and Limits of Law 
Steven L. Schwarcz
Duke University - School of Law
7 109 Transaction Simplicity 
Stephen J. Lubben
Seton Hall University - School of Law
8 96 'Offer to Sell' as a Policy Tool 
Lucas Osborn
Campbell University Law School
9 92 The Common European Sales Law (CESL) Beyond Party Choice 
Jan M. Smits
Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI)
10 89 Forcing Forgetfulness: Data Privacy, Free Speech, and the 'Right to Be Forgotten' 
Robert Kirk Walker
University of California - UC Hastings College of the Law

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  

March 9, 2012 to May 8, 2012

RankDownloadsPaper Title
1 350 The Common European Sales Law and the CISG - Complicating or Simplifying the Legal Environment? 
Nicole KornetNicole Kornet
Maastricht University - European Private Law Institute (M-EPLI), Maastricht University - METRO Institute
2 196 The Effect of Bargaining Power on Contract Design 
Albert H. ChoiGeorge G. Triantis
University of Virginia School of Law, Stanford University - Law School
3 146 Does the Constitution Protect Economic Liberty? 
Randy E. Barnett
Georgetown University Law Center
4 131 The Perils of Social Reading 
Neil M. Richards
Washington University in Saint Louis - School of Law
5 127 Modern Chinese Real Estate Law: Property Development in an Evolving Legal System (Chapter 1) 
Gregory M. Stein
University of Tennessee College of Law
6 113 The Questionable Basis of the Common European Sales Law: The Role of an Optional Instrument in Jurisdictional Competition 
Eric A. Posner
University of Chicago - Law School
7 93 Errors of Fact and Law: Race, Space, and Hockey in Christie v. York 
Eric M. Adams
University of Alberta - Faculty of Law
8 92 The Common European Sales Law (CESL) Beyond Party Choice 
Jan M. Smits
Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI)
9 71 Parallel Contract 
Aditi Bagchi
University of Pennsylvania - Law School - Faculty
10 58 Instructing Juries on Noneconomic Contract Damages 
David A. HoffmanAlexander Radus
Temple University - James E. Beasley School of Law, Temple University James E. Beasley School of Law

 

[JT]

May 8, 2012 in Recent Scholarship | Permalink | TrackBack (0)

Boots on the Ground (or Perhaps on a Shelf in Uganda)

Combat bootsAccording to this report from the local pages of the Washington Post, a non-profit organization, Bancroft Global Development (BGD), ordered 18,000 pairs of combat boots (actual model not pictured) from Atlantic Diving Supply (ADS) as part of a $1.4 milion contract that included other items.  ADS claims that BGD paid for only half the order and has sued BGD seeking over $1 million,

BGD has counter-sued, seekign $1.1 million and claiming that the boots provided were not really combat boots but costume boots that did not satisfy military requirements.  Two years after delivery, the boots are said to be sitting in storage in Uganda.  BGD was working with a Ugandan partner organization, which had won a State Department contract to provide military supplies for the Somali Transitional Federal Government.

The case potentially raises interesting UCC questions, since the goods were allegedly "rejected" but not returned.  The case also raises potential issues of misunderstanding reminiscent of Frigaliment.  BGD apparently wanted the cheapest boots it could buy, but the boots that it got, although called "combat boots" are, according to one industry expert quoted in the Washington Post, suitable only for youth groups and marching bands.  One wonders what sort of youth groups require combat boots . . . .

[JT]

May 8, 2012 in Commentary, Government Contracting, In the News | Permalink | Comments (0) | TrackBack (0)

Monday, May 7, 2012

New York Times "The Haggler" Column Muses on Class Actions

SouqDavid Segal has provided blog fodder for us before, both in his role as the bête noire of the legal profession, and in his more mild-mannered guise as author of the New York Times' column "The Haggler" (lacking a public domain image depicing haggling, we have settled from an image from an open-air market, a prime locus for haggling).  Nancy Kim posted most recently on the "The Haggler" column.  We have posted on Mr. Segal's smack-downs on law schools here and here.  Sunday's column is, once again, right up our alley.

Its topic is the fall-out from the Supreme Court's recent trilogy of arbitration decisions about which we have blogged incessantly.  Mr. Segal's column will add little to our readers' knowledge base on the subject, but it's nice to have a popular column that provides a useful recap of the state of play.  The main ground covered in Sunday's "The Haggler" can be summarized as follows:

  • Post Concepcion, most consumer class actions are being dismissed in favor of arbitration at which class action resolution is not available;
  • Businesses oppose class actions on the ground that they result in "settlements in which lawyers take home millions in fees and consumers wind up with piddling sums, often in the form of coupons";
  • According to the Camber of Commerce, "the class-action system is flawed because it is designed by and for lawyers," but arbitration "can work";
  • However, as Judge Posner pointed out, “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”

At this point, "The Haggler," having satisfied journalistic conventions by citing arguments from both sides, throws up his hands and suggests that there must be some better option. A fair arbitration system might work, but many people do not even know that they are entitled to make a claim, and the class action option enlightens them.

"The Haggler" misses the point.  The problem with $30 claims is not that people do not know that they have them but that they have no incentive to bring them even if they know.  Even if the arbitrataion is paid for by the defendant, it's just not worth the time.  Moreover, class actions are a public good in that they hold corporate defendants accountable in ways that matter and can have prospective effects that help plaintiffs and others similarly situated even if the plaintiffs in the class actions end up only with coupons.  Plaintiffs are not the ones complaining, litigating and lobbying to get rid of class actions.  

The argument that the class action system is flawed because it is designed by and for lawyers is specious.  Arbitration clauses are also designed by lawyers, and where exactly is the evidence that the class action system was desigend for lawyers?  Was the criminal justice system designed for lawyers because they get paid to litigate criminal proceedings, while neither crime victims nor criminal defendants stand to gain?

[JT]

May 7, 2012 in Commentary, In the News | Permalink | Comments (4) | TrackBack (0)

Wisconsin Supreme Court Addresses Two-Party Checks from Insurers

Wisconsin_welcome_signOn May 3, 2012, Wisconin's Supreme Court affirmed a jury verdict in favor of the insurer in Best Price Plumbing Inc. v. Erie Insurance Exchange.  Unfortunately, the judgment turned on a procedural matter -- Best Price apparently did not raise its winning argument until after trial, when it sought a judgment notwithstanding the verdict and thus in the eyes of the majority forfeited the argument.  A full run-down of the case is available from the wonderful State of Wisconsin Bar site. We provide a shorter synopsis.

Best Price did some plumbing work and was entitled to $9000 for its efforts.  Erie Insurance (Erie) issue a two-party check, which was endorsed over to the insured and deposited in the insured's account.  How it got there remains unclear, but in any case Best Price was never paid.  According to the only testimony available, the check was delivered to a mysterious "handyman" who was directed to give it to Best Price for endorsement, but Best Price claims that the endorsement never occurred and was never authorized.

A jury found that the two-party check satisfied Erie's obligations under the contract.  In its post-verdict motion, Best Price relied on Kenosha Home Telephone Co., 158 Wis. 371, 148 N.W. 877 (1914),  in which the Court held that when a contract is silent as to the place of payment, the law implies that payment shall be made at the residence, office, or place of business of the creditor.  As that did not occur here, Erie had breached.  The trial court bought the argument, but the intermediate appellate court reinstated the jury's verdict.

The Supreme Court affirmed.  Refusing to speculate about how the jury would have ruled had it been instructed about the rule from Kenosha Home Telephone, the court ruled that any objection to the jury instructions had been forfeited.

Two Justices dissented pointing out that the motion at issue was for a judgment notwithstanding the verdict and that such motions do not challenge the sufficiency of the evidence but contends that judment should be awarded to the moving party on grounds other than those decided by the jury.

The dissenters also noted the real-world consequences of the decision: 

After today, similar small businesses all over the state should be wary of a client's mere word or handshake, lest their services will go unpaid for. In the future, they ought to get a signed contract requiring payment up-front.

[JT}

May 7, 2012 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Thursday, May 3, 2012

Supreme Court of Tennessee Holds that Email Satisfies Statute of Frauds

597px-Tennessee-StateSeal.svgIn a family squabble over the transfer of land, the parties' attorneys settled on the eve of trial in the following exchange of emails:

At 4:34 p.m., Ms. Hagan sent the following email to Mr. Reed:

Greg,
This confirms that we have settled this case on the following terms:
Elrod deeds property interest back to Waddle, Both [sic] parties sign full release, Waddle bears no court costs.
Let me know if I have correctly stated our agreement.
Thanks,
Mary Bethpage3image20624

At 5:02 p.m., Mr. Reed responded:

That is the agreement. I understand that you will draft the deed and take a shot at the court’s order. No admission of guilt is to be included.
Greg Reed

Chief_justice_clark_066_-_croppedOne of the parties later challenged the settlement agreement as unenforceable because it did not comply with the Statute of Frauds.  First, the Supreme Court of Tennessee held that the settlement agreement came within the Statute of Frauds because it required a transfer of land.  Next, the Court held that Mr. Reed's email satisfied the signature requirement of the Staute of Frauds.  The Court held that UETA applied and, therefore, the email contained an "electronic signature."  Chief Jusice Cornelia Clark reasoned:

The parties, through their attorneys, evidenced an intent to finalize the settlement by electronic means; thus, the UETA applies. See, e.g., Crestwood Shops, L.L.C. v. Hilkene, 197 S.W.3d 641, 651-53 (Mo. Ct. App. 2006) (holding that the UETA applied because the parties manifested their intent to conduct business by email). Pursuant to section 47-10-107(c), the emails counsel exchanged constitute a signed memorandum, note, or writing for purposes of the Statute of Frauds. 

Waddle v. Elrod (Tenn. Apr. 24 2012).

[Meredith R. Miller]

 

 

May 3, 2012 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Breaking News on the Miramax and David Bergstein

Earlier this week, we posted about David Bergstein's lawsuit against Miramax's principals.  Apparently, by the time we reported on it, the case had already settled.  Today, we received this update in the form of the following press release:

FOR IMMEDIATE RELEASE

MIRAMAX AND DAVID BERGSTEIN REACH AGREEMENT 

Bergstein Dismisses Lawsuit, Retracts All Claims and Accusations

SANTA MONICA, CA – April 24, 2012 – Filmyard Holdings LLC and David Bergstein today announced they have reached an agreement under which Mr. Bergstein will dismiss the lawsuit filed on April 9, 2012 in the Superior Court of California for the County of Los Angeles, Central District.  Terms of the agreement are not being made public.

Mr. Bergstein stated, “I am pleased that I was able to sit down with my counterparties in this suit, discuss our differences and resolve them.  I fully retract the claims made in the lawsuit against Filmyard, Miramax, Colony Capital, Richard Nanula and Josh Grode.  I’d like to thank everyone involved for their understanding and cooperation.”

Richard Nanula, a principal at Colony Capital, one of the owners of Filmyard, stated, “We want to recognize the contributions David made that ultimately led to Filmyard’s ownership of Miramax.  Without his efforts this very successful transaction wouldn’t have happened.”

 [JT]

May 3, 2012 in In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 2, 2012

New in Print (Featuring a Larry Cunningham Two-Fer)

Lawrence A. Cunningham,  Contracts in the Real World: Stories of Popular Contracts and Why They Matter (Cambridge U.P. 2012)

Cunningham_2009Contracts, the foundation of economic activity, are both vital and misunderstood. This book corrects the misunderstandings through a series of engaging stories involving such diverse individuals as Martin Luther King, Maya Angelou, Clive Cussler, Lady Gaga, and Donald Trump. Capturing the essentials of this subject, the book explores recurring issues people face in contracting. It shows how age-old precedents and wisdom still apply today and how contract law's inherent dynamism cautions against exuberant reforms. The book will appeal to the general reader and specialists in the field alike, and to both teachers and students of contracts.

Lawrence A. Cunningham, Rhetoric Versus Reality in Arbitration Jurisprudence: How the Supreme Court Flaunts and Flunks Contracts, 75 Law & Contemp. Probs. 129 (2012)

Henry D. Fetter, From Flood to Free Agency: the Messersmith-McNally Arbitration Reconsidered. 5 Alb. Gov't L. Rev. 156 (2012)

Jeffrey Douglas Jones, Property Rights, Property Wrongs, and Chattel Dispossession under Self-Storage Leases. 78 Tenn. L. Rev. 1015 (2011)

John E., Jr. Murray, The Dubious Status of the Rolling Contract Formation Theory, 50 Duq. L. Rev. 35 (2012). 

David L. Snyder, The Cobra's Contract: Revisiting Dave Parker's 1979 Contract with the Pittsburg Pirates, 5 Alb. Gov't L. Rev. 188 (2012)

Sarah Swan, A New Tortious Interference with Contractual Relations: Gender and Erotic Triangles in Lumley v. Gye, 35 Harv. J.L. & Gender 167 (2012)

[JT]

May 2, 2012 in Recent Scholarship | Permalink | TrackBack (0)

Trend Spotting: Suits Over Liquidated Damages in Private School Contracts

If you teach O'Brian v. Langley School, you will want to read a NY Times article from earlier this week, For Some Parents, Leaving a Private School is Harder Than Getting In.  Here's a taste:

In February 2011, Nicole Smolowitz’s son was admitted to the Mandell School on the Upper West Side. She signed a contract and paid the $7,500 deposit.

By late April, the family’s financial situation had changed, and private school was no longer an option. Ms. Smolowitz called the school to say her son would not be able to attend. She did not expect to get her deposit back — but she was told she had to pay the remaining $26,250, as well.

“It’s April,” she said she told them. “I will find someone for you to take my child’s spot.” The school told her that was not how things were done. Then, in September, Mandell sued.

For most parents, getting their child into a private school is a moment of joy, or at least relief. But uncomfortable conversations take place at this time of year, as some parents reconsider.

Sometimes these conversations lead to an amicable parting. Other times, they lead to a bare-knuckled fight in court.

Since 2009, at least five private schools in New York City — Mandell, York Preparatory School, Friends Seminary, Léman Manhattan Preparatory School and the Little Red School House and Elisabeth Irwin High School — have sued parents for tuition.

The schools’ argument is simple: Parents sign a contract when they accept placement, saying they will send their child to the school the next year and pay the agreed-upon price.

The article includes discussion of a few specific cases, including the Gunderson case:

In 2007, Erik Gunderson and Sarah Brooks enrolled their son for another year at Park West Montessori School, a preschool on the Upper West Side of Manhattan. They put down a deposit of $4,700 of the $19,300 tuition.

Soon afterward, Ms. Brooks was offered a tenure-track position at a university in Virginia. When she told the school that her family was moving, the school said she had to pay the remaining tuition, according to the lawsuit. Her father, Russell Brooks, a lawyer at Milbank, Tweed, Hadley & McCloy, represented her in court, and won a ruling forcing Park West to turn over records showing that it would be financially harmed by his daughter’s decision to withdraw her son.

“They had no damages,” Mr. Brooks said. “The entire contract amount — the deposit amount plus what they were seeking — would be a windfall to them, because they could fill up the spot in the class from the waiting list.”

Mr. Brooks said the school dropped its demand for payment.

Kathy Roemer, executive director of Twin Parks Montessori Schools, which includes Park West, said the Gundersons’ deposit had not been refunded. The court denied the school’s counterclaim for the remaining tuition, and while Dr. Roemer called that ruling “contrary to basic contract law,” the school did not pursue the case because “the amount was too small.”

Since the Gunderson case, other parents, including Ms. Langbecker, have used the same defense, arguing that schools must prove they have been hurt financially. It is unclear how successful this argument is, as many cases are settled out of court.

Read the article.  Given that tuition at some private schools in Manhattan has surpassed the $40,000 mark, file it under "rich people problems."

[Meredith R. Miller h/t Robert Merrihew]

May 2, 2012 in In the News, Recent Cases, Teaching | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 1, 2012

Weekly Top Tens from the Social Science Research Network

SSRNRECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 

March 2, 2012 to May 1, 2012

RankDownloadsPaper Title
1 365 The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice 
Michael S. FinkeThomas Patrick Langdon
Texas Tech University, Unaffiliated Authors - affiliation not provided to SSRN
2 281 Emerging Policy and Practice Issues (2011) 
Steven L. SchoonerDavid J. Berteau
George Washington University - Law School, Center for Strategic and International Studies, Defense - Industrial Initiatives Group
3 177 The Effect of Bargaining Power on Contract Design 
Albert H. ChoiGeorge G. Triantis
University of Virginia School of Law, Stanford University - Law School
4 141 Does the Constitution Protect Economic Liberty? 
Randy E. Barnett
Georgetown University Law Center
5 121 Zotero - A Manual for Electronic Legal Referencing 
John PrebbleJulia Caldwell
Victoria University of Wellington, Victoria University of Wellington
6 115 Controlling Financial Chaos: The Power and Limits of Law 
Steven L. Schwarcz
Duke University - School of Law
7 97 Transaction Simplicity 
Stephen J. Lubben
Seton Hall University - School of Law
8 96 'Offer to Sell' as a Policy Tool 
Lucas Osborn
Campbell University Law School
9 88 The Perils of Social Reading 
Neil M. Richards
Washington University in Saint Louis - School of Law
10 87 Why Courts Make Orders (and What this Tells Us About Damages) 
Stephen A. Smith
McGill University - Faculty of Law

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  

March 2, 2012 to May 1, 2012

RankDownloadsPaper Title
1 314 The Common European Sales Law and the CISG - Complicating or Simplifying the Legal Environment? 
Nicole KornetNicole Kornet
Maastricht University - European Private Law Institute (M-EPLI), Maastricht University - METRO Institute
2 177 The Effect of Bargaining Power on Contract Design 
Albert H. ChoiGeorge G. Triantis
University of Virginia School of Law, Stanford University - Law School
3 141 Does the Constitution Protect Economic Liberty? 
Randy E. Barnett
Georgetown University Law Center
4 117 Modern Chinese Real Estate Law: Property Development in an Evolving Legal System (Chapter 1) 
Gregory M. Stein
University of Tennessee College of Law
5 88 The Perils of Social Reading 
Neil M. Richards
Washington University in Saint Louis - School of Law
6 83 Errors of Fact and Law: Race, Space, and Hockey in Christie v. York 
Eric M. Adams
University of Alberta - Faculty of Law
7 71 The Common European Sales Law (CESL) Beyond Party Choice 
Jan M. Smits
Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI)
8 68 Parallel Contract 
Aditi Bagchi
University of Pennsylvania - Law School - Faculty
9 57 Instructing Juries on Noneconomic Contract Damages 
David A. HoffmanAlexander Radus
Temple University - James E. Beasley School of Law, Temple University James E. Beasley School of Law
10 53 From Lord Coke to Internet Privacy: The Past, Present, and Future of the Law of Electronic Contracting 
Juliet M. MoringielloWilliam L. Reynolds
Widener University - School of Law, University of Maryland - Francis King Carey School of Law

[JT]

May 1, 2012 in Recent Scholarship | Permalink | TrackBack (0)

Suit over 2010 Sale of Miramax

CinemaFilm financer David Bergstein has filed suit against the his co-venturers in the 2010 acquisition of the Miramax Film Company (Miramx).  Bergstein alleges that his former business partners denied him money and an equity stake owed for his role in the acquisition of the film label from the Walt Disney Company.  The suit, filed in Los Angeles Superior Court, is for breach of contract, fraud, unjust enrichment, and other claims, and named as defendants Miramax Chairman Richard Nanula, Colony Capital and Filmyard Holdings.  According to the Chicago Tribune, non-party Ron Tutor and his group of partners created Filmyard Holdings to finance the deal for Miramax and control the studio after the sale was complete.  Colony Capital, an investment firm, was one of the investors, and Nanula, a former Disney executive who is now Miramax’s chairman, is one of Colony’s principals.  

Bergstein claims that he is owed tens of millions of dollars for his part in structuring and negotiating the purchase.  Bergstein acknowledges that he was paid his $6.1 million “Closing Fee” but claims that he is owed an additional $6.1 million “Transaction Fee.”  In addition, Bergstein maintains that, although he was originally promised a non-dilutable 5% stake in the equity of the transaction, he agreed to reduce his non-dilutable stake to 3.3%, in return for a promise from Colony that his interest would not be further reduced.  He claims that defendants then sought to further reduce his stake “[a]s soon as the ink was dry on the operative agreements.”  The heart of the suit seems to be a claim that his share was further diluted by transactions about which the defendants have refused to provide information.

As reported by The Wrap, Bergstein has been a controversial figure in the movie industry in recent years and has said that Nanula and other investors planned to use the bad publicity surrounding his legal problems as a way to keep from honoring their deal.  As the complaint in this case makes clear, Bergstein can give as good as he gets when it comes to bad publicity.

[JT, Janelle Thompson & Christina Phillips]

May 1, 2012 in Film, In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)