May 18, 2012
Resistance to Arbitration Ruled Quixotic
In M.A Mortenson Company v. Saunders Concrete Company, Inc., the Eight Circuit affirmed the District Court's decision to grant Mortenson's motion to compel arbitration in its dispute with its sub-contractor, Saunders, which allegedly supplied Mortenson with faulty concrete causing Mortenson to incur $4.5 million in repair costs on a wind turbine project.
The arbitration clauses at issue was contained in a four-paragraph provision in the subcontract labled "Disputes." Saunders attempted to resist arbitration by arguing that Paragrah 21.4 of the agreement violated New York's lien law and that the arbitration provision is unconscionable. Following Rent-A-Center West, the Eighth Circuit observed that a court "must enforce 'a specific agreement to arbitrate' despite a litigant's challenges to the contract as a whole or to another provision of the contract." Accordingly, Saunder's challenge to Paragraph 21.4 has no bearing on the enforceability of the arbitration provision, which is contained in Paragraph 21.2.
The Court took about a nanosecond to reject Saunders' arguments that the arbitration provision was procedurally unconscionable because Saunders had no opportunity to negotiate it and that it was substantively unconscionable because it provided for arbitration in Mortenson's "sole discretion." The Eighth Circuit affirmed the District Court's grant of Mortenson's motion to compel arbitration.
May 17, 2012
Welcome to the Blawgosphere: LSU Law Energy Blog
Call for Blog Entries
The newly formed LSU Journal of Energy Law and Resources (JELR) at the Louisiana Sate University Paul M. Hebert Law Center invites submissions of articles for the Journal’s companion blog, The LSU Law Energy Blog. The blog will launch in August 2012 and will continue to publish pieces on a rolling basis. JELR is a student-edited journal devoted to the promotion of legal scholarship in energy law. The Journal is committed to publishing a variety of topics within the purview of energy law, including interdisciplinary pieces. The LSU Law Energy Blog will supplement the Journal by providing shorter articles on recent developments in energy law and the surrounding fields published by students, practitioners, and professionals in these fields.
Submissions: To be considered for publication on The LSU Law Energy Blog, please submit an entry on a current, relevant energy law topic or a case note on a major energy law case. Topical entries should be around 500 words and case notes may be longer. Please email these entries to email@example.com. For publication on the blog in Fall of 2012, please submit a polished entry by July 15, 2012.
Update: South Dakota Supreme Court sides with Costner in Breach of Contract Suit
We've mentioned (here and here) the South Dakota case by a sculpture artist against Kevin Costner -- she alleged that Costner's placement of the sculptures (many large, bronze bison) was a breach of their contract. The Washington Post provides this update:
PIERRE, S.D. — The South Dakota Supreme Court ruled Thursday that actor Kevin Costner did not breach a contract with an artist when he placed commissioned sculptures of bison and American Indians at a different site than was originally planned.
The Hollywood superstar, who filmed much of his Academy Award-winning movie “Dances with Wolves” in South Dakota, paid Peggy Detmers $300,000 to make 17 bronze sculptures for a resort called The Dunbar he planned to build on the edge of the Black Hills gambling town of Deadwood. The resort never was built and the sculptures instead are at his Tatanka attraction near the proposed resort site.
A later contract said if the resort was not built within 10 years or the sculptures were not “agreeably displayed elsewhere,” the sculptures would be sold with Costner and Detmers sharing the proceeds.
Detmers said she spent more than six years creating the sculptures and gave Costner a price break because she anticipated selling smaller reproductions of the sculptures at the resort.
The artist contended in a lawsuit filed in 2008 that because The Dunbar was not built and the sculptures were not “agreeably displayed elsewhere,” the artwork should be sold and she should get 50 percent of the sale proceeds.
But a circuit judge ruled in July that Detmers indicated her approval of the Tatanka location by participating in the site’s development and several events related to its opening in 2003. The Tatanka site, located next to the land where Costner had planned to build The Dunbar, houses the sculptures, a museum and a visitor center.
Detmers argued that she agreed to the placement of the sculptures at the Tantanka site because she was under the impression The Dunbar would still be built.
The Supreme Court unanimously agreed with Circuit Judge Randall L. Macy’s finding that Detmers never received any promise or guarantee that the resort would be built. Detmers knew the resort’s future was questionable, the high court said.
The justices also upheld the trial judge’s ruling that the sculptures have been “agreeably displayed elsewhere,” and that the Tatanka site was separate from the Dunbar site.
On the issue of whether the sculptures had been "agreeably displayed elsewhere," The Court reasoned:
The circuit court concluded as a matter of law that the regular meaning of the term “elsewhere” applied. The court noted that Black’s Law Dictionary defines elsewhere as “in another place, in any other place,” and Webster’s Dictionary defined it as “in or to another place.” See Black’s Law Dictionary 560 (8th ed. 2004). Accordingly, there must first be a designated place to determine if somewhere is “another place.” Paragraph three provides: “if The Dunbar is not built within ten (10) years or the sculptures are not agreeably displayed elsewhere.” (Emphasis added.) The designated place is The Dunbar. The circuit court concluded that “elsewhere” meant at a place other than The Dunbar. And because The Dunbar had not been built, Tatanka was elsewhere.
Costner points out that the circuit court and Detmers both assign “elsewhere” its ordinary meaning, i.e., “in another place.” The analysis diverges on whether “in another place” means another place from The Dunbar itself or from The Dunbar’s intended site. Costner asserts that the circuit court was correct in concluding that “elsewhere” is in a place other than The Dunbar resort itself, which, according to the language, must be built. The land could not be built, but the resort could. Furthermore, the terms of the contract plainly do not say The Dunbar site.
* * *
The plain words of the contract unequivocally provide that if The Dunbar was not built or the sculptures were not agreeably displayed elsewhere, then Detmers would be entitled to the relief described in paragraph three. “Elsewhere” must be understood in relation to the named place in the contract – The Dunbar. Costner is correct that to accept Detmers argument would rewrite the contract to include The Dunbar’s intended location as well as the resort itself. This we will not do. See Culhane v. W. Nat’l Mut. Ins. Co., 2005 S.D. 97, ¶ 27, 704 N.W.2d 287, 297 (“[W]e may neither rewrite the parties’ contract nor add to its language . . . .”). As a matter of law, the court did not err in its conclusion that Tatanka was elsewhere from The Dunbar. This conclusion is supported by giving the terms in the parties’ contract their plain and ordinary meaning.
Detmers v. Costner (S.D. S. Ct. May 9, 2012).
[Meredith R. Miller]
Arkansas Statute of Limitations Trumps Insurance Policy Language
Kenneth Graham was blinded in 2005 when a can of Easy-Off oven cleaner exploded in his face. He filed a timely proof of loss with his insurer, and after his insurer denied his claim -- and his appeal -- he filed a breach of contract claim in Federal District Court against his insurer. Mr. Graham's claim was within the five-year statute of limitations (SoL) provided under Arkansas law. However, the District Court dismissed his suit as outside the three-year SoL provided for in the policy.
In Graham v. Hartford Life and Accident Insurance Company, the Eighth Circuit reversed. The District Court had relied on Arkansas cases that permit insurance policies to set reasonable SoLs. However, the Eighth Circuit recognized a significant limitation on insurers' ability to do so:
The general rule announced and applied in Ferguson, Hawkins, and Wilkins has its limitations, however. A contractually shortened period must "not contravene somestatutory requirement or rule based upon public policy." Ferguson, 821 S.W.2d at 32. Graham contends section 23-79-202 of the Arkansas Code, which applies to property and life insurance policies,1 is one such statutory requirement. Graham further contends Hartford's policy provision, shortening the period for him to file suit to a period of less than five years, contravenes the statutory requirement. We agree.
Language in Hartford's policy setting the SoL at something less than five years was void, according to the EIghth Circuit, as inconsistent with subdivision (b) of section 23-79-202 of the Arkansas Code. Hartford argued that the statutory language was intended to encompass the holdings of the earlier case law. The Eighth Circuit was not persuaded. While the Arkansas courts have not yet addressed this issue with respect to Section 202, both the Arkansas Supreme Court and the Eighth Circuit had addressed identical language in a predecessor statute and both had rejected Hartford's argument.
May 16, 2012
New in Print
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)
Florencia Marotta-Wurgler, Some Realities of Online Contracting, 19 Sup. Ct. Econ. Rev. 11 (2011)
Alan Scott Rau, Arbitral Power and the Limits of Contract: the New Trilogy, 22 Am. Rev. Int'l Arb. 435-550 (2011)
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)
May 15, 2012
Eleventh Circuit Affirms Dismissal of Suit Seeking to Force Modification of Home Loan
On 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.
Weekly Top Tens from the Social Science Research Network
|1||392||The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice
Michael S. Finke, Thomas 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 Prebble, Julia Caldwell,
Victoria University of Wellington, Victoria University of Wellington
|4||152||Does the Constitution Protect Economic Liberty?
Randy E. Barnett,
Georgetown University Law Center
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
Campbell University Law School
|9||84||Arbitration of Trust Disputes: Two Bodies of Law Collide
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
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.