Tag Archives: Breach of Contract

When Is An Offer of Employment Letter The Same As A Contract?

13 Thursday Aug 2015

Posted by in Breach, Contract Law, Employment Contracts, Employment Law, Intentional Promise, Religious Discrimination

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Federal Judge Allows Stephen Salaita’s Suit Against the University of Illinois to Proceed, by Jeremy Telman, ContractsProf Blog

http://tinyurl.com/o7flplx

In a case we have been following for a year (here, here, and here, for example), Stephen Salaita is suing the University of Illinois for withdrawing its offer to hire him to teach in its American Indian Studies Program after discovering some intemperate anti-Zionist tweets Mr. Salaita had posted. . . .

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Impose An Obligation On Someone To Control Something They Can’t Really Control – What’s The Point?

16 Monday Feb 2015

Posted by in Breach, Contract Law, Intentional Promise, Performance

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A Reminder About “Shall Cause,” by Ken Adams, Adams On Contract Drafting

http://www.adamsdrafting.com/a-reminder-about-shall-cause/

Reed Smith has published an inaugural issue of Contract-Drafting Bulletin. One item was of particular interest to me. It’s about an October 2014 opinion from the U.S. District Court for the Southern District of New York, World of Boxing LLC v. King (PDF copy here).

Here’s the gist of it: In May 2013, boxers Guillermo Jones and Denis Lebedev fought, with Jones winning. But after the bout Jones failed a drug test and was stripped of the win. In January 2014, boxing promoters Don King and WOB entered into an “agreement in principle” in which King promised to “cause Jones [ ] to participate” in a rematch. But before the rematch, Jones failed another drug test, so Lebedev withdrew.

In the resulting litigation, WOB claimed that King breached their contract by failing to cause Jones to participate in the match. The court agreed (footnotes omitted):

If Jones could not participate in the bout, it follows a fortiori that King could not have caused Jones to participate in the bout. Therefore, King breached the Agreement.

King protests that this interpretation of the Agreement yields “unreasonable and illogical” results. It would require of King “nothing less than … personal supervision of Jones’s every action between the execution of [the Agreement] and the scheduled date of the [bout against Lebedev].” Indeed, in order to avoid liability, King avers that he would have had “to imprison Jones to prevent him from having any access to a banned substance”—clearly an untenable outcome.

While these arguments might have force, they are addressed to the wrong issue. King could be right: under the circumstances, it is possible that his contractual obligations were too onerous to be enforceable. But that question goes to whether King’s failure to perform may be excused, not to whether King in fact failed to perform. As to the latter, Jones’s disqualification plainly put King in breach.

The court then went on to hold that King’s impossibility defense didn’t excuse his breach.

So, what does this case have to say to contract drafters? . . . .

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Why Is Workers’ Compensation An Exclusive Remedy In Employee’s Death Case?

25 Sunday Jan 2015

Posted by in Damages, Employment Law, Litigation, Torts, Workers' Compensation

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Workers’ Compensation Is Exclusive Remedy, by Barry Zalma, Zalma On Insurance Blog

http://zalma.com/blog/workers-compensation-is-exclusive-remedy/

Tort Judgment Against Employer Is Only Good for Wallpaper

The workers’ compensation system across the United States provides benefits to injured workers without regard to fault. When the injury is serious or results in death the workers’ compensation benefits do not feel sufficient to indemnify the injured worker or his or her estate for the loss incurred. As a result, the injured worker or his estate will attempt a tort action and then try to collect that judgment by means of a suit against the employer’s insurer.

Employers and employees make a bargain: the employer will not require proof of negligence if the employee is injured and the employee agrees that he or his estate will accept the statutory benefits provided by state law and give up the right to sue the employer for tort damages.

In Morales v. Zenith Ins. Co., — F.3d —-, 2015 WL 265445 (C.A.11 (Fla.) 1/22/15) the estate of an injured worker successfully sued an employer and sought to recover by means of a breach of contract claim filed by plaintiff-appellant Leticia Morales, on behalf of herself, the Estate of Santana Morales, Jr., and two minor children against Zenith Insurance Company (‘Zenith’).

FACTS
Santana Morales, Jr. was crushed to death by a palm tree while working as a landscaper for Lawns Nursery and Irrigation Designs, Inc. (‘Lawns’). At the time of Morales’s death, his employer Lawns maintained a ‘Workers’ Compensation and Employers Liability Insurance Policy’ with Zenith. The policy contained two types of coverage: (1) workers’ compensation insurance under Part I and (2) employer liability insurance under Part II. After Morales’s death, Zenith began paying workers’ compensation benefits to the Estate in accordance with its obligation under Part I of the policy.

Under Part II, Zenith was obligated: (1) to ‘pay all sums [Lawns] legally must pay as damages because of bodily injury to [its] employees, provided the bodily injury is covered by this Employers Liability Insurance’; and (2) to defend lawsuits for such damages. In relevant part, Part II contained an exclusion barring employer liability insurance coverage for ‘any obligation imposed by a workers compensation … law’ (the ‘workers’ compensation exclusion’).

On December 3, 1999, the Estate filed a wrongful death action against Lawns in Florida circuit court and obtained a default jury award to the Estate of $9.525 million in damages against Lawns. . . .

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Contracts Must Be Drafted With Specific Language To Enforce Arbitration.

01 Monday Dec 2014

Posted by in 5th Circuit Court of Appeals, 8th Circuit Court of Appeals, Appellate Law, Arbitration, Arbitration, Breach, Contract Law, Employment Law, Legal Analysis, Legal Writing, Precedent

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“Harmonizing” Contract Language Leads Two Circuit Courts To Deny Arbitration, by Arbitration Nation Blog, posted at Lexology Blog

http://tinyurl.com/mh3y6z3

Two parties recently convinced federal circuit courts that the language of their arbitration agreements was not sufficient to compel arbitration of their disputes. Both cases turned on how courts ‘harmonize’ language from different parts of an agreement or from multiple agreements.

The decision from the Eighth Circuit was a pretty easy one. The parties’ contract required them to mediate any dispute. Then it said: ‘if the dispute is not resolved through mediation, the parties may submit the controversy or claim to Arbitration. If the parties agree to arbitration, the following will apply…’ The party fighting arbitration (a city in South Dakota) argued the quoted language does not mandate arbitration, it makes arbitration an option for the parties, so the case should remain in court. [Emphasis in original.]

The party seeking arbitration emphasized a sentence at the end of the arbitration paragraph saying that the arbitrator’s ‘decision shall be a condition precedent to any right of legal action.’ It argued that the only way to harmonize that language is to conclude that arbitration is required. The court disagreed, finding that a reasonable interpretation is simply that if the parties decided to arbitrate, the arbitration decision is a condition precedent to further legal action. Quam Construction Co., Inc. v. City of Redfield, ___ F.3d___, 2014 WL 5334781 (8th Cir. Oct. 21, 2014). Therefore, the Eighth Circuit affirmed the district court’s denial of the motion to compel arbitration.

The Fifth Circuit had a harder case in Sharpe v. AmeriPlan Corp., __ F.3d__, 2014 WL 5293707 (5th Cir. Oct. 16, 2014). In that case, three former sales directors of a company sued for breach of contract after they were terminated. The company moved to compel arbitration and the district court granted the motion.

Their original employment agreements with the company did not call for arbitration, in fact they set the venue for legal proceedings exclusively in Texas courts. The employment agreements also incorporated a ‘Policies and Procedures Manual.’ The employment agreements could only be modified with written consent of all parties, but the Manual could be unilaterally modified by the company. Years later, the company amended its Manual to provide for mandatory arbitration.

The Fifth Circuit reversed the district court, finding that the new arbitration clause was unenforceable. First, the court concluded that the jurisdiction and venue clauses in the original employment agreements survived the amendment to the Manual, because there was no written and signed change to the employment agreements themselves and because the company had affirmatively relied on the venue clause (calling for Texas courts) when it transferred the case from California to Texas. And second, the court found that the old and new provisions “cannot be harmonized” without rendering the original agreement meaningless.

There are drafting lessons from these cases: if you want to have mandatory arbitration of disputes, the contract must consistently say that, and if you want to modify existing agreements to add arbitration, make sure to honor any language in the original agreement about how that agreement can be amended or modified and be clear what clauses are replaced or superseded.

Breach of Contract Claims Against Allstate by Its Employees.

01 Thursday May 2014

Posted by in Contract Law, EEOC, Employment Contracts, Employment Law, Intentional Misrepresentation

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New York Times Report on Litigation Challenging an Allstate Waiver Agreement, by Jeremy Telman, Contracts Prof Blog

http://bit.ly/1kwF7GI

According to this article in today’s New York Times, 6,200 Allstate employees, who joined its Neighborhood Agents Program in the 1980s and 1990s, were called into meetings in 1999 at which they were told that they would now proceed as independent contractors, forfeiting health insurance, their retirement accounts or profit-sharing, and terminating the accrual of their pension benefits.   If they wanted to continue to sell Allstate insurance, they had to sign waivers in which they agreed not to sue the insurer.  Thirty-one agents signed but have now sued nonetheless, alleging age discrimination and breach of contract.

They sued thirteen years ago, but the case is still far from over.  They are still seeking class certification.  The Times article indicates that cases such as this one are hard to win, but the judge in this case has already stated that those that signed the waivers were made substantially worse off, that Allstate’s claimed corporate reorganization was actually a disguised staff reduction, and that Allstate’s conduct was ‘self-serving and, from most perspectives, underhanded.’  In addition, Allstate seems to have misrepresented to the agents the consequences of not signing the waiver, having told the agents that they would be barred for life from soliciting business from their former customers.  Allstate has already paid $4.5 million to settle an age-discrimination claim brought by the EEOC on behalf of 90 of the agents.