Justia U.S. 4th Circuit Court of Appeals Opinion Summaries

NCO Financial Systems, Inc. (NCO) entered into a lease agreement with Montgomery Park, LLC (Montgomery Park) for over 100,000 square feet of office space in Baltimore, Maryland. The lease allowed NCO to terminate early after eight years if certain conditions were met. NCO attempted to terminate early, but Montgomery Park claimed the conditions were not satisfied. NCO vacated the premises and stopped paying rent, leading Montgomery Park to send a default notice. NCO then filed a lawsuit seeking a declaratory judgment that it had properly terminated the lease and that the rent was based on misrepresented square footage.The United States District Court for the District of Maryland found in favor of Montgomery Park after a bench trial, awarding it $9,854,566.95 plus ongoing interest. The court also set a schedule for determining Montgomery Park’s claim for costs, fees, and expenses. Montgomery Park filed a motion seeking approximately $3.8 million for these costs, which NCO opposed on several grounds, including the lack of a proper demand for payment and the inclusion of fees for defending against NCO’s initial suit.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court concluded that Montgomery Park made a valid demand for payment when it filed its motion for costs, fees, and expenses on August 24, 2022. The court held that default interest should run only from the date of this demand, not from when the costs were incurred, and remanded the case to recalculate the interest. The court affirmed the district court’s award of costs, fees, and expenses, including those incurred in defending against NCO’s claims and expert witness fees, finding no abuse of discretion or error in the district court’s decisions.The Fourth Circuit affirmed in part, vacated in part, and remanded with instructions to recalculate the default interest. View "NCO Financial Systems, Inc. v. Montgomery Park, LLC" on Justia Law

Three West Virginia residents, dissatisfied with their cable and internet service provided by Suddenlink, sued Cebridge Acquisition, LLC, Cequel III Communications I, LLC, Cequel III Communications II, LLC, and Altice USA, Inc. They alleged that Suddenlink failed to provide reliable services and sought damages for negligence, unjust enrichment, and breach of contract. Suddenlink moved to compel arbitration based on the arbitration agreement in its 2021 Residential Services Agreement (RSA). The district court denied the motions, concluding that a 2017 arbitration agreement controlled, was unconscionable, and could not be enforced.The United States District Court for the Southern District of West Virginia found the 2017 arbitration agreement procedurally and substantively unconscionable, citing the unequal bargaining power between the parties, the adhesive nature of the contract, and the complexity of the terms. The court also noted that the 2017 agreement lacked an opt-out provision and included terms that were overly harsh and lacked mutuality. Consequently, the district court denied Suddenlink’s motions to compel arbitration in all three cases.The United States Court of Appeals for the Fourth Circuit reviewed the case and determined that the 2021 arbitration agreement, not the 2017 version, governed the disputes. The court found that the 2021 agreement was valid and enforceable, as it satisfied all elements of contract formation, including mutual assent and valuable consideration. The court also concluded that the 2021 arbitration agreement was not procedurally or substantively unconscionable. The court reversed the district court’s judgments and remanded the cases with instructions to compel arbitration. View "Meadows v. Cebridge Acquisition, LLC" on Justia Law

Real Time Medical Systems, LLC provides analytics services to skilled nursing facilities by accessing health records from PointClickCare Technologies, Inc., which operates a system hosting patients’ electronic health records. Real Time uses automated bots to access these records. PointClickCare, citing security and performance concerns, blocked users suspected of using bots. Real Time sued to stop PointClickCare from restricting its access, and the district court granted a preliminary injunction in favor of Real Time.The United States District Court for the District of Maryland granted Real Time a preliminary injunction, finding that PointClickCare’s actions likely constituted information blocking under the 21st Century Cures Act. The court concluded that Real Time was likely to succeed on the merits of its claims for unfair competition and tortious interference with contracts. The court also found that Real Time would suffer irreparable harm without the injunction, that the balance of equities favored Real Time, and that the public interest supported granting the injunction.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court’s decision. The Fourth Circuit agreed that Real Time was likely to succeed on the merits of its unfair competition claim, as PointClickCare’s actions likely violated the Cures Act’s prohibition on information blocking. The court found that PointClickCare failed to demonstrate that any exceptions to the information-blocking provision applied. The court also agreed that Real Time would suffer irreparable harm without the injunction, that the balance of equities favored Real Time, and that the public interest supported the injunction. The court concluded that the district court did not abuse its discretion in granting the preliminary injunction. View "Real Time Medical Systems, Inc. v. PointClickCare Technologies, Inc." on Justia Law

Jason and Kacie Highsmith hired Shelter, LLC to manage a home renovation project and later contracted with Design Gaps, Inc. to design and install cabinets and closets. The contracts required arbitration for disputes but did not specify completion dates. Design Gaps failed to meet multiple promised deadlines, leading the Highsmiths to terminate the contracts and hire another company. The Highsmiths shared Design Gaps' copyrighted drawings with the new contractor. They then filed for arbitration, alleging breach of contract and other claims, while Design Gaps counterclaimed for various issues, including copyright infringement.The arbitrator held a three-day hearing, during which the Highsmiths presented multiple witnesses, while Design Gaps only presented David Glover. The arbitrator found in favor of the Highsmiths, awarding them damages and attorney’s fees, and denied Design Gaps' counterclaims, including the copyright claim, citing fair use and lack of evidence for copyright registration.Design Gaps petitioned the United States District Court for the District of South Carolina to vacate the arbitration award, arguing the arbitrator disregarded the law and failed to issue a reasoned award. The district court denied the petition and confirmed the arbitration award, also granting the Highsmiths' motion for attorney’s fees.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court dismissed the appeal, citing lack of federal jurisdiction based on the precedent set in Friedler v. Stifel, Nicolaus, & Co., which held that federal courts do not have jurisdiction over motions to vacate arbitration awards unless there is an independent basis for federal jurisdiction beyond the Federal Arbitration Act. The court concluded that the petition did not meet this requirement. View "Design Gaps, Inc. v. Shelter, LLC" on Justia Law

Phillip and Sara Alig, along with Daniel and Roxanne Shea, filed a class action lawsuit against Quicken Loans, Inc. (now Rocket Mortgage, LLC) and Title Source, Inc. (now Amrock, Inc.). They alleged that during the refinancing of their home mortgage loans, they paid for appraisals that were not independent because the defendants had provided appraisers with the homeowners' estimates of their homes' value. They claimed this made the appraisals worthless and asserted statutory, breach of contract, and conspiracy claims.The United States District Court for the Northern District of West Virginia certified a class of West Virginia citizens who refinanced mortgage loans with Quicken and received appraisals that included an estimate of the property's value. The court granted summary judgment to the plaintiffs, awarding over $10.6 million in damages. The court found that the plaintiffs had established a conspiracy between the defendants.The United States Court of Appeals for the Fourth Circuit affirmed the class certification and summary judgment on the statutory and conspiracy claims but vacated and remanded the breach of contract claim. The Supreme Court vacated the Fourth Circuit's judgment and remanded the case for reconsideration in light of TransUnion LLC v. Ramirez, which emphasized that every class member must have Article III standing to recover damages.On remand, the district court reinstated its original judgment, stating that TransUnion did not affect the class's standing. However, the Fourth Circuit concluded that the plaintiffs failed to establish that class members suffered concrete harm from the defendants' actions. The court reversed the district court's judgment certifying the class and awarding damages, affirming the judgment on the named plaintiffs' statutory and conspiracy claims, and vacating the judgment on the breach of contract claim, remanding it for further proceedings. View "Alig v. Rocket Mortgage, LLC" on Justia Law

Liberty Mutual Insurance Company ("Liberty") and Atain Specialty Insurance Company ("Atain") were involved in a contract dispute. Liberty sued Atain for breach of contract after Atain refused to indemnify Liberty for a $1 million appeal bond related to a racial discrimination case against McClure Hotel. Atain argued that it was not obligated to indemnify Liberty based on equitable estoppel, claiming it relied on Liberty's misrepresentation that the bond was closed.The United States District Court for the Northern District of West Virginia granted summary judgment in favor of Liberty, rejecting Atain's equitable estoppel defense. The court found that Liberty had not misrepresented the status of the appeal bond to Atain.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision. The Fourth Circuit held that even if Liberty had made a misrepresentation, Atain could not demonstrate detrimental reliance because it had access to all necessary information to understand its obligations under the indemnity agreement. Atain, as a sophisticated party, should have known that the appeal bond remained in effect until the judgment in the underlying action was satisfied, regardless of the outcome of the separate coverage action. Therefore, Atain's equitable estoppel defense failed, and the grant of summary judgment to Liberty was affirmed. View "Liberty Mutual Insurance Co. v. Atain Specialty Insurance Co." on Justia Law

In 2016, a suicide bombing occurred at the U.S. military base in Bagram Airfield, Afghanistan. The bomber, an Afghan national employed by a subcontractor of Fluor Corporation, detonated an explosive vest, injuring Specialist Winston Tyler Hencely, among others. Hencely sued Fluor, alleging negligence in supervision, entrustment, and retention of the bomber, and breach of contract with the U.S. Government.The U.S. District Court for the District of South Carolina granted judgment to Fluor on all claims. The court found that federal law preempted Hencely’s tort claims and that he was not a third-party beneficiary entitled to enforce the Government’s contract with Fluor. Hencely appealed these decisions.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court affirmed the district court’s judgment, holding that the Federal Tort Claims Act’s combatant activities exception preempted Hencely’s state-law tort claims. The court concluded that Fluor was integrated into combatant activities and that the military retained command authority over Fluor’s supervision of Local Nationals at Bagram Airfield. The court also held that Hencely was not an intended third-party beneficiary of the contract between Fluor and the U.S. Government, as the contract did not express an intent to benefit individual soldiers or confer upon them the right to enforce its provisions.Thus, the Fourth Circuit affirmed the district court’s judgment, precluding Hencely’s tort claims and denying his breach of contract claim. View "Hencely v. Fluor Corporation" on Justia Law

Four plaintiffs were injured when a railing collapsed at FedExField during a professional football game. They sued the owner of the football team, the owner of the stadium, the security services provider, and unidentified maintenance persons for negligence. The defendants moved to compel arbitration based on an arbitration clause in the terms and conditions of the tickets, which were purchased online by a friend of the plaintiffs, Brandon Gordon.The United States District Court for the District of Maryland denied the motion to compel arbitration. The court found factual disputes regarding whether Gordon agreed to the arbitration clause. Additionally, the court held that even if Gordon had agreed to the arbitration clause, the defendants did not demonstrate that Gordon was an agent of the plaintiffs who could bind them to the arbitration clause.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court reversed the district court's decision regarding the plaintiffs being bound by any contract Gordon may have entered into, finding that Gordon had apparent authority to bind the plaintiffs to the arbitration clause. The court held that the Washington Football Team's reliance on Gordon's apparent authority was reasonable and traceable to the plaintiffs' actions of using the tickets to enter the stadium. The court vacated the district court's order denying arbitration and remanded the case to resolve the factual disputes about whether Gordon entered into a contract that included the arbitration clause. View "Naimoli v. Pro-Football, Inc." on Justia Law

Alvin Johnson pled guilty to possession with intent to distribute cocaine under a plea agreement. The agreement included a stipulation regarding the drug quantity and its base offense level but allowed the Government to make a sentencing recommendation. Johnson was initially sentenced to 128 months in prison, classified as a career offender based on prior convictions. He later successfully challenged one of these convictions, leading to a recalculated Guidelines range of 57-71 months.The United States District Court for the Eastern District of North Carolina initially sentenced Johnson to 128 months. Upon remand, after Johnson's successful challenge to his career offender status, the Probation Office recalculated his Guidelines range to 57-71 months. The Government then moved for an upward departure or variance, arguing that Johnson's criminal history warranted a higher sentence. The district court agreed and sentenced Johnson to 120 months.The United States Court of Appeals for the Fourth Circuit reviewed the case. Johnson argued that the Government breached the plea agreement by seeking a sentence above the recalculated Guidelines range. The court found that the plea agreement did not restrict the Government from recommending a higher sentence and that the Government had reserved the right to make a sentencing recommendation. The court held that the Government did not breach the plea agreement and affirmed the 120-month sentence. View "United States v. Johnson" on Justia Law

The case involves eight multiemployer benefit plans (the "Funds") seeking to recover delinquent contributions from Stromberg Metal Works, Inc. for health, pension, and other benefits for sheet metal workers. The Funds allege that Stromberg underpaid contributions owed under a collective bargaining agreement (CBA) with the Sheet Metal, Air, Rail and Transportation Union (SMART Union) by hiring temporary workers through staffing agencies without making the required contributions.Initially filed in the Middle District of Tennessee, the case was transferred to the Eastern District of North Carolina. The district court denied Stromberg’s motion for summary judgment, granted the Funds’ cross-motion for summary judgment, and awarded the Funds over $823,000 in delinquent contributions and more than $430,000 in liquidated damages and interest. Stromberg appealed, challenging both the liability and damages rulings.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court affirmed the district court’s liability ruling, agreeing that the 2019 Settlement between Stromberg and Local 5 did not preclude the Funds from seeking delinquent contributions. The court emphasized that multiemployer benefit plans have distinct interests from local unions and are not bound by settlements to which they are not parties.However, the Fourth Circuit vacated the district court’s damages ruling. The appellate court concluded that while the Funds could rely on the CBA’s default staffing ratio to approximate damages due to Stromberg’s failure to maintain adequate records, Stromberg had presented sufficient evidence to cast doubt on the accuracy of the Funds’ damages calculation. The case was remanded for further proceedings to address the disputed damages issue. View "Sheet Metal Workers' Health & Welfare Fund of North Carolina v. Stromberg Metal Works, Inc." on Justia Law