Missouri Federal Contract Cases 2012 (Part 02)

AMCM, Inc. v. Philadelphia Indemnity Insurance Co.

The U.S. District Court for the Eastern District of Missouri granted the defendant’s motion for summary judgment, finding that a hobby farm was not intended for a “similar use” under a newly-acquired property clause of an insurance policy covering a day care center.

Secure Energy, Inc. v. Philadelphia Indemnity Insurance Co.

The U.S. District Court for the Eastern District of Missouri denied the defendant insurance company’s motion to dismiss, holding that the plaintiff had pled facts sufficient to withstand the motion.

After being named as a defendant in a state court action, Secure Energy consulted with its insurance broker. They determined that coverage was not available under D & O liability and employment practices policies issued by the defendant. The plaintiff later submitted a claim. When the defendant denied the claim on the ground that the notice of the claim was untimely, Secure Energy brought a declaratory judgment action in state court, which was removed to federal court.

Chavis Van & Storage of Myrtle Beach, Inc. v. United Van Lines, LLC

Chavis brought suit alleging breach of contract, breach of implied contract, breach of the covenant of good faith and fair dealing, promissory estoppel, fraudulent misrepresentation, negligent misrepresentation, tortious interference with business expectancies, and civil conspiracy. Chavis alleged that it lost its status as United’s exclusive agent for servicing shipments into and out of Shaw Air Force Base in South Carolina when United, in breach of its agency agreement with Chavis, unilaterally changed the roles United agents play in servicing shipments. The U.S. District Court for the Eastern District of Missouri dismissed all of the counts of Chavis’s complaint except the count for breach of contract on the basis that the claims are pre-empted by the Federal Aviation Administration Authorization Act of 1994. United argued that the breach of contract claim should also be dismissed on the ground that it’s contradicted by the express terms of the agency agreement, which gives United permission to unilaterally change the policies and terms of the agreement without the consent of Chavis, but the court declined to dismiss that count.

Hill v. Career Education Corporation

The plaintiff, a former student at Sanford Brown College, filed suit in the Circuit Court of St. Louis County, Missouri, alleging that the defendants made misrepresentations or omissions about the school and about the career prospects of its graduates. She alleged fraudulent misrepresentation, fraud by concealment and omission, and violation of the Missouri Merchandising Practices Act. The defendants, which owned the college, had the case removed to federal court. The defendants’ answers each raised an arbitration clause in the Enrollment Agreement signed by Hill as an affirmative defense and sought to have the case dismissed. The plaintiff argued that the arbitration clause is unenforceable because it’s contained in a contract of adhesion and that it’s procedurally and substantively unconscionable under Missouri law. Following Kenner v. CEC, in which the federal district court addressed an identical motion to compel arbitration filed by the same defendants, the U.S. District Court for the Eastern District of Missouri dismissed the case.