Justia Contracts Opinion Summaries

The Douglas County Health Center Security Union (Union) filed a petition before the Commission of Industrial Relations (CIR) alleging that its employer, Douglas County (County), had engaged in certain prohibited practices. The CIR found the County had engaged in a prohibited practice when it failed to negotiate its intention to contract out bargaining unit work to a private security company. The CIR ordered the parties to recommence negotiation and awarded the Union attorney fees and costs. The Supreme Court reversed and remanded the decision of the CIR with directions to vacate its order and dismiss the Union's petition, holding that the issue of the subcontracting of bargaining unit jobs resulting in the elimination of bargaining unit jobs was covered by the collective bargaining agreement between the County and Union and presented an issue of contract interpretation over which the CIR lacked jurisdiction.

Brentwood Homes, Inc. and the other appellants in this case (collectively "Brentwood Homes") appealed a circuit court's order denying a motion to stay the proceedings and compel arbitration in a lawsuit filed by Petitioner Fred Bradley that arose out of his purchase of a home in South Carolina. Although Brentwood Homes conceded the Home Purchase Agreement did not meet the technical requirements of the South Carolina Uniform Arbitration Act (the "UAA"), it claimed the court erred in denying the motion because the transaction involved interstate commerce and thus was subject to the Federal Arbitration Act ("FAA"). Upon review, the Supreme Court concluded that because the essential character of the Agreement was strictly for the purchase of a completed residential dwelling and not the construction, the Court found the FAA did not apply. Furthermore, the existence of the national warranty and Bradley's use of out-of-state financing did not negate the intrastate nature of the transaction. Accordingly, the Court affirmed the circuit court's order denying Brentwood Homes' motion to stay the proceedings and compel arbitration as Brentwood Homes failed to offer sufficient evidence that the transaction involved interstate commerce to subject the Agreement to the FAA.

Plaintiffs Joseph and Josephine Iozzi owned a home located in Cranston. On October 15, 2005, excessive rainfall overwhelmed the sewer system servicing the Iozzis's home, causing water and sewage to back up and enter their basement, resulting in extensive damage to their home and personal property. Plaintiffs filed suit seeking declaratory relief and compensatory damages from Triton Ocean State, LLC (Triton); U.S. Filter Operating Services, Inc. (Veolia); and Peerless Insurance Company (Peerless). The complaint alleged that Triton and Veolia were jointly and severally liable for negligently "operating, maintaining and repairing the sewer disposal system" in the city. As to Peerless, the complaint alleged that it was liable for breach of contract for rejecting plaintiffs' claim for damages under their homeowner's insurance policy. Peerless moved for summary judgment arguing that the language in the homeowner's policy was clear and unambiguous and excluded coverage for the claims Plaintiffs made. Triton and Veolia filed a joint motion for summary judgment arguing that neither of them had a contractual or common-law responsibility to Plaintiffs for the damage to their property because a lease service agreement with the City of Cranston relieved them of responsibility for the damage and because the flooding that caused Plaintiffs' damages was caused by an "Act of God." Agreeing with the superior court's reasoning for granting defendants' motions for summary judgment, the Supreme Court affirmed dismissal of Plaintiffs' case.

In August of 2009, Samson Resources Company owned oil and gas leases covering 87.78 mineral acres in Roger Mills County, Oklahoma, including the Schaefer Lease. The Schaefer Lease covered 70 net acres in the Southwest Quarter of Section 28 and had a three-year primary term that ended on November 22, 2007. If drilling operations were commenced by the end of the primary term, the lease would continue so long as such operations continued. On August 2, 2007, Newfield sent a letter to Samson, proposing to drill a well in Section 28. The estimated cost of the well was over $8.5 million dollars. On August 9, 2007, Newfield filed an application with the Commission, seeking to force pool the interests of Samson and other owners in Section 28. Newfield sent an e-mail dated April 14, 2008, to Samson that informed Samson that Newfield had commenced operations prior to the expiration of the Schaefer Lease. Newfield's e-mail stated that Samson had underpaid well costs and that an election to participate with 87.78 acres would require prepayment of $1,411,982.45. Samson responded by e-mail on the same date, informing Newfield its intent was only to elect its 17.78 acres. On April 28, 2008, Samson filed an Application seeking to have its election to participate in the well limited to 17.78 acres rather than 87.78 acres. After an administrative hearing, the Administrative Law Judge determined that Samson's timely election to participate only covered 17.78 acres of its interest and that Samson accepted the cash bonus as to its remaining 70 acres. The Oil and Gas Appellate Referee reversed the ALJ's determination, finding that the ALJ improperly relied on actions which occurred prior to the issuance of the pooling order. The Commission issued Order No. 567706, which adopted the Referee's report, reversed the ALJ, and declared that Samson had elected to participate to the full extent of its 87.78 acre interest in the unit. The Commission found Samson made a "unilateral mistake" when it elected to participate to the full extent of its interest. Samson appealed the Commission's order to the Court of Civil Appeals, which affirmed. Before COCA issued its opinion affirming the Commission, Samson filed an action in the district court alleging actual fraud, deceit, intentional and negligent misrepresentation, constructive fraud, and breach of duty as operator. Samson also alleged Newfield's actions amounted to extrinsic fraud on the Commission, rendering Pooling Order No. 550310 invalid as to Samson's working interest attributable to the 70-acre Schaefer Lease. The trial court granted Newfield's motion to dismiss for lack of subject matter jurisdiction, finding the petition to be an impermissible collateral attack on a valid Commission order. The Court of Civil Appeals affirmed. After its review, the Supreme Court found that Samson's actions for damages sounding in tort were beyond the Commission's jurisdiction, and the district court in this case was the proper tribunal for Samson to bring its claims. The trial court's order granting Newfield's Motion to Dismiss was reversed, and the case was remanded for further proceedings.

The Cumberland Teachers Association (union), appealed to the Supreme Court that confirmed an arbitrator's award in favor of the Cumberland School Committee (school committee). After protracted contract negotiations, the school committee and the union agreed on a three-year collective bargaining agreement (CBA) that would govern their relations for the 2006-2007, 2007-2008 and 2008-2009 academic years. "However, the parties soon discovered that they had left the negotiating table with two very different understandings of how a key component of their agreement would be implemented." An arbitrator was selected and the parties agreed that the issue to be decided by the arbitrator was whether “the Cumberland School Committee place[d] the aggrieved teachers at the correct salary level for the 2007-08 school year?” On appeal to the Supreme Court, the union argued that the arbitrator manifestly disregarded a contract provision when he found that there was no written agreement about how the new salary schedule would be implemented for the 2007-2008 year. Upon review, the Supreme Court concluded that the union did not demonstrate that the arbitrator manifestly disregarded the contract or that he was completely irrational in arriving at his decision and award.

Appellant Richard Freemantle challenged the legality of a severance agreement between Anderson County and Respondent Joey Preston, a former Anderson County administrator. Respondent was hired as County Administrator in 1998. His contract with the County provided for an initial employment term of three years, with an annual renewal in the absence of written notice not to renew the contract. The November 2008 election changed the "balance of power" on the Anderson County Council. One of the final acts of the outgoing Council was to execute a severance agreement for Respondent that provided him over one million dollars in benefits which was "well in excess of that provided in his employment contract." The severance agreement also included a release provision stating that the County would never seek legal redress against Respondent for any claims relating to his employment with the County. Appellant filed a complaint against Respondents on behalf of himself and all others similarly situated seeking monetary relief and various declaratory judgments. Specifically, Appellant alleged that Council's vote approving the severance agreement was invalid. In addition, Appellant contended the successor Anderson County Council was not bound by the severance agreement. Relief was sought pursuant to various causes of action, including covin and collusion, breach of fiduciary duties, illegal gift of county funds, misfeasance, malfeasance, conspiracy, violations of public policy, and violations of FOIA, The trial court dismissed the action finding that Appellant's status as a taxpayer did not confer standing to challenge the severance agreement. The Supreme Court agreed with the circuit court in most respects concerning Appellant's lack of standing. However, the Court disagreed with the trial court "only insofar as the FOIA claim is concerned, for traditional standing principles do not apply under FOIA because the legislature has conferred standing on any citizen to enforce the Act's provisions." Accordingly, the Court affirmed in part, reversed in part, and remanded the case for further proceedings.

Plaintiff-Appellee William Mohr was struck in Delaware as a pedestrian by a car insured in Delaware. He recovered the minimum $15,000 coverage limit from the carrier that insured the striking car. Plaintiff also sought to recover from Defendant-Appellant Progressive Northern Insurance Company which sold an automobile insurance policy to Plaintiff's mother. Under the policy, Plaintiff's mother was the named insured, and Plaintiff was a member of her household. The Progressive policy, by its terms, did not cover Plaintiff as a pedestrian. The superior court held nonetheless that Plaintiff was entitled to recover under Progressive's policy because insofar as it denied PIP coverage, the policy conflicted with the Delaware automobile insurance statute which mandated such coverage. Progressive appealed. The court ordered Progressive to pay the difference between the amount Plaintiff recovered from the striking-car's policy and PIP limit of his mother's policy. Finding no error in the superior court's decision, the Supreme Court affirmed.

In 1983, the Nuclear Waste Policy Act, 42 U.S.C. 10101-10270, authorized the Department of Energy to contract with nuclear facilities for disposal of spent nuclear fuel and high level radioactive waste. The Standard Contract provided that rights and duties may be assignable with transfer of SNF title. Plaintiff entered into the Standard Contract in 1983 and sold its operation and SNF to ENVY in 2002, including assignment of the Standard Contract, except one payment obligation. Plaintiff transferred claims related to DOE defaults. As a result of DOE’s breach, ENVY built on-site dry-storage facilities. The Claims Court consolidated ENVY’s suit with plaintiff’s suit. The government admitted breach; the Claims Court awarded ENVY $34,895,467 (undisputed damages) and certain disputed damages. The Federal Circuit affirmed in part. Plaintiff validly assigned pre-existing claims; while partial assignment of rights and duties under the contract was not valid, the government waived objection. The assignment encompassed claims against the government. Legal and lobbying fees to secure Vermont approval for mitigation were foreseeable, but other expenses were not recoverable. ENVY failed to prove costs of disposing of contaminated material discovered due to the breach and its characterization of spent fuel moved to dry storage. ENVY is not entitled to recover cost of capital for funding mitigation, or Resource Code 19 payroll loader overhead costs, but may recover capital suspense loader overhead costs,.

Plaintiff Susan Jeffery appealed a superior court order that granted summary judgment in favor of Defendant City of Nashua on her wrongful discharge and breach of contract claims. Plaintiff worked for the City since 1977 in the payroll department. She became the City's risk manager in 1998. n 2004, Plaintiff became concerned that her direct supervisor, Maureen Lemieux, did not understand the budgetary process because "she wanted to level fund the health line items" in the City’s 2005 fiscal year budget. Plaintiff raised her concerns with Lemieux "dozens of times," but Lemieux responded that "she was comfortable with her numbers." In April 2005, the City discovered that the health insurance line item was underfunded. Consequently, the Board of Aldermen convened an ad hoc health care budget committee to investigate the circumstances leading up to the shortfall. Plaintiff alleged that between her two interviews with the committee, she was summoned to a meeting with the mayor, at which he asked her whether she, as department manager, should be held responsible for the budget shortfall. Plaintiff refused to accept responsibility, explaining that she had tried to prevent the error by raising her concerns with Lemieux and others. Further, Plaintiff alleged that on a separate occasion, the mayor suggested that they "all share the blame," but she refused his suggestion. Subsequently, Plaintiff started receiving poor performance evaluations and later received disciplinary actions. She would later be demoted. Shortly after her demotion, Plaintiff took a leave of absence under the Family and Medical Leave Act; while still on leave, Plaintiff resigned her position, stating she wished to retire early. Three years after her resignation, Plaintiff sued the City alleging constructive discharge and breach of contract. Finding that Plaintiff's suit fell outside the statute of limitations, and that Plaintiff had no enforceable employment contract with the City, the Supreme Court affirmed summary judgment granted in favor of the City.

At issue in this appeal was a decision made by Appellee, Office of State Procurement (OSP), rejecting the protest submitted by Appellant, Fatpipe, Inc., of a contract award for the State's purchase of bandwidth equipment. Fatpipe sought judicial review of that decision. The circuit court granted OSP's motion to dismiss. The Supreme Court dismissed Fatpipe's appeal, holding that the circuit court lacked subject-matter jurisdiction to review the decision, as (1) Fatpipe was not among the class of entities entitled to lodge a protest against the contract award, and (2) OSP's decision, which merely determined that Fatpipe's protest could not be heard, was not subject to review under the APA.