Justia Contracts Opinion Summaries

Dustin Irwin died in 2014, in the Ward County, North Dakota jail. The circumstances of his death led to an investigation and criminal charges against Ward County Sheriff Steven Kukowski. Initially, Divide County State’s Attorney Seymour Jordan was appointed to handle the criminal proceeding. Jordan determined the circumstances justified a petition for removal of Sheriff Kukowski from office. Governor Jack Dalrymple appointed Jordan as the special prosecutor for the removal. Ultimately, Jordan requested to withdraw and Governor Burgum appointed attorney Daniel Traynor as the special prosecutor. After completion of the removal proceedings, Traynor submitted his bill to the State on May 1, 2017. The State forwarded the bill to Ward County. Ward County refused to pay the bill. Traynor sued the State and Ward County to recover the unpaid fees. The State responded to Traynor’s complaint by filing a motion to dismiss. Ward County answered Traynor’s complaint and cross-claimed against the State. The State moved to dismiss Ward County’s cross-claim. Traynor moved for judgment on the pleadings. The district court entered judgment in Traynor’s favor against the State, and awarded interest at 6% per annum. The State argued Ward County had to pay Traynor’s bill because Chapter 44-11, N.D.C.C., failed to address who should pay for the special prosecutor fees in a county official’s removal proceeding, and therefore the catch-all provision in N.D.C.C. 54-12-03 applied. Ward County argues neither Chapter 44-11, N.D.C.C., nor Chapter 54- 12, N.D.C.C., imposes an obligation upon a county to pay the fees of an attorney appointed by the Governor for proceedings for the removal of a public official. The North Dakota Supreme Court concurred with the district court that Chapter 44-11, N.D.C.C., was silent regarding the payment of special prosecutor fees in a removal proceeding, and it was not necessary or required to import N.D.C.C. 54-12-03 into Chapter 44-11. Based on these facts, the Supreme Court concluded the district court did not err in finding a contract existed for legal services between Traynor and the State. The Court agreed with Traynor that the district court erred by awarding 6% per annum interest instead of the 1.5% monthly interest rate stated on its bill. The Supreme Court therefore affirmed in part, reversed in part and remanded for further proceedings. View "Traynor Law Firm v. North Dakota, et al." on Justia Law

In 2014, Cook Medical entered a five-year agreement for Acheron to serve as the distributor of Cook medical devices and products to VA and Department of Defense Medical Centers. Sales to Defense are primarily made through a Distribution and Pricing Agreement (DAPA); sales to the VA require a Federal Supply Schedule (FSS). Cook already had a DAPA, but not an FSS; the agreement required Acheron to obtain an FSS. Cook refused to submit to a required audit of its commercial sales records as required by 48 CFR 515.408(b)(5) to obtain an FSS and refused to deactivate its DAPA, preventing Acheron from selling Cook products to Defense through Acheron’s own DAPA. Cook sent notice that Acheron was in material breach and terminated the agreement 30 days later due to Acheron’s failure to cure. Acheron filed suit.The district court granted Cook summary judgment; Acheron materially breached its obligation to obtain an FSS but owed no damages because the breach was excused by the force majeure clause. The Seventh Circuit affirmed. The Agreement does not expressly obligate Cook to submit to the VA audit or to deactivate its DAPA. The duty of good faith requires that a party perform its obligations under the contract in good faith but does not require a party to undertake a new, affirmative obligation. Neither party actively sought to sabotage the other party’s performance to escape its own obligations or obtain an unfair advantage. View "Acheron Medical Supply, LLC v. Cook Medical Inc." on Justia Law

In August 2013 the Alaska Department of Transportation and Public Facilities (DOT) entered into a contract with Osborne Construction Company to upgrade the Aircraft Rescue and Fire Fighting building at the Fairbanks International Airport to withstand damage in the event of an earthquake. The DOT appealed a superior court decision reversing the agency's decision in an administrative appeal. The agency denied a contractor’s claim for additional compensation because the claim was filed outside the filing period allowed by the contract. After applying its independent judgment to interpret the contract, the Alaska Supreme Court agreed with the DOT that the contractor failed to file its claim within the period allowed. The Supreme Court therefore reversed the superior court’s decision and reinstated the agency’s. View "Alaska, Dept. of Transportation & Public Facilities v. Osborne Construction Co." on Justia Law

In this construction contract dispute, the Supreme Court held that the San Antonio River Authority possessed the authority to agree to arbitrate claims under Texas Local Government Code Chapter 271 and exercised that authority in the contract and that the judiciary, rather than an arbitrator, retains the duty to decide whether a local government has waived its governmental immunity.The River Authority hired Austin Bridge and Road L.P. for a construction project. The parties agreed to submit any disputes about the contract to arbitration. Austin Bridge invoked the contract's arbitration provisions when disagreements about the scope of work and payment arose. After the arbitrator denied the River Authority's plea of governmental immunity, the River Authority sued Austin Bridge, arguing that it lacked the authority to agree to the contract's arbitration provisions. The trial court concluded that the arbitration provisions in the contract were enforceable. The court of appeals agreed that the River Authority had the authority to agree to arbitrate but concluded that a court, rather than an arbitrator, must decide whether the River Authority was immune from the claims against it. The Supreme Court affirmed, holding that chapter 271 waived the River Authority's immunity from suit for Austin Bridge's breach of contract claim. View "San Antonio River Authority v. Austin Bridge & Road, L.P." on Justia Law

North Edwards Water District (the District) selected Clark Bros., Inc. (Clark) as its general or direct contractor on a public works project to build an arsenic removal water treatment plant. Clark hired subcontractor Crosno Construction (Crosno) to build and coat two steel reservoir tanks. The subcontract contained a "pay-when-paid" provision that stated Clark would pay Crosno within a reasonable time of receiving payments from the District, but that this reasonable time "in no event shall be less than the time Contractor and Subcontractor require to pursue to conclusion their legal remedies against Owner or other responsible party to obtain payment . . . ." After Crosno completed most of its work, a dispute arose between the District and Clark halting the project. As Clark sued the District, Crosno sought to recover payments owed under the public works payment bond that Clark had obtained for the project. The issue this case presented for the Court of Appeal's review involved Crosno's claim against the bond surety, Travelers Casualty and Surety Company of America (Travelers). At issue was whether the pay-when-paid provision in Crosno's subcontract precluded Crosno from recovering under the payment bond while Clark's lawsuit against the District was pending. Relying on Wm. R. Clarke Corp. v. Safeco Ins. Co., 15 Cal.4th 882 (1997), the trial court found the pay-when-paid provision here unenforceable because it affected or impaired Crosno's payment bond rights in violation of Civil Code section 8122. With the facts largely undisputed, the court granted Crosno's motion for summary judgment and entered judgment in its favor for principal due plus prejudgment interest. Travelers argued the trial court misconstrued Wm. R. Clarke and erred in failing to enforce the pay-when-paid provision against the bond claim. After carefully considering the parties' arguments, the Court of Appeal agreed with the trial court's analysis and affirmed. View "Crosno Construction, Inc. v. Travelers Casualty etc." on Justia Law

Restore was asked to mitigate and repair significant fire damage at Proviso East High School, having provided similar service to the District in the past. The District’s customary practice when contracting for repair and payment of losses covered by insurance was to proceed without a recorded vote of its Board. The fire loss was covered by insurance. The District’s superintendent executed contracts with Restore.The District was subject to the School District Financial Oversight Panel (FOP) and Emergency Financial Assistance Law (105 ILCS 5/1B-1) and the Financial Oversight Panel Law (105 ILCS 5/1H-1). The FOP’s chief fiscal officer attended construction meetings and approved numerous subcontracts, quotations, bids, sales orders, change orders, and invoices. Although there was no recorded vote, “a majority of the Proviso Board knew and informally approved" the work. Restore was paid by the insurers for all but $1,428,000. Restore sued, seeking recovery from the District based on quantum meruit. The District argued that it had no obligation to pay because the contracts had not been let out for bid and approved by a majority vote as required by the School Code (105 ILCS 5/1-1).The Illinois Supreme Court affirmed the reinstatement of the case following dismissal. The failure of a governmental unit to comply with required contracting methods is not fatal to a plaintiff’s right to recover based on quasi-contract or implied contract principles. The Board was subject to the FOP; the FOP was fully apprised of and approved the work. Any misconduct was on the part of the Board; allowing Restore to recover presents no “risk of a raid on the public treasury.” View "Restore Construction Co., Inc. v. Board of Education of Proviso Township High Schools District 209" on Justia Law

Lakeview Excavating appealed a district court judgment dismissing its complaint against Dickey County and German Township (Defendants) for breach of contract, intentional fraud, and misrepresentation. In spring 2012, the Defendants awarded to Lakeview three road construction project contracts funded by the Federal Emergency Management Agency (FEMA). The parties executed three identical contracts, one for each project. The contracts required Lakeview to provide the necessary documents to satisfy FEMA requirements for funding. Lakeview had to use more material than was listed in the bid documents to complete the projects. Some of the material used by Lakeview was taken from private property without permission and resulted in litigation against Lakeview. Lakeview completed the road construction projects in August 2012. In October 2016, Lakeview sued the Defendants for breach of contract, fraud, misrepresentation, and unlawful interference with business. The court ruled Lakeview breached its contracts with the Defendants, and held Lakeview’s tort claims against the Defendants were barred by the statute of limitations. Lakeview appealed, but finding no reversible error, the North Dakota Supreme Court affirmed. View "Lakeview Excavating, Inc. v. Dickey County, et al." on Justia Law

After Mount Diablo School District hired Taber to modernize eight school campuses, the plaintiffs challenged the District’s use of a lease-leaseback agreement for the construction project. The court of appeal affirmed the dismissal of most of plaintiff’s claims, except a claim against Taber of conflict of interest. Plaintiff alleged Taber provided preconstruction services regarding the project, so a conflict of interest arose when the District subsequently awarded Taber the contract. The court of appeal affirmed summary judgment in Taber’s favor, finding no violation of Government Code section 1090(a). Section 1090 only prohibits a contract made by a financially-interested party when that party makes the contract in an “official capacity.” Where the financially-interested party is an independent contractor, section 1090 applies only if the independent contractor can be said to have been entrusted with “transact[ing] on behalf of the Government.” In this case, it cannot reasonably be said that Taber was hired to engage in or advise on public contracting on behalf of the District. The District contracted with Taber for Taber to provide preconstruction services in anticipation of Taber completing the project. Taber provided those services (planning and setting specifications) in its capacity as the intended provider of services, not as a de facto official of the District. View "California Taxpayers Action Network v. Taber Construction, Inc." on Justia Law

In 1980, Langkamp, then a toddler, suffered severe burn injuries on U.S. Army property. In a suit under the Federal Tort Claims Act, the parties entered into a Settlement Agreement. The government agreed to pay $239,425.45 upfront to cover attorney fees and costs, plus a structured settlement: $350.00 per month, 1985-1996; $3,100.00 per month, guaranteed for 15 years, beginning in 1996, and Lump Sum Payments of $15,000.00 in 1996, $50,000.00 in 2000, $100,000.00 in 2008, 250,000.00 in 2018, and $1,000,000.00 in 2028. The government issued a check for $239,425.45 to the parents and a check for $160,574.55 payable to JMW Settlements, an annuity broker. JMW purchased two single-premium annuity policies from ELNY to fund the monthly and periodic lump-sum payments. Until 2013, ELNY sent Langkamp the specified monthly and periodic lump-sum payments. Following ELNY’s insolvency and court-approved restructuring, Langkamp’s structured settlement payments were reduced to 40 percent of the original amount. The Claims Court rejected Langkamp’s argument that the government had continuing liability for the Settlement Agreement payments. The Federal Circuit reversed. The Settlement Agreement contains no reference to the purchase of an annuity from a third party but unambiguously obligates the government to ensure that all future monthly and periodic lump-sum payments are properly disbursed. The court noted that in 1984 it cost the government approximately $160,000 to obtain a promise from an insurance company to fund the future payments specified in the Settlement Agreement. View "Langkamp v. United States" on Justia Law

Ron Koenig was the superintendent and principal of the Warner Unified School District (the district). He and the district entered an agreement to terminate his employment one year before his employment agreement was due to expire. Under the termination agreement, Koenig agreed to release any potential claims against the district in exchange for a lump sum payment equivalent to the amount due during the balance of the term of his employment agreement, consistent with Government Code section 53260. The district also agreed to continue to pay health benefits for Koenig and his spouse "until Koenig reaches age 65 or until Medicare or similar government provided insurance coverage takes effect, whichever occurs first." The district stopped paying Koenig's health benefits 22 months later. Koenig then sued to rescind the termination agreement and sought declaratory relief he was entitled to continued benefits pursuant to his underlying employment agreement, which provided that Koenig and his spouse would continue receiving health benefits, even after the term of the agreement expired. After a bench trial, the trial court determined the district's promise in the termination agreement to pay health benefits until Koenig turned 65 violated section 53261, was unenforceable, and rendered the termination agreement void for lack of consideration. Both Koenig and the district appealed the judgment entered after trial. Koenig contended the trial court properly determined the termination agreement was void but should have concluded he was entitled to continued health benefits until the age of 65. The district contended the trial court erred when it concluded the termination agreement was void; rather, the trial court should have severed the termination agreement's unenforceable promise to continue paying benefits, enforced the remainder of the termination agreement, and required Koenig to pay restitution for benefits paid beyond the term of the original agreement. The Court of Appeal concluded the termination agreement's unlawful promise to pay health benefits in excess of the statutory maximum should have been severed to comply with sections 53260 and 53261, Koenig did not establish he was entitled to rescind the termination agreement, and the district was entitled to restitution for health benefits paid beyond the statutory maximum. Judgment was reversed and the trial court directed to enter judgment in favor of the district for $16,607. View "Koenig v. Warner Unified School District" on Justia Law