Justia Contracts Opinion Summaries

In 1983-1984, the Farmers Home Administration issued apartment owners (Appellants) 50-year loans to provide low-income housing under 42 U.S.C. 1485. A promissory note provided that prepayments “may be made at any time at the option of the Borrower.” The mortgage stated that the loan must be used in compliance with the statute and that Appellants must use the property for low-income housing for 20 years before they could prepay and exit the program. The documents were contemporaneously executed and cited each other. The Emergency Low Income Housing Preservation Act of 1987 and Housing and Community Development Act of 1992 provided that borrowers could no longer prepay after the 20-year period but must notify FmHA’s successor, which was to make “reasonable efforts" to extend the low-income use,” 42 U.S.C. 1472(c)(4)(A). If the agreement is not extended, the borrower must attempt to sell the property at fair market value to a nonprofit organization or a public agency. Appellants rejected incentive offers and, in 2009-2010, unsuccessfully marketed their properties for the required period. Facing foreclosure and low occupancy due to high unemployment, Appellants submitted deeds in lieu of foreclosure, then filed suit. The Federal Circuit reinstated certain claims. In transferring deeds to the government, Appellants did not assign away their accrued claims for breach of the prepayment right. The Claims Court properly dismissed a contract-based Fifth Amendment “takings” claim. In entering contracts, the government acts in its commercial capacity and remedies arise from the contracts themselves, rather than from constitutional protections. Appellants can succeed under a theory premised on their property interests in the land and buildings before entering the contracts. View "Callaway Manor Apartments v. United States" on Justia Law

S. Mark Booth petitioned the Alabama Supreme Court for a writ of mandamus directing the the trial court to dismiss an action filed against him by the City of Guin. In 2008, Booth and the City entered into a contract entitled "Commercial Development Agreement." The agreement provided that the City would sell Booth approximately 40 acres of real property located in Marion County at a price of $5,000 per acre. Booth, in turn, promised to subdivide the property into lots for commercial development. The agreement included a provision granting the City the right to repurchase the property should Booth fail to develop the land within three years following the execution of the agreement. In 2017, the City sued Booth, asserting a claim for specific performance pursuant to the agreement's repurchase option. The City alleged Booth failed to construct at least one commercial facility on the property within three years from the effective date of the agreement. The City alleged that it had "timely tendered the purchase price to [Booth] and requested a conveyance of the real property described in the contract but [that Booth] refused to accept the tender or to make the conveyance." Booth moved to dismiss, arguing that, although he had fulfilled his obligations under the agreement by developing a hotel on the property, the City's complaint seeking to specifically enforce the repurchase of the property pursuant to its option to repurchase in Section 4.4(b) of the agreement was time-barred by the two-year statutory limitations period for such options in 35-4-76(a), Ala. Code 1975. After review, the Supreme Court granted Booth's petition as to the City's claims for specific performance, and its claims alleging fraud and breach of contact; the trial court was ordered to dismiss those claims. The Court denied Booth's petition relating to the City's rescission claim. View "Ex parte S. Mark Booth." on Justia Law

Section 515 of the Housing Act of 1949, 42 U.S.C. 1485, authorizes the Department of Agriculture, Farmers Home Administration to loan money to nonprofit entities to provide rental housing for elderly and low- and moderate-income individuals and families. Sonoma, a limited partnership contracted with the government to construct low-income housing in exchange for a $1,261,080 Section 515 loan. In 2010, Sonoma submitted a written request to prepay the balance of its loan. The government denied the request. Sonoma sued for breach of contract, including a claim for a “tax neutralization payment” to offset the negative tax consequences of a lumpsum damages award. The Claims Court awarded Sonoma expectancy damages of $4,223,328 and a tax gross-up award of $3,171,990. The Federal Circuit vacated. The Claims Court clearly erred in using the income from a single tax year to predict the future rates at which each partner would pay taxes. While the government’s breach created the circumstances that require consideration of future income and tax rates, Sonoma is not absolved of its burden of showing an income-tax disparity and justifying any adjustment. View "Sonoma Apartment Associates v. United States" on Justia Law

The Federal Reserve Act of 1913 established a system that includes the Federal Reserve Board of Governors and 12 regional Reserve Banks. The Board exercises broad regulatory supervision over the Reserve Banks, which serve as banks to the U.S. government and to commercial banks who are members of the Federal Reserve System. The Act set the statutory rate for dividend payments on Federal Reserve Bank stock at six percent per year, which remained in effect until 2016, when an amendment (12 U.S.C. 289(a)(1)) effectively reduced the dividend rate for certain stockholder banks to a lower variable rate. Plaintiffs argued that banks that subscribed to Reserve Bank stock before the amendment are entitled to dividends at the six percent rate and that, by paying dividends at the amended rate, the government breached a contractual duty or effected a Fifth Amendment taking. The Federal Circuit affirmed the dismissal of the suit. There is no “clear indication” of the government’s intent to contract in either the language of the Federal Reserve Act or the circumstances of its passage. Plaintiffs did not allege a legally cognizable property interest arising from its “statutory rights” and the requirement that member banks subscribe to reserve bank stock under the Act does not constitute a regulatory taking. View "American Bankers Association v. United States" on Justia Law

In November 2008, the Anderson County, South Carolina Council (2008 Council) approved a $1.1 million Severance Agreement for county administrator Joey Preston (Preston). In January 2009, a new county council (2009 Council) was sworn in, and filed suit seeking to invalidate the Severance Agreement. The circuit court ruled that, despite tainted votes, the Severance Agreement was valid and also held: (1) public policy rendered neither the Severance Agreement nor the vote adopting it void; (2) Preston did not breach a fiduciary duty because he owed no duty to disclose Council members' personal conflicts of interest; (3) the County failed to prove its claims for fraud, constructive fraud, and negligent misrepresentation; (4) the 2008 Council's approval of the Severance Agreement was neither unreasonable or capricious nor a product of fraud and abuse of power; (5) the County's constructive trust claim no longer remained viable; (6) rescission was unavailable as a remedy; (7) the County had unclean hands; (8) adequate remedies at law barred the County from invoking the court's equitable jurisdiction; (9) the County breached the covenant not to sue in the Severance Agreement by bringing this lawsuit; and (10) the issue concerning the award of attorney's fees should be held in abeyance pending the final disposition and filing of a petition. Pertinent here, a panel of the Court of Appeals found the trial court erred in refusing to invalidate the 2008 Council's approval of the Severance Agreement based upon the absence of a quorum, and reversed. The South Carolina Supreme Court determined this judgment was made in error: the County lacked a quorum. The matter was remanded to the circuit court to determine the exact amount Preston had to refund the County. View "Anderson County v. Preston" on Justia Law

The Moodys leased Pine Ridge Indian Reservation parcels for agriculture. The government has a trust responsibility for Indian agricultural lands, 25 U.S.C. 3701(2). The Secretary of the Interior is authorized to participate in the management of such lands, with the participation of the beneficial owners and has delegated some responsibilities to the Bureau of Indian Affairs (BIA). BIA regulations generally allow Indian landowners to enter into agricultural leases with BIA approval. Each Moody lease defined “the Indian or Indians” as the “LESSOR.” The Claims Court concluded that the Oglala Sioux Tribe signed the leases. Other lease provisions distinguished between the lease parties and the Secretary of the Interior/United States. Issues arose in 2012. The BIA sent letters canceling the leases, noting that the Moodys could appeal the decision to the Regional Director. Within the 30-day appeal period, the Moodys returned with a cashier’s check in the proper amount, which the BIA accepted. The BIA informed the Moodys that they need not appeal, could continue farming, and did not require written confirmation. Subsequently, the Moodys received trespass notices and were instructed to vacate, which they did. The Moodys did not appeal within the BIA but sued the government. The Federal Circuit affirmed the Claims Court’s dismissal of the written contract claims for lack of jurisdiction because the government was not a party to the leases, for failure to state a claim upon which relief could be granted because the Moodys did not have implied-in-fact contracts with the government, and for failure to raise a cognizable takings claim because their claim was based on the government’s alleged violation of applicable regulations. View "Moody v. United States" on Justia Law

From 1943-1990, the government produced plutonium for nuclear weapons at Washington’s Hanford Site, leaving behind 56 million gallons of nuclear waste in underground tanks. In 2000, Bechtel was awarded a cost-plus-incentive-fee contract by the Department of Energy (DOE) for the design, construction, and operation of a Hanford nuclear waste treatment plant, incorporating provisions of the Federal Acquisition Regulation (FAR). During the contract’s performance, two former Bechtel Hanford employees sued Bechtel under 42 U.S.C. 1981, alleging sexual and racial discrimination and retaliation. Bechtel settled these lawsuits and sought $500,000 in reimbursement from DOE for its defense costs. The settlement payments were covered by insurance. DOE provisionally approved Bechtel’s request and reimbursed Bechtel as requested. A contracting officer later disallowed the costs, citing Federal Circuit precedent, “Tecom” and stating that the government would offset the provisional reimbursement from future amounts owed to Bechtel. The Claims Court granted the government summary judgment, concluding that Tecom provided the proper standard. The Federal Circuit affirmed. The Bechtel contract incorporated FAR 31.201-2 and 52.222-26, the same provisions that barred reimbursement in Tecom. Under the Tecom standard, Bechtel’s defense costs related to the discrimination suits are only allowable if Bechtel can show that the former employees “had very little likelihood of success.” Bechtel did not challenge the contracting officer’s determination that the former employees’ claims had more than a very little likelihood of success. View "Bechtel National, Inc. v. United States" on Justia Law

The Supreme Court reversed the judgment of the court of appeals in part and rendered judgment dismissing Plaintiff's claims that a governmental entity breached a contractual promise to make a good faith effort to obtain authorization for a higher payment than the parties' written contract required the entity to make, holding that governmental immunity applied and that chapter 271 of the Texas Local Government Code did not waive the entity's immunity.Vizant Technologies sued the Dallas-Fort Worth International Airport Board for, inter alia, breach of contract, alleging in part that the Board failed to make a promised good-faith effort to authorize increased compensation than that set forth in the parties' contract. The Board filed a plea to the jurisdiction, asserting that governmental immunity barred Vizant's claims. The trial court denied the plea. The court of appeals affirmed the trial court's denial of the Board's plea against Vizant's breach of contract claim, holding that, while governmental immunity applied, chapter 271 of the Texas Local Government Code waived the Board's immunity against that claim. The Supreme Court reversed, holding that governmental immunity barred all of Vizant's claims against the Board and that chapter 271 did not waive that immunity. View "Dallas/Fort Worth International Airport Board v. Vizant Technologies, LLC" on Justia Law

The Subletting and Subcontracting Fair Practices Act governs public works projects, requires a prime contractor to obtain the awarding authority's consent before replacing a subcontractor listed in the original bid (Pub. Contract Code 4107(a)), and limits the awarding authority’s ability to consent. If the original subcontractor objects to being replaced, the awarding authority must hold a hearing. San Francisco entered a contract with prime contractor Ghilotti for a major renovation of Haight Street. Consistent with its accepted bid, Ghilotti entered a contract with subcontractor Synergy for excavation and utilities work. After Synergy broke five gas lines and engaged in other unsafe behavior, the city invoked a provision of its contract with Ghilotti to direct Ghilotti to remove Synergy and substitute a new subcontractor. Under protest, Ghilotti terminated Synergy and identified two potential replacement contractors. Synergy objected. A hearing officer determined that Synergy’s poor performance established a statutory ground for substitution. Synergy and Ghilotti argued that the hearing officer lacked jurisdiction because Ghilotti had not made a “request” for substitution. The trial court agreed. The court of appeal reversed. Although the statute contemplates that the prime contractor will normally be the party to seek substitution, the procedure followed here “complied in substance with every reasonable objective of the statute.” View "Synergy Project Management, Inc. v. City and County of San Francisco" on Justia Law

In this contract dispute over whether a municipally created economic development corporation is entitled to immunity from suit as if it were a political subdivision of the state, the Supreme Court affirmed the court of appeals’ judgment denying an economic development corporation’s plea to the jurisdiction, holding that economic development corporations are not governmental entities in their own right and, therefore, are not entitled to governmental immunity.Rosenberg Development Corporation (RDC), an economic development corporation created by the City of Rosenberg under the authority of the Development Corporation Act, executed a contract with Imperial Performing Arts, a nonprofit organization, to renovate a historic theater. When RDC refused to extend the deadline to complete the theater’s renovation, Imperial ceased work on the theater project. This dispute followed. The immunity issue on appeal was limited to Imperial’s breach of contract and declaratory judgment claims. The trial court denied RDC’s plea to the jurisdiction, and the court of appeals affirmed. The Supreme Court affirmed, holding that economic development corporations are not governmental entities immune from suit. View "Rosenburg Development Corp. v. Imperial Performing Arts, Inc." on Justia Law