Justia Contracts Opinion Summaries

In this case arising from a bond transaction involving a municipal golf course in the City of Buena Vista, Virginia (the City), the Fourth Circuit affirmed the district court’s motion to dismiss a ten-count complaint filed by ACA Financial Guaranty Corporation (ACA) and SunTrust Bank (Bank) against the City and the Public Recreational Facilities Authority (Authority), holding that the complaint failed to allege claims for which relief could be granted.In an effort to refinance a loan that the Authority took out to finance the construction of the golf course, the Authority issued over $9 million in bonds. The Authority and the Bank entered into a trust agreement regarding the bonds. To repay the bonds, the Authority leased the golf course to the City. The City and the Authority then issued deeds of trust to the Bank pledging certain property as security. The City later failed to pay the rent due on the golf course lease, and the Authority could not repay the bonds. ACA, which provided insurance on the bonds, and the Bank sued. The district court dismissed the complaint. The Fourth Circuit affirmed, holding that the City’s obligation to make rent payments was not legally enforceable when the obligation was expressly subject to the city’s annual decision to appropriate funds. View "ACA Financial Guaranty v. City of Buena Vista, Virginia" on Justia Law

In 2007, the VA sought to lease space for a Parma, Ohio VA clinic. A pre-solicitation memorandum stated that the building must comply with the Interagency Security Committee (ISC) Security Design Criteria. The subsequent Solicitation discussed the physical security requirements. Premier submitted a proposed design narrative that did not address those requirements. In 2008, Premier and the VA entered into a Lease. Premier was to provide a built-out space as described in the Solicitation. About 18 months later, the VA inquired about Premier’s first design submittal, advising Premier to obtain access to the ISC standards, because “the project needs to be designed according to the ISC.” The ISC denied Premier’s request, stating that the documents had to be requested by a federal contracting officer who has a “need to know.” The VA forwarded copies of three ISC documents. Some confusion ensued as to which standard applied. The VA then instructed Premier to disregard the ISC requirements and to incorporate the requirements from the latest VA Physical Security Guide. Months later, the VA changed position, stating that “[t]he ISC is the design standard.” Premier’s understanding was that only individual spaces listed in a Physical Security Table needed to comply with the ISC. The VA responded that the entire building must conform to the ISC at no additional cost. Premier constructed the building in accordance with the ISC standards then unsuccessfully requested $964,356.40 for additional costs. The Federal Circuit affirmed summary judgment in favor of the government. The contract unambiguously requires a facility conforming to ISC security requirements. View "Premier Office Complex of Parma, LLC v. United States" on Justia Law

The U.S. Department of Housing and Urban Development (HUD) administers the project-based Section 8 housing program using Housing Assistance Payments renewal contracts. The landlords own publicly-assisted housing in Yonkers and allege that the government breached the renewal contracts, resulting in money damages. The trial court determined that it had jurisdiction, found the government liable for breach of contract, and awarded $7.9 million in total damages. The Federal Circuit vacated, finding that the trial court lacked jurisdiction because the parties were not in privity of contract. The contracts at issue were executed in a two-tiered system. First, HUD contracted with a public housing agency (New York State Housing Trust Fund Corporation), which contracted with the Landlords. Neither contract explicitly named both the government and the Landlords as directly contracting parties. View "Park Properties Associates v. United States" on Justia Law

In 2009, the U.S. Department of Agriculture’s Natural Resources Conservation Service (NRCS) entered into a “Cooperative Agreement” with St. Bernard Parish under the Federal Grant and Cooperative Agreement Act, 31 U.S.C. 6301–08. Under the Emergency Watershed Protection Program, NRCS was “authorized to assist [St. Bernard] in relieving hazards created by natural disasters that cause a sudden impairment of a watershed.” NRCS agreed to “provide 100 percent ($4,318,509.05) of the actual costs of the emergency watershed protection measures,” and to reimburse the Parish. St. Bernard contracted with Omni for removing sediment in Bayou Terre Aux Boeufs for $4,290,300.00, predicated on the removal of an estimated 119,580 cubic yards of sediment. Omni completed the project. Despite having removed only 49,888.69 cubic yards of sediment, Omni billed $4,642,580.58. NRCS determined that it would reimburse St. Bernard only $2,849,305.60. Omni and St. Bernard executed a change order that adjusted the contract price to $3,243,996.37. St. Bernard paid Omni then sought reimbursement from NRCS. NRCS reimbursed $355,866.21 less than St. Bernard claims it is due. The Federal Circuit affirmed the dismissal of the Parish’s lawsuit, filed under the Tucker Act, 28 U.S.C. 1491(a)(1), for failure to exhaust administrative remedies. In the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994, 7 U.S.C. 6991–99, Congress created a detailed, comprehensive scheme providing private parties with the right of administrative review of adverse decisions by particular agencies within the Department of Agriculture, including NRCS. View "St. Bernard Parish Government v. United States" on Justia Law

In 2003, Dobyns, then an ATF agent engaged in undercover work, infiltrated the Hells Angels and assisted in the indictment of 36 people for racketeering and murder. The disclosure of his identity during the prosecutions led to threats against Dobyns and his family. ATF’s alleged failure to appropriately respond to the threats and to adequately conceal Dobyns’ identity during an emergency relocation, led Dobyns to seek compensation. In 2007, ATF agreed to pay Dobyns a lump-sum. ATF withdrew Dobyns’ and his family’s fictitious identities in 2008 despite a 2007 threat assessment. A 2008, arson attack substantially damaged Dobyns’ home, but his family escaped without injury. ATF pursued Dobyns as a suspect. In 2013, ATF’s Internal Affairs Division concluded that there was no valid reason for the withdrawal of the fictitious identifies; that risks to the family had been ignored; and that the response to the arson had been mismanaged. Dobyns sued in 2008, alleging breach of the agreement. While the suit was pending, Dobyns’ book was released; Dobyns made frequent media appearances. In 2013, the Claims Court held that there was no breach of any express provision of the agreement but that there was a breach of the implied duty of good faith and fair dealing and that Dobyns was entitled to emotional distress damages of $173,000. Dobyns alleged misconduct by the Justice Department during the litigation; the court determined that none of the alleged misconduct warranted Rule 60 relief because, even if they occurred, there was no showing that these acts could have affected Dobyns’ case. The Federal Circuit reversed the judgment as to the breach of the implied duties and affirmed the Rule 60 decision. View "Dobyns v. United States" on Justia Law

During World War II, the Hanford Nuclear Reservation was established by the U.S. Army Corps of Engineers. After the war, Hanford continued in use, operated by contractors. Each time the work was transferred to another contractor, the employees that performed the work would stay the same, typically with the same pay and benefits. The Hanford Multi-Employer Pension Plan (MEPP) was established in 1987 as a contract between “Employers,” defined as named contractors, and “Employees.” The government is not a party to the MEPP but may not be amended without government approval. In 1996, some employees accepted employment with a Hanford subcontractor, Lockheed, and were informed that, upon their retirement, they would not receive retirement benefits that were previously afforded under the MEPP. They were subsequently told that they would remain in the MEPP but that, instead of calculating their pension benefits based on their total years in service, their benefits would be calculated using the highest five-year salary, and that they could not challenge the change until they retired. This became a MEPP amendment. In 2016, former Lockheed employees sued the government, alleging that an implied contract was breached when they did not receive benefits based on their total years in service. The Federal Circuit held that the former employees did not prove that an implied-in-fact contract existed. The government funds Lockheed and others to manage Hanford, but there is no evidence that the government intended to be contractually obligated to their employees; there was no mutuality of intent. View "Turping v. United States" on Justia Law

Maynard, Cooper & Gale, P.C. ("MCG"), petitioned the Alabama Supreme Court for a writ of mandamus to direct the Jefferson Circuit Court to vacate its July 30, 2018 order denying MCG's motion for a change of venue and to enter an order transferring the underlying action to the Madison Circuit Court on the basis of the doctrine of forum non conveniens. In late 2017, AAL USA, Inc. ("AAL"), a Delaware corporation doing business in Alabama, and Oleg Sirbu, a resident of Dubai, United Arab Emirates (collectively, "the plaintiffs"), sued MCG, asserting a claim of legal malpractice pursuant to the Alabama Legal Services Liability Act ("the ALSLA"), and seeking, among other relief, disgorgement of all attorney fees paid by the plaintiffs to MCG. AAL maintained, repaired, and overhauled helicopters through various government contracts or subcontracts on United States military bases. MCG represented the plaintiffs from 2014 through October 28, 2016; two MCG attorneys, Jon Levin and J. Andrew Watson III, were shareholders of MCG whose allegedly wrongful conduct was performed within the line and scope of their employment with MCG. The events giving rise to this litigation began in September 2016, when AAL received a "base-debarment" letter notifying it that it no longer had access to certain military bases outside the continental United States. MCG chief financial officer Keith Woolford forwarded this letter to MCG, and, according to the plaintiffs, MCG "immediately embarked in a central role in [MCG CEO Paul] Daigle's and Woolford's scheme to steal the assets of AAL." The complaint alleged that Levin worked closely with Woolford and Daigle to draft the APA pursuant to which Black Hall Aerospace, Inc., Daigle, and Woolford would purchase all of AAL's assets, as a way to cure the base-debarment problem. The plaintiffs alleged that MCG knew that the APA would "gut" the plaintiffs –- its current clients –- while simultaneously benefiting Daigle, Woolford, and BHA –- other clients of MCG -- and that this "clear and irreconcilable conflict of interest ... was never disclosed to [the plaintiffs]." The Alabama Supreme Court concluded MCG carried its burden of showing that Madison County's connection to the action was strong and that Jefferson County's connection to the action was weak. Thus, the circuit court exceeded its discretion in refusing to transfer the case to the Madison Circuit Court in the interest of justice. MCG's petition for a writ of mandamus was granted. View "Ex parte Maynard, Cooper & Gale, P.C." on Justia Law

The Second Circuit affirmed the district court's summary judgment dismissal of all claims in the Second Amended Complaint against defendants in an action stemming from construction projects with the U.S. Army Corps of Engineers. The court held that MES's claims failed to articulate any support for its accusations that Safeco breached its contractual obligations or engaged in bad faith or tortious conduct. The court noted that the claim that Safeco acted inappropriately by attending the cure meetings was particularly frivolous. In this case, MES failed to identify any good faith basis, in law or on the basis of the agreements at issue, for its assertion that Safeco had no right to take steps to meet its obligations under the surety bonds. The court sua sponte awarded Safeco double costs. View "M.E.S., Inc. v. Safeco Insurance Co. of America" on Justia Law

JRI contracted with the City of Los Angeles Department of Airports (LAWA), to provide LAWA specialized airport firefighting trucks. Each sued the other for breach of the contract. LAWA further alleged JRI violated the California False Claims Act (CFCA), Government Code section 12650, asserting that when JRI submitted it[s] invoices for progress payments and final payments, JRI knew that it was not in compliance with the contract and sought to defraud the government entity LAWA into making payments and that JRI fraudulently induced LAWA to enter into the contract. LAWA was awarded $1 in contract damages. LAWA’s CFCA claim was rejected by the jury, as were JRI’s claims against LAWA. The court awarded LAWA costs as a prevailing party on the contract claims but awarded JRI attorney fees on the CFCA claim, finding the claim frivolous and harassing. The court of appeal affirmed JRI “prevail[ed] in the action” under the relevant CFCA fee provision (section 12652(g)(9)(B);) regardless of its failure to prevail in the action as a whole. View "John Russo Industrial Sheetmetal, Inc. v. City of Los Angeles Department of Airports" on Justia Law

K-Con and the Army entered into two contracts for pre-engineered metal buildings. K-Con claims that the Army subsequently delayed issuance of a notice to proceed for two years, resulting in $116,336.56 in increases in costs and labor. According to K-Con, this delay was due solely to the government’s decision to add to each contract the performance and payment bonds set forth in Federal Acquisition Regulation (FAR) 52.228-15. The Armed Services Board of Contract Appeals held that bonding requirements were included in the contracts by operation of law when they were awarded, pursuant to the Christian doctrine. The Federal Circuit affirmed. The two contracts are construction contracts and, under the Christian doctrine, the standard bond requirements in construction contracts were incorporated into K-Con’s contracts by operation of law. If the contracts had been issued using the standard construction contract form, there would have been no issue, but these contracts issued using the standard commercial items contract form. There were, however, many indications that the contracts were for construction, not commercial items. The statement of work included many construction-related tasks, including developing and submitting construction plans, obtaining construction permits, and cleaning up construction areas. The statement of work also required compliance with FAR regulations relevant only to construction contracts. View "K-Con, Inc. v. Secretary of the Army" on Justia Law