Justia Contracts Opinion Summaries

Cardi Corporation contracted with the State to construct a portion of a highway construction project dealing with Interstate 195 in Rhode Island (I-Way Project). Cardi subcontracted with High Steel to supply steel for the project. Asserting that it was never paid for 182,873 pounds of temporary steel bracing, High Steel brought suit against Cardi. In response, Cardi filed a third-party action for breach of contract against the State. The superior court granted summary judgment in favor of the State on the third-party suit. The Supreme Court affirmed, holding that the contract was clear and unambiguous and did not require payment for temporary bracing steel. View "High Steel Structures, Inc. v. Cardi Corp. v. State" on Justia Law

JEM Contracting, Inc. (JEM) and Ohio Farmers Insurance Company (OFIC) executed two indemnity agreements so that JEM could obtain bonding from OFIC for construction projects. Thereafter, OFIC executed and delivered two surety bonds on behalf of JEM for two construction projects. JEM hired a subcontractor, Hollow Contracting (Hollow), to furnish labor and equipment for both projects. After a dispute arose between JEM and Hollow regarding payment for the work performed, Hollow filed a complaint against JEM and OFIC. The lawsuit was resolved, and the district court dismissed the litigation. Thereafter, OFIC filed a complaint seeking indemnification from JEM for attorney fees and costs incurred in the underlying litigation. In its answer, JEM alleged that the fees and costs OFIC incurred in the litigation were not covered under the indemnity agreements. The district court granted partial summary judgment on the pleadings in favor of OFIC, concluding that JEM was required to indemnify OFIC for “appropriate expenses.” The Supreme Court affirmed, holding that the district court did not err in granting partial summary judgment on the pleadings to OFIC on the limited issue of whether OFIC may seek indemnification from JEF pursuant to the indemnification agreements. View "Ohio Farmers Insurance Co. v. JEM Contracting, Inc." on Justia Law

Service Employees International Union, Local 509 (Union) brought a declaratory judgment action against the Department of Mental Health (DMH) maintaining that certain contracts DMH made with private vendors were “privatization contracts” subject to the requirements of the Pacheco Law. The Union sought a declaration invalidating the contracts because DMH did not comply with the statutory prerequisites of the Pacheco Law. The case was dismissed. The Supreme Judicial Court remanded the case. On remand, DMH again successfully moved to dismiss the Union’s declaratory judgment action on the basis that it was moot because the initial contracts had expired and the remaining extant renewal contracts were immune from challenge by virtue of Mass. Gen. Laws ch. 7, 53. The Union appealed, asserting that because the non-compliant initial contracts were invalid under Mass. Gen. Laws ch. 7, 54, so too were any renewal contracts made pursuant to them. The Supreme Judicial Court vacated the judgment of dismissal, holding that the protection afforded renewal contracts by section 53 is not extended to those renewal contracts made pursuant to timely challenged and subsequently invalidated privatization contracts under section 54. View "Service Employees International Union, Local 509 v. Department of Mental Health" on Justia Law

In 1994, Rocky Mountain and the Bureau of Land Management entered into the Helium Contract, giving Rocky Mountain the right, for up to 25 years, to extract helium gas from roughly 21,000 acres of federal lands in Colorado and Utah. Rocky Mountain never extracted helium from the property and, after one year, stopped paying rent. In 2004, the Bureau informed Rocky Mountain that it had cancelled the contract due to nonpayment. The parties entered into a Settlement Agreement, under which the Bureau was required to provide Rocky Mountain with data about gas composition on the land covered by the Helium Contract and Rocky Mountain had to pay $116,579.90 (back rent) so that the Helium Contract would be reinstated. Rocky Mountain subsequently objected that the Bureau's information as incomplete, refused to pay the $116,579.90, and informed the Bureau that it wanted to pursue mediation under the Agreement. When the parties were unable to agree whether the information was complete, the Bureau sent a termination letter. The Claims Court rejected Rocky Mountain’s breach of contract suit for lack of jurisdiction and on the merits. The Federal Circuit agreed that the Helium Contract was terminated in 2004 and never reinstated, but found that the court had jurisdiction over the Settlement Agreement dispute. View "Rocky Mountain Helium, LLC v. United States" on Justia Law

The issue in this appeal centered on whether a force majeure clause in a written contract between the county and a developer did not apply to the developer’s failure to obtain zoning approval in order to construct the cement plant required in the agreement. After review of the contract and the clause at issue here, the Supreme Court held that the clause was broad enough to apply. Accordingly, the Court vacated the district court's judgment and remanded this case for further proceedings. View "Burns Concrete, Inc v. Teton County" on Justia Law

The State and the City of Pass Christian’s entered into a forty-year lease. Under the terms of the lease, the City would use a portion of the Harrison County shoreline as a harbor and pursue related commercial development. Russell RP Services, LLC, filed its complaint against the State and the City on November 21, 2013. Russell RP asserted that it held an undivided one-half interest in a parcel of land lying between U.S. 90 and the Gulf of Mexico shoreline, and that the City and State, by executing the aforementioned lease, had effectuated a taking upon its property which required just due compensation. On August 18, 2015, the Harrison County Circuit Court granted the State and City's motions for summary judgment. Concluding that Russell Real Property lacked standing to pursue its claim of inverse condemnation, the circuit court dismissed without prejudice its claim of inverse condemnation. Russell RP appealed, but finding no reversible error, the Supreme Court affirmed. View "Russell Real Property Services, LLC v. Mississippi" on Justia Law

Nutt was hit and killed by a U.S. Army soldier driving an Army truck in 1983. His family filed a claim under 28 U.S.C. 2674, the Federal Tort Claims Act. A 1985 Agreement provided that the government “agrees to purchase annuities which will pay:” $60,000 per year to Cynthia; lump-sum payments on specified anniversaries to Cynthia; lump-sum payments on specified anniversaries to James; plus $240,000 to Cynthia and a payment to the Nutts’ attorneys. The Agreement provided that “[t]he payments by the United States set forth above shall operate as full and complete discharge of all payments to be made to and of all claims which might be asserted.” The government purchased a structured annuity ELNY. ELNY went into receivership in 1991. In 2011, the New York State Liquidation Bureau informed the Nutts that their benefit payments would be reduced. In 2013, they began receiving payments reduced to approximately 45% of their expected benefits. They were informed that, as of 2015, they would not be receiving the anniversary payments. The Nutts alleged breach of the agreement. The Federal Circuit affirmed dismissal, finding that the government “was not obligated to guarantee or insure that annuity; its obligation ended at the initial purchase of the ELNY annuity.” View "Nutt v. United States" on Justia Law

Appellant City of Allentown (City) contracted with appellee A. Scott Enterprises, Inc. (ASE), to construct a new public road. After arsenic-contaminated soil was discovered at the worksite, the City suspended work on the project. Following testing, it was determined construction could resume if precautions were taken. Accordingly, the City instructed ASE to obtain revised permits and proceed with the project. However, the existing contract did not include terms regarding the potential for contaminated soil, despite the fact the City was aware there might be contamination prior to entering into the contract, and ASE declined to proceed, explaining it would incur substantial additional costs due to the contaminated soil. The parties made several attempts to reach an agreement in which ASE would continue the construction, but to no avail. Consequently, ASE sued the City to recover its losses on the project, alleged breach of contract, and sought compensation under theories of quantum meruit and unjust enrichment, as well as interest and a statutory penalty and fee award for violations of the prompt pay provisions of the Procurement Code. After a trial, a jury found the City breached its contract with ASE and also withheld payments in bad faith. In this discretionary appeal, the issue this case presented for the Supreme Court's review was whether an award of a statutory penalty and attorney fees under the prompt payment provisions of the Commonwealth’s Procurement Code was mandatory upon a finding of bad faith, irrespective of the statute’s permissive phrasing. The Court held such an award was not mandatory, and therefore reversed the order of the Commonwealth Court and remanded the case to the trial court for further proceedings. View "A. Scott Enterprises v. City of Allentown" on Justia Law

In 2003, the government awarded Laguna a contract for Worldwide Environmental Remediation and Construction (WERC). Under the contract, Laguna received 16 cost-reimbursable task orders to perform work in Iraq, and awarded subcontracts to several subcontractors. The physical work under the contract was completed by 2010. Laguna sought reimbursement of past costs, a portion of which the government refused to pay after an audit by the Defense Contract Audit Agency. Before the Armed Services Board of Contract Appeals, the government alleged that it was not liable because Laguna had committed a prior material breach by accepting subcontractor kickbacks (18 U.S.C. 371, 41 U.S.C. 53), excusing the government’s nonperformance. Three of Laguna’s officers were ultimately indicted for kickbacks. The Board granted the government summary judgment on that ground, The Federal Circuit affirmed. Laguna committed the first material breach by violating the contract’s Allowable Cost and Payment clause because its vouchers were improperly inflated to include the payment, Federal Acquisition Regulation 52.216-7. View "Laguna Constr. Co. v. Carter" on Justia Law

In 2001, Immigration and Customs Enforcement (ICE) awarded Northrop an order for network monitoring software produced by Oakley for one base year and three option years. A subsequent modification required ICE to use best efforts to secure funding for the option years. Without notifying ICE, Northrop entered into a private agreement with ESCgov, an IT services company, assigning all payments under the order to ESCgov. ESCgov paid more than $3,000,000. The agreement absolved Northrop from liability for failure of ICE to exercise a renewal option if Northrop “use[d] its best efforts to obtain the maximum recovery.” ESCgov assigned its rights to Citizens, a financial institution. None of the parties provided notice, as required by the Anti-Assignment Act, 31 U.S.C. 3727(a)(2). ICE paid Northrop $900,000 for the base year, which it delivered to ESCgov. ICE did not use the software in any investigations, and sent Northrop notification of its decision not to exercise the first option year. ICE did not exercise any option year. A contracting officer declined a claim that ICE breached the contract by failing to use its best efforts. The Claims Court dismissed a lawsuit on grounds that it lacked jurisdiction because Northrop failed to provide “adequate notice” of its claim by failing to disclose the assignments. The Federal Circuit affirmed a second dismissal, following remand, agreeing that Northrop “is unable to identify any way that it, as opposed to ESCgov or Citizens, was harmed.” View "Northrop Grumman Computing Sys., Inc. v. United States" on Justia Law