Justia Contracts Opinion Summaries

In 2007 the Postal Service awarded Tip Top a contract under which the Postal Service would assign individual projects by issuing work orders. In 2009, the Postal Service issued a work order to replace the air conditioning system at the Main Post Office in Christiansted, Virgin Islands, for the price of $229,736.92. As a result of that work Tip Top submitted a claim and request for an equitable adjustment under the Contract Disputes Act, 41 U.S.C. 7101-7109, in the amount of $34,553.77, consisting of a subcontractor’s price for a change, plus 10% profit, 4% insurance, and 4% gross receipts tax, plus $9,655 for “Preparation Costs & Extended Overhead” and $2,745 for “Legal Fees.” The Postal Service Board of Contract Appeals ruled that Tip Top was entitled to recover $2,565. The Board ruled that Tip Top was not entitled to recover the balance of the amount claimed because it had failed to demonstrate that the costs at issue were incurred as a result of the change order. The Federal Circuit reversed and remanded, with directions to grant the appeal in its entirety. The ruling was based upon an error of law and not supported by substantial evidence. View "Tip Top Constr., Inc.v. Donahoe" on Justia Law

In 2009 the Forest Service awarded Scott contracts to remove timber on federally-owned plots during a designated period. Scott was then pursuing litigation based on delays in other contracts resulting from environmental litigation. The government therefore included provisions in the contracts at issue, authorizing suspension of the contracts to comply with court orders or for environmental reasons. The contracts provided for term adjustment, but prohibited award of lost profits, attorney’s fees, replacement costs, and similar losses. Another environmental suit arose in Oregon, resulting in an injunction that included the contracts at issue. The Forest Service suspended the contracts and began protected species surveys required by that litigation. Surveys were completed in late 2000, but the suspensions continued, due to new litigation, until 2003. In 2004-2008, Scott harvested the total contractual amount of timber. In 2005, Scott sought damages. The Claims Court found breach of an implied duty of good faith and fair dealing and that the government unreasonably delayed the surveys and continued the suspensions. The court found that Scott was entitled to $28,742 in lost profits and $129,599 in additional costs, offset by some actual profit; the government was also liable to a log-processing subcontractor, for $6,771,397 in lost profits; The Federal Circuit reversed. View "Scott Timber Co. v. United States" on Justia Law

This case stemmed from a dispute over the proper calculation of royalty payments on state oil and gas leases. Over the years, the Legislature has enacted several versions of the statutory oil and gas lease, and Lessees have entered into “hundreds” of oil and gas leases with the State. Specifically, the New Mexico Legislature enacted statutory oil and gas leases in 1919, 1925, 1927, 1929, 1931, 1945, 1947 and 1984. This appeal concerned the royalty clauses contained in the 1931 and the 1947 statutory lease forms. Both the 1931 lease and 1947 lease specified that the payment of royalty was to be calculated as a percentage of the “net proceeds” resulting from the sale of gas. During 2005 and 2006 Commissioner audited ConocoPhillips Company and Burlington Resources Oil & Gas Company’s royalty payments. Following the Audit, Commissioner notified Lessees that they had been underpaying their royalty obligations and issued them assessments for the underpayment. The Commissioner claimed that pursuant to the terms of the statutory lease forms Lessees could not deduct the post-production costs necessary to prepare the gas for the commercial market when calculating their royalty payments. Commissioner claimed that the improper deductions for post-production costs resulted in ConocoPhillips underpaying royalties by approximately $18.9 million and Burlington underpaying by approximately $5.6 million. In response to Commissioner’s audit and assessments, Lessees filed a complaint in the district court seeking a declaration that Commissioner’s assessment of additional royalty constituted a deprivation of due process, an unconstitutional impairment of contract, and breach of contract. In addition, Lessees claimed that Commissioner had exceeded his constitutional and statutory powers by issuing the assessments and had effectively usurped legislative power by seeking royalty payments under calculation methods not approved by the Legislature. In response, Commissioner alleged a host of counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, and breach of the implied covenant to market. This appeal pertained to three orders granting summary judgment on behalf of Lessees and a fourth order denying Commissioner’s motion for reconsideration of the district court’s previous dismissal of his counterclaim for breach of the implied covenant to market. In the first order, the district court granted Lessees’ motion for summary judgment. Upon review of the several orders and claims before the Supreme Court on appeal, the Court affirmed the trial court's grant of summary judgment. View "ConocoPhillips Co. v. Lyons" on Justia Law

The Army solicited proposals for aerial target flight operations and maintenance services. Kratos provided these services under a predecessor contract. The solicitation listed three evaluation factors: Technical/Management; Past Performance; and Price/Cost to be rated as “outstanding,” “satisfactory,” “marginal,” or “unsatisfactory.” The contract was subject to the Service Contract Act of 1965, under which the Federal Acquisition Regulation requires that “successor contractors … in the same locality must pay wages and fringe benefits … at least equal to those contained in any bona fide collective bargaining agreement … under the predecessor contract.” The Army received three proposals, including the offers from SA-TECH and Kratos. After review, the Technical Evaluation Committee announced a Final Evaluation Report, noting potential difficulties for SA-TECH under the Labor sub-factor, but rating SA-TECH as “outstanding” for all factors. Kratos also received “outstanding” ratings. The Source Selection Authority concluded that SA-TECH offered the best value for the government. Kratos filed a protest with the Government Accountability Office. SA-TECH subsequently protested the Army’s decision to engage in corrective action instead of allowing SA-TECH’s award to stand. The Claims Court denied the Army’s motion to dismiss and found the Army’s actions unreasonable and contrary to law. The Federal Circuit affirmed. View "Sys. Application & Tech., Inc. v. United States" on Justia Law

Watkins, an African-American, worked for the school district, overseeing security systems. Fultz supervised Watkins and, relying on Watkins’s advice, Fultz awarded Vision a $182,000 annual contract for service of security cameras. Vision’s president, Newsome, testified that Watkins called her and talked about a “finder’s fee.. Newsome went to Cleveland for a customer visit. She e-mailed Watkins and he replied: “Absolutely$.” Newsome believed that Watkins expected her to pay him at their meeting. Newsome notified Fultz. At the meeting, Watkins requested “an envelope.” After Fultz contacted police, the FBI recorded meetings at which Newsome gave Watkins $5,000 and $2,000. A white jury convicted on two counts of attempted extortion “under color of official right” (Hobbs Act, 18 U.S.C. 1951), and one count of bribery in a federally funded program, 18 U.S.C. 666(a)(1)(B). The court determined a total offense level of 22, applying a two-level enhancement for obstruction of justice, another two-level enhancement for bribes exceeding $5,000, and a four-level enhancement for high level of authority, plus an upward variance of 21 months under 18 U.S.C. 3553(a), and sentenced Watkins to six years’ incarceration. The Sixth Circuit affirmed, rejecting challenges to jury instructions, sufficiency of the evidence, the jury’s racial composition, and the reasonableness of the sentence.View "United States v. Watkins" on Justia Law

Plaintiff brought suit under the qui tam provisions of the False Claims Act (FCA) against Lockheed Martin Corporation, alleging that Lockheed defrauded the United States Air Force under a contract for the Range Standardization and Automation IIA program concerning software and hardware used to support space launch operations at Vandenberg Air Force Base and Cape Kennedy. Hooper filed his suit in the Maryland district court, which transferred the suit to the central district of California on forum non conveniens grounds. The district court granted summary judgment in favor of Lockheed on all grounds. The Ninth Circuit Court of Appeals (1) affirmed the district court's evidentiary rulings and conclusion that Hooper failed to establish his claims of fraudulent use of the software and defective testing procedures because there was no genuine issue of material fact as to whether Lockheed "knowingly" submitted a false claim; and (2) reversed the district court's dismissal of (i) Hooper's wrongful discharge claim as barred by California's two-year statute of limitations, holding that Maryland's three-year statute of limitations applied here, and (ii) Hooper's claim that Lockheed violated the FCA by knowingly underbidding the contract. View "Hooper v. Lockheed Martin Corp." on Justia Law

In 2004-2005, Costa & Son Construction performed site work for the general contractor (Braitt) on such a project in Bridgewater. After Braitt terminated the relationship Costa sued, alleging breach of contract and violations of G.L. c. 93A. Costa sought to recover damages under a payment bond obtained by Brait from Arch Insurance, G.L. c. 149, 29. Brait asserted similar counterclaims against Costa. Arch argued that Costa had relinquished any right to claim against the bond pursuant to a provision of his subcontract with Brait. The trial court granted Brait and Arch directed verdict with respect to claims under the bond. A jury returned a verdict for Costa, against Brait. The Massachusetts Supreme Court vacated the directed verdict. A subcontractor on a public construction project for which a payment bond has been obtained by the general contractor pursuant to G.L. c. 149, 29, may not by private agreement forgo its right to pursue payment under the bond. The court also vacated the portion of the amended judgment granting consequential damages to Costa; consequential damages were precluded by the contract. View "Costa v. Brait Builders Corp." on Justia Law

Sea Hawk Seafoods, Inc. sued the City of Valdez for damages after Valdez applied for a grant from the State of Alaska for funding to convert Sea Hawk's seafood processing facility into a fish meal plant but then declined to accept the $600,000 grant that the State conditionally awarded to Valdez. On pre-trial motions, the superior court dismissed Sea Hawk's claims for breach of contract, breach of an agreement to negotiate, and breach of a duty to negotiate in good faith. Valdez and Sea Hawk filed cross-motions for summary judgment on Sea Hawk's remaining claim for promissory estoppel, which the court denied. Shortly before trial, the court dismissed Sea Hawk's promissory estoppel claim as a discovery sanction. Sea Hawk and Valdez both appealed. Upon review, the Supreme Court affirmed: Sea Hawk's claims were based on statements made and a letter sent by the Valdez City Manager to the owner of Sea Hawk. Because these communications, even when viewed in the light most favorable to Sea Hawk, were insufficient as a matter of law to support Sea Hawk's claims. The Court reversed the lower court's ruling denying Valdez summary judgment on Sea Hawk's promissory estoppel claim.

The Regional School District (Mahar), entered into a price watch agreement with Northeast Energy Partners, a licensed broker of energy services based in Connecticut, pursuant to which Northeast would negotiate and secure contracts for the provision of Mahar's electricity from energy suppliers. Mahar did not enter into the agreement to obtain Northeast's services pursuant to the competitive bidding procedures contained in G.L. c. 30B. When Mahar questioned the validity of the agreement, Northeast sought a declaratory judgment that the agreement is valid and enforceable because, under G.L. c. 30B, 1 (b ) (33), the agreement is exempt from the competitive solicitation and bidding procedures set forth in G.L. c. 30B. The Massachusetts Supreme Court ruled in favor of Northeast, holding that a contract between a school district and an energy broker for procurement of contracts for electricity is exempt from the requirements of G.L. [c.] 30B as a contract for 'energy or energy related services' pursuant to G.L. c. 30B, 1 (b ) (33).

Access to the Ambassador Bridge between Detroit and Windsor, Ontario necessitated traversing city streets. The state contracted with the Company, which owns the Bridge, to construct new approaches from interstate roads. The contract specified separate jobs for the state and the Company. In 2010, the state obtained a state court order, finding the Company in breach of contract and requiring specific performance. The Company sought an order to open ramps constructed by the state, asserting that this was necessary to complete its work. The court denied the motion and held Company officials in contempt. In a 2012 settlement, the court ordered the Company to relinquish its responsibilities to the state and establish a $16 million fund to ensure completion. Plaintiffs, trucking companies that use the bridge, sought an injunction requiring the state to immediately open the ramps. The district court dismissed claims under the dormant Commerce Clause, the motor carriers statute, 49 U.S.C. 14501(c), and the Surface Transportation Assistance Act, 49 U.S.C. 31114(a)(2). The Sixth Circuit affirmed. For purposes of the Commerce Clause and statutory claims, the state is acting in a proprietary capacity and, like the private company, is a market participant when it joins the bridge company in constructing ramps.