Justia Contracts Opinion Summaries

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.

Monte Sano Research Corporation ("MSRC"), Steven L. Thornton, and Steven B. Teague appealed a preliminary injunction entered against them in an action brought by Kratos Defense & Security Solutions, Inc.; Digital Fusion, Inc. ("DFI"), and Digital Fusion Solutions, Inc. ("DFSI") alleging breach of the duty of loyalty, breach of contract, tortious interference with business and contractual relationships, and civil conspiracy. Additionally, Kratos sought injunctive relief. Thornton and Teague were employees of DFI, which also engaged in government subcontract work; they became employees of Kratos when Kratos Defense merged with DFI in 2008. In February 2009, Thornton and Teague met with Doyle McBride, a NASA consultant who had never been employed by Kratos, to discuss starting a new company to perform government contract work. Several months later, MSRC was incorporated, with McBride and Teague each owning 50 percent. Thornton had no legal interest in MSRC at its formation. McBride acquired office space, issued stock, filed tax returns, obtained business licenses, registered to engage in government contracting, attended meetings, and talked with prime contractors on MSRC's behalf. In June 2011, Thornton's supervisor at Kratos learned that several employees under Teague's supervision had resigned in a short period. Following an investigation, Kratos terminated Teague's employment on June 23, 2011; Thornton resigned four days later. Teague and Thornton then went to work for MSRC. Thornton subsequently purchased MSRC from McBride and became its CEO and president. Subsequently Kratos filed a complaint against MSRC, Thornton, and Teague alleging specifically that Thornton and Teague, while employed by Kratos, assisted in the creation of MSRC, solicited Kratos employees, wrongfully diverted business opportunities, and misappropriated confidential and proprietary information. Kratos also alleged that MSRC wrongfully diverted business opportunities and misappropriated confidential and proprietary information. Kratos applied for a temporary restraining order ("TRO") and for a preliminary injunction on June 29, 2011. On appeal, MSRC, Thornton, and Teague argued that the preliminary injunction should be dissolved. MSRC, Thornton, and Teague raised several issues on appeal; however, because the Supreme Court concluded that the trial court's order was overbroad and that it failed to comply with Rule 65, Ala. R. Civ. P., the Court did not reach any of their other issues.

In 1983, the Nuclear Waste Policy Act, 42 U.S.C. 10101-10270, authorized the Department of Energy to contract with nuclear facilities for disposal of spent nuclear fuel and high level radioactive waste. The Standard Contract provided that rights and duties may be assignable with transfer of SNF title. Plaintiff entered into the Standard Contract in 1983 and sold its operation and SNF to ENVY in 2002, including assignment of the Standard Contract, except one payment obligation. Plaintiff transferred claims related to DOE defaults. As a result of DOE’s breach, ENVY built on-site dry-storage facilities. The Claims Court consolidated ENVY’s suit with plaintiff’s suit. The government admitted breach; the Claims Court awarded ENVY $34,895,467 (undisputed damages) and certain disputed damages. The Federal Circuit affirmed in part. Plaintiff validly assigned pre-existing claims; while partial assignment of rights and duties under the contract was not valid, the government waived objection. The assignment encompassed claims against the government. Legal and lobbying fees to secure Vermont approval for mitigation were foreseeable, but other expenses were not recoverable. ENVY failed to prove costs of disposing of contaminated material discovered due to the breach and its characterization of spent fuel moved to dry storage. ENVY is not entitled to recover cost of capital for funding mitigation, or Resource Code 19 payroll loader overhead costs, but may recover capital suspense loader overhead costs,.

Andrews was designated as contractor for improvements to the sewage system, in a no-bid process involving kickbacks and bribery, having made numerous false statements in the bond application package. After the contract was terminated, he submitted a claim of $748,304, based on false statements and duplicate charges. Evidence indicated that Andrews was not capable of the project work and that the entire scheme was fraudulent. He was convicted of one count of conspiracy, 18 U.S.C. 371, four counts of wire fraud, 18 U.S.C. 1343, 1346, and 2, one count of program fraud, 18 U.S.C. 666(a)(1)(B) and 2, one count of making a false claim upon the Government of the Virgin Islands, 14 V.I.C. 843(4), and one count of inducing a conflict of interest, 3 V.I.C. 1102, 1103, and 1107. The Third Circuit affirmed the conviction, but remanded for resentencing. Errors in the indictment and jury instructions concerning honest services fraud did not affect substantial rights. Although the 151-month term of imprisonment was within the statutory maximum for Counts Two through Five, it exceeded the statutory maximum for Counts One and Six; it was not possible to determine whether the sentence was legal as to each count

In February, 2002, the Navy awarded GM&W a contract for floor coating at a military base. GM&W subcontracted with FloorPro, which completed the work on February 27, 2002 and billed GM&W. On March 8, the Navy informed GM&W that the work was completed satisfactorily. On April 17, FloorPro informed the Navy’s contracting officer that it had not been paid. GM&W had claims pending and was not sure whether funds that the Navy directly deposited would be available to FloorPro. In April 2002, the Navy and GM&W entered into contract modification providing for mailing to FloorPro of a check payable to GM&W and Floor-Pro. The Navy paid GM&W directly by electronic transfer and informed FloorPro that its recourse was to sue GM&W. In December 2002, FloorPro submitted a claim to the Navy’s contracting officer. On March 27, 2003, FloorPro filed at the Armed Services Board of Contract Appeals, which awarded $37,500. The Federal Circuit reversed, holding that under the Contract Disputes Act, 41 U.S.C. 7101, ASBCA has no jurisdiction over a claim by a subcontractor. In 2009, FloorPro filed in the Court of Claims, which ruled in favor of FloorPro. The Federal Circuit vacated, ordering dismissal under the six-year limitations period of 28 U.S.C. 2501.