Justia Contracts Opinion Summaries

The State brought a complaint against BNSF Railway Co. ("BNSF") in November 2009 seeking a declaratory judgment requiring BNSF to abide by the terms of a 1984 agreement between them and a declaration that BNSF was in violation of that agreement; specific performance by BNSF of the agreement, and damages for BNSF's alleged breach of the agreement. The State subsequently filed an application for a preliminary injunction in June 2010 to prohibit BNSF from terminating the payment to the State and its short line operator per loaded car for each car handled in interchanges as required by Section 9 of the agreement. At issue was whether the district court's order granting the preliminary injunction was an abuse of discretion. The court held that the district court manifestly abused its discretion in issuing the preliminary injunction where it went beyond the State's requested relief and effectively ordered specific performance on the agreement under new terms substantially different than the prior agreed upon terms which severely limited termination of the new interchange agreement and was never part of the 1984 or 1986 agreements. Accordingly, the court reversed the order and resolved the injunction, remanding for further proceedings.

The City of Torrington ("city") filed suit against Strong Construction, Inc. ("Strong") alleging breach of contract claims based on Strong's failure to supply and install water pump motors that conformed to contract specifications. At issue was whether the district court's judgment in favor of the city was supported by the record. The court affirmed and held that the district court's determination was not clearly erroneous where there was ample evidence to support the district court's decision that the Centripro Guidelines were provided to Baker & Associates, the city's engineer, prior to approval of the project submittals; where Strong breached the agreement with the city by failing to provide motors that conformed to the specifications in the parties' agreement; where section 13.07 of the General Conditions did not preclude the city's breach of contract claim and the repair obligation, by its terms, was not limited to one year; and where the court found no basis in common law to extend apportionment of damages to breach of contract claims and the comparative fault statute was not applicable to the breach of contract action.

After petitioners fell behind schedule in developing a stealth aircraft (A-12) for the Navy, the contracting officer terminated their $4.8 billion fixed-price contract for default and ordered petitioners to repay approximately $1.35 billion in progress payments for work the Government never accepted. Petitioners filed suit in the Court of Federal Claims ("CFC"), challenging the termination decision under the Contract Disputes Act of 1978, 41 U.S.C. 609(a)(1). The CFC held that, since invocation of the state-secrets privilege obscured too many of the facts relevant to the superior-knowledge defense, the issue of that defense was nonjusticiable, even though petitioners had brought forward enough unprivileged evidence for a prima facie showing. Accordingly, at issue was what remedy was proper when, to protect state secrets, a court dismissed a Government contractor's prima facie valid affirmative defense to the Government's allegations of contractual breach. The Court concluded that it must exercise its common-law authority in this situation to fashion contractual remedies in Government-contracting disputes and held that the proper remedy was to leave the parties where they were on the day they filed suit.

The Missoula City Counsel, the City of Missoula, and the Mayor, (collectively "City") and Muth-Hilberry, LLC ("developer") appealed a district court determination that found that the City was arbitrary and capricious in approving a zoning and preliminary plat for a subdivision known as Sonata Park located in Rattlesnake Valley, Montana. At issue was whether neighbors, several parties opposed to the subdivision, and the North Duncan Drive Neighborhood Association, Inc. ("Association") had standing. Also at issue was whether the district court erred in striking affidavits filed by the developer and the City in connection with their motions for summary judgment. Further at issue was whether the 1989 Sunshine Agreement between the City and the developer's predecessor in interest superseded the City's growth policy. Finally at issue was whether the City's decision in Sonata Park was arbitrary, capricious, or unlawful. The court held that the neighbors had standing to sue in their own right and that the Association had associational standing to proceed on behalf of its members. The court also held that any error made by the district court in granting the neighbor's motion to strike the developer's affidavit was harmless. The court further held that the Sunlight Agreement did not supersede the City's growth policy where the Sunlight Agreement could be void ab initio and did not appear to guarantee certain density. The court finally held that substantial compliance was still valid and that a government body must substantially comply with its growth policy in making zoning decisions and that the City's decision to approve Sonata Park was arbitrary, capricious, and unlawful.

Beka Industries, Inc. ("BEKA") sued the Board of Education of Worcester County ("County Board") alleging claims that arose from a written contract dispute between BEKA and the County Board when BEKA was dissatisfied with the methods and amounts of the County Board's payment for its work. The court considered several issues on appeal and held that a new trial was warranted where the County Board was precluded from presenting evidence on its recoupment claim and BEKA may have been awarded impermissible "delay damages" under the contract. The court also reversed the intermediate appellate court's holding that the County Board's governmental immunity was not waived unless and until BEKA proved that there was a funding mechanism to satisfy a judgment for money damages rendered against the County Board. Accordingly, court affirmed in part, reversed in part, and remanded the case to the intermediate appellate court with direction to remand to the circuit court for a new trial.