Justia Contracts Opinion Summaries

Articles Posted in US Court of Appeals for the Federal Circuit
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In their divorce settlement, Roman gave Iris $150,000. Iris transferred to Roman her interest in their home. Roman agreed to pay any taxes assessed on Iris for her receipt of the $150,000. The IRS assessed $50,002.04 in taxes and penalties and mailed her a notice of intent to take possession of her property, including the home. Although Iris no longer had any ownership rights in the home and no lien had been placed, an IRS employee stated that the tax liability must be paid to stop a levy against Roman’s home and that Roman could appeal once the tax was paid. Roman apparently believed that he had no alternative to paying "a tax that he did not owe.” An installment agreement listed Iris as the taxpayer, identifying Roman’s checking account. Roman did not sign the agreement but sent the IRS payments until the obligation was satisfied.Roman sought a refund, arguing that under 26 U.S.C. 121(a) his payment to Iris qualified for an exclusion from gross income of gain for certain sales of a principal residence. The Federal Circuit vacated Roman’s award. Roman was not a “taxpayer” under 26 U.S.C. 6511(a), so the Claims Court lacked jurisdiction to hear Roman’s third-party refund claim under section 1346(a)(1). Roman nevertheless pled a claim under 28 U.S.C. 1491(a)(1); a party who pays a tax for which he is not liable may sue to recover that tax if it was paid under duress. View "Roman v. United States" on Justia Law

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In 2005, the Defense Logistics Agency (DLA) awarded Supreme a contract to provide food to U.S. forces in Afghanistan. During negotiations concerning deliveries to forward operating bases, Supreme submitted inflated cost proposals. Supreme threatened to withhold payments to subcontractors (potentially cutting off supplies to troops), The parties executed a Modification, including Supreme’s proposed rates, subject to verification. The Defense Contract Audit Agency concluded that Supreme’s documentation was not adequate and questioned more than $375 million of claimed costs. The contracting officer, in 2011, determined that DLA had overpaid Supreme by $567,267,940. DLA withheld $540 million from Supreme’s monthly payments. Supreme submitted unsuccessful “reverse image” claims. In 2014, Supreme pled guilty to fraud and entered into a civil settlement in a False Claims Act suit. During the investigations, with Supreme’s contract expiring, the parties entered into two extensions. In 2015, based on Supreme’s guilty plea, DLA demanded the return of all money paid under the contract. In 2020, the Armed Services Board of Contract Appeals concluded that Supreme’s contract claims against the government were barred by Supreme’s prior material breach.The Federal Circuit affirmed. The government did not waive its prior material breach defense. While DLA had some notice of Supreme’s fraudulent behavior in 2009, it had no “known right” until Supreme’s guilty plea, after which DLA never extended Supreme’s contract. Supreme cannot treat the bridge contracts as separate only to evade the government’s affirmative defenses. The parties treated the original contract and the extensions as inextricably intertwined; DLA’s prior material breach defense applies to those contracts. View "Supreme Foodservice GmbH v. Director of the Defense Logistics Agency" on Justia Law

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Uniloc brought multiple infringement suits against Google concerning patents directed to innovations in multimedia content delivery, IT security, high-resolution imaging, network connectivity, video conferencing, and image and text searching. Google alleged Uniloc lacked standing because its predecessors had granted Fortress a license and an unfettered right to sublicense to the asserted patents as part of a financing arrangement. Uniloc argued that any license had been eliminated by a Termination Agreement executed between Uniloc’s predecessors and Fortress before the suits commenced.The district court dismissed, finding that a license had been granted and survived the Termination Agreement. The Federal Circuit reversed. The district court erred in interpreting the Termination Agreement. The License Agreement granted Fortress a “non-exclusive, transferrable, sub-licensable, divisible, irrevocable, fully paid-up, royalty-free and worldwide license” to several of Uniloc’s patents, including those at issue. The Termination Agreement stated that the License Agreement “shall terminate and shall be of no further force or effect without any further documentation or action and without liability to any party hereto, and the rights of each of the applicable parties under the applicable agreement shall terminate.” By terminating the License Agreement and rights under that agreement, the Termination Agreement terminated Fortress’s license. Although the License Agreement describes the license as “irrevocable” the context clearly refers to the license’s being “irrevocable” by the licensor and does not preclude revocation by mutual agreement. View "Uniloc 2017 LLC v. Google LLC" on Justia Law

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CSI was awarded a government contract to provide “[a]ir charter services operated by brokers, and various auxiliary services that will be used to support the contract.” After U.S. Immigration and Customs Enforcement (ICE) canceled various removal flights, CSI sought payment ($40,284,548.89) from the Department of Homeland Security. The Civilian Board of Contract Appeals dismissed the action, concluding that the CSI Terms and Conditions, which include “Cancellation Charges” were not incorporated by reference into the Schedule Contract.The Federal Circuit vacated and remanded. The Schedule Contract expressly incorporates at least one document that unambiguously identifies the CSI Terms and Conditions and makes clear such terms and conditions apply to all operations. CSI’s Offer plainly identified the CSI Terms and Conditions—along with the CSI Commercial Sales Practice attachment, its Pricing Policy, and its Commercial Price List—in the “Pricing” section of its table of contents. View "CSI Aviation, Inc. v. Department of Homeland Security" on Justia Law

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Shinyaku and Sarepta executed an Agreement concerning “a potential business relationship relating to therapies for the treatment of Duchenne Muscular Dystrophy.” During the Agreement’s term the parties would “not directly or indirectly assert or file any legal or equitable .. claim or otherwise initiate any … form of legal or administrative proceeding against the other Party . . . in any jurisdiction … concerning intellectual property in the field of Duchenne Muscular Dystrophy,” including “patent infringement litigations, declaratory judgment actions, patent validity challenges” before the U.S. Patent and Trademark Office (PTO) or Japanese Patent Office, and reexamination proceedings before the PTO. A forum selection, governing intellectual property disputes between the parties after the term’s expiration named the District of Delaware. The term ended in June 2021; the two-year forum selection clause took effect. That same day, Sarepta filed seven Patent Trial and Appeal Board petitions for inter partes review (IPR). Shinyaku filed suit in the District of Delaware asserting breach of contract (alleging that the IPR petitions violated the forum selection clause), declaratory judgment of noninfringement and invalidity concerning Sarepta’s patents, and infringement of Shinyaku’s patents.The Federal Circuit directed that the district court enter an injunction, requiring Sarepta to withdraw the petitions. The plain language of the forum selection clause resolved the dispute. View "Nippon Shinyaku Co., Ltd. v. Sarepta Therapeutics, Inc." on Justia Law

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PlasmaCAM sued CNCElectronics for infringing the 441 patent, for which Plasmacam has an exclusive license. In 2019, the parties notified the district court that they had settled the case. When the parties met to draft a formal agreement, however, it became evident that they interpreted the settlement differently, and further negotiations resulted. The parties eventually advised the district court that they had reached a complete agreement. The district court granted the motion to enforce Plasmacam’s version of that agreement and ordered CNC to execute it. The Federal Circuit reversed after holding that the district court order to execute the settlement agreement constituted either an appealable injunction or a final judgment. The court concluded that CNC’s version of the agreement accurately reflects the parties’ understanding. View "PlasmaCAM, Inc. v. CNCElectronics, LLC" on Justia Law

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In 2015, JKB and the Army entered into a three-year indefinite-delivery, indefinite-quantity contract. JKB agreed to provide instructional services up to 14 classes per year. The contract incorporates Federal Acquisition Regulation (FAR) 52.212-4, which includes a termination for convenience clause for the government, and incorporates Defense Federal Acquisition Regulation Supplement (DFARS) 252.216-7006, which requires all supplies and services furnished under the contract to be ordered by issuance of delivery or task orders. The Army issued three year-long task orders, each listing one lot of training-instructor services, the price per class, and a total price corresponding to the price of 14 classes. Each year, the Army used JKB for fewer than 14 classes and paid for each class actually taught, refusing to pay the total price listed in the task orders.JKB sued for breach of contract. The Claims Court ultimately granted the government summary judgment based on FAR 52.212-4 and the doctrine of constructive termination for convenience. The Federal Circuit vacated. FAR 52.212-4 governs the termination of commercial item contracts for the government’s convenience; it does not apply to service contracts, such as the contract at issue. On remand, the Claims Court may consider whether the “Christian doctrine” applies to incorporate a termination for convenience clause and whether the doctrine of constructive termination for convenience applies. View "JKB Solutions and Services, LLC v. United States" on Justia Law

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In 2013, Bullock, a civilian employed by the Army, received a formal letter of reprimand from her supervisor. Bullock filed an EEO claim alleging sex discrimination and retaliation. In proceedings before the EEOC’s mediation program, Bullock was represented by her attorney, Elliott; the Army was represented by its management official Shipley, and attorney Lynch. According to Bullock, the parties reached agreement as to seven non-monetary demands on July 29 and reached an oral agreement regarding her monetary demands on August 27, 2015. The mediating administrative judge sent an email to the parties asking for the “agency’s understanding of the provisions of the settlement agreement” and noting that, “[o]nce we confirm that the parties are in complete agreement, the agency can begin work on the written settlement agreement.”. No written settlement agreement was executed. In September, the Army “rescinded its settlement offer.” Bullock continued to press her claims before the EEOC for a year, then filed a breach of contract claim regarding an oral settlement agreement.The Federal Circuit reversed the dismissal of the complaint, rejecting an argument that EEOC and Army regulations, requiring that settlement agreements be in writing, preclude enforcement of oral settlement agreements. The court remanded for a determination of whether the representative of the Army had the authority to enter a settlement agreement and whether the parties actually reached an agreement. View "Bullock v. United States" on Justia Law

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ICE issued a solicitation for the provision of detention, food, and transportation at its Florence Detention Center. Asset was the incumbent contractor. ICE responded "yes" to, “Arizona charges 4.5% ‘business tax’; will the Federal Government issue a tax exemption certificate to the successful offeror?” Asset’s initial proposal indicated that “[s]ales taxes were not charged” based on that answer. ICE selected Akima's proposal. Asset filed a bid protest. ICE took voluntary corrective action and issued Amendment 17; Amendment 19 subsequently clarified that ICE “CANNOT delegate its tax-exempt status” and instructed that offerors review their proposals and provide their best and final prices. Asset responded that it had reviewed Amendment 19 and that its proposal did not require revision but did not remove the tax-exempt language from its proposal. ICE again clarified the tax-exempt status question via Amendment 20. Asset again responded that it did not need to amend its proposal but the tax-exempt certificate language remained. ICE ultimately selected Akima, concluding that Asset was ineligible for the award because the tax-exempt certificate language rendered its proposal a contingent price. Asset filed another bid protest, disputing ICE’s best-value analysis. The GAO agreed that ICE improperly determined that Asset’s bid contained contingency pricing but concluded that Asset “was not prejudiced” because ICE’s best-value analysis was “reasonable,”The Claims Court concluded that Asset lacked standing to bring the bid protest. The Federal Circuit affirmed. Asset’s proposal was non-responsive to the requirements of the Solicitation, as explicitly amended, making it ineligible for the award. View "Asset Protection and Security Services, L.P. v. United States" on Justia Law

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GSA leased a building from NOAA’s predecessor; the annual rent includes agreed “[b]ase year taxes.” GSA must compensate NOAA for “any increase in real estate taxes during the lease term over the amount established as the base year taxes” and defines “real estate taxes” as “only those taxes, which are assessed against the building and/or the land upon which the building is located, without regard to benefit to the property, for the purpose of funding general Government services. Real estate taxes shall not include, without limitation, general and/or special assessments, business improvement district assessments, or any other present or future taxes or governmental charges that are imposed upon the Lessor or assessed against the building and/or the land upon which the building is located.In 2016, NOAA asked GSA to reimburse it for the Stormwater/Chesapeake Bay Water Quality tax, the Washington Suburban Transit Commission tax, the Clean Water Act Fee, and a Supplemental Education Tax. All four appear on the consolidated tax bill. The clean water tax, effective in 2013, is collected for the Watershed Protection and Restoration Fund, “in the same manner as County real property taxes and [has] the same priority, rights, and bear[s] the same interest and penalties, and [is] enforced in the same manner as County real property taxes.”GSA denied the claim. The Civilian Board of Contract Appeals held that the lease provision excludes all taxes enacted after the date of the lease, even if those taxes meet expressly stated criteria for being a real estate tax. The Federal Circuit reversed. Under ordinary interpretive principles, a real estate tax qualifies under the Lease provision whenever it satisfies the three criteria of the first sentence. View "NOAA Maryland, LLC v. General Services Administration" on Justia Law