Justia Contracts Opinion Summaries

Two companies competed for a Federal Aviation Administration (FAA) hardware contract related to air traffic control tower simulators. Adacel, having already secured a related software contract, knew that its own software would be used, giving it an informational advantage over Adsync, which was unaware of the software selection. Adacel’s bid was lower, and it initially won the hardware contract. Adsync protested, and the FAA’s Office of Dispute Resolution for Acquisition (ODRA) found Adacel’s advantage unfair. The FAA allowed Adsync to revise its bid with knowledge of the software, but restricted changes to those attributable to the new information and barred Adacel from revising its bid.After Adsync revised its proposal with significant price reductions, the FAA’s contracting team accepted most, but rejected about $734,000 in reductions pertaining to basic hardware, finding Adsync had failed to justify their connection to the software selection. As a result, Adacel’s bid remained lower, and it again won the contract. Adsync filed a second protest with ODRA, challenging the FAA’s rejection of some price reductions, the technical evaluation, and the best value determination. ODRA concluded that the FAA had a rational basis for its decisions and recommended denial of the protest. The FAA adopted ODRA’s recommendations.Adsync sought review in the United States Court of Appeals for the District of Columbia Circuit. The court held that the FAA did not violate its Acquisition Management System Guidance’s “price realism” provision, as it was not applicable to the remedial rebid context. The court further found substantial evidence supported the FAA’s rejection of certain price reductions and concluded that ODRA did not abuse its discretion in denying bid and proposal costs. Accordingly, the petition was denied. View "Adsync Technologies, Inc. v. FAA" on Justia Law

A company operating a gas station in Washington entered into a series of agreements with a petroleum refiner and a logistics company. The agreements allowed the company to rebrand its station and market motor fuel under the refiner’s trademarks, even though the refiner did not supply the actual fuel. Instead, the logistics company served as an intermediary, and fuel was sourced from a third party. Later, the refiner and logistics company claimed the agreements were terminated, demanding the removal of the trademarks. The gas station operator refused, alleging that the termination violated the Petroleum Marketing Practices Act (PMPA), which regulates the termination and nonrenewal of petroleum marketing franchises.The United States District Court for the Western District of Washington dismissed the gas station operator’s PMPA claim. The court held that no PMPA franchise existed because the refiner did not supply the fuel to either the operator or the logistics company. The court reasoned that the statute required the refiner to be the supplier of the fuel for a franchise relationship to exist under the PMPA.The United States Court of Appeals for the Ninth Circuit reviewed the dismissal de novo. It held that the PMPA does not require the refiner to supply the actual fuel; rather, a franchise exists if there is a contract authorizing the use of the refiner’s trademark in connection with the sale of motor fuel. The court determined that the operator plausibly alleged franchise relationships with both the refiner and the logistics company, based on the mutual obligations in the agreements and the statutory definitions. The Ninth Circuit reversed the district court’s dismissal of the PMPA claims and remanded the case for further proceedings. View "CAN-AM FUEL DISTRIBUTION, LLC V. SINCLAIR OIL, LLC" on Justia Law

A dispute arose over a 2,300-acre land development project in Washington County, Utah. The owners, Keith and Lorin Walker, planned a large residential community but faced foreclosure following the 2008 financial crisis. To save the project, they entered into a contract with Western Mortgage & Realty Company, which agreed to clear the land’s title and transfer ownership to a jointly controlled entity. Western failed to form the promised entity, leading to litigation. Western sued to quiet title, and the Walkers counterclaimed for breach of contract and fiduciary duty, among other claims.The Fifth District Court held a bench trial, finding in favor of the Walkers on their breach of contract and fiduciary duty claims. The court imposed a constructive trust, awarded the Walkers monetary damages, and granted attorney fees as consequential damages for the breach of fiduciary duty. The Walkers were instructed to seek attorney fees through a post-trial motion under Utah Rule of Civil Procedure 73. After trial, the parties signed a stipulation waiving appeals on prior rulings but reserving the right to appeal any future rulings regarding attorney fees.In their post-trial motion, the Walkers, for the first time, disclosed a hybrid contingency-hourly fee arrangement with their counsel. The district court accepted this late disclosure, finding that it was either for good cause or harmless, and awarded the Walkers consequential damages based on the contingency fee, increasing their monetary award and interest in the trust.On direct appeal, the Supreme Court of the State of Utah reversed the district court’s award of the contingency fee as consequential damages. The court held that attorney fees sought as consequential damages require disclosure under Rule 26, and their foreseeability and amount must be proven at trial. The Walkers’ failure to disclose and prove these elements was neither harmless nor for good cause. The Supreme Court instructed the district court to modify the damages award accordingly. View "Western Mortgage v. Walker" on Justia Law

Two North Dakota counties jointly owned a detention facility and entered into a contract with a construction company to build it, hiring an architectural firm to specify and approve materials, including paints. In early 2017, during a walk-through, a county official noticed that paint on a bunk bed was peeling off easily, exposing bare metal with no visible primer. He documented the issue and notified both the architect and the painting subcontractor, who suggested the paint had not cured. Despite this, the paint problems persisted and were reported as a widespread issue months later; the counties continued to express concerns and sought to identify responsibility.The counties later sued the architect and other parties for breach of contract, alleging failure to ensure proper paint specifications. Claims against all other defendants were resolved by settlement, leaving the architect as the sole defendant. The District Court of Burleigh County, South Central Judicial District, granted summary judgment in favor of the architect, concluding that the six-year statute of limitations applied. The court found that the counties were on notice of a potential claim as of the February 2017 walk-through and that their action, filed in 2023, was untimely. The court also declined to consider equitable estoppel, as it was not raised before the trial court.On appeal, the Supreme Court of North Dakota reviewed the summary judgment de novo. The court agreed that the discovery rule triggered the statute of limitations in February 2017, when the counties became aware of facts that would place a reasonable person on notice of a potential claim. The court held that the counties’ claim was time-barred and affirmed the district court’s dismissal, declining to address arguments inadequately raised or preserved for appeal. View "Burleigh Cty v. Comstock Construction" on Justia Law

In the aftermath of severe flooding in Whitley County, Kentucky, the county government sought bids for infrastructure repair projects, specifying that bids should use unit pricing for materials. King-Crete Drilling, Inc. submitted bids and was awarded contracts for two projects. During the bidding and performance phase, King-Crete asserted that a county official directed it to rely on FEMA specifications for material quantities but assured payment for actual quantities required to complete the projects, even if these exceeded the bid amounts. After completing the work, King-Crete invoiced the county for the unit prices multiplied by the actual quantities used. The county, however, paid only the original bid amounts.King-Crete sued the county and the official, claiming breach of contract, unjust enrichment, and seeking to enforce oral modifications to the contract. The Whitley Circuit Court denied the county’s motion to dismiss, allowing the claims to proceed. The county and the official appealed. The Kentucky Court of Appeals ruled that the county was immune from suit due to sovereign immunity and dismissed all claims against it. The Court of Appeals also found the official could not be personally liable but remanded for further proceedings to clarify his immunity status.On discretionary review, the Supreme Court of Kentucky held that, while the Kentucky Model Procurement Code does not waive counties’ sovereign immunity, longstanding common law allows enforcement of express written contracts against counties. The Court reversed in part, holding that King-Crete’s claim to enforce the express written contract may proceed. However, the Court affirmed dismissal of claims based on oral contract modifications and unjust enrichment, as sovereign immunity bars such relief. The case was remanded to the circuit court to interpret the written contract’s terms and determine whether the county met its contractual obligations. View "KING-CRETE DRILLING, INC. V. WHITLEY COUNTY FISCAL COURT" on Justia Law

Merchants Bank of Indiana lent substantial amounts to two entities for the purchase of assisted living facilities in Arkansas and Tennessee. The loans were secured by mortgages on the properties as well as personal guaranties executed by three individuals. When the borrowers defaulted on the loans, Merchants initiated federal lawsuits against the guarantors to collect the outstanding debts and, after dismissing the borrowers from those suits, later began foreclosure actions on the mortgaged properties in state courts. Receivers were appointed for the properties, but Merchants had not recovered the loan amounts.After Merchants moved for summary judgment in the United States District Court for the Southern District of Indiana, the guarantors argued that Indiana’s “One Action” statute (Indiana Code § 32-30-10-10) barred simultaneous suits on the guaranties and foreclosures. The district court, acting on its own, granted summary judgment to the guarantors, finding that the statute applied to guaranties and rendered the waivers in the guaranty contracts unenforceable as contrary to Indiana public policy.On appeal, the United States Court of Appeals for the Seventh Circuit found that the scope of Indiana’s One Action statute and the enforceability of waivers in this context were unsettled under Indiana law. Recognizing the ambiguity and the lack of controlling precedent, the Seventh Circuit certified two questions to the Indiana Supreme Court: whether the statute prohibits a lender from foreclosing while simultaneously suing on guaranties in separate proceedings, and, if so, whether such protections may be waived by guarantors. The Seventh Circuit stayed further proceedings in the case pending the Indiana Supreme Court’s response. View "Merchants Bank of Indiana v. Craik" on Justia Law

Several employees of Veolia Water Contract Operations USA, Inc. sued their employer, seeking prevailing wages under the Massachusetts Prevailing Wage Act (PWA) for certain repair and replacement work they performed pursuant to a contract between Veolia and the Springfield Water and Sewer Commission. That contract was authorized by a 1997 Massachusetts Special Act, which provided that work falling within "the construction and design of improvements" remained governed by the PWA. The disputed work occurred during the contract’s second stage, which involved ongoing operation, maintenance, repair, and replacement of wastewater facilities.After both sides moved for summary judgment, the United States District Court for the District of Massachusetts ruled for Veolia. The court concluded that the employees’ work did not fall under "construction and design of improvements" as used in the Special Act and, relying on the Supreme Judicial Court of Massachusetts’s (SJC) decision in Metcalf v. BSC Group, Inc., determined that the structure of the procurement scheme made the PWA inapplicable to the service contract as a whole. The employees appealed.The United States Court of Appeals for the First Circuit, reviewing the case, certified two questions regarding Massachusetts law to the SJC. The SJC clarified that "construction and design of improvements" in the Special Act is broader than the PWA’s definition of “construction” but does not include ordinary repairs or maintenance. The SJC also held that the Special Act was not incompatible with the PWA and that Metcalf was not controlling. Based on the SJC’s answers, the First Circuit held that the district court’s summary judgment for Veolia could not stand, reversed the order, vacated the judgment, and remanded the case for further proceedings to determine which, if any, of the employees’ tasks fell within the statutory phrase. View "Nicholls v. Veolia Water Contract Operations USA, Inc." on Justia Law

Two couples, who were friends and interested in purchasing vacation property to accommodate their families, entered into identical purchase agreements in 2015 with the owner of a luxury resort in Montana. The agreements granted each couple a fractional interest in a three-bedroom villa, with the understanding that they would be transferred to a four-bedroom villa once one was constructed. Until that time, they were to be exempt from maintenance fees and allowed use of a four-bedroom cabin. Both couples paid the purchase price and received warranty deeds for the three-bedroom villas but never received the promised upgrade, as no four-bedroom villas were ever constructed. In 2023, the resort owner demanded maintenance fees and cancelled their reservations when the couples refused to pay, citing the unfulfilled contractual obligation. After the resort was sold to a new owner, the couples received no further communication or access.The couples sued for breach of contract and under the Montana Consumer Protection Act (MCPA), seeking damages and attorney fees. The Montana Nineteenth Judicial District Court granted summary judgment in their favor on the breach of contract claim, finding the agreements valid and breached by the owner for failing to provide the upgrade and improperly charging fees. The court denied summary judgment on the MCPA claim, which went to a jury along with the issue of contract damages. The jury awarded $250,000 in contract damages to each couple but found for the defendant on the MCPA claim. The court subsequently awarded all attorney fees and costs to the couples, finding these were inseparable from the contract claim.On appeal, the Supreme Court of the State of Montana affirmed. It held that substantial credible evidence supported the jury’s damages award, including damages for loss of use after the property changed hands, and that the verdict was consistent with the instructions and supported by the evidence. The court also upheld the award of full attorney fees, finding the claims and related work inseparable, and remanded for a determination of fees and costs incurred on appeal. View "McNain Holdings v. Wilderness Preserve" on Justia Law

The Village of Schaumburg owns a hotel and convention center that it alleges has defective exterior walls. In February 2022, it initiated a lawsuit in the United States District Court for the Northern District of Illinois, Eastern Division, against several parties for fraud, breach of warranty, and products liability. In November 2022, the Village added Permasteelisa North America, a subcontractor, as a defendant. About eight months later, the Village sought to compel arbitration of its dispute with Permasteelisa, even though it had not previously requested arbitration in its complaint or before filing suit, and the arbitration clause was contained in a contract between Permasteelisa and the general contractor, not the Village directly.The District Court concluded that by filing a lawsuit and then delaying its request for arbitration, the Village presumptively waived any right to arbitrate it might have had. The Village argued that the lawsuit was filed to avoid the statute of limitations expiring, but the District Court responded that the Village should have requested arbitration at the outset or, at the latest, soon after Permasteelisa’s motion to dismiss was filed. The court found that the combination of filing suit and substantial delay amounted to waiver of any right to arbitrate and denied the Village’s motion to compel arbitration.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the District Court’s decision for abuse of discretion. The appellate court held that the District Court did not err in concluding that the Village waived any right to arbitrate by acting inconsistently with that right through both initiating litigation and delaying the arbitration request. The Seventh Circuit also rejected the argument that a contractual anti-waiver clause could override federal procedural rules governing litigation conduct. The judgment of the District Court was affirmed. View "Village of Schaumburg v Permasteelisa North America" on Justia Law

A conservation district in Montgomery County, Texas, required large water users to reduce groundwater usage by 30%. To facilitate compliance, the San Jacinto River Authority (the “River Authority”), a political subdivision of Texas, created a joint groundwater reduction plan and entered into contracts with about 80 utilities, including Quadvest, L.P. (“Quadvest”). These contracts required participants to pay certain fees and, at the River Authority’s discretion, to connect to surface water provided by the River Authority. The fees aimed to equalize costs between groundwater and surface water users and to finance new infrastructure. Quadvest, a family-owned utility, initially operated only in the retail market and later expanded into wholesale water supply.After the relevant groundwater regulations were rescinded due to political changes and litigation, Quadvest challenged the lawfulness of its contract with the River Authority in the United States District Court for the Southern District of Texas. It alleged that the contract constituted an unlawful restraint of trade under the Sherman Act, specifically as per se illegal horizontal price-fixing and market allocation. After a bench trial, the district court found in favor of the River Authority, concluding that Quadvest failed to prove its claims.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s findings of fact for clear error and legal conclusions de novo. The Fifth Circuit held that the challenged contract did not constitute a per se illegal horizontal restraint because the parties were not competitors at the time of contracting, and the agreement was vertical in nature. The court further determined that the contract did not fix prices or allocate markets in a manner prohibited by the Sherman Act. Under the rule of reason, Quadvest also failed to define the relevant market and thus could not demonstrate anticompetitive effects. The Fifth Circuit affirmed the judgment of the district court. View "Quadvest v. San Jacinto River Auth" on Justia Law