Justia Government Contracts Opinion Summaries

The Supreme Court affirmed the judgment of the trial court entering judgment on the jury’s general verdict in favor of real-estate developers (Developers) and against the City of Rapid City in this suit seeking to recover the prospective cost of repairing roads in a development outside Rapid City.Specifically, the Court held that the circuit court did not err by (1) denying the City’s motion for summary judgment on the issue of liability; (2) excluding evidence of the Developers’ litigation and settlement with their subcontractors; (3) granting one of the developer’s motion for judgment as a matter of law; (4) instructing the jury on estoppel defenses; and (5) not instructing the jury on the City’s public-nuisance claim. View "City of Rapid City v. Big Sky, LLC" on Justia Law

The terms of the insurance policy at issue in this coverage dispute required a written contract between the named insured and an additional insured if coverage was to be extended to an additional insured, and therefore, Liberty Insurance Underwriters was entitled to summary judgment.Gilbane Building Co. and TDX Construction Corporation (collectively, Gilbane JV) was the construction manager for a new forensic laboratory, and Samson Construction Co. was the general contractor. Samson obtained general liability insurance coverage from Liberty Insurance Underwriters. When disputes arose over the construction, Gilbane JV commerced this lawsuit arguing that it qualified for coverage under the Liberty policy as an additional insured. Gilbane JV had no written contract with Samson denominating it as an additional insured but argued that no such contract was necessary. Supreme Court denied Liberty’s motion for summary judgment, determining that Gilbane JV was an additional insured under the policy. The Appellate Division reversed and granted Liberty’s motion. The Court of Appeals affirmed based on the terms of the policy at issue. View "Gilbane Building Co./TDX Construction Corp. v St. Paul Fire & Marine Insurance Co." on Justia Law

Meridian contracted to construct the Chula Vista Project flood control project, including construction of concrete channels, relocation of a sewer line, and dewatering and water diversion. After commencing work, Meridian encountered problems relating to “a layer of dripping saturated dark clay material under which a clean layer of sand is producing water” with “the potential for serious structural damage.” The government issued contract modifications, including an increase in funds for larger pipe, addition of a reinforced concrete access ramp, investigation of soil properties, remediation of saturated soils, and additional sheet piling. The government directed Meridian to suspend work following structural failures and terminated the project following a final inspection. Meridian sued for breach of contract, breach of the duty of good faith and fair dealing, and violation of the Contract Disputes Act, 41 U.S.C. 601−613. The government conceded liability for certain costs relating to suspension of work, channel fill, and interim protection. With respect to other claims, the Federal Circuit affirmed in part. Meridian’s interpretation of the contract was not reasonable; the existence of subsurface saturated soil conditions was “reasonably foreseeable.” The Trade Court did not impose an improper requirement for investigation of site conditions beyond what a reasonable contractor would undertake. The court remanded for consideration of whether the parties reached a meeting of the minds on flood event claims and held that the Trade Court erred dismissing Meridian’s unpaid contract quantities claim, in light of conflicting information. View "Meridian Engineering Co. v. United States" on Justia Law

In 2004, Hesperia began acquiring vacant property in its downtown for development of a Civic Plaza, with a city hall, public library, other government buildings and “complimentary retail, restaurant, and entertainment establishments.” Cinema West articulated a plan to develop a cinema immediately west of the Civic Plaza Park: the city would convey 54,000 square feet of real property to Cinema for $102,529, the property‘s fair market value; Cinema would construct a 38,000-square foot, 12-screen digital theatre; the city would construct the necessary parking lot, develop a water retention system for the theater and the parking lot, and install off-site improvements including curb, gutter and sidewalks. Cinema would execute a 10-year operating agreement with the city. The city later made a $250,000 forgivable loan to Cinema to aid with a $700,000 anticipated shortfall. As development of the theater and parking lot was nearing completion, the Electrical Workers Union requested a public works coverage determination under California‘s prevailing wage law (Lab. Code, 1720–18611 ) The State Department of Industrial Relations concluded that the project was subject to the prevailing wage requirement. The court of appeal affirmed, noting that Cinema received the benefit of a new, publicly-funded parking lot adjacent to the theater, which, though owned by the city, is Cinema‘s to use for as long as it operates the theater. View "Cinema West v. Baker" on Justia Law

Education Code section 17406 authorizes school districts to use lease-leaseback agreements for construction or improvement of school facilities: the school district leases its own real property to a contractor for a nominal amount, and the contractor agrees to construct or improve school facilities on the property and lease the property and improvements back to the district. At the end of the lease-leaseback agreement, title to the project vests in the school district. California Taxpayers Network brought a reverse validation action (Code Civ. Proc. 863), challenging a lease-leaseback agreement between Mount Diablo School District and Taber Construction, alleging that the Education Code requires “genuine lease-leaseback agreements,” which “provide for financing of the school facility project over time,” but defendants’ lease-leaseback contracts were “sham leases”; that the contracts were illegal because a public bidding process is required for school construction projects; and that Taber provided professional preconstruction services to the District regarding the project before entering the lease-leaseback contracts. The court of appeals affirmed dismissal of claims "that attempt to engraft requirements on the transaction" that are not part of the Education Code. The court reversed in part, holding that the plaintiff did state a conflict of interest claim against Taber sufficient to withstand a demurrer. View "California Taxpayers Action Network v. Taber Construction, Inc." on Justia Law

The State of Michigan contracted with E.L. Bailey to construct a prison kitchen. After delays, the parties sued each other for breach of contract. Bailey had obtained surety bonds from Great American Insurance Company (GAIC) and had agreed to assign GAIC the right to settle claims related to the project if Bailey allegedly breached the contract. Exercising that right, GAIC negotiated with the state without Bailey’s knowledge, then obtained a declaratory judgment recognizing its right to settle. The Sixth Circuit affirmed, rejecting, for insufficient evidence, a claim that GAIC settled Bailey’s claims against the state in bad faith. Although “there can be bad faith without actual dishonesty or fraud,” when “the insurer is motivated by selfish purpose or by a desire to protect its own interests at the expense of its insured’s interest,” “offers of compromise” or “honest errors of judgment are not sufficient to establish bad faith.” There was no evidence that GAIC’s settlement of Bailey’s claims was undertaken with selfish purpose at Bailey’s expense. GAIC and Bailey shared an interest in securing the highest settlement possible from the state. Even if GAIC misunderstood Michigan law, leading it to miscalculate its liability and accept a lower settlement, “honest errors of judgment are not sufficient to establish bad faith.” View "Great American Insurance Co. v. E.L. Bailey & Co." on Justia Law

Midwest Fence, which provides guardrails, challenged federal and state programs that offer advantages in highway construction contracting to disadvantaged business enterprises (DBEs). For purposes of federally-funded highway construction, DBEs are small businesses that are owned and managed by “individuals who are both socially and economically disadvantaged,” 49 C.F.R. 26.5, primarily racial minorities and women, who have historically faced significant obstacles in the construction industry due to discrimination. States that accept federal highway funding must establish DBE participation goals for federally funded highway projects and must attempt to reach those goals through processes tailored to actual market conditions. Midwest, which is not a DBE, alleged that the DBE programs violated its equal protection rights. The Seventh Circuit affirmed summary judgment in favor of the government-defendants. While DBE programs permit contracting decisions to be made with reference to racial classifications and are subject to strict scrutiny, they serve a compelling government interest and are narrowly tailored to further that interest. Remedying the effects of past or present discrimination can be a compelling governmental interest. The program provides states with ample discretion to tailor their DBE programs to the realities of their own markets and requires the use of race- and gender-neutral measures before turning to race- and gender-conscious ones. View "Midwest Fence Corp. v. United States Department of Transportation" on Justia Law

In 1997, Virginia Polytechnic Institute & State University awarded General Contractor a prime contract for construction work. General Contractor hired Subcontractors to complete portions of the project. Sureties acted as sureties to Subcontractors. After construction was substantially completed, Virginia Tech made final payment to General Contractor in 1999, which made final payment to Subcontractors. All work was concluded in 2000. In 2012, Virginia Tech asserted a claim against General Contractor seeking compensation for the cost of remedying defective workmanship. In 2014, General Contractor settled the claim with Virginia Tech and, the same year, filed this action alleging breach of contract and common law indemnity claims against Subcontractors and breach of contract claims against Sureties. In 2015, the court dismissed the case in its entirety, concluding, as relevant to this appeal, that the statute of limitations barred the breach of contract claims. The Supreme Court affirmed, holding that the statute of limitations had run by the filing of the suit in 2014, and because any breach of Subcontractors occurred at the time of their respective performances, the statute of limitations had similarly run against Sureties. View "Hensel Phelps Construction Co. v. Thompson Masonry Contractor, Inc." on Justia Law

The issue in this appeal centered on whether a force majeure clause in a written contract between the county and a developer did not apply to the developer’s failure to obtain zoning approval in order to construct the cement plant required in the agreement. After review of the contract and the clause at issue here, the Supreme Court held that the clause was broad enough to apply. Accordingly, the Court vacated the district court's judgment and remanded this case for further proceedings. View "Burns Concrete, Inc v. Teton County" on Justia Law

Brian Welken appealed after a jury returned a verdict in favor of Eugene Taszarek, Marlys Taszarek, Trina Schilling, Steven Taszarek, and Michael Taszarek ("Taszareks") and against Lakeview Excavating, Inc., ("Lakeview") and Welken. Lakeview was a corporation primarily involved in flood control projects, and Welken was Lakeview's president and sole shareholder. In the spring of 2012, German Township in Dickey County solicited bids for road construction projects to repair and raise the grade of a road near the Taszareks' property. Lakeview, acting through Welken, successfully bid and was selected as the contractor for the road projects. Lakeview obtained most of its field rock for the project from area farmers and ranchers with rock piles on their properties. Lakeview arranged with landowners to harvest rocks from their fields and reclaim the ground so it could again be farmed, and landowners allowed Lakeview to remove rock piles. Herb Buerkley owned land adjacent to land owned by the Taszareks, and Buerkley permitted Lakeview to enter his family's property to harvest field rock. While harvesting the rock piles from Buerkley's land, Lakeview's employees crossed into the Taszareks' land and harvested field rock. The Taszareks brought an action against both Lakeview and Welken, asserting claims of intentional trespass, conversion, and unjust enrichment arising from Lakeview's work on the German Township road-raising project. The district court held a jury trial on the Taszareks' trespass and conversion claims against Lakeview and Welken. During trial, the Taszareks' attorney asked the court to instruct the jury on the theory that Lakeview was the "alter ego" of Welken and that Welken should therefore be personally liable for any judgment. Over the objection of Welken's attorney, the court gave an instruction regarding the alter ego doctrine. After review, the Supreme Court concluded Welken failed to preserve whether the district court misapplied the law by allowing the jury to resolve whether Lakeview was the alter ego of Welken. Furthermore, the Court concluded that the trial court erred as a matter of law in inadequately instructing the jury regarding the alter ego doctrine. The Court therefore reversed the judgment and remanded for a new trial. View "Taszarek v. Welken" on Justia Law