Tuesday, December 6, 2011
Contracts profs love teaching Peevyhouse. We at the blog love Peevyhouse. We have composed songs and poems, we’ve written scholarship about the case. There is even a movie. We just can’t get enough of it. And as if there were not already enough materials available to profs looking to jazz up their Peevyhouse discussion, the New York Times has this big front-page story, which is part of an on-going series of articles, plus the Times has also established an online archive of oil and gas leases.
The Times story relates the experience of Scott Ely and his father, who entered into a lease to allow Cabot Oil and Gas engage in gas drilling on their land. They were left with “toxic drilling sludge stored in large waste ponds” on their property. When the waste seeped out, it contaminated the drinking water on a separate property. Mr. Ely sued. Cabot’s spokesman contends that “the company’s cleanup measures met or exceeded state requirements.”
The Times’ review of 111,000 similar leases suggests that many or most such leases do not provide all of the contractual protections that landowners like the Elys expect.
For more very interesting information on the complications associated with oil and gas exploration in Pennsylvania, we recommend this episode of This American Life.
Monday, December 5, 2011
Frank McCourt may be in the process of suing his former lawyers, Bingham McCutchen, LLP, according to this article in the Wall Street Journal. As you've probably heard, Frank McCourt had a nasty divorce from his wife, Jamie, not too long ago - although it seems like this morning. I tried not to pay too much attention to it (not easy to do when you live in SoCal) until I realized that a major issue in the divorce concerned the marital agreement between the couple which would determine who owned the Dodgers. Apparently there was some confusion about attachments to the original marital agreement, with only some naming Frank McCourt as the sole owner. A drafting error - or was it? Jamie McCourt's attorneys argued that the various copies indicated there was no meeting of the minds. The judge agreed and threw out the agreement. Frank McCourt wasn't happy about that and has filed claims against Bingham that could be worth "hundreds of millions of dollars."
The Department of Health and Human Services (HHS) provides training courses for its employees through HHS University (HHSU). In May 2007, HHS put out a request for quotations (RFQ) to provide grant management courses covering eight topics at HHSU. The Gonzales-McCaulley Investment Group, Inc. (GMIG). GMIG submitted a cover letter ad quote. It referenced "course book" binder that had apparently already been submitted to HHS.
The training program manager at HHS sent an e-mail to GMIG attaching "confirmation of selection to provide training in Grants Management to HHS University" and suggesting further contacts to discuss date for training sessions. Throughout June 2007, the parties exchanged communications setting up dates for the trainings. At that point, Kimberly Hill, HHSU's Manager of the Center for Administrative and Systems Training reviewed GMIG's submissions and compared them with the website of Management Concepts, the organization that had previously been providing services to HHSU, finding them virtually identical. On that basis, Ms. Hill concluded that GMIG had engaged in plagiarism, and she informed GMIG that HHSU would not be using its services. CMIG filed a pretest to the Government Accountability Office (GAO), arguing that GMIG never had an opportunity to defend itself against the charge of plagiarism. When HHS subsequently cancelled the original Request for Quotations (RFQ), the GAO dismissed the protest as "academic."
GMIG persisted, claiming that the decision to rescind the RFQ was pretextual. The GAO recommended that upon reinstating the RFQ, HHSU should give due consideration to all of the responding vendors. HHS instead decided to do all future HHSU training in-house. GMIG sued seeking $900,000 in general and consequential damages, and the suit, originally filed in California, was transferred to the Court of Federal Claims. After some procedural complexities, the Court of Federal Claims heard HHS's motion to dismiss or for summary judgment on the ground that there could be no breach of contract because there had never been a valid acceptance.
In a November 14, 2011 opinion and order, the Court of Federal Claims granted summary judgment to HHS. The court reviewed the elements of a breach of contract and concluded as follows:
“To prove the existence of a contract with the government, a plaintiff must prove four basic elements: (1) mutuality of intent to contract; (2) offer and acceptance; (3) consideration; and (4) a government representative having actual authority to bind the United States.” Hometown Fin., Inc. v. United States, 409 F.3d 1360, 1364 (Fed. Cir. 2005). Here, at a minimum, there was no offer and acceptance.
Since the federal rules do not consider a quotation to be an offer, the issuance by the government of an order in response to a quotation cannot establish a contract. But if GMIG's quotation was not the offer, perhaps the order was the offer, which was accepted through the exchange of e-mails. Unfortunately for GMIG, according to the court, the resulting e-mails merely discussed tentative dates and never amounted to an agreement. In the post-Iqbal and Twombly atmosphere, GMIG's inability to point to a "particular order and acceptance in its pleadings" is fatal to its claim.
Thursday, December 1, 2011
When NBA owners and players tentatively agreed to end the lockout and begin the NBA season on Christmas Day, their agreement resolved many contractual issues, such as the maximum number of years permitted in a player's contract. One issue left unresolved involves the fate of three players who played for the NBA's Denver Nuggets last year--Kenyon Martin, J.R. Smith, and Wilson Chandler (Martin and Chandler pictured here). The three Nuggets signed contracts to play for teams in the Chinese Basketball Association. Unlike the international contracts signed by dozens of other NBA players, the Nuggets' contracts reportedly contained no "opt-out" clause that would permit the players to return to the NBA if and when the lockout ended. Some commentators initally suggested that the players could return to the NBA anyway. After all, there is no specific performance available for breach of contract. The problem with that approach, however, is that the NBA, as a member of the International Basketball Federation, requires its teams to recognize international contracts. This relationship presumably would bar any NBA team from contracting with the three former Nuggets due to their Chinese contracts. All three players reportedly have been doing quite well on the court (averaging 15, 22 and 32 points per game, respectively) and even enjoy some decent off-court perks, such as a driver and personal chef. Although they likely won't make it home for Christmas, all three players' contracts end in March, well before the NBA playoffs.
[Heidi R. Anderson, h/t SB Nation and WSJ Online]