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Justia Weekly Opinion Summaries

Government Contracts
July 10, 2020

Table of Contents

Mid-American Salt LLC v. Morris County Cooperative Pricing Council

Business Law, Contracts, Government Contracts

US Court of Appeals for the Third Circuit

Hanover Insurance Co. v. Dunbar Mechanical Contractors, LLC

Construction Law, Government Contracts, Insurance Law

US Court of Appeals for the Eighth Circuit

COVID-19 Updates: Law & Legal Resources Related to Coronavirus

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Legal Analysis and Commentary

A Modest Proposal: A Heartbeat Bill for Those Who Don’t Wear Masks

MARCI A. HAMILTON

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University of Pennsylvania professor Marci A. Hamilton draws upon a strategy used by anti-abortion advocates in suggesting a way to encourage (or coerce) more people into wearing masks to avoid the spread of COVID-19. Hamilton proposes requiring persons who opt not to wear a mask in public (1) to watch, on a large screen, an adult's beating heart for 30 seconds, and (2) to be read a statement about how their decision unreasonably endangers others.

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Government Contracts Opinions

Mid-American Salt LLC v. Morris County Cooperative Pricing Council

Court: US Court of Appeals for the Third Circuit

Docket: 18-2112

Opinion Date: July 6, 2020

Judge: Hardiman

Areas of Law: Business Law, Contracts, Government Contracts

The Council handles contracts for over 200 New Jersey municipalities, police departments, and school districts. Mid-American sells bulk road salt. The Council's members estimated their salt needs for the 2016-17 winter. The Council issued a comprehensive bid package, anticipating the need for 115,000 tons of rock salt. MidAmerican won the contract, which stated: There is no obligation to purchase [the estimated] quantity. As required by the contract, Mid-American obtained a performance bond costing $93,016; imported $4,800,000 worth of salt from Morocco; and paid $31,250 per month to store the salt and another $58,962.26 to cover it. Mid-American incurred at least another $220,000 in finance costs and additional transportation costs. Council members purchased less than five percent of the estimated tonnage. Mid-American claims “several” Council members purchased salt from MidAmerican’s competitors, who lowered their prices after MidAmerican won the contract. Mid-American sued the Council and 49 of its members, alleging breach of contract, breach of the covenant of good faith and fair dealing, and bad faith under UCC Article 2. The Third Circuit affirmed the denial of relief. No valid requirements contract existed here because the contract was illusory. These sophisticated parties were capable of entering into precisely the contract they desired. Neither the Council nor its members ever promised to purchase from Mid-American all the salt they required

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Hanover Insurance Co. v. Dunbar Mechanical Contractors, LLC

Court: US Court of Appeals for the Eighth Circuit

Docket: 19-2226

Opinion Date: July 9, 2020

Judge: Bobby E. Shepherd

Areas of Law: Construction Law, Government Contracts, Insurance Law

Dunbar, a Service Disabled Veteran Owned Small Business (SDVOSB), was awarded an Army Corps of Engineers ditch and tributary project in Arkansas. Dunbar then hired a subcontractor, Harding Enterprises, to work on the project. After Harding Enterprises defaulted, Dunbar made a demand on the bond guaranteed by Hanover, which Hanover denied. Hanover then filed suit seeking a declaration that it had no obligations under the bond and seeking to have the bond rescinded based on illegality of the subcontract. The Eighth Circuit reversed the district court's grant of summary judgment in favor of Hanover, holding that the district court erroneously concluded that the subcontract was undisputedly in violation of 13 C.F.R. 125.6(b)(2) because the percentage that Dunbar spent on contract performance relative to the prime contract price could not be conclusively ascertained until conclusion of performance of the prime contract. The court also held that the potential that Hanover may have liability under the False Claims Act if it were to perform under the bond does not justify discharging Hanover from its obligations and rescinding the contract.

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