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Judge rules on summary judgment motions in IBM case

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The State of Indiana may be on the hook to pay IBM $40 million in subcontractor assignment fees per the contract it had with IBM to update the state’s welfare system, a contract the state cancelled in October 2009 because it wasn’t happy with results.

Marion Superior Judge David Dreyer issued several rulings Wednesday in the lawsuit stemming from the cancelled contract between the state and IBM. The state hired IBM in 2006 but cancelled the contract three years later and sued IBM to try to recover the millions it paid before ending the contract, plus triple damages. IBM countersued for breach of contract, arguing the state still owed around $100 million.

Dreyer rejected the state’s contention that IBM isn’t entitled to the $40 million in subcontractor assignment fees. The contract between the state and IBM said that the “state shall pay” IBM those fees, and there is no dispute that the state accepted assignment of the subcontracts at issue. The Family & Social Services Administration believes this ruling is an error and plans to appeal, according to a spokeswoman.

IBM also asked for $43 million in deferred fees due to the termination of the agreement as well as $9.3 million for equipment the state has but did not pay IBM for, but Dreyer denied summary judgment on those issues.

Dreyer ruled in favor of the state on IBM’s argument that its poor performance could be excused because of the economic downtown and flooding that occurred after the contract was signed. He found that any contention by IBM at trial that the economy or the flooding rendered its performance “impossible” or otherwise justifies any failure by IBM to meet contractual obligations are precluded as a matter of law.

There are also disputes of material fact as to whether there was a breach of the contract, so Dreyer denied the state’s motion for summary judgment on the matter.

The court has ruled the state is limited to recovering no more than $125 million in damages; if the state can’t prove IBM breached the contract, it could owe the company $100 million per a termination clause.

An issue that arose from this case is whether Gov. Mitch Daniels can be deposed. Dreyer originally ruled Daniels doesn’t have to be deposed, but later ruled that he can be. That issue will be before the Indiana Supreme Court Feb. 13.

The case is set to go to bench trial Feb. 27.

 

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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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