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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. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  2. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  3. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

  4. I totally agree with John Smith.

  5. An idea that would harm the public good which is protected by licensing. Might as well abolish doctor and health care professions licensing too. Ridiculous. Unrealistic. Would open the floodgates of mischief and abuse. Even veteranarians are licensed. How has deregulation served the public good in banking, for example? Enough ideology already!

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