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Judges rule in favor of state in contract dispute

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The Indiana Court of Appeals reversed a trial court judgment against the state in a lawsuit filed by a subcontractor working on an airport project in Gary, holding the lower court erroneously determined the state had breached a contract between it and the subcontractor.

Subcontractor Continental Electric Co. sued the State of Indiana Military Department, State Armory Board of Indiana and Gov. Mitch Daniels for breach of contract and quantum meruit. The Indiana Military Department hired Larson-Danielson Construction Co. as contractor. Continental submitted a bid to Larson for $1,794,660 to “furnish and install the labor, material and equipment necessary for the electrical portion of the above project.”

At dispute is an alternative known as Alternate No. 2 relating to the installation of a generator at the facility and what was included in the bid. Continental contended to Larson that it included all labor and materials associated with the generator in its bid and that the company would need a change order of $207,000 because this was the amount above the cost for the generator quoted to Continental at the time of the bid.

After trying to resolve the dispute with the state to no avail, Continental sued the state actors, claiming it performed all work under the contract and hadn’t been paid all of the money owed. Continental also made a claim for quantum meruit, claiming the government accepted the benefits it provided, despite the opportunity to decline them, and that Continental had not been paid. It also argued it was denied due process because Daniels refused to respond to an appeal by Continental even though the main contract between Larson and the government provided a remedy and appeals process.

The trial court ruled Continental was allowed to recover under its unjust enrichment claim, that the state was in breach of contract by refusing to participate in the administrative appeal, and it awarded Continental nearly $207,000 plus costs.

The Court of Appeals found there was no contract between the state and Continental, so the lower court erroneously ruled the state breached a contract between the two. Any remedy Continental sought had to be against Larson as general contractor.

The judges also found there was no showing the state unjustly retained a benefit without paying for it. Despite what Continental claimed, there was no confusion in the main contract about what was or was not to be included in the agreement regarding the generator.

 

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  2. Hail to our Constitutional Law Expert in the Executive Office! “What you’re not paying attention to is the fact that I just took an action to change the law,” Obama said.

  3. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

  4. I made the same argument before a commission of the Indiana Supreme Court and then to the fedeal district and federal appellate courts. Fell flat. So very glad to read that some judges still beleive that evidentiary foundations matter.

  5. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

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