Boston Shipyard Corp., Debtor. Appeal

¶ … BOSTON SHIPYARD CORP., Debtor. Appeal of BOSTON SHIPYARD CORP. No. 89-1144. United States Court of Appeals, First Circuit. Heard June 7, 1989. Decided Sept. 27, 1989. 886 F.2d 451. 35 Cont.Cas.Fed. (CCH) 75,728

Key Facts

Boston Shipyard Corporation (BSC), while undergoing Chapter 11 bankruptcy, entered into a contract with the United States Military Sealift Command (MSC) to overhaul the USNS Mississinewa within 100 days. There were many delays. BSC's financial condition had worsened "and MSC payments were necessary for the company's continued ability to perform on the contract." The delay in processing work change orders and demands for modifications were the source of many of the delays, according to BSC. After a work stoppage, BSC's president signed an agreement to obtain an immediate payment to compensate BSC for the delays. However, he found the agreement he signed to be inconsistent with the oral agreement he made with MSC even though he said he did sign the agreement to obtain the necessary funds for BSC to continue production. Eventually, BSC stopped all work for MSC as delays and demands for modifications continued. "The government filed a motion for partial summary judgment, arguing that Modification 14 settled and released all claims against MSC up to and including August 30. The bankruptcy court granted this motion." The district court affirmed this decision, which BSC then appealed.

Legal Issue(s) Presented before Court

The legal issue in question of when a summary judgment is appropriate. "Summary judgment is appropriate under Rule 56(c) of the Federal Rules of Civil Procedure when there exists no genuine issue of material fact and, as a matter of law, the movant is entitled to a judgment." However, BSC argued that the payment for Modification 14 was not supported by proper consideration and that the payment signed for was a progress payment already owed to BSC, not a settlement. BSC also argued that it had signed the contract under economic duress.

Holding of the Court

The court affirmed the lower courts' rulings.

Court Rationale or Reasoning for its Decision

The court stated that the modification was signed for with due consideration, and that it clearly stated that the payment was a settlement, regardless of how BSC may have viewed it. It also rejected BSC's claim of duress, given that BSC waited for over a year and a half to make the claim, accepted the money and continued to work for MSC until MSC terminated the contract.

Case name and citation

Appeal of the Ensign-Bickford Company. ASBCA. No 6214, 60-2. BCA 217. October 31, 1960.

Key Facts

The case revolves around a contract dispute between the government and the armament manufacturer Ensign-Bickford. After contracting with Ensign-Bickford to produce a specific type of weapon, the government later ordered an acceleration in production. As is customary, the government agreed to pay Ensign-Bickford a specific amount to compensate the company for the additional revenue this would require in terms of securing materials and worker overtime. However, the government had contracted with another entity for a similar product, which demanded a far smaller sum in acceleration costs. Thus, the government justified its demand that the award be far smaller than originally agreed upon. The government's offering of $19, 636.96, while smaller than the $41, 651.63, was still greater than the $16, 500 paid to the other contractor.

Legal Issue(s) Presented before Court

Both parties recognized that the legal issue in question was the extent to which an equitable adjustment was needed in the amount originally demanded by Ensign-Bickford. Both Ensign-Bickford and the government agreed that an adjustment was warranted, given the increase in the appellant's costs.

Holding of the Court

The appeal was sustained.

Court's Rationale or Reasoning for its Decision