Transportation & Transit Associates, Inc. v. Morrison Knudsen Corp.

255 F.3d 397 (2001)

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Nature of the Case

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Facts

P worked as a subcontractor for D. A disagreement was resolved in 1993 by a contract promising P at least $ 15 million in business over the next five years, plus status as 'a most preferred vendor' for other work. In 1994, a downturn in business resulted in $350 million in losses in 1994 for D. D decided to spin off its rail operations. In 1995, D divested its transit division to American Passenger Rail Car Company, LLC (Amerail), which was formed and funded by firms that had issued surety bonds for D's transit contracts. D delegated to Amerail the obligation to P. P did not consent. Amerail hired P for some work, but not as much as the contract required. Near the end of the five-year term, P sued D and Amerail. A default judgment was entered against Amerail. On cross-motions for summary judgment, the district court ruled that D is liable to P for failing to meet the award-value requirements of para.3 in the contract, but is not liable for breach of the most-preferred-vendor undertaking in para.4. P got the judgment for $863,000, and both sides appealed.