Opinion ID: 691321
Heading Depth: 2
Heading Rank: 3

Heading: Why HACC Retained Linan-Faye's Performance Bond

Text: 60 Linan-Faye next contends that the trial court improperly resolved a factual dispute as to why HACC retained Linan-Faye's performance bonds after terminating Linan-Faye. According to Linan-Faye, it is entitled to damages arising from HACC's failure to return this performance bond. Linan-Faye alleges that by retaining its bond, HACC prevented it from accepting other construction contracts and used the bond as an inducement to force Linan-Faye to accept an unreasonable resolution of this dispute. HACC argues that it retained Linan-Faye's performance bond because Linan-Faye instituted a suit seeking specific performance and if Linan-Faye were successful, HACC would need Linan-Faye's bond. 61 This issue is not resolved solely by reference to the termination for convenience clause because the events that give rise to this claim occurred after termination. 18 Recognizing this, the district court decided the issue by concluding that keeping the bonds during the pendency of the litigation was the logical response to the plaintiff's lawsuit. Linan-Faye Construction Co., 847 F.Supp. at 1205. 62 Unfortunately, there is no testimony or record evidence to support the conclusion that HACC engaged in the logical response posited by the district court. No one from HACC ever indicated that it was Linan-Faye's suit for specific performance that prevented HACC from returning the bond. Counsel for HACC simply raised this argument when the case took on a litigation posture. This naked assertion by counsel, without record support, is not sufficient to warrant a grant of summary judgment. 63 The district court attempts to justify its decision to accept HACC's argument by referring to the September 25, 1990 termination letter sent by Gregory Kern, the Interim Executive Director of HACC. Nevertheless, its reasoning is unpersuasive. According to the court, Mr. Kern's letter which indicated that HACC would return the bonds was sent before Linan-Faye instituted suit. Linan-Faye, 847 F.Supp. at 1205 n. 16. Therefore, the court reasoned, [t]he decision of the HACC to depart from Mr. Kern's original plan only supports [the] finding that HACC felt compelled to hold onto the bonds until the Court had disposed of plaintiff's claims for specific performance. Id. (emphasis added). The court in this passage, however, merely assumes its conclusion. What eludes the district court is any evidence indicating that it was the suit for specific performance that caused retention of the bond. In effect, what the district court stated is that the decision of HACC to depart from Kern's original plan supports HACC's decision to depart from Kern's original plan--a statement without significance. 64 Moreover, even taking HACC's view of the timing of the relevant events, there was an unjustified gap of over one month between the time HACC terminated Linan-Faye and the time Linan-Faye served its complaint seeking specific performance. According to HACC, after it issued its September 25, 1990 letter of termination, Linan-Faye sought reversal of HACC's decision to terminate. HACC states that it sent a letter to Linan-Faye on October 23, 1990 confirming its decision to terminate. Linan-Faye did not serve its complaint for specific performance until early in December of 1990, however, and the bond had not yet been returned. This unexcused delay strengthens Linan-Faye's argument that HACC did not decide to hold onto the performance bond as the result of the specific performance suit. In light of these facts, we will reverse the district court's grant of summary judgment for HACC and remand for trial on this disputed issue. 19 65