Court Opinion

ID: 5174753
Source: CourtListenerOpinion
Date Created: 2022-01-02 05:25:09.694152+00
Date Added: 2024-06-11T08:26:14.306538
License: Public Domain

J. JONES, J.,
specially concurring.
I fully concur in the Court’s opinion but feel it necessary to comment upon a ruling by the district court that was not pursued by the Foundation on appeal. The district court did a good job of winnowing through the various agreements and the conflicting arguments made by the parties with respect thereto, but too lightly dismissed one. of the Foundation’s legal theories — that the parties had agreed to a novation whereby the University of Idaho would be substituted in place of the Foundation to assume and pay the Annual Contribution of $350,000.
The Foundation argued to the district court that by virtue of the University’s entry into a Parking Access Agreement with CCDC on December 17, 2002, whereby the University agreed to pay the $350,000 Annual Contribution for a period of 30 years, the Foundation and Civic Partners had accomplished a novation of the contract, relieving the Foundation of its obligation to pay the Annual Contribution and substituting the University of Idaho as the sole party responsible for paying the same. The district court ruled against the Foundation on its novation argument, stating: “The Annual Contribution agreed to by the University under the Parking Access Agreement is a parking access fee, is renewable by the University each year, and is subject to termination by the University in the event funds are not available.” It appeared to be the district court’s belief that the performance undertaken by the University was not essentially the same as that required of the Foundation and, therefore, a novation could not have been agreed upon between the Foundation and Civic Partners. When asked why the Foundation did not appeal this ruling, counsel *547essentially responded that the district court’s ruling was not incorrect.
It should first be observed that in a novation the parties can agree to different terms in the new agreement than those which were contained in the previous agreement. Novation is a species of accord and satisfaction and, “[a] novation results when an accord and satisfaction is reached by substitution of a new agreement or performance in place of the performance or compromise of the original obligation.” Harris v. Wildcat Corp., 97 Idaho 884, 886, 556 P.2d 67, 69 (1976). In order to establish an accord and satisfaction, the parties accepting a new or different obligation must do so knowingly and intentionally, but “[a]n accord and satisfaction may be implied from the attendant circumstances.” Id. Thus, the performance in the new contract need not be identical to that in the old contract. What is necessary is the mutual agreement of the parties to the old contract to any changes in the performance, as well as the identity of the party obligated to provide that performance.
It appeared to be the assumption of all concerned in the proceedings in district court that the novation under review primarily dealt with substituting the University in place of the Foundation as the party obligated to make the Annual Contribution. Assuming there was no contention that the performance to be rendered was different in nature, the district court was wrong in determining out of hand that the performance of the University was not comparable to the performance required of the Foundation. The district court viewed the University’s obligation to be different because the Annual Contribution was characterized as a “parking access fee” in the Parking Access Agreement. However, the Parking Access Agreement also specifically identified the $350,000 per year obligation as an “Annual Contribution” and the provisions of section 2.2 of that agreement, as concerns the specifics of the payment, the length of the obligation (30 years) and the credit to be applied for parking used by the “Forest Service (or other tax-paying owners or tenants)” are virtually identical to the provisions of section 2.5 of the Reconciliation Agreement.
The other two distinctions made by the district court are what prompted this special concurrence. The district court apparently held the view that the performance under the allegedly novated contract was automatically disqualified as being comparable to the performance under the Foundation’s contract because the Parking Access Agreement provided the University’s parking lease was renewable each year and was subject to termination by the University in the event funds were not available. The fact of the matter is that all state contracts contain those same provisions because Article VIII § 1 of the Idaho Constitution prohibits the State from incurring multi-year indebtedness without submitting the matter to the public for a vote. Article VIII § 3 imposes a similar limitation on public indebtedness with respect to subdivisions of state government. It is a virtual impossibility to present every multi-year governmental contract or lease to the public for a vote. Thus, leases and other contracts that are intended to extend beyond one year always contain provisions (1) making the government’s performance subject to availability of appropriated funds and (2) making the agreement renewable on an annual basis for the contemplated term. That does not necessarily mean that the government’s contracts or leases are less worthy than those between private parties. Governmental entities, while having the ability to do so, rarely invoke these clauses to terminate a contract prematurely. Further, private parties can negotiate terms that will essentially provide assurance of performance by the governmental entity for the contemplated duration of the contract or lease. That appears to be what occurred here. The Parking Access Agreement tied payment of the $350,000 Annual Contribution .to the availability of parking to the University. In other words, should the University determine that there were not appropriated funds to pay the Annual Contribution or otherwise decide not to renew the contract for a succeeding year, it would lose its parking rights for the building. This certainly is a powerful disincentive to terminate the agreement prematurely.
In viewing the record in this ease, there appears to be conflicting evidence as to *548whether or not the Foundation and Civic Partners agreed to a novation that would substitute the University in place of the Foundation as the party solely obligated for the Annual Contribution. It does not appear that summary judgment would have been appropriate simply because the Parking Access Agreement contained the two provisions made necessary in order to avoid invalidity by virtue of Article VIII § 1. It is unfortunate that the novation issue was not presented to this Court for determination because it is an issue of substantial importance for state entities and the strength of their contracts.