Court Opinion

ID: 9759940
Source: CourtListenerOpinion
Date Created: 2023-08-29 00:33:40.990427+00
Date Added: 2024-06-11T07:29:06.315391
License: Public Domain

LIPEZ, Justice,
dissenting.
Because I cannot find any language in the contract between SCI and the DEP to support the Court’s interpretation of the contract, I respectfully dissent. The Court is correct that the risk of legislative repeal of the emissions inspection program was a major point of contention during the contract negotiations. Given the focus on this point, the failure of the parties to finalize a contract that clearly addressed this important issue is remarkable. Yet that failure is unmistakable.
The first sentence of the “Conflicts” clause sets forth a deceptively simple proposition: “This Contract shall control in the event of any conflict between the provisions hereof and the provisions of either the RFP or the Proposal.” That language suggests that the “contract” provisions are distinct from two other documents, the amended RFP and the Proposal, and in the event of a conflict between the contract provisions and either the amended RFP or the Proposal, the contract controls. In reality, however, the Contract consists of Rider A, a seventy-page document attached to a signature page. Far from being a document distinct from either the amended RFP or the Proposal, Rider A, and hence the contract, includes:
1. The Proposal itself, specifically incorporated into the contract by reference.
2. Nine sections of the amended RFP incorporated by reference.
3. Other amended RFP provisions copied verbatim.
4. Modified amended RFP provisions.
There can be no conflict between the contract and the amended RFP or the Proposal because the contract is the Proposal and selected portions of the amended RFP. Moreover, there is no express language incorporating the entire amended RFP into the contract by reference, and hence no express *426incorporation of the repeal provision of the amended RFP into the contract.
In the absence of express language of incorporation relating to the amended RFP, the Court inappropriately transforms the conflicts clause of Rider A into an incorporation clause by holding that “the parties’ reference to the amended RFP in the conflicts clause would be meaningless” without the incorporation of the entire RFP into the contract. The Court further concludes that “Rider A expresses a clear intention on the part of SCI and the DEP to incorporate into their agreement those provisions of ■ the amended RFP that were not addressed in Rider A and that did not conflict with it.” Using a conflicts clause intended to resolve conflicts between documents, the Court cites the absence of conflict between documents to achieve wholesale incorporation of amended RFP provisions into the contract, including the repeal provision. This interpretation strains logic and the language of the contract.
I do not know what the parties intended by the reference in the first sentence of the conflicts clause to the amended RFP. SCI’s legal arguments on this issue are no more persuasive than the State’s. There is an inescapable ambiguity in that reference to the RFP which precludes the entry of summary judgment for either party. “Where there is an ambiguity in a written contract, and the record does not completely eliminate the possibility of an issue of material fact concerning the intent of the parties, summary judgment is inappropriate.” Tondreau v. Sherwin-Williams, 638 A.2d 728, 730 (Me.1994).
The legal consequences of this ambiguity-are not avoided by the Court’s application of the unmistakability doctrine. This doctrine, developed in federal case law, recognizes a presumption that when a sovereign government enters into a contract, it does not intend to limit its ability to make its own performance impossible by means of a future sovereign act. “[Sjovereign power ... governs all contracts subject to the sovereign’s jurisdiction, and will remain intact unless surrendered in unmistakable terms.” Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U.S. 41, 52, 106 S.Ct. 2390, 2396-97, 91 L.Ed.2d 35 (1986) (quoting Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 148, 102 S.Ct. 894, 907, 71 L.Ed.2d 21 (1982)). The Court asserts Maine’s version of the doctrine in these terms: “... when a party enters into a contract with a state agency, it does so with the understanding that the Legislature may at some future time take action that nullifies the subject matter of the contract and, necessarily, the respective performance obligations of the parties.” According to the Court, this understanding governed the contract between SCI and the DEP because “nowhere in the contract does the State affirmatively undertake to maintain the Program for any length of time.”
The United States Supreme Court recently applied the unmistakability doctrine in United States v. Winstar, — U.S. —, 116 S.Ct. 2432, 135 L.Ed.2d 964 (1996). During the savings and loan crisis of the 1980s, the Federal Home Loan Bank Board sought to encourage healthy thrifts and outside investors to take over ailing thrifts. As an inducement to act, the board agreed to permit acquiring entities to use certain accounting techniques in calculating capital reserves, the minimum levels of which were mandated by federal regulations. Subsequently, Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act, which forbade thrifts from using the above-mentioned accounting techniques. Three affected thrifts brought suit for breach of contract. Although unable to agree on an opinion, seven members of the Supreme Court agreed that the United States was liable to the three thrifts in damages, and four members concluded that “application of the [unmistakability] doctrine ... turns on whether enforcement of the contractual obligation alleged would block the exercise of a sovereign power of the Government.” Id. at -, 116 S.Ct. at 2457 (Souter, J., plurality opinion). Working from that principle, the plurality concluded that the unmistakability doctrine should not bar government liability on the contracts at issue because they could be enforced without effectively limiting sovereign authority.
*427I agree with the position of the plurality in Winstar. As in Winstar, the contractual obligations at issue in this case could be enforced without limiting the State’s sovereign authority to act now or in the future. The Court’s application of the uiunistakability doctrine wrongly equates the State’s need to protect its sovereign power to act with its ability to abrogate contracts without exposure to damage claims.
The Government took this position in Winstar, arguing that any award of substantial damages against the government for “breach of contract through a change in the law ‘unquestionably carries the danger that needed future regulatory action will be deterred,’ and thus amounts to an infringement on sovereignty requiring an ‘unmistakable’ promise.” — U.S. at -, 116 S.Ct. at 2476 (quoting Brief for Petitioner). As Justice Breyer noted in his concurring opinion in Winstar:
[T]his rationale has no logical stopping point.... It is difficult to see how the Court could, in a principled fashion, apply the Government’s rule in this case without also making it applicable to the ordinary contract case ... which ... [is] properly governed by ordinary principles of contract law. To draw the line — i.e., to apply a more stringent rule of contract interpretation — based only on the amount of money at stake, and therefore (in the Government’s terms) the degree to which future exercises of sovereign authority may be deterred, seems unsatisfactory.
— U.S. at-, 116 S.Ct. at 2475. In his plurality opinion, Justice Souter warned that broad application of the unmistakability doctrine could impair an important aspect of sovereignty:
Injecting the opportunity for unmistakability litigation into every common contract action would ... produce the untoward result of compromising the Government’s practical capacity to make contracts, which we have held to be ‘of the essence of sovereignty5 itself. From a practical standpoint, it would make an inroad on this power, by expanding the Government’s opportunities for contractual abrogation, with the certain result of undermining the Government’s credibility at the bargaining table and increasing the cost of its engagements.
— U.S. at —, 116 S.Ct. at 2459 (quoting United States v. Bekins, 304 U.S. 27, 51-52, 58 S.Ct. 811, 815-16, 82 L.Ed. 1137 (1938)). Absent special circumstances I do not find present here, the State’s interests are best served by subjecting it to the same principles of contract law applicable to private parties. That application imposes no undue burden. The State would simply have to rely on the drafting of clear contract language, rather than legal presumptions, to protect its interests.
I would vacate the summary judgment and remand this matter to the Superior Court for inquiry by a factfinder into the intent of the parties on the risk of repeal.