The Cedroni decision is important particularly to contractors who invest substantial resources into bid development on the expectation of fair treatment, only to find that the cards have been stacked against them.  Too often those contractors are convinced to accept an unfair result without fully exploring sources of recovery.

• Where the parties agree on all material elements, a contract can be formed even if further details are left, even if due diligence is yet to be performed, and even if the contract execution is expressly contemplated to occur at a future date.

• Even if a construction agreement had not been formed prior to formal execution, the parties were contractually bound to execute the contract, and a breach of that “agreement to agree” would give rise to a cause of action.

• It is significant that the bid documents made clear that, upon bid acceptance, the contractor would be required to perform, and the (AIA-A201) general conditions included in the bid package did not expressly require execution as a precondition to performance obligations.  Because the Airport Authority presumably would have required the contractor to perform once its bid was accepted, the court held that the Airport Authority itself must be similarly bound at that time.

• Michigan’s Public Airport Authority Act (“PAAA”), MCL 259.108, et seq. does not grant an airport authority’s CEO exclusive authority to enter contracts.  Although the PAAA does contemplate that a CEO would have that authority, it also indicates that an airport authority’s board has independent authority to contract.

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Meanwhile, Michigan First pursued recovery under the “faithful performance” coverage of its Credit Union Bond.  It sought recovery on the basis of its Vice President’s conscious disregard of its lending policies.  The bond carrier, Cumis, denied the claim, however.  It asserted that Michigan First’s losses were the result of a permissive, high-risk credit culture.

At trial, Cumis spared no expense.  Its team of Chicago lawyers hired experts from New Jersey to Chicago to Los Angeles.  They followed a “blame-the-victim” approach, putting Michigan First on trial for every imaginable thing it purportedly could have done to avoid its losses.

In response, Michigan First’s lead trial counsel, Don Blevins, trained the jury in the field of lending, as well as in Michigan First’s lending policies.  Having thus positioned each juror as  proxy loan officer, Michigan First then went through dozens of loans and asked the jury whether those loans could have been made without consciously violating lending policy. That required Michigan First to distill hundreds of thousands of documents into a narrowly targeted computerized presentation so that each juror could see exactly what the loan officer saw then they were approving the loans.  Then Michigan First asked the jury to rely on its own judgment , rather than the opinion of Cumis’s highly paid experts.

Following a two-week trial, the federal jury agreed entirely with Michigan First.   It awarded Michigan First the maximum amount of $5,000,000, on its faithful performance coverage.  Michigan First then was awarded $50,000 in accounting expenses plus more than $2.7 million in penalties under Michigan’s Unfair Trade Practices Act, for a total judgment of $7,780,415.

This action is one of numerous successful collaborations between Don Blevins of McAlpine & Associates, a trial firm, and Holzman Corkery, a credit union firm with a strong litigation practice led by Patricia Corkery.  The collaboration allows Holzman Corkery to maintain a vigorous but stream-lined litigation practice while tapping into the trial counsel and resources of McAlpine & Associates as needed.

The ultimate and most important winners in situations like these are our clients.  We pride ourselves on our ability to work closely with counsel from across town and across the country, ensuring that there are no barriers between our clients and the best representation that can be obtained.

To discuss this or any other legal issues you may face, e-mail Don Blevins at dwblevins@mcalpinelawfirm.com.