Viele Contracting, Inc. v. Performance Pipelining, Inc.

This is a contract dispute. The Minnesota Court of Appeals affirmed the district court's judgment in favor of Performance Pipelining, Inc. Performance specializes in rehabilitating pipelines and conduits; Viele specializes in excavation. Performance contracted with Viele to perform services on a project it was doing for the City of Duluth. During the project, Viele submitted numerous invoices to Performance, whose accountant then reviewed the invoices and presented checks to Performance's president for his signature. Viele over- and mis-billed Performance many times during the project. Viele sued Performance for breach of contract, alleging it failed to pay for labor and materials. Performance cross-claimed, alleging breach of contract and unjust enrichment stemming from Viele's overcharging. The court ruled in favor of Performance, concluding that, contrary to Viele's stated defense to its claims, the doctrine of voluntary payment did not apply.

The doctrine of voluntary payment states that amounts paid voluntarily and with full knowledge of the facts cannot be recovered by the payor from the payee. The district court rejected this defense proffered by Viele, concluding that Performance did not know Viele was not billing in accordance with the contract, that Performance did not know all the facts, that the president did not know the invoices were inconsistent with the proposal, and that the invoices were difficult to interpret. The court of appeals affirmed, rejecting Viele's argument that Performance had the information necessary to validate the invoices. The court concluded that the doctrine only applies when a party makes a payment "in the face of recognized uncertainty," and that Performance did not recognize any uncertainty when it made the payments.

Marvin Lumber manufactures windows and doors. MAL is an Irish company to which Marvin sold products for resale. The parties had a Distribution Agreement governing their relationship. In 2013, MAL decided to terminate the contract at the end of its existing two-year term. The reason for the termination was that Marvin Lumber's products were not standing up well to Irish weather, resulting in excessive claims on the warranty from Marvin Lumber. In preparation for the termination of the relationship, the parties entered into a Windup Agreement that stated that MAL agreed to release Marvin Lumber from claims arising out of the products in the future and that future warranty claims would be directly referred to Marvin Lumber. MAL continued to receive claims after the termination of the parties' relationship, which it has tendered to Marvin Lumber, which refused to pay.

The U.S. District Court for the District of Minnesota found in favor of Marvin Lumber, stating that the Windup Agreement unequivocally released it from its obligations. It also concluded that MAL identified no source of the alleged duty to defend or indemnify it, therefore its breach of contract claim necessarily failed. The court also concluded that the agreement between the parties dictated that the parties would work together to resolve existing issues and warranty obligations and Marvin Lumber performed its obligations under the agreement, so there was no breach of the covenant of good faith and fair dealing. The court also concluded that there was no viable claim for unlawful termination because the parties agreed to terminate the contract.