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Internal E-mails Prove Possible Existence Of A Subcontract

Friday, February 12, 2010 03:07 am


Contract Termination - Fraud

Takota Corporation v. United States

A contractor argued that it didn't have to pay two subcontractors it alleged it had never hired. But the contractor's own e-mail messages concerning project work betrayed that claim.

In 2005, Takota Corporation (Takota) contracted to perform on a marina project at the Marine Corps Air Station in Cherry Point, North Carolina. The government terminated the contract for default 10 months later. Takota filed suit, seeking $500,000 in costs associated with the alleged wrongful termination, and the government responded by questioning $300,000 of those costs. It claimed that Takota fraudulently submitted three progress invoices during the project and certified it would, but did not, pay two subcontractors -- Montemayor, Inc.

(Montemayor) and United Rentals, Inc. (United Rentals) -- based on those invoices.

Though the government subsequently withdrew its fraud claim, the court upheld the termination due to Takota's failure to adhere to contract specifications. Takota then sought sanctions against the government's counsel under the Rules of the Court of Federal C [...]

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