In November 1987, API (then doing business as Gary White Associates) entered into a 5-year contract with CDCR to operate and maintain a detention facility in Mesa Verde, California. Pursuant to that contract, Gary White Associates built the 400-bed Mesa Verde Community Correctional Facility and began receiving prisoners in April 1989.
In June 1992, API and CDCR extended the 1987 contract. The contract extension was renewed annually 11 times until funding was denied (by the California legislature) and the contract expired in December 2003. Under the terms of the contract, API received payment from CDCR to provide housing, sustenance, programming and other services for prisoners housed at the Mesa Verde facility.
In August 2006, API sued CDCR in Sacramento County Superior Court, claiming that CDCR had failed to fulfill its contractual obligations over the lifetime of the contract between the parties. Represented by Kevin Collins and Scott Huber, attorneys with the Sacramento law firm of Best Best & Krieger LLP, API alleged that CDCR had failed, for three years, to reimburse API (as required by the terms of the contract) for lease payments and liability insurance premiums; that CDCR also failed to reimburse API for deactivation expenses associated with CDCR’s then-planned early termination of the contract in June 2002, as well as for reactivation expenses associated with CDCR’s subsequently-announced intentions to resume funding for API’s operation of the Mesa Verde facility; and that CDCR wrongfully withheld from API payment in the amount of nearly $750,000 for telephone revenue that API had generated.
API sued for breach of contract, violation of California’s Prompt Payment Act (Government Code § 927), anticipatory repudiation of contract and breach of the implied covenant of good faith and fair dealing. The company sought damages in excess of $1.4 million on each of the first and fourth causes of action; damages in excess of $440,000 on the second cause of action; and damages in an amount according to proof at trial on the third cause of action. When CDCR sought a bill of particulars, however, API balked.
The parties then entered into settlement negotiations and, in the end, API settled for just $200,000. See: Alternative Programs, Inc. v. California Dept. of Corrections, Sacramento County Superior Court (CA), Case No. 06AS03644.
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Related legal case
Alternative Programs, Inc. v. California Dept. of Corrections
|Cite||Sacramento County Superior Court (CA), Case No. 06AS03644|
|Level||State Trial Court|