Baltimore County Loses Appeal; Forced to Pay $700,000 Plus Interest in Breach of Contract Suit; Monetary award has been accruing interest at a rate of 10% as allowed by Maryland law.

Today the Fourth Circuit Court of Appeals issued an opinion affirming that Baltimore County is liable for breach of contract by wrongly terminating its contract to purchase all petroleum products exclusively from an Indiana petroleum vendor, Petroleum Traders Corporation. The County lost the case after a jury trial in May of 2009, and then appealed to the federal court in Richmond, arguing that its contract with PTC never existed because the right people in the County government did not approve it.

The County had admitted that all of the more than 5,600 other commodities and related contracts with other vendors over a period of years had been approved in the identical manner, and thus, took the position that it could declare PTC’s and any of these contracts void whenever it decided that the contract terms were no longer to the County’s benefit.

The federal appellate court rejected the County’s legal argument and logic and affirmed the jury’s verdict of more than $700,000 against the County. Because the County had decided to appeal rather than pay the judgment, the jury’s monetary award has been accruing interest at a rate of 10% under Maryland law. The County’s only other options, other than paying, are to ask the Fourth Circuit for a rehearing, and to appeal to the Supreme Court, which it must do by April 12, 2011.

Josh Glikin, a partner in the law firm of Bowie & Jensen, LLC, along with a Chicago-based law firm, represented Petroleum Traders.

Baltimore County was ordered to pay more than $700,000 in damages to an Indiana company after a federal court jury in Baltimore found the county unlawfully terminated the company’s contract to provide gas and diesel fuel.

The jury in U.S. District Court on May 15 awarded Fort Wayne, Ind.-based Petroleum Traders Corp. $468,726 in contract damages and $121,670 in lost profits, plus interest, after a four-day trial before Chief Judge Benson E. Legg.

In ruling in Petroleum Traders’ favor, the jury rejected the county’s argument that the company had breached the contract when it didn’t immediately agree to the county’s demand to lock in fuel prices after the price for gasoline and diesel fell in late 2005.

County officials also tried to back out of the contract claiming it wasn’t properly signed as required by the county’s charter and county code. It was disclosed during the trial that the county entered into more than 5,600 contracts in the same way from 2004 to 2007.

Fourth Circuit Court of Appeals ruling may make it less likely the county would try to disavow other contracts on similar grounds, said Josh Glikin, a partner in the law firm of Bowie & Jensen, who represented Petroleum Traders.

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