In a very interesting new decision, the Court of Federal Claims has rejected the Park Service’s attempt to use the argument that DNC Parks & Resorts had materially (and in bad faith) breached its concessions contract at Yosemite as a defense to the company’s claim that NPS had breached its obligations under the contract. DNC had claimed that, under the contract which expired in February 2016, NPS was to (but did not) require DNC’s successor to purchase all property used in its operations at Yosemite along with DNC’s ‘possessory interest’. Avoiding the question of its duty, NPS argued instead that DNC had committed a prior material breach of the contract which relieved NPS of any duty to continue performance—i.e., it did not have to require DNC’s successor to buy DNC’s property or possessory interest.
In holding against NPS, the court found that here the parties had legally agreed to terms (the inclusion of termination and compensation clauses) that displaced the common law defense that a prior material breach by one party permits the other to cease performance.
It remains to be seen if the Court’s approach will be viewed with favor at the appellate court.