A federal appeals court has ruled that a New Jersey moving company cannot recover more than $800,000 from the Philadelphia school district for alleged cost overruns on a moving project.
A three-judge panel of the U.S. Court of Appeals for the 3rd Circuit, in Philadelphia, overturned a lower court and said the school district deserved summary judgment in the suit by Wayne Moving and Storage of New Jersey Inc.
The company was the main subcontractor on a $1.4 million contract to help the district consolidate five administrative offices. (A professional relocation firm was the main contractor.) Wayne Moving was paid $840,000 under the contract, but it submitted invoices for an additional $834,000 for extra work stemming from delays, inoperable elevators at some of the district’s facilities, and other difficulties. A district administrator, Frank Seifert, allegedly told the main contractor at one point not to worry about cost overruns as long as they were documented.
The School Reform Commission, the district’s governing body, refused to pay anything beyond the original $1.4 million contract. Wayne Moving sued the district for “unjust enrichment.” A federal district court granted summary judgment to the moving company in 2008.
In its Oct. 28 decision in Wayne Moving & Storage of New Jersey Inc. v. The School District of Philadelphia, the 3rd Circuit held that the Pennsylvania school code bars the moving company from recovering for unjust enrichment.
The court said the administrator who told the contractor to document additional expenses appeared to be under the impression that the total would still be within the original $1.4 million contract.
“Wayne Moving should have known that Siefert did not have the power to approve expenditures beyond those approved by the Board,” the court said. “Wayne Moving [also] should have been aware that private companies that do business with the School District do so at their own peril and have an affirmative responsibility to inquire into the powers of the School District and its agents to enter into any contracts.”
Those appear to be lessons the moving company learned the hard way.
A version of this news article first appeared in The School Law Blog.