Data Documents, Inc. v. Pottawattamie County

Breach of Contract - efendant Pottawattamie County is a member of the Iowa State
County Treasurers' Association (ISCTA), an association made up of
the county treasurers of the ninety-nine Iowa counties.

In 1989, Pottawattamie County was also a member of the Iowa County
Treasurers' Group Limited (the Group), an unincorporated
association of fifty-seven Iowa county treasurers. The Group was
formed so that its county treasurers could join together for
purposes of purchasing motor vehicle license renewal notices. The
notices would then be sent out to vehicle owners in their
respective counties before the owners' vehicle licenses would
expire. By joining together, the county treasurers could order
larger quantities of renewal notice forms and therefore purchase
the forms at a lower price. Each member county had the right to
join or leave the Group with thirty days notice.

An eight-member committee known as the Motor Vehicle Renewal
Notice Committee (RNC) acted on behalf of the Group to acquire
bids for the production and distribution of the motor vehicle
renewal notice forms. Charles Pacha, Washington County Treasurer,
was co-chairperson of the RNC in 1989-1990.

On March 28, 1989, Pacha, acting as co-chair of the RNC and on
behalf of the Group, sent out bid requests to four printers,
including the plaintiff, Data Documents, Inc. (Data), for the
production of motor vehicle renewal notice forms (MVRNs or
notices). The bid notice indicated that the number of monthly
renewal notices would be approximately 1.25 million notices per
annum.

On April 4, plaintiff Data Documents submitted a written proposal
to the RNC for the printing and handling of the monthly renewal
notices for the participating Iowa counties. Data's bid quoted a
price of $74.00 per thousand, for 1.25 million notices per year,
plus postage. This included the notices, and outside and reply
envelopes that were to be sent to the vehicle owners.

Later, on April 12, Pacha informed Data by letter that the RNC had
selected Data to produce and distribute the renewal notices,
beginning in July 1989 and ending in June 1990. The parties later
agreed to lower the quantity of notices to be produced to 1.2
million, with an adjusted price of $75.00 per thousand.

To keep costs down, Data printed all the notices ordered under the
contract, including component parts, early in the contract period.
A completed notice included the notice form, a reply envelope and
an outside envelope. Data would receive a tape at the beginning of
each month from the Iowa Department of Transportation, which
contained all the information that would be included on the
renewal notice forms. Data would fill in the owner's names and the
vehicle descriptions on the forms. Data would then assemble the
renewal notice forms, put them in envelopes, and forward the MVRNs
to vehicle owners in each of the fifty-seven member counties whose
vehicle licenses would be expiring in the next month. Data billed
each individual county based on the number of notices sent to the
vehicle owners in that county.

In July 1990, Data informed Pacha that 862,026 notices had been
mailed, but that Data still had 337,974 notices and a lesser
number of outside and reply envelopes on hand. Data requested that
it be allowed to produce and mail at least 279,000 more renewal
notices to deplete its remaining inventory.

Later, on October 5, 1990, Data sent an invoice to Pacha for
$25,350 covering the alleged contract price for the unused notices
and envelopes.

In response, Pacha, acting in behalf of the RNC and the Group,
wrote to Data indicating his refusal to pay the invoice or to
accept delivery of the remaining notices. Pacha indicated in the
letter that Data might contact Midwest Printing Services, the
1990-91 contract holder for MVRNs, to see if Midwest would be
interested in purchasing Data Documents' unused supply of
envelopes. The notices were at that time outdated and obsolete
under current law.

Data contacted Midwest Printing Services and offered to sell
Midwest its overstock of outside and return envelopes for $14.78
per thousand and $12.56 per thousand, respectively. Midwest
Printing did not accept Data's offer. Lloyd Royer, a Midwest
Printing employee, testified that Midwest had purchased outer
envelopes in the past at $13.25 per thousand and return envelopes
at $10.34 per thousand and that he would have bought the envelopes
from Data at those prices. Royer also testified that Data showed
no willingness to lower the price for the envelopes. Data made no
other attempts to resell the envelopes.

Thereafter, Data filed a petition in district court against
defendant Pottawattamie County on February 21, 1996. In its
petition, Data alleged that defendant Pottawattamie County was a
member of the Group and that the Group breached its agreement with
Data by refusing to accept delivery of and tender payment for the
remaining MVRNs and envelopes. The petition further alleged that
defendant Pottawattamie County was jointly and severally liable
for the Group's contractual obligations and asked for judgment
against defendant Pottawattamie County in the amount of $25,350,
the amount allegedly unpaid under the contract. Defendant's answer
raised several affirmative defenses.

Defendant's verdict.

Unknown

Unknown

Affirmed by the Supreme Court of Iowa. See: ___ N.W.2d ___ (Iowa 1-20-2000). Note: The above date reflects the appellate court decision date, not the original trial date. Reported by kkm.