Tlt Const. Corp. v. Ri, Inc.

• Decision Date: 19 April 2007
• Docket Number: No. 06-2214.,06-2214.
• Citation: 484 F.3d 130
• Parties: TLT CONSTRUCTION CORP., Plaintiff, Appellee, v. RI, INC., d/b/a Seating Solutions, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

484 F.3d 130

TLT CONSTRUCTION CORP., Plaintiff, Appellee, v. RI, INC., d/b/a Seating Solutions, Defendant, Appellant.

No. 06-2214.

United States Court of Appeals, First Circuit.

Heard February 6, 2007.

Decided April 19, 2007.

Terry Klein, with whom Henshon Parker Vyadro P.C. was on brief, for appellant.

James G. Grillo, with whom Patrick J. Sullivan and Heaftiz & Sullivan were on brief, for appellee.

Before LYNCH, Circuit Judge, STAHL, Senior Circuit Judge, and HOWARD, Circuit Judge.

STAHL, Senior Circuit Judge.

This diversity case arises out of a common situation in commercial dealings: the failure of negotiations and the resulting bad blood between the parties. Here, after a protracted — and ultimately failed — nine-month negotiation between a general contractor and a potential subcontractor, the general contractor brought suit against the subcontractor for breach of contract, claiming that at some point during the negotiations a binding contract had been formed. After cross-motions for summary judgment on the question of contract formation, the district court ruled in favor of the general contractor. Because we hold that no contract was formed, we reverse.

I. Background

TLT Construction Corp. ("TLT"), a Massachusetts company, was the general contractor on renovation and expansion projects for Reading Memorial High School in Reading, Massachusetts (the "Reading Project"), and Wachusett Regional High School in Holden, Massachusetts (the "Wachusett Project"). In April 2004, as TLT was preparing its bid for the Reading Project, RI Inc., d/b/a Seating Solutions ("Seating"), a New York company specializing in selling and installing spectator seating for athletic facilities, submitted a bid to TLT to install bleachers for the Reading Project as a subcontractor. In its proposal, Seating stated, "We have worked very closely with this architect and have helped them design this bleacher from the very first steps." On the record before us, it does not appear that Seating's bid was a filed sub-bid, nor does TLT makes such a claim. See Mass. Gen. Laws ch. 149, § 44F.

On May 10, 2004, TLT, having been awarded both the Reading and the Wachusett Projects, requested that Seating submit a new quote that would include both projects. On May 12, Seating quoted a price of nearly $568,000 for both. TLT responded that the price was too high, and Seating replied on May 17 with a revised quote of $480,000. Seating said that the price was "contingent on a letter of intent being received [May 18] and an AIA contract being executed by Friday." TLT responded that day, seeking clarification of a few terms, including whether or not bonding was included in the quote, since a bond was required and had been included in the quotes from Seating's competitors. Seating responded later that day that bonding was not included in the quote, and that it did not feel bonding was necessary, since it would be paid in progress payments. TLT replied, "We have a deal if we can split the bond" and if TLT could have retainage of 5% (Seating had originally proposed no retainage). TLT also said that it would not be able to draft a contract in Seating's time frame, but that it could provide a letter of intent. Seating agreed to accept a letter of intent, and granted TLT two weeks to draft and execute a final contract, but said that it could not hold the price any longer than that. On the record before us, it appears that no letter of intent was ever sent.

Rather, four days later, on May 21, 2004, TLT sent Seating a draft contract,¹ along with manuals and specifications, and asked that the contract be signed and returned within five days, along with payment and performance bonds and certificates of insurance. The contract package included standard bond forms.

The record becomes more opaque at this point. It appears that a revised draft contract may have been sent on June 7, but that draft does not appear in the record.² A handwritten notation on the cover letter to the May 21 draft contract shows that the same cover letter may have been resent on June 7, with the only change being that a previous line asking for return of the payment and performance bonds had been excised. The record contains no response from Seating with respect to either contract until TLT contacted Seating on June 21 to request return of the signed contract.

On June 22, Seating wrote to TLT to say that it had several issues with the draft contract. First, Seating said that it had understood that no bonding would be required, and that there would be a 10% retainage in lieu of bonding. Second, Seating wanted to clarify the timing for submission of shop drawings. Third, Seating said that its quote was made using prevailing wages, not union labor, and if TLT were to require union labor (as the May 21 draft contract did), then there would be a price increase. Fourth, Seating noted that the quote was exclusive of taxes, permits, and fees. This letter was apparently returned to Seating with notations by TLT, but that response is not in the record.

On June 28, Seating wrote to TLT, responding to TLT's notations to Seating's June 22 letter, saying that after "only a few comments" it could "get this thing executed." First, Seating said that its insurance company would not make a certain change to the language on the certificates that TLT had presumably requested. Second, it said that an umbrella policy was cost-prohibitive. Third, it requested a six-week time frame for return of engineered shop drawings. On June 29, TLT accepted the first two changes, but did not reply to the third. TLT also requested that Seating mark up the original contract with these changes and return it to TLT.

On July 5, Seating returned a marked-up version of the May 21 draft contract. The changes covered five areas. First, Seating struck all language related to payment and performance bonds and struck out the bonding forms that had been attached. Second, Seating struck the language requiring union labor. Third, Seating struck the language requiring that insurance coverage be "in the same Limits as required by the Owner's contract of the general contractor," and inserted language that Seating's "standard insurance limits to apply to this contract." Fourth, Seating struck the language making it responsible for permits and fees (though it kept the language making it responsible for taxes). Fifth, Seating added language saying that it would provide shop drawings within six weeks of receiving the executed contract. With these changes, Seating signed the draft contract and returned it to TLT. TLT neither signed nor returned this version of the contract.

The next writing in the record, perhaps after some verbal communication between the parties, is a July 12 letter from Seating to TLT. The letter provided a break-down of additional cost if union labor was to be required. Then the letter continued:

Regarding the bonding, it was agreed that 10% retainage would be held in lew [sic] of bonding. We will bond this and pass the cost along to you as an add-on to the contract. When bonding is required we reserve the right, depending on our current bonding capacity at that time[,] to have our factory supply the required bonds.

The letter closed, "If all is acceptable please forward new contracts for us to execute."

On July 21, TLT sent a new draft contract to Seating.³ The draft no longer required union labor, but it was otherwise unchanged with respect to Seating's July 5 edits.

On July 29, TLT wrote to Seating to request the return of the signed contracts. On August 13, Seating wrote to say that its price would have to increase by $19,236 to account for an I-beam that it had not realized was in the plans.

On August 18, Seating provided a certification of insurance from Outdoor Aluminum, an affiliated company that ran Seating's factory, asking if it was "acceptable." In addition, the letter said, "Per our conversation, bonding will not be an issue. They [Outdoor Aluminum] bond many projects [for] us and unless there is something out of the ordinary all will be done."

On August 19, TLT wrote back to challenge the price increase, saying that Seating had the specifications showing the I-beam when it made the bid. At that point, relations deteriorated. Over the next few months, the parties continued to try to reach agreement, but with decreasing levels of cooperation. TLT ultimately had the work performed by another company, at a cost of $514,160.

In December 2004, TLT brought suit in Massachusetts state court for breach of contract and violation of the Massachusetts consumer protection law, Mass. Gen. Laws ch. 93A, § 11. Seating removed the case to the United State District Court for the District of Massachusetts on February 3, 2005. The parties agreed to have the case tried by a magistrate judge. The parties then cross-moved for summary judgment on the issue of contract formation. The district court held that a contract existed and that Seating had breached.⁴ The court awarded damages of $34,160.⁵ Seating now appeals.

II. Discussion

We review the district court's grant of summary judgment de novo, with all reasonable inferences resolved in favor of Seating. See Fenton v. John Hancock Mut. Life Ins. Co., 400 F.3d 83, 87 (1st Cir.2005). Although the question of contract formation is typically a question for the factfinder, and would thus be subject to clear error review, see Crellin Tech., Inc. v. Equipmentlease Corp., 18 F.3d 1, 7 (1st Cir.1994), where "the evidentiary foundation for determining the formation of the parties' contract [is] either undisputed or consist[s] of writings," contract formation is instead a question of law for the court, Lambert v. Kysar, 983 F.2d 1110, 1114 n. 4 (1st Cir.1993); see Mass. Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 412 F.3d 215, 229 (1st Cir.2005); Jewelers Mut. Ins. Co. v. N. Barquet, Inc., 410 F.3d 2, 9-10 (1st Cir.2005). Here, both parties moved for summary...