Janke Const. Co., Inc. v. Vulcan Materials Co.

• Citation: 527 F.2d 772
• Decision Date: 06 January 1976
• Docket Number: No. 75--1120,75--1120
• Parties: JANKE CONSTRUCTION COMPANY, INC., Plaintiff-Appellee, v. VULCAN MATERIALS COMPANY, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 772

527 F.2d 772

JANKE CONSTRUCTION COMPANY, INC., Plaintiff-Appellee, v. VULCAN MATERIALS COMPANY, Defendant-Appellant.

No. 75--1120.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 12, 1975.

Decided Jan. 6, 1976.

Claude J. Covelli, Madison, Wis., for defendant-appellant.

John W. Kelley, Wausau, Wis., for plaintiff-appellee.

Before STEVENS, Circuit Justice, ^* PELL, Circuit Judge, and PERRY, Senior District Judge. ^**

PERRY, Senior District Judge.

This is an appeal from a judgment of the District Court in favor of the plaintiff below, Janke Construction Company, Inc. (hereinafter 'Janke'), in an action for damages resulting from the failure of defendant below, Vulcan Materials Company (hereinafter 'Vulcan'), to provide Janke with appropriate subaqueous pipe and fittings for a marine construction project upon which Janke was the successful bidder. The complaint alleged that prior to March 10, 1970 Janke received an invitation to submit a sealed bid at 2:00 P.M. that date for State Bureau of Engineering Project No. 6512--38 on behalf of the Regents of the University of Wisconsin for marine construction work in accordance with printed drawings, specifications and other contract documents; that prior to and on the aforesaid date Vulcan studied the requirements of the project and agreed to provide Janke, on a per unit cost, with pipe and fittings for water transmission lines required for the project for $149,754.10; that prior to and on the aforesaid date Vulcan expressly warranted and represented to Janke that Vulcan's products would meet the specifications required for the project; that in reliance thereon Janke used Vulcan's quoted prices in bidding on the marine part of the project and was awarded the contract; that, following the award, Vulcan's products were not approved by the project engineers because they did not meet specifications; and that Janke was thereby forced to purchase specifications-meeting pipe and fittings from another pipe manufacturer, at an additional cost of $39,992.40.

On August 1, 1974, the action was tried to the District Court without a jury. After hearing all the evidence, the court granted Vulcan's motion that post-trial briefs be submitted by the litigants prior to the decision of the court.

In an Opinion and Order entered on October 21, 1974, the District Court, finding Vulcan liable on the grounds of promissory estoppel, ordered judgment entered in favor of Janke in the amount of $39,942.40 (sic) plus costs. The court found that the facts which Janke pleaded and relied upon to support its claim and to which Vulcan responded in entering its defense, gave rise to the application of the doctrine of promissory estoppel as expressed in Section 90 of the Restatement of the Law of Contracts. The court found that Janke had established that Vulcan had made a definite promise with the reasonable expectation that its promise would induce action of a definite and substantial character on Janke's part; that Janke had acted in justifiable reliance upon the promise to Janke's detriment; and that injustice could be avoided only by enforcement of the promise.

On October 31, 1974, Vulcan filed a motion to alter or amend judgment, or in the alternative for a new trial. The District Court denied the motion in an order entered December 6, 1974. On December 27, 1974, Vulcan appealed from the judgment entered against it, and from the order denying Vulcan's post-judgment motion.

The facts, as found by the District Court, are as follows:

Janke, a Wisconsin corporation with its principal offices near Wausau, Wisconsin, had been engaged in various types of construction work, including highway, sewer, airport and marine projects. Vulcan, a New Jersey corporation, operates quarries and has sand, gravel, aggregate and redi-mix concrete plants in several states. In 1970, it also operated a concrete-pipe manufacturing plant located in Illinois.

In February 1970, the State Bureau of Engineering, on behalf of the Regents of the University of Wisconsin, publicly invited submission of sealed bids for the construction of condenser water transmission lines, lake piping and a pumping station for the University of Wisconsin--Milwaukee campus. The project was intended to provide the University with its own cooling system. The bids were to be opened at 2:00 P.M., on March 10, 1970, in Madison, Wisconsin.

The general construction, land, marine and electrical work portions of the project were to be bid on separately, each portion requiring a separate lump sum bid. The marine portion of the work included the furnishing and installation of water intake and return lines into Lake Michigan. The materials required for marine piping included concrete subaqueous pipe in full compliance with either AWWA Specification C300 or AWWA Specification C301. The main contract also contained an 'or equal' clause, permitting use of non-specified materials of equal quality to those specified if they were considered equally acceptable to and approved by the project engineers.

Janke, intending to bid on the marine work, obtained price quotations from suppliers of the various materials required for that portion of the project. On March 5, 1970, Jerry Janke, then vice president of Janke, received price quotations by telephone from a Vulcan representative for the various concrete pipe items to be used in the marine work. Janke made a memorandum of the prices quoted, but did not inquire during this conversation whether Vulcan proposed to supply C300 or C301 pipe, nor did the caller specify the quality or type of pipe Vulcan intended to furnish. Vulcan's quoted prices were $40,000 below prices quoted by Interpace, another subaqueous concrete pipe supplier.

On the evening of March 9, 1970, Jerry Janke and his brother, James Janke, owner of Janke, checked in at a Madison hotel for the purpose of submitting their bid the next day. Around midnight they were visited in their hotel room by Alex Barry, then general manager of Vulcan's Wisconsin operations, and Peter W. Fox, a salesman for Vulcan's sand, gravel, crushed limestone and redi-mix concrete.

While it is not clear whether the visit was only social or included some discussion of Vulcan's ability to furnish the pipe for the project, all parties present at the visit agreed that there was no reference to the particular specifications or type of pipe that Vulcan proposed to supply. The next day, shortly prior to submitting his bid, James Janke met Mr. Barry in the hallway of the State Office Building. James Janke testified that he was concerned because of the disparity in the prices quoted by Vulcan and Interpace. He requested and received assurance from Mr. Barry that Vulcan could furnish the pipe for the project. During the meeting Mr. Barry also placed a telephone call to someone at Vulcan who confirmed his assurance.

According to Mr. Barry, Mr. Janke merely inquired at this meeting whether Vulcan could reduce its quoted prices on the pipe, and his telephone call to Vulcan's vice president was made only to confirm his statement that prices would not be reduced.

Mr. Janke, who had relied upon Vulcan's quoted pipe prices in calculating his prime bid, thereupon submitted the bid and was subsequently awarded the contract.

Within the week after the bid opening, Janke received a written quotation from Vulcan setting forth the same prices that were quoted to Jerry Janke over the telephone on March 5th, but stating that the quotation was for AWWA C302 pipe. The writing was dated March 6th, but it is not known when it was mailed.

The record does not indicate the date when Janke discovered that Vulcan was offering to supply C302 pipe and not the pipe listed in the specifications. Between March 10th and March 23rd, however, James Janke met three times in Milwaukee and in Madison with the engineers for the State of Wisconsin, a representative from the University, and Alex Barry and Art Littva of Vulcan's engineering department, in an effort to persuade the State to accept the C302 pipe. Mr. Littva then sent James Janke specifications and shop drawings showing use of the C302 pipe on the marine project and requested Janke to submit them under the 'or equal' clause. The plans were submitted as requested, and were rejected by the State's project engineers as not approved.

In response to James Janke's inquiry as to why the pipe did not meet specifications, the engineers stated that the pipe was not AWWA C300 or C301 as specified; was not steel cylinder type; was not designed for an internal pressure of 50 psi; and did not have a beam strength equal to the pipe specified.

The engineers subsequently requested Janke to submit shop drawings using design conditions and materials as specified, stating that time was critical. Janke was then forced to buy the specified pipe from Interpace at a cost of $197,093.50, which was $39,942.40 (sic) over the $157,101.10 it would have paid for Vulcan's pipe in accordance with the latter's quotation.

The University of Wisconsin-Milwaukee project was first opened for bidding on May 21, 1969, but at that time it had to be bid on as an entire unit. Janke had bid as a subcontractor with a prime contractor on the marine portion, using Vulcan's prices in preparing its bid; however, there was a dispute at the time between the University and the City of Milwaukee as to whether the University should connect to the city's water system and, although the bids were opened, the contract was never awarded.

According to the normal bidding practices in the construction industry in the area, a contemplated project is generally listed or advertised in trade magazines and in the 'Dodge Reports', a daily construction news service which lists proposed construction activity for various areas of the country. A subscriber to the 'Dodge Reports' for a particular area may inspect the plans for a project in any Dodge plan room located in that area. The University...