C & K Engineering Contractors v. Amber Steel Co.

• Decision Date: 22 December 1978
• Docket Number: S.F. 23837
• Citation: 23 Cal.3d 1,587 P.2d 1136,151 Cal.Rptr. 323
• Court: California Supreme Court
• Parties: , 587 P.2d 1136 C & K ENGINEERING CONTRACTORS, Plaintiff and Respondent, v. AMBER STEEL COMPANY, INC., Defendant and Appellant.

Page 323

151 Cal.Rptr. 323

23 Cal.3d 1, 587 P.2d 1136

C & K ENGINEERING CONTRACTORS, Plaintiff and Respondent, v. AMBER STEEL COMPANY, INC., Defendant and Appellant.

S.F. 23837.

Supreme Court of California.

Dec. 22, 1978.

Di Giorgio, Davis & Klein and V. P. Di Giorgio, Bakersfield, for defendant and appellant.

Gill & Baldwin, Samuel D. Hale, Jr., and Leroy M. Gire, Los Angeles, for plaintiff and respondent.

RICHARDSON, Justice.

The issue posed by this case is whether or not defendant was improperly denied its constitutional right to a jury trial. (Cal.Const., art. I, § 16.) We will conclude that because plaintiff's suit for damages for breach of contract was based entirely upon the equitable doctrine of promissory estoppel (see Drennan v. Star Paving Co. (1958) 51 Cal.2d 409, 333 P.2d 757), the gist of the action must be deemed equitable in nature and, under well established principles, neither party was entitled to a jury trial as a matter of right.

Plaintiff, a general contractor, solicited bids from defendant and other subcontractors for the installation of reinforcing steel in the construction of a waste water treatment plant in Fresno County. Plaintiff included defendant's bid in its master bid, which was ultimately accepted by the public sanitation district, the proposed owner of the plant. After defendant refused to perform in accordance with its bid on the subcontract, plaintiff brought the present action to recover $102,660 in damages for defendant's alleged breach of contract. (A second cause of action, claiming defendant's negligence in preparing its bid, was dismissed during trial and is not presently at issue.)

The allegations of plaintiff's first cause of action may be summarized: defendant submitted a written bid of $139,511 for the work; defendant gave a subsequent "verbal promise" that the work would be performed for the bid price; plaintiff "reasonably relied" on defendant's bid and promise in submitting its master bid; defendant knew or should have known that plaintiff would submit a master bid based upon defendant's bid; defendant refused to perform in accordance with its bid; plaintiff was required to expend $242,171 to perform the reinforcing steel work; as a result plaintiff was damaged in the amount of $102,660; and "Injustice can be avoided only by enforcement of defendant's promise to perform . . .."

Defendant's answer to the complaint alleged its bid was the result of an "honest mistake" in calculation; plaintiff knew of the mistake but failed to notify defendant or permit it to revise its bid as is customary in the industry; and plaintiff's conduct in this regard should bar it from recovering damages.

Defendant demanded a jury trial. The trial court, deeming the case to be essentially in equity, denied the request but empaneled an advisory jury to consider the sole issue of plaintiff's reasonable reliance on defendant's promise. The jury found that plaintiff reasonably relied to its detriment on defendant's bid. The trial court adopted this finding and entered judgment in plaintiff's favor for $102,620, the approximate amount of its prayer, together with interest and costs. Defendant appeals.

Defendant's primary contention is that it was improperly denied a jury trial of plaintiff's action for damages. In resolving this contention we first review the nature and derivation of the doctrine of promissory estoppel. Thereafter, we discuss certain authorities governing the right to jury trial in this state. As will appear, we have concluded that by reason of the essentially equitable nature of the doctrine and plaintiff's exclusive reliance upon it in the present action, the case was properly triable by the court with an advisory jury.

1. Promissory Estoppel

The elements of the doctrine of promissory estoppel, as described concisely in section 90 of the Restatement of Contracts, are as follows: "A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." The foregoing rule has been judicially adopted in California and it applies to actions, such as the present case, to enforce a subcontractor's bid. (Drennan v. Star Paving Co., Supra, 51 Cal.2d 409, 413-415, 333 P.2d 757; Saliba-Kringlen Corp. v. Allen Engineering Co. (1971) 15 Cal.App.3d 95, 111, 92 Cal.Rptr. 799.) It is undisputed that plaintiff's complaint in the matter before us relies exclusively upon the doctrine to enforce defendant's alleged promise to perform its bid. In fact, the language of the complaint, summarized above, paraphrases that of section 90 in asserting that "Injustice can be avoided only by enforcement of defendant's promise to perform . . .."

We have recently characterized promissory estoppel as "a doctrine which employs Equitable principles to satisfy the requirement that consideration must be given in exchange for the promise sought to be enforced. (Citations.)" (Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665, 672, 111 Cal.Rptr. 693, 697, 517 P.2d 1157, 1161, italics added; see Seymour v. Oelrichs (1909) 156 Cal. 782, 794-800, 106 P. 88; Klein v. Farmer (1948) 85 Cal.App.2d 545, 552-553, 194 P.2d 106.) Many years ago in Seymour, we recognized a comparable doctrine in the enforcement of an oral promise to enter into a written contract of employment, where plaintiff had detrimentally relied thereon by surrendering his former position. We observed therein that "The right of Courts of equity to hold a person estopped to assert the statute of frauds, where such assertion would amount to practicing a fraud, cannot be disputed." (p. 794, 106 P. p. 94, italics added.) We did not find that application of the doctrine of equitable estoppel was barred by the fact that the case involved a Promise of future action rather than a representation of Fact. (Pp. 797-800, 106 P. 88, 94.)

Treatise writers and commentators have confirmed the generally Equitable nature of promissory estoppel in enforcing a promise which otherwise would be unenforceable. (See 3 Pomeroy, Equity Jurisprudence (5th ed. 1941) § 808b, at pp. 211-216; 1 Williston Contracts (3d ed. 1957) § 140, pp. 618-619, fn. 6; Seavey, Reliance Upon Gratuitious Promises or Other Conduct (1951) 64 Harv.L.Rev. 913, 913, 925; Henderson, Promissory Estoppel and Traditional Contract Doctrine (1969) 78 Yale L.J. 343, 379-380; Ames, The History of Assumpsit (1888) 2 Harv.L.Rev. 1, 14.) As expressed by Professor Henderson, "(P)romissory estoppel is A peculiarly equitable doctrine designed to deal with situations which, in total impact, necessarily call into play discretionary powers, . . ." (78 Yale L.J., supra, at pp. 379-380, italics added.) One distinguished commentator has observed that promissory estoppel derives from both "the decisions of the courts of common law from the very beginnings of the action of assumpsit (as well as) the decrees of courts of equity making a very flexible use of the doctrine of 'estoppel,' . . ." (1A Corbin, Contracts (1963) § 194, at p. 193, fn. omitted; see also Id., § 195.) The available authorities generally concur, however, that as of 1850 assumpsit would not lie to enforce a gratuitous promise, where the promisee's detrimental reliance was not requested by the promisor. (Ames, supra, 2 Harv.L.Rev. at p. 14; Seavey, supra, 64 Harv.L.Rev. at p. 913; Shattuck, Gratuitous Promises A New Writ (1937) 35 Michigan L.Rev. 908, 909-914; 1 Williston, supra, at pp. 618-619, fn. 6; 8 Holdsworth, A History of English Law (1966) p. 10.)

The equitable character of promissory estoppel is confirmed by a close scrutiny of the purpose of the doctrine, namely, that "Injustice can be avoided only by enforcement of the promise." (Rest., Contracts, supra, § 90, italics added.) As expressed by us in a similar subcontractor bid case, once the prerequisites of the doctrine are met, ". . . It is only fair that plaintiff should have at least an opportunity to accept defendant's bid after the general contract has been awarded to him." (Drennan v. Star Paving Co., supra, 51 Cal.2d at p. 415, 333 P.2d at p. 760, italics added; see also Seavey, supra, 64 Harv.L.Rev. at p. 925; Henderson, supra, 78 Yale L.J. at p. 379 ("The specific concern of Section 90 with 'injustice', standing alone, contemplates broad judicial discretion to make use of equitable principles").) We think that it is noteworthy that a proposed addition to section 90 would add the language "The remedy granted for breach may be limited As justice requires." (Rest.2d Contracts (Tent. Drafts Nos. 1-7, 1973) § 90, p. 215, italics added; Swinerton & Walberg Co. v. City of Inglewood L. A. County Civic Center Authority (1974) 40 Cal.App.3d 98, 103, fn. 7, 114 Cal.Rptr. 834.)

We conclude, accordingly, that the doctrine of promissory estoppel is essentially equitable in nature, developed to provide a remedy (namely, enforcement of a gratuitous promise) which was not generally available in courts of law prior to 1850. We now move to an examination of the authorities on the subject of the right to a jury trial, to determine whether the equitable nature of plaintiff's action precluded a jury trial as a matter of right.

2. Right to Jury Trial

The right to a jury trial is guaranteed by our Constitution. (Cal.Const., art. I, § 16.) We have long acknowledged that the right so guaranteed, however, is the right as it existed at common law in 1850, when the Constitution was first adopted, "and what that right is, is a purely historical question, a fact which is to be ascertained like any other social, political or legal fact." (People v. One 1941 Chevrolet Coupe (1951) 37 Cal.2d 283, 287, 231 P.2d 832, 835; accord Southern Pac. Transportation Co. v. Superior Court (1976) 58 Cal.App.3d 433, 436, 129 Cal.Rptr. 912; Meyer Koulish Co. v. Cannon (1963) 213 Cal.App.2d 419,...