CG Schmidt Inc. v. Permasteelisa N. Am.

• Decision Date: 23 October 2015
• Docket Number: Case No. 14–CV–1553–JPS.
• Citation: 142 F.Supp.3d 755
• Parties: CG SCHMIDT INC., Plaintiff, v. PERMASTEELISA NORTH AMERICA, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

142 F.Supp.3d 755

CG SCHMIDT INC., Plaintiff,

v.PERMASTEELISA NORTH AMERICA, Defendant.

Case No. 14–CV–1553–JPS.

United States District Court, E.D. Wisconsin.

Signed Oct. 23, 2015.

Anthony J. Anzelmo, Joshua B. Levy, Whyte Hirschboeck Dudek SC, Milwaukee, WI, for Plaintiff.

Christa D. Wittenberg, Steven J. Slawinski, O'Neil Cannon Hollman Dejong & Laing SC, Milwaukee, WI, for Defendant.

ORDER

J.P. STADTMUELLER, District Judge.

On December 15, 2015, the plaintiff, CG Schmidt, Inc. ("CGS"), filed a breach of contract claim and promissory estoppel claim against the defendant, Permasteelisa North America ("PNA"). (Docket # 1). The allegations in the complaint tell the classic trilogy of a general contractor and subcontractor relationship gone wrong: a bid, ensuing negotiations, and disengagement. PNA moved for summary judgment on both claims asserted against it on August 3, 2015. (Docket # 16).¹ As will be discussed more fully below, the Court finds that the undisputed facts entitle PNA to judgment as a matter of law on both the breach of contract and promissory estoppel claims. Thus, the Court will grant PNA's motions for summary judgment.

1. BACKGROUND

The facts in this case are largely undisputed.² CGS is a general contractor managing a portion of the construction of a mixed-use, eighteen-story office building located at 833 East Michigan Street, Milwaukee, Wisconsin; a project valued at nearly $52 million. (Docket # 18 ¶ 3; Docket # 24 Ex. 3 at 22:20–24, 70:17–18). PNA is part of an international conglomerate of subcontractors that participates in various architectural engineering projects, including the custom design, manufacture, and installation of unitized curtainwalls.³ (Docket # 19 at 2; Docket # 24 Ex. 10 at 36:22–37:22). The following events took place over the course of approximately fourteen months, from April of 2013 through June of 2014. (Docket # 18 ¶¶ 10, 12, 77–79).

1.1. The Bid

The relationship between CGS and PNA began in April of 2013, when CGS began to solicit subcontractor bids for a custom curtainwall on its 833 East Michigan Street Project (the "Project"). (Docket # 18 ¶ 10; Docket # 22 ¶ 3). The curtainwall was slated to be one of the largest subcontracts for the development. (Docket # 18 ¶ 8). To guide the bidding process, CGS provided prospective subcontractors a number of documents, including its Contract Manual (the "Manual") and a Draft Schedule. (Docket # 15 Ex. 1 at 3, 11; Docket # 18 ¶ 10; Docket # 22 ¶ 3). The Manual contained instructions to bidders on the logistics of bid submission, blank bid forms, work category descriptions, and numerous agreement forms, which included CGS's blank, standard subcontract and exhibits. (Docket # 15 Ex. 1 at 13–14; Docket # 18 ¶ 10; Docket # 22 ¶ 3). In relevant part, the standard subcontract stated:

The Contract between CGS and the Subcontractor includes all the terms and conditions of this Subcontract and its Exhibits ... and all the terms and conditions of the Agreement between CGS and the Project Owner (the "Prime Agreement") ... applicable to the Subcontractor's Work ... (collectively, the "Subcontract Documents").⁴ The Subcontract Documents form the entire and integrated agreement between the parties and supersede all prior bidding, proposals, negotiations and/or agreements, written or oral, between Subcontractor and CGS, except to the extent expressly referenced in these Subcontract Documents.

(Docket # 15 Ex. 1 at 74).

PNA submitted its bid to furnish, fabricate, and install a custom curtainwall for the Project on April 19, 2013. (Docket # 18 ¶ 11; Docket # 15 Ex. 2). As instructed, PNA used the bid form provided in CGS's Manual. (Docket # 15 Ex. 2). PNA's legal team reviewed the bid, and PNA's Senior Vice President, Michael Kneeland, signed it. (Docket # 22 ¶¶ 9, 17). The bid stated, in relevant part:

The Bidder ... hereby proposes to furnish all labor, materials, tools, equipment ... and to construct all work in the Work Category in accordance with the Contract Drawings and Specifications ... and CG Schmidt Contract Manual dated March 22, 2013 for the bid amount stated in this document.... The Bidder, if awarded a contract, agrees to commence work and to fully complete this Work Category in accordance with a schedule to be established in collaboration with CG Schmidt....

(Docket # 15 Ex. 1 at 19). The bid added that, "[t]he Bidder agrees that his/her Base Bid shall be good and may not be withdrawn for a period of one hundred twenty (120) calendar days after the bid opening date." (Docket # 15 Ex. 2 at 2).

CGS's bid form also required PNA to submit information related to its price estimate, alternative fee proposals, insurance coverage, and resident-and race-based employment practices. (Docket # 15 Ex. 2 at 2–5). Attached to its bid, PNA, on its own letterhead, submitted a more detailed financial breakdown of its initial proposal for the curtainwall project, which totaled $12,675,421.00. (Docket # 15 Ex. 2 at 3). PNA likewise outlined the "scope specifically included" in the curtainwall, various warranties, site logistics, clarifications, and exclusions. (Docket # 15 Ex. 2 at 8–11). Within a "couple of months" from the submission of PNA's bid, CGS selected PNA as its subcontractor of choice. (Docket # 18 ¶ 18; Docket # 24 Ex. 3 at 77:22–78:9).

1.2 The Negotiations

Though CGS was "not prepared to write a subcontract" during the spring of 2013, it began "working towards a signed contract" with PNA "based on the award." (Docket # 18 ¶ 19; Docket # 24 Ex. 3 at 79:18–80:6). The parties waited to sign a subcontract for two primary reasons.

First, CGS had not yet entered into two important agreements with the Project's owner: the "prime contract" and an important corollary thereto, known as the Guaranteed Maximum Price Amendment ("GMPA").⁵ (Docket # 18 ¶¶ 27–28, 34–41; Docket # 22 ¶ 24). CGS followed industry practice insofar as it maintained a general policy of signing written agreements with all of its subcontractors. (Docket # 18 ¶ 2). But, it could not proceed to sign a contract with PNA until it signed the prime contract and GMPA.⁶ (Docket # 18 ¶ 34–41; Docket # 22 ¶¶ 1–3, 53; see also Docket # 24 Ex. 3 at 62:25–63:5). By the same token, CGS does not dispute that, as a general matter of good business practice, it does not execute subcontracts until it first executes a prime contract with a project owner. (Docket # 18 ¶ 40).

Second, immediately after the award of the curtainwall project to PNA, the parties actively engaged in refining various aspects of their agreement. (Docket # 18 ¶¶ 12–15, 21–23, 46–48). CGS was particularly interested in reducing the proposal's cost and, as a result, PNA issued a series of revised proposals in order to save CGS money. (Docket # 24 Ex. 3 at 31:7–32:12, 71:25–72:16). The specific requests made by CGS during this "value engineering process" primarily centered on cost-saving "alternate" materials and the proposed contract scope.⁷ (Docket # 18 ¶¶ 12–14; Docket # 24 Ex. 2 at 75:16–76:23).

Beyond refining the financial aspect of their agreement, as early as May 10, 2013, PNA forwarded various comments (the "May 2013 email") to CGS from its legal department about CGS's standard subcontract. (Docket # 18 ¶ 15). Mr. John Stanko ("Stanko")⁸ related that, "[b]ecause we have not yet had an opportunity to review the prime contract, which is referenced in the subcontract,⁹ we do not believe it would be constructive to initiate discussion on the subcontract, but look forward to discussing the documents' terms in the near future." (Docket # 18 ¶ 15). Moreover, PNA expressed specific concerns related to the order of precedence of documents, remedies for nonpayment, compensation terms, damage liability, and bonds. (Docket # 18 ¶ 15).

Despite these two roadblocks, during the spring and summer of 2013, PNA and CGS continued to discuss other matters related to the curtainwall. For example, at one point, PNA offered a "design assist" service to advise CGS, the architect, and the developer in managing the curtainwall's installation, which CGS declined. (Docket # 22 ¶ 26). In addition, continuing into June of 2013, the parties met with the developer and the architect to discuss a number of construction related issues, including, but not limited to, the budget, systems performance, and installation. (Docket # 22 ¶ 28).

In September of 2013, the parties continued their discussions about the subcontract's terms. Specifically, on September 12, 2013, CGS provided PNA an updated version of CGS's standard contract.¹⁰ (Docket # 18 ¶ 20). CGS expressed interest in "discuss[ing] any concern such as those attached using the actual contract language as the basis." (Docket # 18 ¶ 20). In response, PNA echoed the request made in its May 2013 email to view the terms of the prime contract. (Docket # 18 ¶ 20). PNA likewise provided CGS an updated list of particular concerns related to the terms of CGS's subcontract and the prime contract.¹¹ (Docket # 18 ¶¶ 22–23).

Discussions about the manufacturing aspect of the curtainwall also occurred in September of 2013. (Docket # 22 ¶ 29).¹²

At this point, PNA was "prepar[ing] itself" for the proposed use of its Global Architectural Technologies ("GAT II") (Docket # 24 Ex. 10 at 115:21–116:2) facility in Thailand for fabrication of the curtainwall. (Docket # 22 ¶ 29). The reason behind pursuing production at GAT II was that, if the materials were made in Thailand, as opposed to the United States, PNA would be willing to offer a financial credit, or "deduct," towards the subcontract price. (Docket # 24 Ex. 10 at 116:15–117:11; Docket # 22 ¶ 29(a)).

From about late 2013 through 2014, construction was delayed. (Docket # 18 ¶ 37; Docket # 24 Ex. 2 at 85:14–86:5). At this time, however, CGS's "project team" suggested to PNA that it wanted to move forward with certain "engineering activities" in order to keep on track with the overall schedule. (Docket # 24 Ex. 2 at 89:8–90:3). PNA advised that, in order to "devote those...