Fletcher-Harlee v. Pote Concrete Contractors

• Decision Date: 05 April 2007
• Docket Number: No. 06-2199.,06-2199.
• Citation: 482 F.3d 247
• Parties: FLETCHER-HARLEE CORP., Appellant v. POTE CONCRETE CONTRACTORS, INC.
• Court: U.S. Court of Appeals — Third Circuit

482 F.3d 247

FLETCHER-HARLEE CORP., Appellant v. POTE CONCRETE CONTRACTORS, INC.

No. 06-2199.

United States Court of Appeals, Third Circuit.

Submitted Under Third Circuit LAR 34.1(a) March 8, 2007.

Opinion Filed April 5, 2007.

John A. Greenhall, Esquire, Cohen, Seglias, Pallas, Greenhall & Furman, P.C., Philadelphia, PA, for Appellant.

Thomas A. Clark, Esquire, Karen M. Murray, Esquire, Cureton Caplan, Mount Laurel, NJ, for Appellee.

Before SLOVITER and AMBRO, Circuit Judges POLLAK,^* District Judge.

OPINION OF THE COURT

AMBRO, Circuit Judge.

This is a cautionary tale of offer, acceptance, commercial practice, and how to amend a complaint. In the construction industry, general contractors compete for work by submitting bids detailing how they will complete the project, the materials they will use, the time it will take, and the price they will charge. To prepare these bids, general contractors in turn solicit bids from more specialized subcontractors. It is well understood in the industry that bids at both levels are "firm offers;"¹ in other words, subcontractors submit bids expecting to be held to their terms if selected. General contractors rely on subcontractors' bids to create a single-priced package of work. A subcontractor's subsequent refusal to honor its bid wreaks havoc on the general contractor's bid — and can quickly turn a profitable project into a financial "black hole."

Since the advent of legal realism, building the law around commercial practice has been a goal of common law courts. It stems from principles of judicial restraint: judges recognize that the repeat players in an industry often are more capable of setting the industry's ground rules than they are. Thus, we use relevant commercial practice to aid us in interpreting contracts. See Restatement (Second) of Contracts § 202 (1981).

As this case demonstrates, however, there is a contract-law principle more powerful than commercial practice: we interpret documents in accord with their plain language. Id. at § 203(b) ("[E]xpress terms are given greater weight than ... usage of trade."). When the text of a subcontractor's bid, which would typically be a firm offer, specifically states that it is not one, we must follow that text. Therefore, we cannot allow a general contractor who purports to accept such a bid to sue for breach of contract or for promissory estoppel.

I.

Fletcher-Harlee Corp., a general contractor, solicited bids from subcontractors on various aspects of a building project for which it intended to compete. In keeping with industry custom, Fletcher-Harlee's solicitation letter stipulated that bids must be held open for a minimum of 60 days and that subcontractors must agree to be accountable for the prices and proposals submitted. In response, Pote Concrete Contractors, Inc. submitted a written price quotation for providing the concrete for the project. Pote's "bid," however, did not conform to Fletcher-Harlee's terms; rather, it stipulated that its price quotation was for informational purposes only, did not constitute a "firm offer," and should not be relied on. Pote's response further stated that Pote did not agree to be held liable for any of the terms it submitted.

The terms that Pote submitted were the most favorable, and, for reasons not apparent from the record, Fletcher-Harlee relied on them in preparing its general bid despite Pote's stated limitations.² Pote was quite serious about those limitations, and, when Fletcher-Harlee won the bid and tried to reduce Pote's terms to a written contract, it raised the price. This increase pushed Pote's bid above the next lowest one, and so Fletcher-Harlee ended up using a different concrete subcontractor and spending over $200,000 more than expected.

Fletcher-Harlee sued Pote in District Court³ for breach of contract and promissory estoppel. Determining that the facts pled did not support either theory of liability, the District Court granted Pote's motion, and Fletcher-Harlee now appeals to us. Besides its arguments on the merits, it now claims that the District Court sua sponte should have extended it the opportunity to amend its complaint. For the reasons that follow, we affirm.⁴

II.

As any first-year law student knows, an offer and its acceptance are required to form a contract, and so we must decide how to characterize each of the communications between the parties.

Fletcher-Harlee solicited a bid from Pote. In its solicitation letter, Fletcher-Harlee stipulated that bids should be held open for 60 days and that the subcontractor would be held liable for the terms of the bid. Was this letter an offer? Probably not. The document itself is not in the record, but we suspect that it was merely a request to submit an offer. "An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it." Restatement (Second) of Contracts § 24 (1981). Here, a subcontractor would understand that submitting a bid would not "conclude" the matter; rather, the general contractor would have to accept the bid to do so. The Restatement and New Jersey caselaw⁵ characterize solicitations like this one not as offers, but as invitations to make offers. Restatement (Second) of Contracts § 26 cmt. d (1981); see also M.A. Stephen Const. Co., Inc. v. Borough of Rumson, 125 N.J.Super. 67, 308 A.2d 380, 383 (App.Div.1973); cf. Schlichtman v. N.J. Highway Auth., 243 N.J.Super. 464, 579 A.2d 1275, 1277-78 (L.Div.1991).

Second, Pote submitted to Fletcher-Harlee the terms on which it could complete the work. Was this an acceptance? Obviously not. Even if the Fletcher-Harlee communication were an offer, Pote's response could be no more than a counteroffer because its terms were materially different from those in the solicitation letter. Morton v. 4 Orchard Land Trust, 180 N.J. 118, 849 A.2d 164, 170-71 (2004); Restatement (Second) of Contracts § 59 (1981) ("A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counter-offer."). More importantly, because the submission expressly disclaimed Pote's intention to be bound, it could not be an offer. As quoted above, an offer is made when the offeree is justified in thinking that "his assent ... will conclude" the deal. Restatement (Second) of Contracts § 24 (1981). Here, the very terms of Pote's letter state that Fletcher-Harlee's assent would not.

No offer and no acceptance mean no contract. The District Court properly dismissed Fletcher-Harlee's breach of contract claim.

III.

Fletcher-Harlee also alleges that Pote is liable for altering its bid on a promissory estoppel theory. A key element of promissory estoppel, however, is reasonable reliance, Pane v. RCA Corp., 868 F.2d 631, 638 (3d Cir.1989), and here Fletcher-Harlee has alleged nothing that would render its reliance on Pote's submission reasonable. While New Jersey courts often use industry practice to determine what is reasonable, cf. SASCO 1997 NI, LLC v. Zudkewich, 166 N.J. 579, 767 A.2d 469, 478 (2001), that alone cannot justify relying on a submission that specifically directs the recipient not to rely on it. Without alleging any facts to undercut the force of Pote's disclaimer, we must conclude that any reliance on the terms of Pote's submission was unreasonable as a matter of law. See Sovereign Bank v. BJ's Wholesale Club, 427 F.Supp.2d 526, 535 (M.D.Pa.2006).

IV.

In the alternative, Fletcher-Harlee argues that it should be allowed to amend its complaint to correct any deficiency. Before the District Court, it did not request leave to amend; rather, it opposed Pote's motion to dismiss on the merits. Fletcher-Harlee now argues that it was reversible error for the District Court not to offer this unrequested relief sua sponte.

Our precedent supports the notion that in civil rights cases district courts must offer amendment — irrespective of whether it is requested — when dismissing a case for failure to state a claim unless doing so would be inequitable or futile. This "amendment rule" emerged in reaction to our requirement that civil rights cases be pled with heightened particularity, thus giving rise to pleading errors in otherwise colorable cases — particularly those with pro se plaintiffs. See Darr v. Wolfe, 767 F.2d 79, 80-81 (3d Cir.1985); Kauffman v. Moss, 420 F.2d 1270, 1276 (3d Cir.1970). Thus, in Darr and Kauffman, we required that district courts exercise their discretion to allow pro se plaintiffs to amend their claims to avoid dismissal. Darr, 767 F.2d at 80-81; Kauffman, 420 F.2d at 1276.

In District Council 47 v. Bradley, 795 F.2d 310, 316 (3d Cir.1986), we used a footnote from Borelli v. City of Reading, 532 F.2d 950 (3d Cir.1976) (per curiam), and our decision in Darr, to create a rule that district courts in civil rights cases must extend the plaintiff an opportunity to amend — irrespective of whether it was requested and irrespective of whether the plaintiff was counseled — before dismissing a complaint. Bradley, 795 F.2d at 316 (citing Borelli, 532 F.2d at 951 n. 1; Darr, 767 F.2d at 81). In the Borelli footnote, we had "suggest[ed]" that district courts expressly give plaintiffs leave to amend when dismissing their complaints "without prejudice." Id. at 951 & n. 1. Borelli's holding did not reach a district court's discretion to dismiss a case with prejudice when a plaintiff fails to request leave to amend. Then-Chief Judge Aldisert dissented from the opinion in Bradley, arguing that a district court should not be faulted for failing to grant relief that the plaintiff did not request. 795 F.2d at 321-22. In any event, the Bradley Court, invoking Darr, appeared to limit its holding to civil rights cases. Id. at 316.

In 1993, the Supreme Court struck down the heightened pleading requirement for civil rights cases. See ...