Interboro Packaging Corporation v. City of Minneapolis, No. A09-0189 (Minn. App. 9/15/2009)

Decision Date15 September 2009
Docket NumberNo. A09-0189.,A09-0189.
CourtMinnesota Court of Appeals
PartiesInterboro Packaging Corporation, Appellant, v. City of Minneapolis, Respondent, Minneapolis Parks and Recreation Board, Respondent.

Appeal from the District Court, Hennepin County, File No. 27-CV-07-22718.

Alan L. Kildow, Jarod M. Bona, DLA Piper LLP, Minneapolis, MN (for appellant).

Susan L. Segal, Minneapolis City Attorney, Sara J. Lathrop, Assistant City Attorney, Minneapolis, MN (for respondent-City of Minneapolis).

Karin E. Peterson, Ann E. Walther, Rice, Michels & Walther, LLP, Minneapolis, MN (for respondent-Minneapolis Parks and Recreation Board).

Considered and decided by Halbrooks, Presiding Judge; Larkin, Judge; and Harten, Judge.*

UNPUBLISHED OPINION

LARKIN, Judge.

Appellant challenges the district court's award of summary judgment to respondents in a breach-of-contract case arising from a competitive-bid process. The distict court ruled that the parties' contract was void and that appellant's equitable claims failed as a matter of law. Appellant raises several claims but none are persuasive. Because the district court did not err by granting summary judgment in respondents' favor, we affirm.

FACTS

In the fall of 2006, respondent City of Minneapolis issued a call for bids for garbage bags on behalf of respondent Minneapolis Parks and Recreation Board pursuant to Minn. Stat. § 471.345 (2006). Bidders were required to reply on a bid form that included a set of precise specifications. The call for bids required bids to conform to the following specifications:

                   Approximately 750 cases:    Large size, 22" x 14" x 59" — All mil [thickness]
                                               measurements must be within 5% of 4 full mil (≥3.8 mil
                                               or ≤44.2 mil) polyethylene trash bags with heavy seam at
                                               the bottom and with gusset, 100 per case.  No substitute
                on size, color or weight
                
                                               Small size, 23" x 10" x 40"—  All mil measurements must
                   Approximately 500 cases:    be within 5% of 2 full mil (≥1.9 mil or ≤2.1 mil)
                                               polyethylene trash bags with gusset, 250 per case.  No
                substitute on size, color or weight
                

(Emphasis added.) The bid form required bidders to supply "the manufacturer's specifications guarantee on weight (mil) of the bags." The city provided a set of instructions in the call for bids, which contained the following language:

Unless qualified by the provision "NO SUBSTITUTE," the use of the name of a manufacturer brand and/or catalog description in specifying any item does not restrict bidders to that manufacturer, brand, or catalog description identification. This is used simply to indicate the character, quality, and/or performance equivalence of the commodity desired, but the commodity on which bids are submitted must be of such character, quality, and/or equivalence that it will serve the purpose for which it is to be used equally well as that specified, and be acceptable to the using department.

In submitting a bid on a commodity other than specified, bidder shall furnish complete data and identification with respect to the commodity he proposes to furnish. Consideration will be given to bids submitted on commodities to the extent that such action is deemed to serve the best interest of the department or boards of the City of Minneapolis.

If a bidder does not indicate that the commodity he proposes to furnish is other than specified, it will be construed to mean that the bidder proposes to furnish the exact commodity as described.

The final product or commodity would need to be specifically manufactured due to the unique specifications. Bidders were required to submit sample bags. According to the park board, the only purpose of requiring a sample was to check the quality of the material. The bid form did not contain language indicating that the bid would be awarded based on the sample or that approval of the sample would supersede the bid form's specifications.

Appellant Interboro Packaging Corporation submitted a bid and sent sample bags, inserting the language "as per sample" on its bid form. Despite the requirements of the bid form, Interboro did not supply "the manufacturer's specifications guarantee on weight (mil) of the bags" with its initial bid submission. Interboro attached a letter to its bid form acknowledging that the samples did not meet all specifications, but the letter informed the park board that the final product would match the sample in strength, and match the specifications in size and color.

Interboro's bid was the lowest. Because the price was so low, the city's purchasing agent, Nancy Pryzmus, was concerned that Interboro's product might not meet specifications. She sent a memo, along with the bid and sample, to the park board's store keeper, Benny Rodriguez, stating, "I recommend Interboro Pack Co. as the low bid if they meet specs. Do they meet specs?" Mr. Rodriguez did not have a micrometer to measure the thickness of the sample. He noticed that the sample bag was thinner than normal, but he pulled on the sample to test it and thought it was "pretty strong." Rodriguez claims that he called Interboro and spoke to an unidentified woman who informed him that Interboro's product would meet the park board's specifications but that the bags' weight was not specifically discussed. Rodriguez informed Pryzmus that the sample bags met specifications for thickness and strength, and the park board accepted Interboro's bid.

Interboro sent the city a manufacturer's specification sheet, identifying the weight of the large bags as "4 mil nominal" and the weight of the small bags as "2 mil nominal." There is a factual dispute regarding whether Interboro sent this correspondence before or after receiving notification that the park board accepted Interboro's bid. Interboro also contacted Pryzmus to verify acceptance of Interboro's product. Interboro sent Pryzmus a document for the city and the park board to sign confirming that they had tested, evaluated, and approved a second set of samples that were sent along with the letter. Pryzmus did not sign or return the letter. According to Interboro, Pryzmus told Interboro over the phone that she knew that Interboro's sample was 2.6 mil and not 4 mil, that Interboro's first sample was satisfactory to the city, and that if Interboro shipped this product, it should have no problems; anything else would not be accepted. Interboro claims that Pryzmus stated that the park board needed immediate delivery and if delivery was not immediate, she would find Interboro in default, which would make it difficult for Interboro to secure future municipal contracts. Respondents deny that Pryzmus made these statements.

The park board received its first order of bags from Interboro in March 2007. The parties dispute whether or not the bags performed according to the park board's needs. The park board claims that the bags tore easily. Interboro presented evidence that the bags that tore were not Interboro's. None of the torn bags were retained or sent to Interboro for inspection. Based on the allegation that Interboro's bags tore easily, a park board supervisor recalled the Interboro bags and did not allow them to be used. The park board then measured the bags' thickness and discovered that Interboro's large bags were only 2.6-2.8 mil thick and the small bags were only 1.0 mil thick.

A park board supervisor wrote to Interboro in March 2007 and informed them that its bags were being rejected because they were of nonconforming thickness and instructed Interboro to make arrangements to retrieve the bags. Interboro did not do so. In May 2007, the park board shipped the bags back to Interboro. Interboro refused to pay for the shipment or retrieve the bags from the carrier. The carrier then returned the bags to the park board. The park board maintains that it used another bidder to fulfill its order for trash bags and is not using Interboro's bags.

Interboro filed suit against the city and the park board alleging breach of contract, fraud, promissory estoppel, equitable estoppel, unjust enrichment, account stated, and quantum valebant. The parties filed cross-motions for summary judgment. The district court denied Interboro's motion for summary judgment on its breach-of-contract claim and granted respondents' motions on all counts of Interboro's complaint. The district court held that the parties' contract was void; Interboro's estoppel and fraud claims fail because Interboro's reliance was unreasonable as a matter of law; Interboro's unjust enrichment and quantum valebant claims fail because respondents did not retain a benefit; and Interboro's account-stated claim fails because Interboro failed to present sufficient evidence of an acknowledged debtor-creditor relationship between the parties. This appeal follows.

DECISION

A motion for summary judgment shall be granted when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law." Minn. R. Civ. P. 56.03. "On appeal from summary judgment, we review de novo whether a genuine issue of material fact exists, and whether the district court erred in its application of the law." Peterka v. Dennis, 764 N.W.2d 829, 832 (Minn. 2009) (quotation omitted). "[T]he reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). "Summary judgment should be affirmed if it can be sustained on any ground." Winkler v. Magnuson, 539 N.W.2d 821, 828 (Minn. App. 1995), review denied (Minn. Feb. 13, 1996).

I. The district court...

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