International Salt Co., LLC v. City of Boston
| Decision Date | 18 April 2008 |
| Docket Number | Civil Action No. 05-10921-RGS. |
| Citation | 547 F.Supp.2d 62 |
| Parties | INTERNATIONAL SALT COMPANY, LLC v. CITY OF BOSTON. |
| Court | U.S. District Court — District of Massachusetts |
Joseph Michael Alden, Hyatt Peters & Weber, LLP, Annapolis, MD, Adam N. Cederbaum, Anouk Danan, Scott C. Holmes, Justin F. Kollar, Christopher M. Mensoian, Susan M. Weise, City Of Boston, Law Department, Boston, MA, for Defendant.
Bruce W. Edmands, Eckert Seamans Cherin & Mellott, LLC, Boston, MA, for Plaintiff.
FINDINGS OF FACT AND RULINGS OF LAW AFTER A NON-JURY TRIAL
During the winter and early spring of 2004-2005, the City of Boston (City) experienced an unusual number of heavy snowfalls. This case involves the City's contract to purchase the road salt that was used by the Department of Public Works to melt snow and ice on city streets. On May 4, 2005, the City's supplier, International Salt Company, LLC (ISCO), sued the City seeking legal and equitable remedies for breach of implied contract. A trial without jury was held in January of 2008. After the taking of evidence, the parties were given leave to file proposed findings of fact and rulings of law. They did so in February of 2008. The court then heard final argument. For reasons that will be explained, the court concludes that ISCO has no viable claim of recovery against the City.
The court makes the following findings of fact based on the parties' stipulations as supplemented by the credible evidence presented at trial.
1. On August 23, 2004, the City posted an invitation soliciting bids for a 75,000 ton supply of road maintenance sodium chloride bulk (salt) for the coming winter.
2. Bids were opened and read on September 8, 2004. On September 23, 2004, the City informed ISCO by fax that it had submitted the winning bid. The notification stated in part: "The following items have been awarded to your company: Item 1."
3. The notation "Item 1" referred to Item 01 in the bidding documents. Item 01 specified the delivery by ISCO of 75,000 tons nf salt to the City at a bid price of $36.42 per ton, for a total of $2,731,500.
4. On October 20, 2004, ISCO accepted the City's offer in writing. The executed contract (# 15878-05) incorporated the invitation for bids as well as ISCO's response.
5. The contract contained several pertinent provisions. ISCO's incorporated bid response stated that: "The total bid price for this contract is $36.42/T; Thirty-six dollars forty-two cents per ton = $2,731,500.00; Two million seven hundred thirty-one thousand five hundred dollars no cents." The section of the contract listing "price components of the bid price" noted: On the signature page, entitled "Standard Contract," the term was specified as running from October 1, 2004, through and including June 30, 2005. On the same page, in bold type, the contract stated: "TOTAL AMOUNT NOT TO ECEED $2,731,500."
6. Page 19 of the contract contained a provision stating that: "PRICE WILL BE HELD FOR THE TERM OF THE COTRACT AND SHALL NOT BE LIMIED TO THE ESTIMATED NUMBER OF ITEMS." At no other place in the contract is the word "estimate" used to describe the quantity of salt to be delivered.
7. On October 13, 2004, Dennis Coughlin, the City Auditor, certified the appropriation of funds.
8. The final contract was approved in writing by Mayor Thomas M. Menino on October 20, 2004.
9. During January of 2005, the City experienced 43.3 inches of snowfall. In February, 17.7 inches fell, and in March, 14.5 inches.
10. By February 4, 2005, ISCO had delivered 70,848 tons of salt to the City. As of February 7, 2005, the City had an inventory of approximately 28,117 tons of salt on hand in its storage yards.
11. On February 7, 2005, Daniel Thompson, ISCO's Vice President of Highway Bidding, sent a letter by fax to Vincent Caiani, the City's Assistant Purchasing Agent. In the letter, Thompson stated that because of increases in ocean freight costs, ISCO was raising its price for salt from $36.42 per ton to $46.36 per ton, effective with any order in excess of 75,000 tons.
12. In response, Cainai telephoned Thompson and insisted that ISCO honor all City orders (whether or not in excess of 75,000 tons) at the $36.42 per ton contract price.
13. The following day, February 8, 2005, William Hannon, the City Purchasing Agent, spoke by telephone with Thompson. Hannon told Thompson that the City was prohibited by the Massachusetts public bidding law from paying more than the contract price of $36.42 per ton. Thompson stated that ISCO's contractual obligations to the City would end once it had completed delivery of 75,000 tons of salt. Thompson insisted that because of increased shipping costs, ISCO could not agree to provide additional salt to the City at the $36.42 price.
14. On February 10, 2005, Hannon wrote to Robert Jones, the Chief Executive Officer of ISCO. He stated that the 75,000 ton figure referenced in the contract was merely an estimate. Hannon told Jones that ISCO was required to continue to deliver salt to the City through the termination date of the contract on June 30, 2005, at the contract price of $36.42 per ton regardless of the amount of salt the City ordered.
15. On February 10, 2005, Joseph Casazza, the Commissioner of Public Works, telephoned Jones. Hannon and Cainai listened in on the conversation in Casazza's office, while Thompson listened in from Jones's office. Casazza's told Jones that the City needed more than 75,000 tons of salt to get through the winter and demanded written assurances that ISCO would supply whatever amount of salt the City ordered. Casazza threatened to hold ISCO responsible for streets rendered unsafe because of any lack of salt.1
16. Jones acquiesced to the demand for deliveries of salt in excess of 75,000 tons, but reiterated that ISCO would charge the City a higher price per ton because of the increased shipping costs.
17. Immediately after the telephone call, Jones wrote a letter to Casazza (faxed the following day) confirming ISCO's agreement to continue to provide salt to the City. The letter stated that the price per ton for salt delivered in excess of 75,000 tons was "yet to be agreed to or determined." It further stated that in the absence of an agreement, ISCO reserved the right "to have the price determined by a court ... on the basis of fair market value."
18. On February 11, 2005, ISCO's outside counsel sent a letter to Hannon stating that the contract expressly obligated ISCO to provide only 75,000 tons of salt at $36.42 per ton, and that ISCO's contractual obligations would end once the 75,000 tons were delivered. The letter also stated that ISCO would supply salt to the City in excess of 75,000 tons at a price to be negotiated or to be determined by a court.
19. On February 11, 2005, the City issued a purchase order (# 0000287141) to ISCO for 25,000 additional tons of salt. The purchase order listed a price of $36.42 per ton, for a total of $910,500. The delivery date was specified as February 10, 2005. The purchase order bore a stamp by Sally Glora, the City's Auditor/Business Manager, indicating that the necessary funds had been appropriated.
20. On February 16, 2005, ISCO completed delivery of 75,000 tons of salt to the City. From February 16 through March 14, 2005, ISCO made eighteen additional deliveries of salt, totaling 27,021.84 tons.
21. The use of road salt is crucial to public safety during snowstorms. It melts snow more rapidly than sand and has a lower after-event cleanup cost.
22. ISCO was able to supply the City's initial requirement of 75,000 tons of salt from the inventory held at its facility in Charlestown, Massachusetts. In order to meet the City's additional request, ISCO turned to the ocean freight "spot market."
23. On February 18, 2005, Jones sent a letter to Hannon stating that ISCO had satisfied its contractual obligations by supplying the City with 75,000 tons of salt. Jones repeated ISCO's February 10 position that the deliveries of additional salt were under protest. The letter stated that for deliveries over 75,000 tons, the City
would be invoiced at $36.42 per ton, with the understanding that ISCO reserved the right to seek a price increase based on a court-determined fair market value if the parties could not agree in the interim. In the alternative, ISCO proposed that the parties enter into a separate contract for deliveries in excess of 75,000 tons at a price of $42.36 per ton.
24. The City did not respond to ISCO's letter of February 18, 2005.
25. On March 11, 2005, the City issued a purchase order (# 0000291021) to ISCO for 3,000 tons of salt. The purchase order stated a price of $36.42 per ton, for a total of $109,260. The purchase order bore a stamp by the City Auditor/Business Manager indicating that funds had been appropriated.
26. One month later, on April 15, 2005, the City issued a purchase order (# 0000297376) to ISCO for 50 tons of salt. The purchase order stated a price of $36.42 per ton. for a total of $1,821. The purchase order bore a stamp by the City's Auditor/Business Manager indicating that funds had been appropriated.
27. On the same date, April 15, 2005, ISCO's counsel sent a letter to Hannon noting that the City had not responded to ISCO's prior letters concerning the increased price. Instead, the City had simply continued to order salt at the contract price. The letter continued that "[b]y placing orders in excess of contractuallyestablished tonnage, the City implicitly agreed to pay the fair market value for any amounts of Rock Salt in excess of 75,000 tons." The letter stated that ISCO had delivered 27,021.84 tons of salt in excess of the agreed 75,000 tons. It additionally stated that the fair market value for rock salt in the Boston area during the period of the excess deliveries was $56.37 per ton. Accordingly, it was ISCO's position that the...
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