MAURICE ELEC. SUPPLY v. ANDERSON SAFEWAY GUARD R.

• Decision Date: 26 March 1986
• Docket Number: Civ. A. No. 85-0152.
• Parties: MAURICE ELECTRICAL SUPPLY COMPANY, INC., Plaintiff, v. ANDERSON SAFEWAY GUARD RAIL CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

632 F. Supp. 1082

MAURICE ELECTRICAL SUPPLY COMPANY, INC., Plaintiff, v. ANDERSON SAFEWAY GUARD RAIL CORPORATION, Defendant.

Civ. A. No. 85-0152.

United States District Court, District of Columbia.

March 26, 1986.

Saul M. Schwartzbach, Washington, D.C., for plaintiff.

Jack K. Segal, Flint, Mich., pro hac vice, and Richard H. Gordin, Washington, D.C., for defendant.

MEMORANDUM

GASCH, Senior District Judge.

I. INTRODUCTION

This breach of contract case was brought by plaintiff Maurice Electrical Supply Company, Inc. ("Maurice Electric") against defendant Anderson Safeway Guard Rail Corporation for its alleged failure to perform a contract to supply high mast lighting poles to be used in the construction of the Ft. McHenry Toll Plaza in Maryland. The Court's jurisdiction over the matter is based on diversity, plaintiff being a Delaware corporation whose sole place of business is the District of Columbia, defendant being a Michigan corporation.

The lighting poles were to have been manufactured by Skyline Structures ("Skyline"), a former subdivision of defendant Anderson that has since been sold to Valmont Industries. The other significant players in this action are Potomac Lighting Associates ("Potomac" or "Potomac Lighting"), the Baltimore-Washington area manufacturer's representative for Skyline, and Snowden River Corporation ("Snowden River"), a subsidiary of the Walter Truland Corporation ("Walter Truland"), which was the electrical subcontractor on the toll plaza project. However, neither Potomac, Snowden River or Walter Truland is a party to this suit.

This case was tried to the bench October 21-22, 1985. Based on the findings of fact and conclusions of law announced below, the Court will enter judgment for the defendant.

II. FINDINGS OF FACT

Plaintiff Maurice Electric is in the business of selling electrical fixtures for use in construction projects. In mid-November, 1983, Snowden River contacted plaintiff to obtain price quotes on electric fixtures to be used in the construction of the Ft. McHenry Toll Plaza. Snowden River's parent corporation, Walter Truland, was hoping to win the electrical construction subcontract on the plaza, to be built for the Maryland Department of Transportation. In order to furnish Snowden River's needs, Maurice Electric contacted several electrical manufacturer's representatives to obtain price quotations on, inter alia, high mast lighting poles and luminaires. One of those contacted was Potomac Lighting, representative for defendant's Skyline subdivision.

Potomac obtained a bill of materials and specifications for the high mast poles directly from Walter Truland. These were forwarded to Skyline by overnight courier service. However, pages from Skyline's own catalogue, depicting standard lighting poles, were also attached to the specifications and bill of materials sent to Skyline. Def's Exh. U. The information packet did not include a line drawing depicting the length of the individual segments or shafts that would make up each lighting pole. A few days later, Helen Hart, a Skyline quotation clerk, called Fred McGiffin, general partner of Potomac, with price quotes on individual items for Maurice Electric. McGiffin transmitted the price quotes to Marvin Kogod, an official of Maurice Electric. They were notably lower than any other price quotes Maurice Electric received for the items,¹ and therefore Maurice relied upon the Skyline price quotes when it submitted its price bid for resale to Snowden River shortly thereafter.

Unfortunately for all concerned, it appears the prices quoted to Maurice Electric were based on standard Skyline products and not those specially made to the specifications of the Maryland Department of Transportation ("DOT"). In fact, Skyline is unable to produce high mast lighting poles for Maryland because DOT always requires its poles to consist of 30-foot segments, or shafts, plus an overlap joint. Skyline's production equipment cannot handle lengths of metal over 30 feet long. The Maryland DOT consistently requires additional features on high mast poles that Skyline finds uneconomical to produce. Therefore, according to Bernard Jenkins, who at all relevant times was national sales manager at Skyline, Skyline generally declined to sell high mast lighting for Maryland DOT projects, although it did provide other items for DOT projects.²

In early January, 1984, Jenkins became aware that Skyline had supplied price quotes on individual high mast lighting poles for potential use in a Maryland DOT project. Because he knew that Skyline could not usually satisfy DOT specifications, he contacted Potomac on January 3 and asked McGiffin to send a blueprint or line drawing that usually accompanied specifications. This was the line drawing that had been omitted from the specifications sent in November, and it showed that the DOT project indeed required 30-foot-plus-lap joint segments. On January 11, 1984, Maurice Electric learned that it was likely Walter Truland would win the electrical construction contract on the plaza, and in that event, would purchase its supplies (through its Snowden River subsidiary) from Maurice. Based on this information, Marvin Kogod of Maurice placed an order over the phone on the same day, through Potomac Lighting, for Skyline products. The order restated the prices originally quoted in November.³

Potomac transmitted this oral purchase order to Skyline on January 12. Upon learning of it, Jenkins became upset because he now knew Skyline could not meet the Maryland DOT specifications. He testified he called McGiffin and Earl Dinsmore, a limited partner of Potomac, and told them both that Skyline could not provide the lighting poles. Potomac officials, fearing they would offend a good customer if they could not fill Maurice Electric's order, did not tell Maurice Electric that Skyline was not interested in the sale.

On January 31, Potomac received a written purchase order from Maurice Electric, confirming the terms of the oral order. This was forwarded to Skyline, where it was received no later than February 3, 1984. Rather than inform Maurice Electric of Skyline's reaction to the order, Dinsmore and McGiffin attempted to get Skyline to perform. They made several phone calls to Skyline to get the supplier to prepare "submittal drawings" which had to be submitted to DOT before final acceptance for use in the project. Jenkins testified that the Potomac officials pressed him to submit drawings based on Skyline's standard pole, in an attempt to get that item accepted by DOT instead of the special-made item. Jenkins refused to do so.⁴ Skyline never sent Maurice Electric an order acceptance form, as it routinely did for orders it intended to fill. By letter dated March 6, 1984, Skyline notified Potomac it would reject plaintiff's order, and Potomac so notified plaintiff. Defendant Anderson Safeway sold the Skyline division to Valmont Industries a few days later.

By this time, Maurice Electric felt it was committed to supply Snowden River with high mast poles and related items and had to obtain these from other suppliers, at a cost of $47,303 above what it would have paid Skyline.

A few words are in order about the general practices of the parties and the industry. Like many other electrical manufacturers, Skyline had no sales staff of its own, but rather relied on manufacturer's representatives to promote its products and make sales. In this capacity, Potomac was authorized to obtain price quotes from the manufacturer and convey these quotes to the purchaser. Because electrical supplies were frequently resold for use by electrical construction contractors, officials at Skyline were aware that oral quotes had to be supplied quickly and that these oral quotes would be relied on in preparation of bids by the contractors and by the middlemen who resold to the contractors. However, as McGiffin of Potomac Lighting testified, verbal quotes are often subject to negotiation.

Because of the time constraints on the bid process, purchase orders are frequently placed orally and then confirmed at a later date in writing. Nonetheless, most manufacturers have a policy of home office acceptance before any sale is finalized, and in the case of Skyline, such home office acceptance was required to be in writing to clarify the specifications and the terms of the sale.⁵ Although it was rare for Skyline to reject an order and decline to issue an acceptance form, this did happen three or four times a year. Potomac, as manufacturer's representative, transmitted purchase orders and order acceptances between Skyline and its customers. However, by express terms of its agreement with Skyline, Potomac was not authorized to enter into contracts on behalf of Skyline or to accept any orders without home office approval by Skyline.⁶

Based on these facts, the Court must determine whether a contract existed between Skyline and Maurice Electric, and if there be one, whether its enforcement is barred by the Statute of Frauds. If the Court determines that no contract was formed, it must consider whether judgment in favor of plaintiff is nonetheless required under the doctrine of promissory estoppel.⁷

III. CONCLUSIONS OF LAW

Plaintiff alleges a contract existed on the theory that defendant's November price quotation constituted an offer that plaintiff accepted by its telephone purchase order of January 11, 1984. In the alternative, plaintiff contends the November price quote was a promise upon which plaintiff reasonably relied in bidding on the contract to resell the high mast lighting poles and fixtures to Snowden River. Therefore, plaintiff contends it should recover on a theory of promissory estoppel.

A. Existence of a Contract

A necessary step in the formation of any contract is the making of an offer creating in the offeree the power of acceptance. This case involves a sale of goods within the ambit of the Uniform Commercial Code ("U.C.C."), codified at ...