Mitchell v. Siqueiros

• Decision Date: 05 July 1978
• Docket Number: No. 12407,12407
• Citation: 99 Idaho 396,582 P.2d 1074
• Court: Idaho Supreme Court
• Parties: Leslie L. MITCHELL, d/b/a Mitchell Construction Company, Plaintiff-Appellant, v. John SIQUEIROS, d/b/a J & R Plumbing & Heating Company, Defendant-Respondent.

Page 1074

582 P.2d 1074

99 Idaho 396

Leslie L. MITCHELL, d/b/a Mitchell Construction Company, Plaintiff-Appellant, v. John SIQUEIROS, d/b/a J & R Plumbing & Heating Company, Defendant-Respondent.

No. 12407.

Supreme Court of Idaho.

July 5, 1978.

Rehearing Denied Sept. 19, 1978.

John B. Kugler, Pocatello, for plaintiff-appellant.

Eugene L. Bush, Idaho Falls, for defendant-respondent.

McFADDEN, Justice.

This appeal is a sequel to Neilsen & Co. v. Cassia & Twin Falls County Joint Class A School District 151, 96 Idaho 763, 536 P.2d 1113 (1975) (hereinafter Neilsen ), involving a public works contract for the construction of the Burley Junior High School. The controversy concerns a specialty subcontract bid to perform a portion of the general contract construction project. The district court granted summary judgment for the specialty subcontractor, defendant-respondent John Siqueiros, doing business as J & R Plumbing and Heating Company. The general contractor, plaintiff-appellant Leslie L. Mitchell, doing business as Mitchell Construction Company, appeals and argues that: (1) determining whether a subcontract existed is a question of fact precluding summary judgment; (2) summary judgment was improper because appellant alleged a claim based on fraudulent misrepresentation; and (3) the district court erred in granting summary judgment because appellant's complaint supports a claim based on promissory estoppel. It is the conclusion of the court that no genuine issue of material fact exists concerning appellant's subcontract claim; however, unresolved issues of fact concerning appellant's fraudulent misrepresentation claim preclude summary judgment. The judgment of the district court is therefore affirmed in part and reversed in part. Because of the court's disposition of the case, appellant's third contention is not addressed.

On February 14, 1974, respondent filed an application for a Class AAA public works contractor's license with the Idaho Public Works Contractors State License Board. Respondent then held a Class AA license authorizing public works contracts not in excess of $250,000.00; a Class AAA license would authorize performing public works contracts in excess of $250,000.00. At the March 3, 1974, meeting of the state licensing board respondent's Class AAA license application was approved but issuance deferred because of the board's thirty day filing requirement. ¹

On March 28, 1974, respondent submitted a subcontract bid through the Idaho Subcontractors Bid Service to appellant. The $465,331.00 subcontract bid was for the plumbing and mechanical portion of the Burley Junior High School construction project. This bid noted that respondent then held a public works contractor's license number 4071-AA. The numerals 4071 indicate the work type or specialty respondent could perform (specialty plumbing and mechanical); the letters AA signify the volume in dollar amounts that respondent was licensed to perform (costs not exceeding $250,000.00). Respondent's bid also noted "Our firm has been cleared by state office for AAA license."

At the April 3, 1974, bid opening appellant submitted the lowest prime bid for the construction project. Appellant named respondent as the plumbing and mechanical subcontractor in the contract bid, ² and appellant was awarded the construction contract for the project. Appellant then tendered to respondent a written contract for the plumbing and mechanical portions of the construction project, conditioned upon respondent obtaining a Class AAA license. However, at the April 8, 1974, meeting of the state licensing board respondent's application for a Class AAA license was again deferred because respondent had submitted to appellant a subcontract bid in excess of $250,000 without first obtaining a Class AAA license. Because of this deferral, appellant did not accept respondent's subcontract offer and appellant executed a written contract for the plumbing and mechanical subcontract with another subcontractor who performed the work at an increased cost.

Appellant's complaint sought to recover these added costs based on breach of contract and tortious misrepresentation. On August 4, 1976, respondent's motion for summary judgment was granted. This appeal is from that judgment.

We note initially that in ruling on an appeal from summary judgment this court will only determine: "1. Whether there is a genuine issue as to any material fact; and 2. Whether the moving party is entitled to judgment as a matter of law." Stewart v. Hood Corporation, 95 Idaho 198, 200, 506 P.2d 95, 97 (1973). This determination is to be based on the "pleadings, depositions, and admissions on file, together with the affidavits, if any . . . ." I.R.C.P. 56(c). However, courts should liberally construe the facts in favor of the party opposing the motion, together with all reasonable inferences from the evidence. Farmer's Insurance Company of Idaho v. Brown, 97 Idaho 380, 544 P.2d 1150 (1976).

I

Appellant maintains that when a subcontractor is named, pursuant to I.C. § 67- 2310, to perform the mechanical subcontract portion of a public works project, a contract exists if the general contractor is awarded the prime contract. Appellant argues that the subcontract bid is an offer, which is conditionally accepted by naming the subcontractor, upon the express condition that the general contractor be awarded the prime contract by the awarding authority. We find nothing in common law contract principles, in I.C. § 67-2310 or in Neilsen, supra, To support this position.

It is a settled common law contract principle that utilizing a subcontractor's bid in submitting the prime or general contract bid does not, without more, constitute an acceptance of the subcontractor's offer conditioned upon being awarded the general contract by the awarding authority. C. H. Leavell and Co. v. Grafe and Associates, Inc., 90 Idaho 502, 414 P.2d 873 (1966). Accord, Universal Const. Co. v. Arizona Consolidated Masonry & Plastering Contractors Ass'n, 93 Ariz. 4, 377 P.2d 1017 (1963); Corbin-Dykes Electric Co. v. Burr, 18 Ariz.App. 101, 500 P.2d 632 (1972); Southern Cal. Acoustics Co., Inc. v. C. V. Holder, Inc., 71 Cal.2d 719, 79 Cal.Rptr. 319, 456 P.2d 975 (1969); Klose v. Sequoia Union High School Dist., 118 Cal.App.2d 636, 258 P.2d 515 (1953); K. L. House Constr. Co., Inc. v. Watson, 84 N.M. 783, 508 P.2d 592 (1973); R. J. Daum Constr. Co. v. Child, 122 Utah 194, 247 P.2d 817 (1952); Plumbing Shop, Inc. v. Pitts, 67 Wash.2d 514, 408 P.2d 382 (1965); Milone and Tucci, Inc. v. Bona Fide Builders, 49 Wash.2d 363, 301 P.2d 759 (1956). Unless the facts otherwise disclose, utilizing respondent's bid was not by itself an acceptance of the subcontract bid offer.

Furthermore, appellant admitted in his deposition that he did not enter into a contract with respondent for the mechanical portion of the Burley Junior High School construction project.

Q. Now you testified that in this case you used the Home Plumbing and Heating Company, I believe of Twin Falls, as your mechanical and plumbing subcontractors in this job, the Burley Junior High School?

A. We ended up using Home Plumbing and Heating to accomplish the mechanical work on the project.

Q. Did you enter into a contract with them?

A. Yes, sir.

Q. And on a subcontract on a project in which you are the prime or general contractor where the subcontract involves $465,000 is it your common and usual practice to use a contract between you and the subcontractor?

A. Always.

Q. And included in that contract are requirements that they have a bond as well as a great many other things?

A. There is several stipulations, yes.

Q. Now have you ever entered into a contract with J & R Plumbing & Heating Company on the Burley Junior High School job?

A. I was never legally able to consummate a contract with the J & R Heating & Plumbing Company.

Q. So do I take it your answer then that it was, no, you have not in effect you have not entered into a contract with J & R on that job?

A. To this date we have not entered into a legal contract on the subject job.

Appellant maintains that this testimony refers to a written contract and does not preclude another less formal contract. Even if this is true, the following testimony by appellant discloses that appellant did not intend to incur legal obligations until a writing had been adopted:

Q. And that's when a contract is entered into. Your understanding when you have a contract is when they give you a contract for signature and you sign it, is that correct?

A. That's correct.

Q. Now with reference to your subcontractors, isn't it true they also submit bids?

A. Yes.

Q. And isn't it your procedure then when you have selected your subcontractor to submit a contract to him?

A. Yes.

Q. And upon his then executing and returning to you the contract there is then a contract?

A. Yes.

In order for a contract to exist, a distinct understanding common to both parties is necessary. Brothers v. Arave, 67 Idaho 171, 174 P.2d 202 (1946). Whether a contract exists when contracting parties agree to reduce their agreement to writing, is a question of the parties' intent. Elliott v. Pope, 42 Idaho 505, 247 P. 796 (1926); Idaho Implement Co., Ltd. v. Lambach, 16 Idaho 497, 101 P. 951 (1909). Where it is clear that one party has agreed that an oral agreement must be reduced to writing before it shall be binding, there is no contract until a formal document is executed. Thrift Shop, Inc. v. Alaska Mut. Savings Bank, 398 P.2d 657 (Alaska 1965); Columbia Pictures Corp. v. De Toth, 26 Cal.2d 753, 161 P.2d 217 (1945); King v. Wenger, 219 Kan. 668, 549 P.2d 986 (1976); Widett v. Bond Estate, Inc., 79 Nev. 284, 382 P.2d 212 (1963); Dolge v. Masek, 70 Nev. 314, 268 P.2d 919 (1954); KVI, Inc. v. Doernbecher, 24 Wash.2d 943, 167 P.2d 1002 (1946). See also Restatement (Second) of Contracts § 26, Comment b (rev'd and edited 1973).

It is uncontroverted that appellant did not intend to be bound...