Piland Corp. v. REA Const. Co.

• Decision Date: 08 October 1987
• Docket Number: Civ. A. No. 87-49-N.
• Citation: 672 F. Supp. 244
• Court: U.S. District Court — Eastern District of Virginia
• Parties: PILAND CORPORATION, Plaintiff, v. REA CONSTRUCTION COMPANY, Defendant.

672 F. Supp. 244

PILAND CORPORATION, Plaintiff, v. REA CONSTRUCTION COMPANY, Defendant.

Civ. A. No. 87-49-N.

United States District Court, E.D. Virginia, Norfolk Division.

October 8, 1987.

Michael J. Goergen, Crossland, Schilling & McCormick, Springfield, Va., for plaintiff.

Hunter W. Sims, Jr., Kaufman & Canoles, Norfolk, Va., for defendant.

OPINION AND ORDER

RICHARD L. WILLIAMS, District Judge.

Piland Corporation (Piland) seeks to recover from REA Construction Company (REA) damages for alleged breach of a contract to perform work pursuant to a bid given by REA. The issue before the court is whether Piland timely notified REA that it had been awarded the contract as general contractor, that the bid of REA, as subcontractor for stone and asphalt work, was accepted by Piland, and REA advised by Piland that REA's bid was accepted. Second, if Piland did timely notify REA that it was being awarded the subcontract on its bid, what damages Piland is entitled to recover.

I.

The background facts are not in dispute. Piland bid on a contract to do construction work at the Operational Training Facility of the United States Navy at Dam Neck, in Virginia Beach. Piland, acting through Dwight Wolf, solicited a bid from REA to do certain stone base and asphalt work on the parking lot at Dam Neck under a subcontract. On or about January 31, 1984, Tommy Thompson, an estimator for REA, telephoned Piland, talked to a secretary there, and gave a bid of $53,845.00 to do the work, but not to include rough grading and engineering. REA also gave the same bid to other general contractors who were bidding on the job. The bids were presented to the Navy on or about January 31, 1984. That same day Piland learned it was the low bidder.

On or about July 20, 1984, Piland mailed a subcontract to REA for it to do the stone and asphalt work on the project at the bid of $53,845.00. REA declined to execute the contract. In a conference in October 1984, REA again declined to do the work at the aforesaid bid.

The real dispute between the parties concerns the events following January 31, 1984. Piland contends that Wolf telephoned REA on either February 2nd or 28th, 1984, and talked to Thompson on one of those dates and advised Thompson that REA was to be awarded a subcontract to do the stone and asphalt work, and that it sent the contract to REA on or about July 20, 1984, for REA's signature; that when REA declined to sign the contract, Piland attempted to prevail upon REA to do so, and had a meeting with REA in October 1984, but REA refused to sign the contract or to do the work for the $53,845.00 bid. On the other hand, REA asserts that having learned Piland was the successful bidder and was to be awarded the contract, Thompson, who had prepared REA's bid, called Piland to see if it was to be awarded the subcontract. Unable to reach Wolf, he left his name and asked that Wolf call him. When a week passed without hearing from Wolf, he called again and he was again unable to reach Wolf, but left his name. After waiting about three or four weeks without hearing from Wolf, he assumed REA was not to be awarded the subcontract and filed the bid figures in a closed or ended file.

The issue here is whether Piland, acting through Wolf, properly notified Thompson of REA that REA was awarded the subcontract for the stone and asphalt work. The answer to this question requires an examination of all of the facts and circumstances of the case.

It is customary in the industry for general contractors to solicit bids from subcontractors by telephone, and to use such bids in submitting their proposal for the general contract. Thereafter, a successful general contractor will often notify the subcontractor by telephone that his bid on the subcontract has been accepted, and will submit a written contract to the subcontractor within 30 days. Too, when a subcontractor does not hear from the general contractor within a period of some 30 days and does not receive a signed contract, he is not bound by the bid. Generally, at the least, often, when the subcontractor submits a bid in writing to the general contractor, his submittal will set forth that the price is subject to change after 30 days.

Each of the parties agree that giving and accepting bids by telephone is one of the customs of the trade.

II.

The parties agree that while solicitation and furnishing of contract bids by telephone is proper, they also agree that there must be an offer and an acceptance of the offer in order to form a binding contract, and the acceptance must be communicated to the one making the offer. General Electric Co. v. Keyser, 166 W.Va. 456, 275 S.E.2d 289 (1981); Bernstein v. Bord, 146 Va. 670, 132 S.E. 698, 699 (1926); Green v. Smith, 146 Va. 442, 132 S.E. 839 (1926); 4-B Michie's Jur. Contracts, § 20 (1986); 17 Am.Jur2d Contracts § 43 (1964). Where the offer is silent on when acceptance must be exercised, it must be exercised within a reasonable time; otherwise, the law presumes it to be withdrawn, and a subsequent acceptance will impose no obligation on the proposer, even though he has done no act and gives no notice of its withdrawal. Crews v. Sullivan, 133 Va. 478, 113 S.E. 865 (1922); Martin v. Basham, 216 Va. 914, 223 S.E.2d 899, 900 (1976); United States v. Roberts, 436 F.Supp. 553 (E.D.Tex.1977); Halstead v. Globe Hoist Co., 231 F.Supp. 1012 (N.D. Cal.1964); 4-B Michie's Jur., Contracts § 19 (1986); 17 Am.Jur2d, Contracts § 56 (1964).

Generally, the use of a subcontractor's bid by a general contractor bidding on a prime contract does not constitute acceptance of the subcontractor's bid and imposes no obligation upon the prime contractor to accept the subcontractor's bid. Electrical Constr. & Maintenance Co., Inc. v. Maeda Pacific Corp., 764 F.2d 619 (9th Cir.1985). Hence, the general contractor carries the burden of establishing that it has in fact accepted the bid and communicated the acceptance to the subcontractor.

A

Time may become of the essence in a contract by stipulation of the parties, or from the very nature of the substance of the contract where the material or substance of the contract is subject to or may undergo sudden or frequent change or fluctuation in value or costs, or subject to seasonal changes or availability. See Waterman v. Banks, 144 U.S. 394, 403, 12 S.Ct. 646, 648, 36 L.Ed. 479, 482 (1892). Hence, what constitutes a reasonable time for acceptance of an offer, particularly in the building industry, must be determined by the nature of the contract, the work to be performed, the materials to be supplied, weather conditions, coordination of the work to be done with other activities of the bidders business, usages and customs in the trade and all circumstances of the case. This is a question of fact for the factfinder. Chain v. Wilhelm, 84 F.2d 138 (4th Cir. 1936), rev'd on other grounds, 300 U.S. 31, 57 S.Ct. 394; Southern Railway Co. v. Wilcox, 99 Va. 394, 39 S.E. 144 (1901).

The evidence clearly establishes that the custom in the trade requires the successful bidder; i.e., the prime contractor, to notify the successful or selected subcontractor whose bid he wishes to accept within a period of thirty days after the prime contractor has been advised of the acceptance of his bid, unless a different time was specified in the bid. Evidence of such a custom is admissible, not to contradict the terms of any agreement, but to explain or supplement an agreement or undertaking and the intentions of the parties when consistent with the terms of the agreement. Brunswick Box Company v. Coutinho Caro & Co., 617 F.2d 355 (4th Cir.1980). Lawful and existing business customs or usage concerning the subject matter of the contract may be received in evidence to explain ambiguities in contracts or to add stipulations about which the contract is silent. United States ex rel Shields, Inc. v. Citizens and Southern National Bank of Atlanta, 367 F.2d 473 (4th Cir.1966). Custom and usage is admissible "to explain or supplement a contract," and in Virginia, "a finding of ambiguity is not necessary for the admission of ... the usage of the trade and the parties' course of dealing." Columbia Nitrogen Corp. v. Royster Co. 451 F.2d 3, 9 (4th Cir.1971). See also Dunagan v. Appalachian Power Co., 33 F.2d 876, 878-79 (4th Cir.1929); Edward E. Morgan Co. v. United States, 230 F.2d 896 (5th Cir.1956); Philip Greenberg, Inc. v. Dunville, 166 Va. 398, 185 S.E. 892 (1936); Richmond v. Barry, 109 Va. 274, 63 S.E. 1074, 1078 (1909).

B

Where acceptance of an offer or bid is by telephone, the burden rests upon the person asserting it to prove that the bidder did in fact accept the bid and that the acceptance was in accordance with the bid or offer. 17 Am.Jur.2d, Contracts § 33 (1964). Here, Piland carries the burden of showing by a preponderance of the evidence that it timely notified REA that it was accepting its bid made on or about July 31, 1984. Valjar, Inc. v. Maritime Terminals, Inc., 220 Va....