Premier Electrical Const. Co. v. Miller-Davis Company

• Decision Date: 23 September 1968
• Docket Number: No. 66 C 1850.,66 C 1850.
• Parties: PREMIER ELECTRICAL CONSTRUCTION COMPANY, Plaintiff, v. MILLER-DAVIS COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Illinois

291 F. Supp. 295

PREMIER ELECTRICAL CONSTRUCTION COMPANY, Plaintiff, v. MILLER-DAVIS COMPANY, Defendant.

No. 66 C 1850.

United States District Court N. D. Illinois, E. D.

September 23, 1968.

A. Denison Weaver, Chicago, Ill., for plaintiff.

Owen Rall, Peter M. Sfikas, Peterson, Lowry, Rall, Barber & Ross, Chicago, Ill., for defendant.

DECISION ON THE MERITS

ROBSON, District Judge.

This is a diversity action for an alleged breach of an oral contract. This court concludes, after a trial on the merits, that judgment should be rendered for the defendant.

On February 3, 1966, the Atomic Energy Commission (A.E.C.) invited several general contractors, including the defendant to bid on a project at the Argonne National Laboratories in Argonne, Illinois.¹ The bids were to be opened at 2:00 p. m. on March 3, 1966. The defendant, in turn, sent out invitations to several electrical subcontractors, including the plaintiff, to bid on the electrical work, which constituted approximately one-third of the entire project. The bid was divided into a base bid, which was of primary importance, and nine alternates.² Daniel J. Casey, of the A.E.C., testified that this form of bid was chosen to allow them to come within their budget. The A.E.C. did not meet its budget when the project was first bid in September, 1965, and because of this lack of funds, the project was not then begun. At the time of this earlier bid, the defendant was the low bidder and, had the project gone through, would have most likely been awarded the contract.

On March 2, 1966, the day before the bids were due, the plaintiff called the defendant, and made it very clear that it wanted to work on the job with the defendant. At that time, plaintiff's Contract Manager and Vice President, Stanley Wielgos, requested some assurance that the defendant would work with them, if the plaintiff helped by being the most competitive electrical subcontractor. The defendant, through Paul Hunsberger, then Chief Estimator of the Chicago office and Assistant Division Manager for defendant, gave no assurances. He told Wielgos to call around 12:30 the next day, March 3. Wielgos gave Hunsberger a base bid of $450,000 to $500,000 during this conversation. No figures were given for any of the alternates.

Wielgos called Hunsberger the next day at the designated time of 12:30. Wielgos gave Hunsberger a bid of $494,800 and asked him whether he thought this bid was a good one. Hunsberger indicated that he thought the bid was all right, but that he would like to know what the alternate bids were. When Wielgos told him that this bid did include the alternates,³ Hunsberger made it clear that he thought the bid was "very interesting." Wielgos then said: "Do we have a job if you have one?" Hunsberger responded, "If it goes in now, you have a job." Hunsberger then intimated that he would like some "sizeable protection" on the plaintiff's price. Wielgos offered to give him a sizeable protection and asked him in what area. Hunsberger then made some reference to the fact that he only had two bids in as of that time, both of which were high, and he expected about three more. Wielgos apparently understood what was desired,⁴ and said that "we are banking on you getting the job and we are willing to gamble on you and you only." Hunsberger suggested that Wielgos call back at about 1:00 or 1:30 p. m. to check with him.

At about 1:00 o'clock, Wielgos called again and asked if his bid was holding up. Hunsberger said it was. Wielgos then repeated what he had said earlier about plaintiff still having the job. Hunsberger replied that "as it stands now, you do." Wielgos called again at 1:30, and a few minutes later, close to 1:40, and wanted to know what the situation was, because if their bid was not the lowest, they wanted to publish their price to the other contractors bidding on the job. Apparently, Hunsberger responded in a similar manner, and indicated that plaintiff's bid was still the lowest, and that if it remained that way, the plaintiff had the job. All these conversations were very short. Wielgos did not call again before 2:00 p. m.

Earlier, the defendant had sent one of its job superintendents, Richard Larsen, to Argonne with the official bid form, so that he would be able to insert any late changes onto the form. Plaintiff's Exhibit (PX) 6-O. At around 1:30, after getting lost, Larsen called his office from an open pay telephone. He talked to Hunsberger, or to William Sinclair, Vice President and Chicago Division Manager for the defendant. At the time of this first call, Larsen was given the nine alternates⁵ to write down on the bid form. Larsen went to a more private telephone in an enclosed office and reached Sinclair again at around 1:40 or 1:45 p. m. Larsen was held on the line, and at about 1:50 p. m., Sinclair gave him the base bid of $1,019,000. Larsen remembered the times clearly because this had been "the only bid he ever took in his life."

At around 1:40 p. m., Hunsberger had given Sinclair the cost figures ($225,000) of another electrical subcontractor, St. Arnaud Electrical Company. Sinclair then called Joe Abrams, Electrical Engineer for St. Arnaud, and asked if they would take the job for $255,000. Abrams called back at around 1:45 or 1:50 p. m. and said "O.K." (See notation in Sinclair's handwriting on PX 6-M) Sinclair then made the necessary changes on the late change sheet (PX 6-D-1), and incorporated this altered electrical base bid into the general base bid. The resultant figure of $1,019,000 was given to Larsen at around 1:50 p. m. Larsen wrote it down and submitted the bid form to the A.E.C. about two or three minutes later.⁶

At the pre-award meeting on March 8, 1966, after the defendant was tentatively chosen as the lowest bidder, the A.E.C. had only to decide that the defendant was financially responsible before they would award them the contract. The A.E.C. told Sinclair that Alternates 4, 6 and 7 were chosen, with options on Alternates 1 and 9. (Alternate 9 was ultimately chosen by the time the contract was signed.) During this meeting, Sinclair told Casey (of the A.E.C.) that St. Arnaud would be used as the electrical subcontractor.⁷ The A.E.C. was satisfied with the defendant's qualifications, and, on March 11, 1966, signed the contract with them.

At around 5:00 or 5:30 p. m. on the day the bids were submitted (March 3), Wielgos called Hunsberger to find out whether plaintiff's figures had been used in defendant's bid. Although the record is not clear on this point, Hunsberger apparently knew at this time that St. Arnaud would be used. However, Hunsberger said to Wielgos that he did not have the file in front of him and that he would have to check the file before he could tell. This conversation was very short, since Hunsberger made it clear that he was tired from the hectic bid day.

Wielgos called again the next morning, March 4, to get an answer to his question. Hunsberger told Wielgos that he was not going to divulge any information until he found out whether the defendant got the contract. Hunsberger definitely knew at this time that St. Arnaud was to be the electrical subcontractor, if the defendant was awarded the prime contract. He explained his reluctance to tell Wielgos anything by referring, in his testimony, to what had happened when this job has been bid the first time in September, 1965. Then, Hunsberger had told Divane Electric Company that they "had the job" five minutes prior to the time the bids were to be opened by the A.E.C. Hunsberger had received many angry calls from other electrical contractors after word got out that he had told Divane. He decided that the best course was to say nothing until the A.E.C. made a public announcement.

Many cross words were spoken by Wielgos during this conversation. He accused Hunsberger of trying to get out of their "bargain." Hunsberger replied that he was not trying to weasel out of "any bargain," but that he just could not say anything right then. Wielgos inquired of him whether, in the 12:30 and subsequent calls, there was an "agreement" that the plaintiff would "protect" the defendant in return for the defendant giving the plaintiff the electrical subcontract, if the defendant got the prime contract. Hunsberger agreed that he had said something to that effect, and further agreed that there had been an "agreement." Hunsberger, however, denied that he had accepted the plaintiff's bid with the assurance that he would let plaintiff know if there was a lower bid after 1:30 p. m. on March 3, 1966.⁸ Wielgos was apparently unhappy with this turn of events (even though he was not expressly told that his bid had not been used), and said to Hunsberger that he "might as well pull out of the thing then." Hunsberger was sympathetic and said:

"If you want to, that's your privilege,⁹ but I can't tell you anything, Stan. This isn't my desire, either. I mean— don't misunderstand. I'm not saying that Bill Sinclair told me not to say anything. What I am saying is that conditions in this case have gotten such that I can't say anything."

The plaintiff contends that the defendant through Paul Hunsberger entered into a binding contract to employ the plaintiff as its electrical subcontractor, in consideration for the plaintiff giving the defendant "protection" by submitting higher bids to the other general contractors. The defendant contends that (1) there was no contract; and (2) if there was a contract, the consideration was illegal and against public policy, thereby making the contract unenforceable.

This court does find that there was an informal oral "agreement" between the parties. The defendant did agree that (1) if the plaintiff did submit higher bids to defendant's competitors, and (2) if the plaintiff was the lowest bidder, and (3) if the defendant used plaintiff's bid in preparing its prime bid, then (4) the plaintiff would get the electrical subcontract. It is clear that plaintiff did submit higher...