Weitz Co. v. Hands, Inc.
| Decision Date | 22 July 2016 |
| Docket Number | No. S–15–581,S–15–581 |
| Citation | 294 Neb. 215,882 N.W.2d 659 |
| Parties | Weitz Company, LLC, v. Hands, Inc., doing business as H & S Plumbing and Heating, appellant. |
| Court | Nebraska Supreme Court |
Brian S. Kruse, of Rembolt Ludtke, L.L.P., Lincoln, for appellant.
Gregory C. Scaglione, Kristin M.V. Krueger, and Patrice D. Ott, of Koley Jessen, P.C., L.L.O., Omaha, for appellee.
Connolly
, J.
The Weitz Company, LLC (Weitz), a general contractor, received an invitation to bid on a planned nursing facility. Hands, Inc., doing business as H & S Plumbing and Heating (H & S), submitted a bid to Weitz for the plumbing work, as well as the heating, ventilation, and air conditioning (HVAC) parts of the job. Weitz' bid to the project owner incorporated the amount of H & S' bid. After the owner awarded the project to Weitz, H & S refused to honor its bid. Weitz completed the project with different subcontractors at greater expense.
At trial, Weitz sought to enforce H & S' bid under promissory estoppel. The court determined that Weitz reasonably and foreseeably relied on H & S' bid, and it therefore estopped H & S from reneging. The court measured Weitz' damages as the difference between H & S' bid and the amount Weitz paid to substitute subcontractors. H & S appeals. We affirm the judgment and the amount of damages.
In 2011, the Evangelical Lutheran Good Samaritan Society (Good Samaritan) invited four “prequalified General Contractors,” including Weitz, to bid on a proposed nursing facility in Beatrice, Nebraska. Good Samaritan chose the four prequalified general contractors based on “prior relationships” recommendations from its architect and its own research.
Good Samaritan is a “big player” in the retirement living market. Weitz is a “dominant contractor” in the same market. Alan Kennedy, a Weitz executive, said that Weitz had sought to build a relationship with Good Samaritan that would lead to “negotiated work,” meaning that Good Samaritan would work with Weitz without inviting other general contractors to bid. Kennedy testified that negotiated work is “one of the best places to be as a contractor.” When Good Samaritan invited Weitz to bid on the Beatrice project, Weitz knew of another potential project with Good Samaritan in Sarpy County, Nebraska.
Good Samaritan's “Invitation to Bid” stated that it would not consider bids received after 2 p.m. on August 30, 2011 (bid day). The invitation incorporated certain “Instructions to Bidders,” which provided that Good Samaritan and its architect could object to a general contractor's proposed subcontractors. The invitation stated that “[n]o bids may be withdrawn for a period of 60 days after opening of bids.” If a general contractor refused to enter into a contract, the instructions provided to bidders state that the general contractor would forfeit its bid security as liquidated damages. A bid security is a bond that “assures the owner that [it] can rely upon the bids.” But Good Samaritan did not ask for bid securities, because it prequalified the general contractors.
Before bid day, Weitz assigned “lead person[s]” to the different categories of work on the project, referred to as “tickets.” The ticket leaders reviewed the project specifications and created a “scope checklist” that described the work for each ticket. Weitz prepared scope checklists because subcontractors sometimes excluded certain work from their bid.
On bid day, Weitz assembled its people in a conference room to collect and organize the hundreds of bids from subcontractors. Ticket leaders called out the bids after comparing them with the scope checklist. Weitz then added the numbers to a “bid day spreadsheet.”
Subcontractors in the mechanical, engineering, and plumbing fields typically submit their bids within 15 minutes of the deadline. As a result, Weitz is often “at the wire turning in [its] number to an owner.” Brian Mahlendorf, a project executive for Weitz, oversaw Weitz' bid for the Good Samaritan project. Mahlendorf said that Weitz received H & S' bid “less than 15 minutes or so” before the 2 p.m. deadline.
Kennedy, who had been involved in “well over a hundred bids,” testified that it was “customary for general contractors to rely on bids submitted by subcontractors” and that subcontractors submit bids because they want the job. Mahlendorf, who had more than 20 years of experience in the construction industry, testified that it was customary for Weitz to rely on subcontractors' bids, that subcontractors knew that Weitz relied on their bids, and that subcontractors submitted bids because they wanted to procure work. Mahlendorf said it was “very rare” for a subcontractor to refuse to honor its bid.
On bid day, H & S sent Weitz a bid for the plumbing and HVAC parts of the project. H & S' base bid was $2,430,600. For alternate duct and radiant heating work, H & S quoted $39,108 and $52,500, respectively. H & S also sent Weitz a “revised” base bid of $2,417,000, but Weitz received the revised bid too late to use in its bid to Good Samaritan.
Kennedy and Mahlendorf would confirm a subcontractor's bid if it looked “funny” or “off,” but H & S' bid did not seem unusual to them. Weitz had estimated what each ticket would cost based on historical data, and H & S' bid was above Weitz' estimate. Mahlendorf was also comfortable with H & S because Weitz had worked with H & S before. Furthermore, Mahlendorf assumed that H & S was “actually looking at [its] number” because it sent Weitz a revised bid. Two of the other four prequalified general contractors stated that they planned to use H & S for the plumbing and the HVAC work.
Kennedy and Mahlendorf testified that the market for construction services was weak in 2011. Subcontractors were “aggressively seeking work” and making low bids to “keep their people busy.” Kennedy said that subcontractors' bids had “ranges that you hadn't traditionally seen in the marketplace.” A difference of 15 percent between the lowest and second-lowest bids was not uncommon.
Mahlendorf said that Weitz used H & S' bid in its own bid to Good Samaritan. Weitz chose H & S' bid because it included the “complete scope with the lowest cost.” Mahlendorf said that H & S' bid was “comprehensive” and that Weitz was “willing to take it as is.” Mahlendorf added H & S' base bid to Weitz' bid-day spreadsheet for the plumbing and HVAC tickets.
On bid day, Weitz sent Good Samaritan a base bid of $9.2 million. Kennedy and Mahlendorf testified that Weitz' base bid of $9.2 million included H & S' $2,430,600 bid. Weitz promised Good Samaritan that it would execute a contract for its base bid if offered the project within 60 days. Weitz' bid to Good Samaritan included a list of “Major Sub–Contractors.”
For the plumbing subcontractor, Weitz wrote “HEP or H & S.” For the HVAC subcontractor, Weitz wrote “Falcon or H & S.”
Mahlendorf explained that he used a disjunctive list of major subcontractors because H & S' bid “came in late enough after this form had been basically ready to send out, and we had to add [its] name to those two line items.” Mahlendorf said that Weitz did not use the bids of the other plumbing and HVAC subcontractors, “HEP” and Falcon Heating and Air Conditioning (Falcon), to reach its $9.2 million base bid. Even if Weitz could have used HEP and Falcon instead of H & S, Mahlendorf said that Weitz intended to use H & S.
On September 1, 2011, Weitz received “early indications” that Good Samaritan would select its bid. Weitz received “[f]inal notification” on September 2. Mahlendorf called H & S on September 6 and told the head of H & S' engineering department that Weitz had won the bidding and had “carried the H & S number.” He said that he told H & S that “we used [its] number in our bid, and we were prepared to enter into a contract with [H & S] and move forward.”
Usually, after the owner of a project accepted Weitz' bid, Weitz asked its subcontractors to sign a “subcontract” establishing the “[e]xact contract terms” between Weitz and the subcontractor. Weitz had used a similar subcontract for more than a dozen years. H & S' chief executive officer testified that in the 10 or 15 times that H & S had worked with Weitz, Weitz had always accepted H & S' revisions to the subcontract.
Weitz signed a contract with Good Samaritan for the base bid of $9.2 million plus six additional areas of work not included in the base bid. The opening paragraph of the contract states that it was “made and entered” on, and has an “Effective Date” of, September 7, 2011. But “Date: 9–19–11” appears below the signature of Good Samaritan's representatives.
Under the contract, Good Samaritan and its architect had the right to reject Weitz' proposed subcontractors. But Good Samaritan did not veto H & S or any of Weitz' other subcontractors. Good Samaritan's architect could not recall having a “conversation of significance” about subcontractors. Despite an owner's reservation of the right to veto subcontractors, Mahlendorf said that “[i]n the real world,” a general contractor treats an owner's silence as an approval and that owners are usually silent.
Hugh Sieck, Jr., H & S' owner and chief executive officer, was fishing in Alaska on bid day. Sieck testified that he told his team of estimators before he left for Alaska not to send a bid to Weitz. He had “bitter feelings” for Weitz because it had a “history of bid shopping,” meaning that Weitz would “get a bid, ... look at it, and [it] will go to another contractor to get a lower number.” Sieck said every general contractor “bid shops,” but he thought Weitz did more than most.
John Sampson, who worked for one of the other prequalified general contractors, called Sieck on bid day and suggested that Sieck review H & S' bid. Sampson...
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