Zoby v. American Fidelity Company
| Decision Date | 06 March 1957 |
| Docket Number | No. 7324.,7324. |
| Citation | 242 F.2d 76 |
| Parties | L. T. ZOBY, trading as L. T. Zoby & Sons, Appellant, v. AMERICAN FIDELITY COMPANY, a foreign corporation, New Hampshire Fire Insurance Company, a foreign corporation, and Alexander M. Heron, Appellees. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Frederick T. Stant, Jr., Norfolk, Va. (P. A. Agelasto, Jr., Norfolk, Va., on brief), for appellant.
Barron F. Black, Norfolk, Va. (Vandeventer, Black & Meredith, Norfolk, Va., on brief), for appellees.
Before PARKER, Chief Judge, and SOPER and SOBELOFF, Circuit Judges.
This appeal challenges the correctness of orders granting defendants' motions for summary judgment on plaintiff's original complaint and amended complaint.
Regent Contracting Company defaulted on its contract with the Navy to construct, for a consideration of $338,000.00, a steam generator at the United States Naval Air Station at Oceana, Virginia. The Navy notified Regent's sureties, the defendants, who are appellees here, and inquired whether they would complete the work or preferred to have the Navy undertake its completion and look to them for indemnity. The latter course was agreed upon, and it was further agreed that the sureties would seek bids and submit rcommendations to the Navy. The defendants' agent Heron, after negotiating with several contractors, received a bid of $268,785.00 from the plaintiff Zoby on August 18, 1954, and in a subsequent telephone conversation that day, he told Zoby, "It is your job." Heron communicated with the Navy that day, informing them of Zoby's bid and that it was acceptable to the sureties, who were responsible for the difference between the cost of completion and the unpaid balance of the original contract price.
On the following day, Mr. Coe, of Coe Contracting Company, who had previously submitted higher unacceptable bids, visited Heron, and the next morning, August 20, 1954, submitted a bid of $261,000.00. Thereupon, Heron notified the Navy of Coe's lower bid and recommended its acceptance; and this was ultimately done.
In his original complaint, plaintiff alleged the breach of a contract between himself and the defendant American Fidelity Company through its agent Heron by which the completion job was said to have been awarded by the defendant to the plaintiff. Considering the evidence disclosed in discovery proceedings, the District Judge granted defendant's motion for summary judgment, 137 F.Supp. 38, finding it to be undisputed that no contract had been entered into. At the same time, he granted plaintiff's request to amend by adding New Hampshire Fire Insurance Company (also a surety on Regent's original contract) as a party defendant, and alleging an additional cause of action in tort. The amended complaint alleged that the defendants, through their agent Heron, unlawfully and maliciously interfered with plaintiff's prospective contract with the Navy which, it was alleged, would have been entered into and executed but for Heron's recommending Coe after first recommending the plaintiff. In respect to this complaint, also, defendants moved for summary judgment.
Assuming, for the purposes of the motion, that Zoby would have been awarded the contract but for Heron's interference, the Court nevertheless granted the summary judgment on the ground that such interference was privileged, inasmuch as defendant's conduct had been motivated by an "economic interest," D. C., 143 F.Supp. 763. The Court noted that the Navy found it necessary to obtain an additional allotment of $30,000.00 for the Coe contract, which would be borne ultimately by defendants under their obligation as sureties; and had plaintiff's bid been accepted instead of Coe's, defendants' responsibility would have been for an amount $7,785.00 higher. The latter figure, it is said, represented the financial interest which privileged the interference.
We agree with the District Judge that on the record, it is beyond dispute that Heron made no contract awarding the job to Zoby. The Navy alone, and not the sureties, was to be the contracting party, and there is no evidence that it authorized Heron to make an award. The depositions clearly indicate that upon the Navy's inquiry Heron stated that the sureties would not undertake completion but would recommend to the Navy's Norfolk "field office" a contractor whose price was agreeable to the sureties. The final choice then rested in the discretion of the Bureau of Yards and Docks in Washington, which was not obliged to follow the sureties' recommendations, for it customarily considers, as it did in this case the contractor's ability as well as other relevant factors.
Although Zoby may have been unaware of all of these administrative details, he unquestionably knew that Heron lacked authority to award the contract. Despite the statement which he attributes to Heron — "Mr. Zoby, it is your job" — his deposition discloses the following significant admissions:
In light of this concession, we think the District Judge was undeniably correct in concluding that both parties, plaintiff and Heron, knew that no contract had been made for the job on August 18.
The appellant further contends, however, although it is not directly raised in the pleadings, that there was a genuine issue of fact, which merited a jury's consideration, as to whether or not, apart from any award, Heron had made a contract binding the surety company to recommend Zoby to the Navy. While such an omission in the pleadings would not necessarily be fatal, and could be supplied even at this stage of the proceedings, we think the contention without merit. The District Judge apparently felt...
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