NOT RECOMMENDED FOR PUBLICATION File Name: 21a0393n.06
No. 20-1858
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED AVERTEST, LLC, dba Averhealth, ) Aug 20, 2021 ) DEBORAH S. HUNT, Clerk Plaintiff-Appellant, ) ) ON APPEAL FROM THE UNITED v. ) STATES DISTRICT COURT FOR ) THE EASTERN DISTRICT OF LIVINGSTON COUNTY, MICHIGAN, ) MICHIGAN ) Defendant-Appellee. )
BEFORE: ROGERS, WHITE, and MURPHY, Circuit Judges.
MURPHY, Circuit Judge. When negotiating a service contract, a business might engage
in costly preparatory work so that it can start providing the services if the contract comes to
fruition. But who should pay for this work if the parties ultimately cannot agree on a formal written
contract? This case should make one thing clear for such a business: Without the written contract,
it will generally bear the risk of loss for the preparatory costs unless it has obtained an unwritten
agreement covering all material terms or at least some type of definite promise from the other side.
Avertest, LLC, which goes by “Averhealth,” conducts drug and alcohol testing. It sought
to contract with a Michigan county for testing services. After a county employee indicated that
the county had “approved” Averhealth’s proposed testing location and would send a contract in
the “near future,” Averhealth signed a pricey lease for this location. But the county had second
thoughts about the relationship five days into Averhealth’s testing and ended the deal without ever
signing a contract. Averhealth sued, alleging breach-of-contract and promissory-estoppel claims. No. 20-1858, Avertest v. Livingston Cnty., Mich.
Averhealth is right that Michigan contract law sometimes enforces an unwritten agreement
even when the parties contemplate (but fail to sign) a written one. Yet the parties must have agreed
on all of the material terms, such that the anticipated written contract represented a mere record of
an agreement already reached elsewhere. Here, however, no reasonable jury could find that the
parties had agreed to all material terms despite their failing to execute the written contract.
Averhealth is also right that Michigan promissory-estoppel law sometimes permits a party
to enforce another entity’s noncontractual promise when the party acts in reasonable reliance on
it. But the promise must have been clear and definite. And the county’s promise that a “contract”
would come in the “future” left too many of the promised terms unknown for a reasonable jury to
find this element met. We thus affirm the grant of summary judgment to the county.
I
Livingston County sits a short distance to the northwest of Detroit, Michigan. Its courts
often require defendants and probationers to take drug and alcohol tests. In early April 2018,
county employees issued a “Request for Proposals” asking vendors to propose plans to provide
this testing. The county expected a vendor to offer testing at the vendor’s location during business
hours and to have staff on hand for emergency testing at the courthouse. Under a section entitled
“Required Types of Tests,” the Request for Proposals indicated that a vendor must perform
“GC/MS” confirmation testing (we take the acronym to mean gas chromatography/mass
spectrometry). It also anticipated that the parties would enter into a “fully executed contract”
before the vendor would perform any work and noted that the contents of both the Request for
Proposals and the winning proposal would “become contractual obligations if a contract ensues.”
RFP, R.25-2, PageID 132. The county sought to have the testing start on June 2, 2018. It requested
a 16-month term from that date until September 30, 2019.
2 No. 20-1858, Avertest v. Livingston Cnty., Mich.
Livingston County told vendors to submit any questions about its request by April 23. The
county posted its answers a day later. One vendor had asked if the county would accept “LC-
MS/MS” confirmation testing (we take this acronym to mean liquid chromatography/mass
spectrometry). The county responded that “GC/MS is the federal standard and is the preferred
confirmation method.” Resp., R.25-2, PageID 146.
Averhealth provides drug and alcohol testing to over 1,000 courts in about 20 states. It
submitted a proposal to Livingston County. Averhealth’s proposal tied its testing price to the
number of tests that Livingston County ordered; the price decreased as the tests increased. The
proposal, for example, suggested a price of $21 per test if the county ordered 1,000 tests per month
and a price of $12.50 per test if it ordered 2,000 tests per month. The proposal also suggested that
Averhealth would perform a “standard confirmation test” without identifying the type.
Livingston County selected Averhealth as a finalist and interviewed the company in early
May. During the interview, Averhealth identified two possible locations for its testing site. One
was only a half mile from the courthouse. After interviewing the finalists, county employees
recommended to the Livingston County Board of Commissioners that the county pick Averhealth.
On May 21, the Board adopted a resolution authorizing the county to enter into a contract
with Averhealth at specified pricing for the period from June 2, 2018 to September 30, 2018. The
proposed pricing had been amended upward so that Averhealth’s basic test would cost $19.25 if
the county ordered 2,000 tests per month. The resolution authorized the Board’s chairman to sign
all contracts and amendments.
The next day, Averhealth hit a snag. It could not finalize its lease at the location near the
courthouse. County employees expressed concern with this development. They had selected
Averhealth based on this location’s convenience and the company’s assurances that it could start
3 No. 20-1858, Avertest v. Livingston Cnty., Mich.
testing on June 2. Sara Applegate, the county’s court programs liaison, had also already emailed
court officials about the transition to Averhealth and the (now incorrect) new location.
Averhealth quickly identified a new building about a mile from the courthouse and told the
county that this change would not affect its start date. The company agreed to terms with the
building’s owner on May 24. It did not want to sign a lease, however, without further assurances
from the county. In an email to Applegate, Averhealth’s CEO indicated: “Before executing the
lease, we need approval on the location and the contract from Livingston County.” Email, R.29-
10, PageID 493. Averhealth asked for the county’s approval and the contract by the next day so
that it could start preparing the location for the June 2 start date. Applegate responded the next
day: “Per our conversation today, we are approving the new location and have attached the
resolution to show that it was approved and a contract will follow in the near future.” Email, R.25-
14, PageID 232. Averhealth entered into a five-year lease.
Averhealth began providing testing services on June 2. Disputes between the parties
emerged in early June. County employees at some point became concerned that Averhealth was
performing LC-MS/MS (not GC/MS) confirmation testing. These employees also sought a price
of $10 for a specific type of test, not the $19.95 that the parties had agreed to for Averhealth’s
more comprehensive test. Lastly, many test-takers immediately began complaining about the
invasive nature of Averhealth’s testing.
By June 5, Applegate informed Averhealth that the county was uncomfortable sending
individuals to the company until the parties could work through various issues and finalize a
contract. Two days later, another county employee told Averhealth that the county would “not be
contracting with Averhealth for drug testing services.” Email, R.25-11, PageID 223. This email
explained that the Request for Proposals had required GC/MS testing, but Averhealth used LC-
4 No. 20-1858, Avertest v. Livingston Cnty., Mich.
MS/MS testing. It identified this problem among “several other inaccuracies, concerns and
inabilities to meet our needs” as the reason for ending the deal. Id. The county directed Averhealth
to send a bill for the testing since June 2.
Averhealth sent the county a bill for $112,547.99. This amount included $1,741.25 in
testing costs (for testing and transportation of samples). It also included about $86,000 in costs
for acquiring and constructing the testing location and $23,000 in costs for training employees.
The county paid Averhealth only $1,741.25 for the tests.
Averhealth sued. It alleged breach-of-contract and promissory-estoppel claims, among
others. The district court granted summary judgment to the county. Avertest, LLC v. Livingston
County, 2020 WL 4437458, at *9 (E.D. Mich. Aug. 3, 2020). It held that the parties never entered
into a contract and that the Board of Commissioners’ resolution only allowed its chairman to do
so. Id. at *5–6. It next rejected Averhealth’s equitable claims, including its promissory-estoppel
claim. The court reasoned that Applegate’s email approving the testing location acknowledged
that the parties had not agreed to a contract, so Averhealth could not rely on this email to believe
that they had done so. Id. at *8.
II
Averhealth challenges the dismissal of its breach-of-contract and promissory-estoppel
claims. We review the district court’s decision de novo, applying the Michigan law that governs
this dispute. See Sroka v. Wal-Mart Stores East, LP, 785 F. App’x 324, 328 (6th Cir. 2019).
A. Breach of Contract
Averhealth argues that Livingston County breached the parties’ contract. This claim faces
an obvious obstacle: The company cannot identify a traditional “contract” in which the parties
incorporated all of their agreed-upon terms into a written document signed by both sides. Not only
5 No. 20-1858, Avertest v. Livingston Cnty., Mich.
that, the Request for Proposals anticipated that the parties would execute such a formal contract.
Averhealth nevertheless argues that a genuine dispute of fact exists over whether the parties’
interactions in May and June 2018 created an unwritten contract.
Averhealth’s argument is at least possible under Michigan contract law. Parties who have
reached an unwritten agreement may form a binding contract even when they anticipated (but
failed to complete) a “written memorial” of the agreement in a formal document. Scholnick’s
Importers-Clothiers, Inc. v. Lent, 343 N.W.2d 249, 253 (Mich. Ct. App. 1983); see Remark, LLC
v. Adell Broad. Corp., 702 F.3d 280, 283 (6th Cir. 2012); Restatement (Second) of Contracts § 27
(Am. L. Inst. 1981). For this rule to apply, however, the parties must have agreed on all of the
material terms, such that the contemplated written document was designed merely to memorialize
the terms that they had already accepted. No binding contract exists if some of those terms
remained disputed when one party decided not to go through with the written agreement. See Pro.
Facilities Corp. v. Marks, 131 N.W.2d 60, 63 (Mich. 1964); Cent. Warehouse Operations, Inc. v.
Riffel, 2015 WL 1314634, at *4 (Mich. Ct. App. Mar. 24, 2015) (per curiam).
Yet Averhealth’s argument fails on the facts. No reasonable jury could find that the parties
entered into an “express agreement” on all material terms. Remark, 702 F.3d at 284 (quoting
Restatement (Second) of Contracts § 27 cmt. c). A few examples prove the point.
What were the agreed-upon prices? As late as June 1, the day before Averhealth started
testing, the parties continued to negotiate the price. The county sought a price of $10 for a specific
type of test, not the $19.95 standard price for Averhealth’s comprehensive test. Averhealth
responded that it could provide the specific test but for $19.95. That price, the county complained,
would cause probation officers to send probationers to other testing agencies. If the probation
officers did so, Averhealth rejoined, its prices might increase because the standard price depended
6 No. 20-1858, Avertest v. Livingston Cnty., Mich.
on the quantity ordered. On June 2, Averhealth proposed a “call to discuss possible solutions” to
this disagreement, but no evidence suggests that the parties resolved it. Email, R.25-6, PageID
203. This price negotiation belies the claim that the parties made an unwritten contract covering
all material terms.
In response, Averhealth argues that a jury could find that the county’s $10 price request
was an attempt to amend a pricing agreement that the parties had reached when the Board of
Commissioners authorized the county to contract with Averhealth. The Board’s resolution
approved entering into a contract at the “attached rates” included in a memo accompanying the
resolution. But that memo did not identify a single price. It expressed “uncertainty” over the
county’s testing volume and proposed different prices for different quantities (such as $19.25 for
2,000 monthly tests). It also did not even list the price that the parties later identified as the default
($19.95) during their June negotiations. Besides, the Board’s resolution did not itself “accept” any
particular contract terms. It merely authorized county employees to negotiate within the
resolution’s general parameters and gave the chairman authority to execute a final contract
containing the specific terms.
What quantity of tests did the county agree to send Averhealth? Neither the Request for
Proposals nor the later negotiations stated that the parties were entering into an exclusive
relationship or agreeing to a minimum number of monthly tests. A county employee even told
Averhealth that probation officers might send probationers to other testing agencies if Averhealth
did not reduce its prices—a warning that would make no sense if the parties contemplated an
exclusive deal. Averhealth’s response to this warning also did not suggest that competition from
other testing agencies would breach any contract term. If, however, the parties did not agree to an
7 No. 20-1858, Avertest v. Livingston Cnty., Mich.
exclusive relationship or a minimum quantity, the county would have had every right to stop
sending tests to Averhealth at any time.
What kind of tests would Averhealth perform? The Request for Proposals required vendors
to provide GC/MS confirmation testing, but Averhealth offers LC-MS/MS confirmation testing.
Emails from June show the county raising concerns about the LC-MS/MS testing. This dispute
also disproves an agreement on all material terms.
Averhealth responds that a jury could find that the county had agreed to LC-MS/MS testing
in May before raising complaints in June. During the bidding process, an unidentified vendor
asked whether the county would accept LC-MS/MS testing, and the county responded by calling
GC/MS the “preferred” (not required) method. Resp., R.25-2, PageID 146. In addition, when
Sara Applegate emailed court officials in May announcing the change to Averhealth, she attached
Averhealth’s sheet of frequently asked questions. In this sheet, Averhealth noted, among other
things, that its “confirmation testing is conducted via LC-MS/MS.” Email, R.29-2, PageID 446.
Averhealth relies on this sheet to prove that it brought the testing issue to the county’s attention
and that the county consented to the nonpreferred method before later objecting to it.
This evidence, however, would not allow a reasonable jury to conclude that Livingston
County affirmatively accepted as a contract term that Averhealth would perform LC-MS/MS
confirmation testing. If Averhealth had forthrightly flagged this issue for the county during the
negotiations, it could have easily presented that evidence. Yet Averhealth offers no affidavits from
employees explaining how or when it informed the county that it would undertake a type of
confirmation testing different from the one listed as a requirement in the Request for Proposals.
Averhealth’s proposal was, at best, misleading on the point. The proposal stated the Averhealth
“provides all of the ‘Required Types of Drug Test’ services” listed on the specific page of the
8 No. 20-1858, Avertest v. Livingston Cnty., Mich.
Request for Proposals that required GC/MS testing and noted later that it would perform only a
“standard confirmation test.” Likewise, Averhealth’s slide presentation during the interview with
the county did not mention LC-MS/MS testing. Averhealth also introduced no emails from the
county “approving” this testing like the email it received approving the location change. A jury
would have to engage in rank speculation to find that the county consented to its unpreferred testing
method based on a document attached to an internal county email that was not part of the parties’
negotiations. See K.V.G. Props., Inc. v. Westfield Ins. Co., 900 F.3d 818, 823 (6th Cir. 2018).
What was the contract’s length? The Request for Proposals suggested that it would run
for 16 months from June 2, 2018 to September 30, 2019. Yet the Board’s resolution authorized
the county to enter into an agreement that ran for only 4 months from June to September 2018.
Although Averhealth calls the Board’s 4-month term a “typographical error,” it points to no
evidence in which any county agent later accepted any particular term, let alone the longer one. In
addition, the Request for Proposals made clear that the county could “terminate this contract at
any time” with 30 days’ written notice if it found the vendor’s work unsatisfactory. RFP, R.25-2,
PageID 132. Averhealth does not say whether this opt-out provision made it into the unwritten
contract that it claims exists.
What about the other terms? The Request for Proposals included “many details.”
Restatement (Second) of Contracts § 27 cmt. c. It required the vendor to agree to an
indemnification clause holding the county harmless for damages caused by the vendor’s agents. It
barred the vendor from discriminating against its employees on the basis of identified traits. It
prohibited the vendor from subcontracting any work without permission. It mandated that the
vendor obtain several types of insurance. And it anticipated that the vendor would perform its
work “in compliance with the negotiated contract,” RFP, R.25-2, PageID 132, suggesting that a
9 No. 20-1858, Avertest v. Livingston Cnty., Mich.
formal agreement was itself a material term. Cf. Farrow Grp., Inc. v. Detroit Land Bank Auth.,
2019 WL 2194972, at *2 (Mich. Ct. App. May 21, 2019) (per curiam). As these terms show, the
parties were contemplating a “complex” deal requiring more than a standard-form contract.
Remark, 702 F.3d at 284. One would objectively expect this type of deal to be “put in writing[.]”
Restatement (Second) of Contracts § 27 cmt. c. The nature of the deal further rebuts any claim
that a jury could use an email snippet here or a phone conversation there to fill in all of the terms
of an unwritten agreement. See Skycom Corp. v. Telstar Corp., 813 F.2d 810, 816 (7th Cir. 1987).
All of this leaves one fact that does support Averhealth. Averhealth did not just take
“action in preparation for performance during the negotiations” (it signed the lease and prepared
the testing location); it also provided services for a few days in June. Restatement (Second) of
Contracts § 27 cmt. c. But the county paid for all testing performed. And Averhealth signed the
lease knowing that it had yet to enter into a long-term contract. That is why it requested to see a
contract before signing it. Apart from accepting the proposed location, however, Applegate
responded by saying the contract would follow later. Thus, rather than demanding an executed
contract before signing the lease, Averhealth took the risk that the parties would complete the
formal deal later. They never did. And too many material terms are in dispute to allow a
reasonable jury to find that the parties had entered into any long-term unwritten contract. See Pro.
Facilities Corp., 131 N.W.2d at 63.
B. Promissory Estoppel
Even assuming the parties did not form a contract, Averhealth alternatively argues,
Livingston County should at least be on the hook for Averhealth’s costs in setting up its testing
site under a promissory-estoppel theory. Promissory estoppel permits one party to enforce a
promise made by another party even when the promise did not generate a binding contract under
10 No. 20-1858, Avertest v. Livingston Cnty., Mich.
the usual contract-law rules. See State Bank of Standish v. Curry, 500 N.W.2d 104, 107 (Mich.
1993); Restatement (Second) of Contracts § 90(1). To ensure that this equitable doctrine does not
effectively eliminate the normal legal elements for a contract, however, Michigan courts apply it
with caution. See, e.g., Bodnar v. St. John Providence, Inc., 933 N.W.2d 363, 377 (Mich. Ct. App.
2019); Barber v. SMH (US), Inc., 509 N.W.2d 791, 797 (Mich. Ct. App. 1993) (per curiam).
A Michigan plaintiff must prove four elements. See Leila Hosp. & Health Ctr. v. Xonics
Med. Sys., Inc., 948 F.2d 271, 275 (6th Cir. 1991); Farrow Grp., Inc. v. Detroit Land Bank Auth.,
2021 WL 70649, at *5 (Mich. Ct. App. Jan. 7, 2021) (per curiam). The defendant must have made
a promise (a bank, for example, might promise to lend funds to farmers). See State Bank of
Standish, 500 N.W.2d at 106, 110. The defendant next must have reasonably expected that the
plaintiff would take an action in reliance on this promise (the bank’s conversations with the
farmers, for example, should have led it to expect that its promised loan would induce them to
keep the farm rather than apply for a government buyout). See id. at 106, 110–11. The plaintiff
must actually take the detrimental action (the farmers, for example, must have opted to keep the
farm because of the bank’s promise). See id. Lastly, given that estoppel is an equitable doctrine,
enforcement of the promise must be necessary to avoid an “injustice” (such as the farmers’
predicament caused by the bank’s later refusal to lend the money). See id.
This case concerns the “promise” element. Because Michigan courts cautiously apply
promissory estoppel, they have held that not just any “promise” will do. Rather, the doctrine
applies only if the defendant has made a “clear and definite” promise. State Bank of Standish, 500
N.W.2d at 108; DBI Invs., LLC v. Blavin, 617 F. App’x 374, 385–86 (6th Cir. 2015). As one
treatise puts it, the promise must be “sufficiently specific so that the judiciary can understand the
obligation assumed and enforce the promise according to its terms.” 28 Am. Jur. 2d Estoppel and
11 No. 20-1858, Avertest v. Livingston Cnty., Mich.
Waiver § 52, Westlaw (database updated Aug. 2021); see McMath v. Ford Motor Co., 259 N.W.2d
140, 142–43 (Mich. Ct. App. 1977) (per curiam). Michigan courts thus will not enforce vague or
general promises that require speculation about the promiser’s actual duties under the promise.
See State Bank of Standish, 500 N.W.2d at 108–09; McMath, 259 N.W.2d at 142–43.
A comparison of State Bank of Standish and McMath illustrates the divide between clear
and opaque promises. In State Bank of Standish, the Michigan Supreme Court held that a bank’s
promise to enter into a loan could be “sufficiently clear and definite” if the court could identify the
“material terms of the loan,” including such things as the loan amount and interest rate. 500
N.W.2d at 109–10. Yet the court clarified that these terms need not be expressed in the promise
itself; they can be established by all of the parties’ actions and statements. Id. So when the bank
repeatedly lent funds to the borrowers on the same basic terms, the court held that a reasonable
jury could objectively conclude that the terms of the promised future loan matched the terms from
the parties’ “previous course of dealing[.]” Id. at 110.
In McMath, by contrast, the Michigan Court of Appeals held that promises lacking “the
required specificity” cannot support an estoppel claim. 259 N.W.2d at 143. There, a pilot who
worked for both a private company and the military opted to resign from the military when the
company promoted him to chief pilot. Id. at 141. Because he lost income from the decision, he
decided to resign only after receiving the company’s assurances that it “would take care of him”
and ameliorate any future economic concerns. Id. When the company later fired him, he brought
a promissory-estoppel claim. Id. at 142. The court rejected the claim because the company’s
vague promises were not “definite enough” to justify any reliance on them. Id. at 143.
Which side of this line does Livingston County’s alleged promise fall? It is closer to the
one in McMath than in State Bank of Standish. Recall that when Averhealth asked for a contract
12 No. 20-1858, Avertest v. Livingston Cnty., Mich.
before signing the lease, Applegate responded: “Per our conversation today, we are approving the
new location and have attached the resolution to show that it was approved and a contract will
follow in the near future.” Email, R.25-14, PageID 232. Averhealth argues that Applegate’s email
“promised that a written contract ‘will follow in the near future’” and that it relied on this
statement. Reply Br. 19. But the suggestion that the county would send a contract in the future
did not include “the required specificity” for a reasonable jury to find that the county made an
actionable promise. McMath, 259 N.W.2d at 143. As the Michigan Supreme Court has explained,
a promise of a future contract is insufficiently specific if the “material terms of the agreement are
lacking[.]” State Bank of Standish, 500 N.W.2d at 108 (citation omitted). And Applegate’s email
said nothing about those terms (apart from the testing location).
Indeed, Applegate’s general promise of a future contract is nearly identical to a promise
that the Michigan Court of Appeals has already rejected in a surprisingly similar case. See Farrow,
2021 WL 70649, at *4–6. In Farrow, a municipal agency issued a request for proposals to
demolish dilapidated homes, and the plaintiff demolition company alleged that it had proposed the
winning bid. Id. at *1. The municipal agency later indicated that the agency would need to issue
another round of bidding. Id. But it did so only after the demolition company had bought some
$700,000 worth of equipment in preparation. Id. The company claimed that it relied on promises
from the agency when buying this equipment. Id. at *5. An agency employee allegedly told the
company that it should “procure the necessary equipment,” that it should “‘gear up’ to start the
work,” and that the contracts “would be coming next week.” Id. Farrow held that these statements
could not support a promissory-estoppel claim, reasoning that they did “not constitute a clear and
definite promise.” Id. If the employee’s general assurance of a future contract did not suffice in
Farrow, Applegate’s general assurance of a future contract cannot suffice in this case.
13 No. 20-1858, Avertest v. Livingston Cnty., Mich.
Unlike in State Bank of Standish, moreover, we cannot fill in the gaps of Applegate’s
generic promise using the parties’ other statements or conduct—at least not in a way that is
anything but “speculative.” McMath, 259 N.W.2d at 142 (citation omitted). The parties, for
example, had no prior course of dealing, so we cannot objectively identify the terms of the
promised contract based on the terms of prior contracts. State Bank of Standish, 500 N.W.2d at
110. The parties’ negotiations also left too many contract terms a mystery. Would the promised
contract require Averhealth to perform LC-MS/MS or GC/MS confirmation testing? Would it run
for 4 months or 16 months? Would the testing price be a constant $19.95 or could some tests cost
$10? As explained, the record does not answer these questions. Cf. United States ex rel. Guzall
v. City of Romulus, 743 F. App’x 574, 583 (6th Cir. 2018).
Considering the issue from a slightly different perspective reaffirms this point. The
requirement that a promise be clear and definite is necessary to allow courts to answer whether the
plaintiff could have reasonably relied on it. See State Bank of Standish, 500 N.W.2d at 107–08;
E. Sav. Bank v. Monroe Bank & Tr., 2002 WL 31941034, at *7 (Mich. Ct. App. Nov. 26, 2002)
(per curiam). In this case, for example, suppose that the parties planned to enter into an exclusive
relationship. If that term were impliedly within Applegate’s promise, perhaps it may have been
reasonable for Averhealth to rely on the promise when signing a five-year lease. Suppose instead
that the parties intended to allow the county to withdraw from the contract at any time. If that term
were impliedly within Applegate’s promise, Averhealth’s reliance on an “at-will” relationship as
the basis for signing the lease looks a lot more unreasonable. Cf. Tyler v. Tsurumi (Am.), Inc., 425
F. App’x 702, 705 (10th Cir. 2011). Yet how can we answer this reliance question if we do not
even know the basic outlines of the alleged promise? See McMath, 259 N.W.2d at 143.
14 No. 20-1858, Avertest v. Livingston Cnty., Mich.
In sum, Averhealth took a risk that its relationship with the county would blossom into a
multiyear collaboration providing a steady stream of tests (and revenue). That the relationship did
not pan out as planned provides no basis to shift its costs to the county on this record.
We affirm.
15 No. 20-1858, Avertest v. Livingston Cnty., Mich.
HELENE N. WHITE, Circuit Judge, concurring in part and dissenting in part. I agree that
the district court properly granted summary judgment to Livingston County on Averhealth’s
breach-of-contract claim because the RFP provided that a written contract was necessary, but no
written contract was executed. See, e.g., Farrow Grp., Inc. v. Detroit Land Bank Auth., No.
341822, 2019 WL 2194972, at *2 (Mich. Ct. App. May 21, 2019) (per curiam) (affirming summary
disposition on a breach-of-contract claim “because the RFP clearly indicated that a written contract
would have to be entered into” but “no contract was entered into”). However, because a reasonable
jury could find that Averhealth’s reliance on Sara Applegate’s promise of a forthcoming contract
was reasonable, I would reverse the grant of summary judgment on Averhealth’s promissory-
estoppel claim.
As the majority explains, promissory estoppel has four elements: (1) a clear and definite
promise, which (2) the promisor should have reasonably expected the promisee to act on, (3) the
promisee did in fact rely on, and (4) must be enforced to avoid injustice. See State Bank of Standish
v. Curry, 500 N.W.2d 104, 106-07 (Mich. 1993). Given the facts in this case, viewed in the light
most favorable to Averhealth, a reasonable jury could find that the promise was sufficiently
definite and that Averhealth reasonably relied on that promise to its detriment.
The context of the promise is important. The parties were preparing for the commencement
of testing services on June 2—a date set in the RFP and emphasized in discussions between the
parties as critical to the County. On May 18, Applegate, the County’s main point of contact for
Averhealth, confirmed via email that she had “distributed letters to all specialty court probation
officers” informing them that they should send participants to Averhealth as of June 2. R. 29-2,
PID 445. On May 21, the Livingston County Board of Commissioners adopted a resolution
authorizing the County to contract with Averhealth at its proposed prices, with testing to begin on
16 No. 20-1858, Avertest v. Livingston Cnty., Mich.
June 2. On May 23, after Averhealth’s initial testing location fell through, Averhealth proposed a
new location and stated that the “change will not delay the June 2 start date.” R. 29-9, PID 488.
After not receiving a response, Averhealth sent another email on May 24 stating that it had reached
an agreement for another testing location but that it needed approval and the contract before it
would sign the lease. The next day, just eight days before commencement of testing, Applegate
responded: “Per our conversation today, we are approving the new location and have attached the
resolution to show that it was approved and a contract will follow in the near future.” R. 29-11,
PID 498. She also requested “a copy of the lease agreement once it [was] signed” so she could
“let everyone know about the new testing location.” Id.
Given this context, I disagree with the majority that the promise was not sufficiently
definite or that reliance on this promise was unreasonable. In reaching the opposite conclusion,
the majority concludes that there were too many unresolved material terms for the promise to be
definite. At the time the promise was made, however, none of these disputes had materialized,
and a jury could find that Averhealth reasonably believed based on the communications between
the parties that all material terms had been agreed upon.
Livingston County argued that there were disagreements regarding some essential terms,
citing the type of confirmation testing (GC/MS vs. LC-MS/MS), pricing, and Averhealth’s testing
procedures. Regarding the type of confirmation testing, the RFP stated that GC/MS was required,
but during the bidding process, in response to a question asking specifically whether LC-MS/MS
was acceptable, the County merely indicated a preference for GC/MS. Further, on May 18, prior
to the Board approving a contract with Averhealth, Applegate distributed information about
Averhealth to court officials, which stated that Averhealth provided LC-MS/MS confirmation
testing. Three days later, the Board approved a contract with Averhealth. Because County officials
17 No. 20-1858, Avertest v. Livingston Cnty., Mich.
were aware that Averhealth would use LC-MS/MS testing before the Board approved a contract
with Averhealth, a reasonable jury could conclude that there was agreement as to this term.
For the testing prices, the Board approved a contract with Averhealth “at the attached
rates,” rates which set a price for a ten-panel test plus certain specialty tests based on the volume
of tests per month. R. 29-4, PID 451. Livingston County points to a dispute about a standalone
price for one of the included specialty tests, which it raised seven days after Applegate’s promise
that a contract was forthcoming. There is no indication in the record that this issue had been raised
before, and Averhealth’s price proposal, approved by the Board, explained that it offered a single
price point for a defined set of tests, and its perspective on the cost benefits of pricing its services
in this manner. Nor is there any evidence that certain testing procedures employed by
Averhealth—procedures that were questioned only after Averhealth began providing services to
the County—were in dispute prior to services commencing. Thus, a reasonable jury could find
that these terms were agreed upon at the time Applegate made her promise.
I would not rely on other terms cited by the majority (i.e., quantity of tests, contract length,
indemnification, insurance, discrimination, and subcontracting) because these terms were not
raised by Livingston County in its summary-judgment motion.1 Although it may be appropriate
to decide an issue not raised below in some instances, I would not do so when the record is
incomplete or the result is unclear. In this case, neither party provided enough evidence to decide
other issues. Rather, the parties appeared to include only as much evidence as necessary to support
the specific factual statements and arguments it made in its briefing (sometimes, as the district
court noted, failing even to do that). Aside from the bid documents, we have only a few pages
from two deposition transcripts and a handful of emails to fill in the gaps about the parties’
1 In any event, most of these terms are dictated by the RFP, and there is no indication that any of these terms that were set forth in the RFP were unacceptable to Averhealth.
18 No. 20-1858, Avertest v. Livingston Cnty., Mich.
communications. And it is apparent from those materials that there were further discussions
between the parties about which this record sheds little light. Rather than use both parties’
omissions against Averhealth, as the majority does, I would allow the district court and the parties
to address these issues in the first instance. See In re Oakland Physicians Med. Ctr., LLC, 836 F.
App’x 342, 348 n.4 (6th Cir. 2020) (“Had Simon specifically raised these issues in his summary-
judgment briefing, the parties may have been able to flesh out these issues by submitting additional
portions of deposition transcripts, or it would have alerted Singhal of the necessity to gather further
evidence, if available, to address these issues.”).
The majority’s reliance on Farrow Group, Inc. v. Detroit Land Bank Authority, 2021 WL
70649 (Mich. Ct. App. Jan. 7, 2021) (per curiam), to support its conclusion that Applegate’s
promise was insufficiently definite is misplaced. The court in Farrow explained, as the majority
highlights, that statements made by an agency employee that the plaintiff, Farrow, should “procure
the necessary equipment,” should “gear up to start the work,” and that another employee was
“working on the contracts” that “would be coming next week,” were insufficiently definite on their
own. Id. at *5 (internal quotation marks omitted). The court held, however, that these statements
in addition to evidence that the agency “awarded the demolition work to Farrow on the basis of
Farrow’s particular bid (as evidenced by the entries in the [agency]-managed database), and
prevented Farrow from lodging any new bids as a result of having been awarded the demolition
work at issue,” would allow “[a] jury [to] find . . . that [the agency] had promised to give the
demolition work to Farrow, the terms of which could be objectively determined from the nature
of the accepted bid and the allegedly customary practices of awarding work packages through the
[agency]-managed database.” Id. at *6. A reasonable jury could conclude similarly here based on
19 No. 20-1858, Avertest v. Livingston Cnty., Mich.
the terms of the RFP, Averhealth’s proposal, the Board’s resolution authorizing a contract with
Averhealth at specified prices, and Applegate’s assurance that a contract was forthcoming.
The court in Farrow, however, affirmed the grant of summary disposition (in this case,
what federal courts would call a motion to dismiss) against Farrow on its promissory-estoppel
claim because Farrow should have known that a contract was still pending due to the fact that “the
RFP clearly outlined the process necessary to formalize an accepted bid into a contract” and that
several steps needed to be completed before a contract could be finalized, including formal
issuances of notices to proceed on the demolition sites. Id. at *6. The circumstances here are
distinguishable. As Averhealth argues, it is unclear what, if any, additional steps needed to occur
prior to issuance of a contract. There is no testimony indicating whether the Board needed to
further sign off on the written contract, and Averhealth reasonably argues that the Resolution
approving a contract with Averhealth merely required the ministerial task of the Board Chairman
signing a contract containing the terms approved by the Board. This interpretation is backed up
by Applegate’s instructing Averhealth to sign a lease and instructing probation departments to
begin sending test-takers there on June 2. And as discussed above, by the time Averhealth began
expending substantial sums of money to perform by June 2, which was a mere eight days after
Applegate told Averhealth to secure the lease, none of the disputes about the terms of the contract
had arisen. In contrast, in Farrow, there is no indication that the start date for the contracts was
imminent and no indication that anyone at the agency specifically instructed the plaintiff to
purchase the more than $700,000 worth of equipment it claimed as reliance damages.
In sum, although the more prudent course for Averhealth would have been to insist on a
written contract before binding itself to a lease and expending a substantial sum of money in
preparatory costs, a reasonable jury could find that Averhealth’s reliance here was reasonable.
20 No. 20-1858, Avertest v. Livingston Cnty., Mich.
I would therefore reverse and remand on the promissory-estoppel claim to allow a jury to make
that determination.
Finally, I agree with the majority that certain terms in the RFP make some of the reliance
damages Averhealth claims appear unreasonable. Most problematically, the RFP provided that
the County had the right to terminate the contract “at any time, with a minimum thirty (30) days
written notice to the vendor in the event that the services of vendor are deemed by the County to
be unsatisfactory, or upon failure to perform any of the terms and conditions contained in this
agreement.” R. 25-2, PID 132. Signing a five-year lease under these circumstances is likely
unreasonable, but that does not mean that Averhealth is entitled to none of its reliance damages. I
would allow the jury to make that determination as well.