Florsheim Co. v. Miller

575 F. Supp. 84, 1983 U.S. Dist. LEXIS 12651
CourtDistrict Court, E.D. Texas
DecidedOctober 18, 1983
DocketCiv. A. No. TX-82-127-CA
StatusPublished
Cited by3 cases

This text of 575 F. Supp. 84 (Florsheim Co. v. Miller) is published on Counsel Stack Legal Research, covering District Court, E.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Florsheim Co. v. Miller, 575 F. Supp. 84, 1983 U.S. Dist. LEXIS 12651 (E.D. Tex. 1983).

Opinion

MEMORANDUM ORDER

JOE J. FISHER, District Judge.

This is a declaratory judgment action, brought by a building contractor and her surety, against the County Judge and Commissioners, in their official capacities, of Bowie County. The contractor made a $1,078,000.00 mistake in tabulating her estimate of the cost of a building for the county, making her low bidder by $443,-000.00. The court here considers her motion for summary judgment.

The contractor advised the county of the mistake the day after bid opening and withdrew her bid. The county refused the withdrawal and “accepted” the bid in spite of the mistake. Naturally, the contractor refused to sign the formal contract with the county. Without advertising for a second set of bids and without incurring additional expenses, the county accepted the second lowest bid and entered a construction contract.

[85]*85She filed this action the following week, seeking declaratory judgment that the “contract” be rescinded, or avoided, without her being liable to the county. Her bonding company, FIDELITY & DEPOSIT CO. OF MARYLAND, joined the action to limit its exposure under the 5% bid bond submitted with the proposal. The Defendants counter-claimed, seeking the difference between the Plaintiff’s actual bid and the second lowest bid. They seek, at least, to force the bonding company to pay 5% of the Plaintiff’s bid as provided in the bond. In either event, however, the contractor would be ultimately liable for the amount of any judgment for the counter-claimant.

The facts are simple and essentially undisputed. The Plaintiff worked on the estimate for three weeks but could not complete it until nearly the last minute before the deadline. Although that appears to be an unbusinesslike procedure, it is the custom in the industry. Generally, contrae-1 tors find it impossible to tally an estimate earlier than the last hour or two before the bid is due. Subcontractors and suppliers invariably wait until then to submit their quotations to the general contractors, fearing their bid will be “shopped,” or “peddled,” if given earlier. In her final tabulation of subtotals, the Plaintiff correctly wrote the mechanical and electrical cost of $1,197,779.00 on the worksheet. But she inadvertently entered only $119,779.00 when adding the subtotals. That this happened is manifest from a glance at the actual worksheet. The Defendants do not dispute that this error occurred as described. Rather, they contest the consequences of the miscalculation.

The law in Texas, if not clear, is at least directly on point. The court can grant equitable relief — by ordering recission of the contract — for such a unilateral mistake when the conditions of a remediable mistake are present, to wit:

(1) the mistake is so consequential that enforcing the contract would be unconscionable;
(2) the mistake relates to a material feature of the contract;
(3) the mistake was made regardless of the exercise of ordinary care;
(4) the parties can be restored to the status quo ante, i.e., rescission will not prejudice the Defendant except for the loss of its bargain. Taylor v. Arlington Independent School District, 335 S.W.2d 371, 373 (Tex.1960); Colvin v. Baskett, 407 S.W.2d 19 (Tex.Civ.App.1966 — no writ).

The facts of Taylor are similar: a final computation error resulted in a 20% underbid; the contractor withdrew his bid after verbal acceptance but before signing a formal contract; the owner accepted the next lowest bid; and no additional expenses resulted from the rescission.

Testing the facts of this case against the Taylor rule, the Plaintiff argues that:

(1) the $1,078,000.00 mistake on a 5.5 million dollar job is consequential enough to make enforcement unconscionable;
(2) the cost of mechanical and electrical subcontracts is a material feature of the contract;
(3) the mistake was made despite the use of ordinary care, considering the practice in the industry and the time pressure of completing a bid involving over 100 subcontractors’ and suppliers’ bids;
(4) rescission would not prejudice the county beyond loss of a bargain since it bore no additional costs of rebidding or negotiating.

In Taylor the Court declined to affirm the summary judgment for the contractor — remanding instead — because the only witness testifying to the error was the contractor’s estimator, an interested witness. The court was concerned whether enough evidence was in the record to prove that a mistake was in fact made. That issue is not disputed in this case.

Of course, each of the four elements above is a fact issue for the jury, unless the court can resolve it from undisputed evidence. Id. at 376. Here the only arguably disputable issue is the “ordinary care” question, element (3) above. Not surprisingly, the Defendants insist that an issue of fact is raised as to whether the careless[86]*86ness of the Plaintiff bars relief; the Plaintiff urges the contrary.

Unfortunately, in deciding Taylor, the Court did not make clear what kind of mistake bars or justifies equitable relief. In its frequent reference to “remediable mistake,” the Court seemed to adopt a negligence standard: “the mistake must have been made regardless of the exercise of ordinary care ...” Id. at 373. Setting so high a standard of care for clerical errors, however, negates the doctrine of equitable rescission. Any conceivable mistake made in preparing an estimate would be detected, if not prevented initially, through the exercise of ordinary care. To verify and reverify one’s computations requires so little effort relative to the possible consequences of error that failure to do so is necessarily negligence. The court cannot conceive in this context of an example of a non-negligent mistake. But clearly, the doctrine of equitable rescission presupposes some category of excusable mistake. If not a mistake like Mrs. Florsheim made, then what kind at all?

In Taylor the Court tacitly recognized that point by noting that “ordinary negligence will not necessarily bar the granting of equitable relief.” Id. at 375. Generally, the Court noted, to bar relief the negligence must amount “to such carelessness or lack of good faith in calculation which violates a positive duty in making up a bid ...” Taylor’s clerical error, the Court conceded, “do[es] not indicate such negligence as would bar Taylor from equitable relief.” Id.

Having clarified the negligence standard and offered an example of an excusable mistake, the Court concluded its opinion with an apparent contradiction. It noted that the fact of Taylor’s plainly negligent miscalculation, “if true, would not necessarily bar equitable relief where the elements of remediable mistake are present ...” In other words, a mistake due to the failure to exercise ordinary care is excusable so long as the mistake was made regardless of the exercise of ordinary care. The court can only agree that “the question of negligence gives us the most difficulty.” Id. at 376.

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575 F. Supp. 84, 1983 U.S. Dist. LEXIS 12651, Counsel Stack Legal Research, https://law.counselstack.com/opinion/florsheim-co-v-miller-txed-1983.