Jordan Panel Systems Corp. v. Turner Construction Co.

45 A.D.3d 165, 841 N.Y.S.2d 561
CourtAppellate Division of the Supreme Court of the State of New York
DecidedSeptember 18, 2007
StatusPublished
Cited by35 cases

This text of 45 A.D.3d 165 (Jordan Panel Systems Corp. v. Turner Construction Co.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jordan Panel Systems Corp. v. Turner Construction Co., 45 A.D.3d 165, 841 N.Y.S.2d 561 (N.Y. Ct. App. 2007).

Opinions

OPINION OF THE COURT

Friedman, J.P.

“It is well settled that, if the parties to an agreement do not intend it to be binding upon them until it is reduced to writing and signed by both of them, they are not bound and may not be held liable until it has been written out and signed” (Scheck v Francis, 26 NY2d 466, 469-470 [1970]). In this case, in which plaintiff subcontractor sues defendant general contractor for revoking an alleged oral award of a subcontract, undisputed documentary evidence establishes that defendant advised plaintiff—in writing, and in terms that left no room for doubt— that defendant did not intend to be contractually bound to hire plaintiff until both of these highly sophisticated parties had signed the contemplated written agreement. Specifically, defendant plainly and explicitly notified plaintiff, in a preliminary term sheet dated July 11, 2003 (the July 11 term sheet), that the potential subcontract would not be binding on defendant, even after any initial award of the job to plaintiff, and even after plaintiffs signing of the contemplated written agreement, until defendant had also signed that agreement, an act defendant reserved the right to do (or not do) until October 31, 2003. Although plaintiff alleges that defendant orally awarded it the job on July 14, 2003, neither in the complaint nor in the affidavit opposing the motion to dismiss does plaintiff allege any words or conduct by defendant, before it took plaintiff off the job on July 24, 2003, that would have been inconsistent with the exercise of defendant’s expressly reserved right to withdraw [167]*167plaintiffs designation as the subcontractor, or that could be construed as a waiver of that right. Accordingly, Supreme Court correctly granted defendant’s motion to dismiss the complaint pursuant to CPLR 3211 (a) (1) and (7).

For purposes of this appeal, we assume the truth of the facts alleged in plaintiff’s complaint, as amplified by the affidavit plaintiffs president submitted in opposition to defendant’s preanswer motion to dismiss. We also consider the documentary evidence (including the aforementioned July 11 term sheet) that defendant submitted in support of that motion. Plaintiff does not dispute any of this documentary evidence.

This action arises from the effort by defendant Turner Construction Company (Turner) to obtain and then perform the contract to build a steel hangar and technical operations facility for Jet Blue Airways (Jet Blue) at John F. Kennedy International Airport. The project required Turner, through its subcontractors, to both design and build the hangar. Before it was awarded the contract, Turner solicited bids from several subcontractors, including plaintiff Jordan Panel Systems Corp. (Jordan), to design and construct the hangar’s structure and cladding, which was the largest component of the project.

Jordan submitted a competitive bid, and negotiations between Turner and Jordan commenced in the summer of 2003. In the course of these negotiations (and before Turner allegedly told Jordan it had been chosen), Turner sent Jordan, among other documents, the aforementioned July 11 term sheet, which contained the following paragraph (the inception paragraph) concerning when any subcontract between Turner and Jordan would become binding on Turner in the event Jordan were awarded the job:

“The Subcontractor shall firstly execute the [not yet prepared] Subcontract. Turner reserves the right to not execute this Subcontract pending an internal review and prior approval by the Owner where appropriate. Unless and until Turner Construction Co. executes this Subcontract, Turner shall not be bound by any of the terms or conditions herein. Subcontractor, however, shall be bound and hereby waives the right to withdraw, rescind or in any way cancel this Subcontract. If Turner does not notify Subcontractor that Turner has executed this Subcontract, either verbally, in writing or by returning a fully executed Subcontract to Subcontractor, on or before [168]*168October 31, 2003, Subcontractor may then notify Turner in writing that it shall not be bound by its obligations under this Subcontract. In such an event neither Turner nor the Subcontractor shall have any liability to the other and Turner shall have no liability to make payments for Work performed by Subcontractor, if any, or for anticipated profits. . . . Subcontractor shall not be obligated to perform work until Turner executes the Subcontract.” (Emphasis added.)1

Jordan alleges that, on July 14, 2003, a conference call was held between Turner and Jordan. Prior to that conference call, according to Jordan, the parties had agreed on all material terms of the subcontract except for price. During the July 14 conference call, the parties agreed that Jordan would perform the subcontract for a price of $3.9 million. After that agreement was reached, the complaint alleges, Turner’s representatives, in the same telephone conversation, “advised Jordan that it had been awarded the structure/cladding subcontract,” and “directed Jordan to proceed with its design development work, to accommodate the Project’s ‘fast track’ schedule.”2

Promptly after the July 14 conference call, Jordan commenced the design work (there is no claim that physical construction was performed) called for by the July 11 term sheet, in conjunction with its partner in the bid, Bass Construction Company (Bass), and with USA Structures, the company Jordan and Bass had chosen to manufacture the steel building components. A “kickoff meeting” for the project was held on July 22, 2003, which was attended by representatives of Jordan, Bass, USA Structures, Turner, and Turner’s joint venturer, the design and engineering firm of Hatch Mott MacDonald Group (Hatch Mott). The representatives of Jordan, Bass and USA Structures left that meeting believing it had gone well.

Only two days later, however, on July 24, 2003, Jordan’s president attended a meeting with Turner at which he was told that Turner was terminating Jordan’s involvement in the project, and the (as yet unwritten) subcontract was being transferred to Butler Manufacturing Company (Butler). Although Hatch Mott, [169]*169Turner’s aforementioned joint venturer in the project, regarded Butler as its preferred vendor of steel building components, Butler’s bid for the subcontract had been rejected because it was priced substantially higher than Jordan’s. Turner told Jordan at the July 24 meeting that, since the oral award of the subcontract to Jordan on July 14, Turner and Hatch Mott had turned over Jordan’s work product to Butler and had persuaded Butler to take over the subcontract at the price and terms to which Jordan had agreed. The next day, Turner sent Jordan a letter confirming that the job was being awarded “to a subcontractor that more closely meets the requirements of the contract documents and schedule.”

Jordan subsequently commenced this action, asserting against Turner (as relevant to this appeal) causes of action for breach of contract, promissory estoppel, and damages in quasi contract. In lieu of answering, Turner moved, pursuant to CPLR 3211 (a) (1) and (7), to dismiss the complaint based on documentary evidence and for failure to state a cause of action. Turner argued that it was entitled to terminate Jordan as subcontractor because, in the July 11 term sheet, it had clearly stated its intention to become bound only upon signing a “written, formal subcontract,” and no such document had ever been drafted or signed.

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Cite This Page — Counsel Stack

Bluebook (online)
45 A.D.3d 165, 841 N.Y.S.2d 561, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jordan-panel-systems-corp-v-turner-construction-co-nyappdiv-2007.