Standard Coating Service, Inc. v. Walsh Construction Company

• Court: Indiana Court of Appeals
• Decided: March 29, 2012
• Docket: 49A02-1109-CT-922
• Status: Unpublished

Opinion

Pursuant to Ind.Appellate Rule 65(D),

FILED this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of Mar 29 2012, 9:20 am establishing the defense of res judicata, collateral estoppel, or the law of the case. CLERK of the supreme court, court of appeals and tax court

ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:

PATRICK STERN THOMAS A. PASTORE Indianapolis, Indiana Thomas Pastore, P.C. Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

STANDARD COATING SERVICE, INC., ) ) Appellant-Plaintiff, ) ) vs. ) No. 49A02-1109-CT-922 ) WALSH CONSTRUCTION COMPANY, ) ) Appellee-Defendant. )

APPEAL FROM THE MARION SUPERIOR COURT The Honorable Heather A. Welch, Judge Cause No. 49D12-1005-CT-23989

March 29, 2012

MEMORANDUM DECISION - NOT FOR PUBLICATION

BAILEY, Judge Case Summary

Standard Coating Service, Inc. (“Standard”) appeals from the trial court‟s order

granting Walsh Construction Company‟s (“Walsh”) motion for summary judgment on

Standard‟s claims for breach of contract and for damages as a third-party beneficiary to a

contract between Walsh and the City of Indianapolis (“the City”).

We affirm.

Issue

Standard presents two issues for our review, which we consolidate and restate as

whether the trial court erred when it granted summary judgment in favor of Walsh on

Standard‟s claims.

Facts and Procedural History

Walsh provides prime contracting services on, among others, large public works

projects. Standard provides painting, coating, and waterproofing services.

In late 2009, the City‟s Department of Public Works (“DPW”) solicited bids for

Project BE-28-002A, Wet Weather Secondary Treatment Expansion, Belmont Advanced

Wastewater Treatment (AWT) Facility (“the Project”). (Walsh App. 14.) Walsh planned to

submit a bid to serve as prime contractor on the Project.

Prime contractors for such projects, which draw money from the Clean Water and

Drinking Water State Revolving Fund, are often required to seek out as subcontractors

businesses that have been certified as Minority Business Enterprises (“MBEs”) and Women‟s

Business Enterprises (“WBEs”); such was the case here. To that end, on December 4, 2009,

2 Walsh placed a classified ad in the Indianapolis Star newspaper and on the newspaper‟s

website seeking bids from certified MBEs and WBEs. Walsh also directly contacted a

number of businesses certified as MBEs and WBEs.

Among the MBEs that submitted a bid to Walsh was Standard. On December 8,

2009, Standard submitted a bid to perform waterproofing, water repellent, and coating work

for $1,759,132.00. (Standard App. 33-34; Walsh App. 11-12, 44.)

On December 10, 2009, Walsh submitted its bid to the city, in which it offered to

serve as the prime contractor on the Project for a total cost of $53,600,000. (Walsh. App. 32-

33.) Along with its bid, Walsh included U.S. Environmental Protection Agency (“EPA”)

forms 6100-3 and 6100-4. The EPA uses these forms to identify MBEs and WBEs that a

prime contractor has engaged as subcontractors. The forms Walsh submitted to the City

identified Standard as a provider of waterproofing, water repellents, and coating services.

On January 4, 2010, Patrick Stern (“Stern”), counsel for Standard, sent a letter to

Walsh observing that Walsh was the lowest bidder on the Project and that Walsh had

submitted with the bid EPA forms that designated Standard as providing waterproofing,

water repellent, and coating on the Project. Stern opined that it seemed likely that the City

would engage Walsh as prime contractor sometime in the middle of January 2010, and went

on to request that Walsh contact Standard to arrange for the completion of a purchase order

so that Standard could start work on the project. At some point, Walsh decided not to use

Standard‟s services and selected a different subcontractor for the project.

On January 13, 2010, Stern appeared on Standard‟s behalf at a meeting of the City‟s

3 Commission of Public Works (“the Commission”) to request that the City delay approval of

Walsh‟s bid on the Project. Stern told the Commission that he had learned that day that

Walsh did not intend to use Standard‟s services. He went on to note that EPA form 6100-4

requires the prime contractor to designate its subcontractors under penalty of perjury, and

opined that Walsh‟s decision to use someone other than Standard should have raised

concerns with the Commission regarding Walsh‟s claimed proportions of MBE and WBE use

on the Project. After hearing from representatives of Walsh, who confirmed that they would

not use Standard on the Project, and from DPW staff, the Commission went on to approve

Walsh‟s bid.

On March 1, 2010, the City and Walsh entered into an agreement designating Walsh

as the prime contractor for the Project.

On May 28, 2010, Standard filed suit against Walsh, alleging breach of contract and

seeking damages as a third-party beneficiary of Walsh‟s agreement with the City. After

several enlargements of time, Walsh answered the complaint on August 30, 2010.

On March 15, 2011, Walsh moved for summary judgment, seeking dismissal of the

suit. After the trial court granted an enlargement of time in which to respond to the summary

judgment motion, Standard filed its response on May 16, 2011. On July 14, 2011, Walsh

replied to Standard and moved to strike numerous paragraphs of the affidavit of Arun Das

(“Das”), Standard‟s President, which Standard submitted in support of its opposition to the

summary judgment motion.

On July 18, 2011, the trial court conducted oral argument on the motions and granted

4 Standard additional time in which to respond to Walsh‟s motion to strike certain of

Standard‟s designated materials. Standard filed its response on July 27, 2011, and further

moved to strike certain materials Walsh had designated in support of its motion for summary

judgment and in its reply to Standard.

On August 18, 2011, the trial court granted Walsh‟s motion to strike, denied

Standard‟s motion to strike, and went on to grant summary judgment in favor of Walsh.

This appeal followed.

Discussion and Decision

Standard of Review

Standard appeals the trial court‟s order granting summary judgment to Walsh. We

review a summary judgment order de novo, Murphy v. Curtis, 930 N.E.2d 1228, 1232 (Ind.

Ct. App. 2010), trans. denied, and we are bound by the same standard as the trial court.

Coca-Cola Co. v. Babyback‟s Intern., Inc., 841 N.E.2d 557, 561 (Ind. 2006). Summary

judgment is appropriate only where “the designated evidentiary matter shows that there is no

genuine issue as to any material fact and that the moving party is entitled to a judgment as a

matter of law.” Ind. Trial Rule 56(C). We consider only those materials the parties

designated in support of their submissions to the trial court. Gunkel v. Renovations, Inc., 822

N.E.2d 150, 152 (Ind. 2005). We construe all factual inferences in favor of the non-movant,

and likewise resolve any question as to the existence of a material issue in the non-movant‟s

favor. Murphy, 930 N.E.2d at 1228.

The moving party bears the burden of making a prima facie showing that there is no

5 genuine issue of material fact and that it is entitled to judgment as a matter of law. Dreaded,

Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1270 (Ind. 2009). Once the movant

satisfies that burden, the burden shifts to the non-movant to designate and produce evidence

showing the existence of a genuine issue of material fact. Id. We may affirm a grant of

summary judgment on any legal basis supported by the materials submitted to the trial court.

Melton v. Ousley, 925 N.E.2d 430, 437 (Ind. Ct. App. 2010).

Standard’s Breach of Contract Claim

Standard first contends that the trial court erred because it improperly concluded that

there was no contract between it and Walsh. Whether a contract exists is a question of law.

Fiederlein v. Boutselis, 952 N.E.2d 847, 856 (Ind. Ct. App. 2011). The basic requirements

for a contract are offer, acceptance, consideration, and a meeting of the minds between the

contracting parties “on all essential elements or terms” of the transaction. Id. (quoting

DiMizio v. Romo, 756 N.E.2d 1018, 1022 (Ind. Ct. App. 2001) (quotation marks and

citations omitted), trans. denied). “[A] meeting of the minds of the contracting parties,

having the same intent, is essential to the formation of a contract.” Ochoa v. Ford, 641

N.E.2d 1042, 1044 (Ind. Ct. App. 1994). Whether the parties intended to contract is a

question of fact “to be determined from all the circumstances.” Id.

Walsh concedes that Standard‟s bid was an offer for waterproofing, water repellent,

and coating services on the Project. Thus, we turn to whether Walsh accepted Standard‟s

offer. On this point, Standard contends that while Walsh did not communicate directly its

acceptance of Standard‟s offer, Walsh nonetheless accepted Standard‟s offer by naming

6 Standard in the EPA forms that accompanied Walsh‟s bid to the City.

This court has previously addressed a situation in which an offeror sought to bind a

party that did not communicate acceptance of an offer in Mueller v. Karns, 873 N.E.2d 652

(Ind. Ct. App. 2007). In Mueller, Karns provided consulting services and later extended an

offer by letter setting forth payment terms, which the offeree conservatorship rejected in a

telephone conversation one week after Karns‟s letter‟s designated start date for the

agreement. Id. at 655-56. Karns argued, and the trial court agreed, that the conservatorship

had accepted Karns‟s offer by remaining silent until after the designated effective date. Id. at

656. We reversed, observing that “Karns did not tell the Conservatorship that it could

manifest acceptance … by remaining silent, nor did he provide a clear and timely mechanism

for rejecting the offer or his services,” and that, indeed, Karns had already rendered his

services before tendering the letter. Id. at 658.

In reaching our decision in Mueller, we relied upon the Restatement (Second) of

Contracts, which states in relevant part:

Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:

(a) Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.

(b) Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer.

(c) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.

7 Restatement (Second) of Contracts § 69(1).

Here, Standard submitted an offer to Walsh in the form of a subcontractor‟s bid.1

Walsh in turn submitted its bid to the City, in which it included two EPA forms that named

Standard as an MBE with whom Walsh expected to do business in the event the City

accepted the bid. Walsh‟s bid to the City included three statements that “[n]o contracts have

been made at this time, however, see attached Bidders List for subcontractors which we have

acquired quotes from.” (Walsh App. 99, 100.) It is unclear whether Walsh informed

Standard directly that it would not accept Standard‟s bid before the City approved Walsh‟s

bid at the Commission meeting on January 13, 2010. It is clear, however, that Standard was

aware before the meeting began that Walsh had decided not to use Standard‟s services, as

Stern informed the Commission that it was Walsh‟s decision that prompted his appearance

before the Commission to recommend that it delay acceptance of Walsh‟s bid.

As in Mueller, Walsh responded to Standard first with silence, and then rejection.

Neither Standard nor Walsh designated any evidentiary matter that would give rise to an

inference that Standard informed Walsh that Walsh‟s silence would amount to acceptance.

Cf. Restatement (Second) of Contracts § 69(1)(b). Thus, we cannot conclude that Walsh‟s

silence in response to Standard‟s offer gives rise to an inference that Walsh‟s silence

amounted to acceptance of Standard‟s bid.

Nor does the concept underlying subsection 69(1)(a) of the Restatement—that an offer

1 Ordinarily, submission of a bid is not the same as an offer to contract. See infra. Walsh‟s brief on appeal appears to concede that the bid was an offer, and we therefore accept this characterization for purposes of rendering an opinion in this case.

8 is accepted when the offeree “takes the benefit of services” after having an opportunity to

reject them and knowing that the offeror expects payment for those services—avail Standard.

A bid is ordinarily, at most, “an offer creating the power of acceptance.” I.C.C. Protective

Coatings, Inc. v. A.E. Staley Mfg. Co., 695 N.E.2d 1030, 1035 (Ind. Ct. App. 1998), trans.

denied. Bids are “often described as a „preliminary negotiation‟” and … a purchase order

from a bid‟s recipient “usually constitutes an offer.” Id. (quoting 1 ARTHUR L. CORBIN, A

COMPREHENSIVE TREATISE ON THE WORKING RULES OF CONTRACT LAW 22

(1963)).

The only evidentiary material designated to the trial court that provides any of the

terms of Standard‟s bid to Walsh are EPA form 6100-3 and Das‟s affidavit, which specify the

types of services Standard offered to provide and the price, but nothing else.2 Further,

according to Das‟s affidavit, Standard requested a purchase order from Walsh in anticipation

of beginning work on the Project, but Walsh never provided one. At most, Standard‟s bid

amounted to an offer that was not accepted in the manner specified by Standard—the

submission of a purchase order.3 Thus, we cannot conclude that Standard‟s bid amounted to

anything other than an offer, and indeed, we question whether the designated materials

amount even to that.

Nor can we conclude that Walsh accepted the benefit of Standard‟s services as

2 Das‟s affidavit indicates that Standard submitted a copy of the bid along with its complaint. While we find the complaint in Standard‟s appendix, we find no copy of the bid in any of the materials submitted to the trial court or to this court. 3 Because Walsh in its appellee brief appears to concede that Standard‟s bid constituted an offer, we do not reach the question of whether Standard‟s bid was an offer giving rise to the power of acceptance, or merely a bid as contemplated in I.C.C., supra.

9 contemplated by Restatement subsection 69(1)(a). Standard contends that it is entitled to

damages for Walsh‟s breach when Walsh refused to use Standard‟s services on the Project.

Yet Standard provided no services in this regard. Nor is there any evidence tending to give

rise to an inference that Walsh accepted Standard‟s services in the form of a bid for which

Walsh would have had reason to know Standard expected compensation for the bid itself.

This is, again, unlike Mueller, where Karns provided consulting services before reaching an

agreement on his compensation for those services. Here, there is no evidence that Standard

provided any compensable service to Walsh, nor does Standard contend that its bid was such

a service.

Simply put, Standard, having been frustrated in its efforts to obtain work on the

Project as a subcontractor to Walsh, seeks recovery on a breach of contract claim by insisting

that a prime contractor‟s communication of a subcontractor‟s offer in a bid amounts to

acceptance of that offer. We decline to reach Standard‟s desired conclusion. The trial court

did not err when it granted Walsh‟s motion for summary judgment on Standard‟s breach of

contract claim.

Standard‟s Third-Party Beneficiary Claim

Standard also seeks recovery as a third-party beneficiary of the agreement between the

City and Walsh, a claim the trial court also dismissed upon summary judgment.

A third-party beneficiary may directly enforce a contract between other parties.

Eckman v. Green, 869 N.E.2d 493, 496 (Ind. Ct. App. 2007), trans. denied. To do so, the

claimed third-party beneficiary must show that 1) the parties to the contract clearly intended

10 to benefit the third-party claimant, 2) a duty was imposed upon one of the contracting parties

favoring the third party, and 3) performance of the contract terms is necessary to render to the

beneficiary the direct benefit intended by the contracting parties. Id. The “controlling

factor” in a determination of whether a third party is a beneficiary of a contract is “[t]he

intent of the parties to benefit the third party,” which may be shown either by naming the

third party or by other evidence. R.R. Donnelley & Sons Co. v. North Texas Steel Co., 752

N.E.2d 112, 122 (Ind. Ct. App. 2001), trans. denied.

Here, the City and Walsh entered into the agreement for Walsh‟s services as prime

contractor on the Project on March 1, 2010. This was nearly two months after Walsh

communicated to Standard that it had rejected its bid and the Commission meeting at which

Walsh announced this to the City. Standard acknowledged this rejection when Stern told the

Commission that he was present at the meeting on Standard‟s behalf because Walsh had

decided not to engage Standard for the Project. Standard‟s appearance before the

Commission in turn made the City aware of Standard‟s claims, which the City apparently

disregarded in deciding to approve Walsh‟s bid. Moreover, the agreement between the City

and Walsh includes Provision 6.11, which states, “[a]ll Work performed by Subcontractors

shall be pursuant to an appropriate agreement between [Walsh] and the Subcontractor which

specifically binds the Subcontractor to these General Conditions and the applicable terms and

conditions of all other Contract Documents.” (Walsh App. 19.) There is no evidence that

Walsh and Standard entered into any such agreement.

Thus, the designated materials show that Standard submitted a bid, some portion of

11 which Walsh included in its proposal to the City on December 10, 2009, but later rejected in

January 2010. Standard acknowledged that rejection through its subsequent actions,

including its appearance before the Commission on January 13, 2010. Walsh did not engage

Standard in an agreement contemplated by Provision 6.11 of the contract between Walsh and

the City. Even drawing all inferences in Standard‟s favor, there is no material issue with

respect to Standard‟s claim that it was a third-party beneficiary to the contract between Walsh

and the City. The designated materials do not give rise to an inference that Walsh and the

City intended to make Standard a third-party beneficiary to their agreement. The trial court

therefore did not err when it concluded that Walsh was entitled to summary judgment on

Standard‟s third-party beneficiary claim.

Conclusion

There is no material issue as to whether Walsh breached a contract between itself and

Standard when it rejected Standard‟s bid on the Project. Nor is there a material issue as to

whether Standard was a third-party beneficiary to the contract between Walsh and the City.

Thus, the trial court did not err when it granted summary judgment to Walsh and against

Standard.

Affirmed.

BAKER, J., and DARDEN, J., concur.