Preview:

STATE OF MICHIGAN COURT OF APPEALS

THE GARRISON COMPANY, Plaintiff-Appellant, v BISHOP INTERNATIONAL AIRPORT AUTHORITY, Defendant-Appellee.

UNPUBLISHED November 18, 2010

No. 293415 Genesee Circuit Court LC No. 08-088216-CK

Before: MURPHY, C.J., and METER and SHAPIRO, JJ. PER CURIAM. Plaintiff appeals as of right an order granting defendant's motion for summary disposition under MCR 2.116(C)(10) in this dispute regarding whether a contract existed between the parties with respect to the construction of an air freight handling facility referred to as the Intermodal Center. We find that the trial court erred in granting defendant's motion for summary disposition, and we agree with plaintiff that a contract was formed as a matter of law. Accordingly, we reverse and remand for further proceedings. "This Court reviews de novo a trial court's decision on a motion for summary disposition." Allen v Bloomfield Hills School Dist, 281 Mich App 49, 52; 760 NW2d 811 (2008). The question of whether a contract existed or was formed is an issue of law that is also reviewed de novo on appeal. Bandit Industries, Inc v Hobbs Int'l, Inc (After Remand), 463 Mich 504, 511; 620 NW2d 531 (2001); Kloian v Domino's Pizza, LLC, 273 Mich App 449, 452; 733 NW2d 766 (2006). MCR 2.116(C)(10) provides for summary disposition where there is no genuine issue regarding any material fact, and the moving party is entitled to judgment or partial judgment as a matter of law. A motion brought pursuant to MCR 2.116(C)(10) tests the factual support for a party's cause of action. Skinner v Square D Co, 445 Mich 153, 161; 516 NW2d 475 (1994). A trial court may grant a motion for summary disposition under MCR 2.116(C)(10) if the pleadings, affidavits, and other documentary evidence, when viewed in a light most favorable to the nonmovant, show that there is no genuine issue with respect to any material fact. Quinto v Cross & Peters Co, 451 Mich 358, 362; 547 NW2d 314 (1996), citing MCR 2.116(G)(5). "A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ." West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003). A court may only consider -1-

substantively admissible evidence actually proffered relative to a motion for summary disposition under MCR 2.116(C)(10). Maiden v Rozwood, 461 Mich 109, 121; 597 NW2d 817 (1999). The trial court may not weigh the evidence, assess credibility, or determine facts for purposes of a summary disposition motion. Skinner, 445 Mich at 161. Here, the project manual included or incorporated all of the documents associated with constructing the facility and with bidding on the construction project, which we shall refer to collectively as the bid documents or bid package. The bid package was comprised of over 1,000 pages in materials. The bid documents included an American Institute of Architects (AIA) owner-contractor agreement, referred to as AIA-A101, and a contract of general conditions governing the construction project, referred to as AIA-A201. A "bid form" was also included in the bid package. The bid form provided: The undersigned, having become thoroughly familiar with the terms and conditions of the proposed [bid documents] and with local conditions affecting the performance and costs of the work at the place where the work is to be completed, and having fully inspected the site in all particulars, hereby proposes and agrees to fully perform the work within the time stated and in strict accordance with the proposed [bid documents], including furnishing any and all labor and materials, specified allowances, and to do all of the work required to construct and complete said work in accordance with the [bid documents], for the following sum of money: By submitting a bid, plaintiff was effectively agreeing to abide by all of the bid documents, including contracts AIA-A101 and AIA-A201 (hereinafter "construction contracts"), should its bid be accepted. The bid form further provided that upon acceptance of a bid and communication of the acceptance to the winning contractor, the contractor agreed to execute and deliver the bid documents, and thus the included construction contracts, to defendant in accordance with the bid as accepted, along with various bonds and proof of insurance. There can be no doubt that a contractor would be contractually obligated to perform on acceptance of a bid and communication of the acceptance, which performance would include the formality of executing the construction contracts. The contractor could not opt to walk away from the project without liability. Plaintiff submitted a bid in the amount of $6,650,000, along with the necessary bid documents. Defendant's governing board subsequently passed a unanimous resolution accepting plaintiff's bid on the project. The resolution indicated that the board had entered into an engineering contract with an architectural firm for design services, that the firm prepared the bid documents, that the firm reviewed the bids it found to be acceptable in general, and that the architectural firm recommended that the board accept plaintiff's bid, which was the low bid. The resolution further provided that the board's staff, after consultation with the operations committee, recommended accepting plaintiff's bid and awarding the project to plaintiff. According to the resolution, funding for the project was available. Based on the information provided to the board, the board voted "to accept the bid" from plaintiff to construct the facility. Finally, the resolution authorized the airport director, who is defendant's chief executive officer (CEO) according to defendant, to execute the necessary construction contracts to carry out and complete the project. The board's decision was communicated and delivered to plaintiff. Numerous emails between one of plaintiff's employees and an architect employed by the -2-

architectural firm that planned the project suggest that the parties were proceeding as if a contractual relationship existed and that execution of the construction contracts was a mere formality. Defendant's CEO did not execute the construction contracts, nor were they executed by any other of defendant's agents. And approximately one month after the bid was accepted by the board, the board rescinded its acceptance. Plaintiff filed suit, alleging that the parties had formed a binding contract, that defendant rescinded the contract absent a factual basis or legal authority, and that AIA-A201, although allowing defendant to terminate the contract for purposes of convenience, entitled plaintiff to recover the amount of expenses incurred by plaintiff for any completed work together with a reasonable amount for overhead and lost profits. Plaintiff asserted that AIA-A201 required arbitration of the dispute but defendant refused to participate, claiming that there was no enforceable contract. Plaintiff sought an order compelling arbitration or, in the alternative, a judgment for damages in the amount of $600,000. Defendant's position was and is that no contract was ever formed. After first denying cross-motions for summary disposition on the basis that an issue of fact existed in regard to contract formation and that discovery had just commenced, the trial court subsequently granted defendant's motion for summary disposition. The court ruled, as a matter of law, that the documentary evidence reflected that the parties did not intend to be contractually bound until the construction contracts themselves were actually executed by both sides, which never occurred. This case boils down to whether there was acceptance by defendant of plaintiff's offer to perform the construction project for $6,650,000 in accordance with the bid documents, such that a contract was legally recognizable and enforceable. In order to form a contract, there must be mutual assent or a meeting of the minds on all material or essential terms. Kloian, 273 Mich App at 453. If the promises and performances to be rendered by the parties are set forth with reasonable certainty, encompassing the essentials, missing details will not militate against a conclusion that there was a meeting of the minds. Nichols v Seaks, 296 Mich 154, 159-160; 295 NW 596 (1941). "Destruction of contracts because of indefiniteness is not favored." Id. at 159. The question whether there was a meeting of minds is judged by an objective standard, examining the parties' express words and visible acts and not their subjective states of mind. Id. at 454. A contract requires an offer and an unambiguous acceptance in strict conformance with the offer. Id. at 452. Discussions, negotiations, and unaccepted offers do not suffice to create a contract. Kamalnath v Mercy Mem Hosp Corp, 194 Mich App 543, 549; 487 NW2d 499 (1992). An acceptance sufficient to create a contract arises when the person or entity to whom an offer is extended manifests an intent to be bound by the offer through voluntarily undertaking some unequivocal act that reflects such an intent. Kloian, 273 Mich App at 453-454. Additionally, we note that a contract to enter into or execute a subsequent contract may be just as valid as any other contract if the essential terms are in place. Opdyke Investment Co v Norris Grain Co, 413 Mich 354, 359; 320 NW2d 836 (1982). We find that upon the board's passage of the unanimous resolution accepting plaintiff's bid on the project and communication of the acceptance to plaintiff, there was objective evidence of a meeting of minds on the essential terms of a contract; the resolution constituted a voluntary and unequivocal act reflecting a manifestation of intent to be bound by the offer. There were absolutely no conditions or condition precedents set forth in the resolution, nor were further pertinent negotiations envisioned; the bid and all of the bid documents were accepted. We

-3-

initially note the inherent conflict in defendant's position, where it claims that it did not become contractually bound on acceptance of plaintiff's bid and communication thereof, but where the bid documents themselves clearly indicated that the contractor submitting a bid that is accepted is contractually bound. We find a lack of relevant support for the trial court's position that the parties did not intend to be contractually bound until the construction contracts themselves were fully executed. We have no doubt that had plaintiff, after submission and acceptance of its bid and communication of acceptance, attempted to renege, defendant would have claimed breach of a formed contract. Once plaintiff's offer was made and the board resolved to accept the offer and communicated the acceptance, all of the requisite elements of a valid contract were present, i.e., parties competent to contract, a proper subject matter, legal consideration, mutuality of agreement or assent, and mutuality of obligation. Hess v Cannon Twp, 265 Mich App 582, 592; 696 NW2d 742 (2005). While there were some minor details that needed addressing, the essential terms of a contract were in place; therefore, the trial court's focus on non-essential terms as a basis to find a lack of intent to be contractually bound was misplaced. The act of formally executing the construction contracts was not a step that had to be completed before a valid contractual relationship arose, given that plaintiff had already agreed to these contracts as part of the bidding process and that defendant had necessarily agreed to these contracts by making them available to bidding contractors and mandating that they be part of the bid documents. Furthermore, the resolution accepting plaintiff's bid and communication of acceptance can also be viewed as forming a contract to enter into or execute the construction contracts, with all of the essential terms being in place, and a failure to execute the construction contracts would constitute a breach. Defendant argued that the AIA-A201 required execution of the construction contracts by the parties before a contractual relationship could be recognized. However, the cited provision, while stating that the construction contracts shall be signed, goes on to merely provide that, if unsigned, the architect shall identify the unsigned documents, not that there is no binding contractual relationship. Indeed, the provision supports a conclusion that execution was a formality, finalizing an already existent contractual relationship. Further, as indicated above, there was a preexisting obligation to execute the construction contracts predicated on acceptance of the bid. Defendant argues that there was no acceptance of plaintiff's offer because the board lacked the authority to enter into a contract on its own behalf where only defendant's CEO had the authority to enter into a contract, and he never accepted plaintiff's offer, nor executed any contract. This argument is predicated on

Download THE GARRISON COMPANY V BISHOP INTERNATIONAL AIRPORT AUTHORITY.pdf

Michigan Law