## Facts

- The Pennsylvania Department of General Services (DGS) issued an RFP on November 12, 2008 for a telecommunications project.
- Verizon Business Network Services, Inc. (Verizon) decided to submit a prime bid and, in December 2008 and January 2009, solicited subcontract pricing and information from Clark Resources, Inc. (Clark).
- Clark’s president and CEO, Frank Clark, submitted a subcontract proposal to Verizon on February 9, 2009 (a long-term subcontract Clark valued at roughly $7.5 million over 10 years).
- On February 25, 2009, Frank Clark met with Verizon’s Area Sales Vice President for Government and Education (Pennsylvania and Delaware), Bette DeRogatis, to discuss Clark’s proposal.
- According to Clark, DeRogatis said Clark’s proposal would be used “as the basis” for Verizon’s contract and told him he had a “deal,” which Clark treated as an oral acceptance of a subcontract.
- Clark did not dispute that DeRogatis lacked actual authority to bind Verizon to a subcontract; instead, Clark argued she had apparent authority based on her title, her role as the highest-ranking Verizon employee Clark met, her asserted control over the project, and the fact that other Verizon personnel Clark interacted with appeared to report to her.
- Verizon later declined to enter into a subcontract with Clark. During 2009, the parties discussed changing the arrangement, including a restructuring under which Clark would perform work as a subcontractor to Adept (another Verizon subcontractor) and later discussions to narrow Clark’s work to two project management positions.
- Clark refused to accept the reduced scope. Verizon advised DGS on October 8, 2009 that it could not successfully conclude negotiations with Clark.
- Verizon received the prime contract on October 9, 2009, and on October 13, 2009 informed Clark it would not subcontract with Clark; DGS approved Verizon’s substitution of Adept for Clark.
- Clark sued Verizon asserting contract-based theories to enforce the alleged subcontract. After earlier motion practice, one claim remained, and Verizon moved for summary judgment supported by DeRogatis’s affidavit stating she lacked authority to contract on Verizon’s behalf.

## Issues

1. Whether Verizon’s conduct and communications to Clark could support a reasonable finding that DeRogatis had apparent authority to bind Verizon to an oral subcontract.
2. Whether DeRogatis’s “you have a deal” statement and her position/title were sufficient to create a genuine dispute of material fact on contract formation and agency under Pennsylvania law.
3. Whether the record showed a completed agreement, as opposed to bid-stage discussions and continuing negotiations that contemplated a later finalized subcontract.

## Decision

- The court granted Verizon’s motion for summary judgment on the sole remaining claim.
- The court held Clark failed to present evidence from which a reasonable factfinder could conclude Verizon cloaked DeRogatis with apparent authority to enter a multi-year, multi-million-dollar subcontract.
- The court determined the evidence, including the “basis for our contract” language and the parties’ later restructuring and scope-reduction talks, reflected ongoing negotiations rather than a final, enforceable subcontract.

## Legal Principles

- Under Pennsylvania law, apparent authority depends on manifestations by the principal to the third party that would lead a reasonable person to believe the agent is authorized; it cannot be established solely by the agent’s own statements or self-description.
- A corporate title and participation in negotiations, without principal-generated conduct indicating contracting authority for the transaction at issue, do not by themselves create apparent authority.
- Where an alleged agreement arises in the context of procurement bidding and subsequent negotiations continue over work scope and structure, the record may show the parties had not reached final assent on an enforceable subcontract.
- On summary judgment, the nonmovant must point to evidence that could allow a reasonable jury to find in its favor on essential elements such as agency authority and contract formation.

## Conclusion

The court entered judgment for Verizon because Clark conceded DeRogatis lacked actual authority and did not produce sufficient principal-based evidence to show apparent authority or a completed subcontract; the “deal” statement and later negotiations supported, at most, an expectation of a future agreement rather than an enforceable contract.


Clark Resources, Inc. v. Verizon Business Network Services, Inc., 2012 WL 1339697 (2012)