Facts
- The plaintiff was a general contractor (identified in summaries as LeCesse Construction Company) preparing a bid to renovate a University of Rochester building.
- The defendant, J. Kozel & Sons, Inc. (a subcontractor), provided pricing for steel work, including an oral bid for certain structural-steel work.
- The general contractor used Kozel’s figures when assembling and submitting its own prime bid for the project.
- The general contractor was awarded the prime contract.
- After award, the general contractor contacted Kozel but initially did not disclose that it had already obtained the prime contract; it sought to negotiate a lower price and different terms than Kozel’s original bid.
- Kozel refused to perform on the renegotiated terms.
- The general contractor then asserted it had relied on Kozel’s bid, stated it was “too late” to withdraw, and sent Kozel a standard written subcontract for signature.
- Kozel refused to sign the written subcontract and refused to perform the work.
- The general contractor hired a substitute subcontractor at a higher price and sued Kozel to recover the difference, alleging (1) breach of contract and (2) promissory estoppel based on reliance on Kozel’s bid.
- Kozel moved for summary judgment dismissing the complaint.
Issues
- Did the subcontractor’s oral bid, combined with the general contractor’s use of that bid in its prime bid and later transmission of a form subcontract, create an enforceable subcontract?
- If no contract was formed, could the general contractor recover under promissory estoppel based on claimed reliance on the subcontractor’s bid, where the general contractor attempted post-award price reductions before demanding performance?
Decision
- The court granted the subcontractor’s motion for summary judgment and dismissed the complaint.
- No enforceable contract existed because there was no showing of an unequivocal acceptance and mutual assent sufficient to form a subcontract.
- Promissory estoppel did not apply because the general contractor’s conduct—seeking a better deal after obtaining the prime contract—made any claimed reliance on the original bid unreasonable in the circumstances.
Legal Principles
- A subcontract is not created merely because a general contractor uses a subcontractor’s bid in submitting a prime bid; the plaintiff must show acceptance and mutual assent on material terms.
- Sending a standard form subcontract after post-award negotiations, when the subcontractor refuses to sign, supports the conclusion that the parties did not reach a binding agreement.
- Promissory estoppel requires a clear promise, reasonable reliance by the promisee, and injury resulting from that reliance.
- In the construction-bidding context, reliance is not reasonable where the general contractor treats the subcontractor’s bid as a starting point for post-award bargaining and seeks to reduce the subcontractor’s price or change terms before claiming the bid was binding.
- Summary judgment is appropriate when, on the undisputed record, the plaintiff cannot establish contract formation or the elements of promissory estoppel as a matter of law.
Conclusion
In LAHR Construction Corp. v. J. Kozel & Sons, Inc., the New York Supreme Court (Monroe County) entered summary judgment for the subcontractor, holding that the subcontractor’s oral bid did not become an enforceable subcontract absent clear acceptance and mutual assent, and that the general contractor could not shift to promissory estoppel where it sought post-award price concessions before insisting the bid was irrevocable and suing for the cost difference of a replacement subcontractor.