Opinion
Cause No. IP 99-1262-C G/H
December 6, 2002
ENTRY ON MOTIONS FOR SUMMARY JUDGMENT
This diversity case is before the court on cross-motions for summary judgment on the parties' claims for breach of contract. In January 1999 plaintiff ASI Cartotech contracted to provide computerized mapping services to defendant Green Bay Water Utility. Green Bay Water contends that ASI agreed to provide certain services within a specified amount of time for a cost of no more than $130,000, and that ASI failed to do so. ASI contends that the original contract was more open-ended and that the parties later amended the contract to limit the scope of work and to raise the total contract price. Green Bay Water contends that there was no valid amendment.
ASI filed this action for breach of contract, and Green Bay has filed a counterclaim for breach of contract. Each party has filed its own motion for summary judgment. The motions were earlier denied without prejudice as the parties explored settlement negotiations. Pursuant to agreement of the parties and a notice from defendant that settlement negotiations had not been fruitful, however, on January 7, 2002, the court stated that it would deem the motions to have been refiled as of that date and would decide them on the previous submissions. As explained below, the court now grants Green Bay Water's motion for summary judgment and denies ASI's motion for summary judgment. The undisputed evidence shows that the original agreement between the parties required ASI to complete the entire project for a total price of no more than $130,000. As a result, the purported contract amendment was not supported by any new consideration and was void. The court will schedule a trial on Green Bay Water's damages.
The court hereby vacates the Magistrate Judge Assignment Order previously entered in this case. The undersigned district judge will handle future aspects of this case.
Plaintiff ASI offers services to utilities and local governments for automated mapping, facilities management, and geographic information systems. ASI is a Colorado corporation with its principal place of business in Indiana. ASI is a citizen of Colorado and Indiana for purposes of diversity jurisdiction.
Defendant Green Bay Water is a municipal corporation in Wisconsin that provides water distribution services in and near Green Bay, Wisconsin. Green Bay Water's business is managed and controlled by the Green Bay Water Commission. Green Bay Water is a Wisconsin citizen for purposes of diversity jurisdiction. The amount in controversy exceeds $75,000, exclusive of interests and costs.
As required when deciding a motion for summary judgment, the court considers those facts that are undisputed and views additional evidence in the light reasonably most favorable to ASI, the party against whom summary judgment is granted. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Pursuant to the parties' contract, the common law of Indiana governs in this case.
On November 3, 1998, Green Bay Water issued a request for proposals for maintenance services on its geographic information system ("GIS"). A GIS is a computerized map, in this case of water distribution facilities such as buried pipes and pumps, and key surface features near and around those facilities. ASI submitted a proposal in response to the request.
On January 28, 1999, Green Bay Water and ASI executed the written contract at the center of this lawsuit ("the Agreement"). The Agreement incorporated by reference both Green Bay Water's original request for proposal (also called the "Scope of Work") and ASI's proposal in response to the request.
The Agreement also provided that it would be "construed and governed in all respects by the laws of the State of Indiana" and that venue for any litigation would be in Indianapolis, Indiana. The Agreement also contains an integration clause, providing that the written Agreement, including appendices, constitutes the entire agreement. Agreement § 2.1. The Agreement also provided limits on amendments: "Any modification to the terms and conditions set forth in this AGREEMENT may only be made through written CHANGE ORDER(S) or AMENDMENT(S) signed and executed by authorized representatives of the PARTIES identified in Article 9." Agreement § 2.3.
The principal issues here concern the price term of the Agreement and the scope of work under the Agreement.
The Price Term: ASI contends the original Agreement contains no fixed price or ceiling price, while Green Bay Water contends the Agreement provides a price ceiling of $130,000.
Green Bay Water's original request for proposals sought a fixed-price contract. ASI's proposal in response stated that ASI could not then offer a fixed price or unit price proposal. ASI's proposal included payment on an hourly basis, but acknowledged that such proposals are often unacceptable to utilities. ASI's proposal provided an estimate, but not a guarantee, that the work could be completed for $130,000. However, the final Agreement itself plainly provides for a price ceiling in Article 5.1:
As consideration for the WORK performed by CONTRACTOR [ASI], Owner [Green Bay Water] shall pay CONTRACTOR the hourly rates as set forth in the Pricing schedule, attached hereto and incorporated herein as Appendix B. However, in no event, shall the total price for the PROJECT exceed one hundred thirty thousand dollars ($130,000).
The referenced Appendix B (actually titled Addendum "B"/Pricing Schedule) calls for invoices at a specified rate schedule for different groups of employees and for certain material costs. Appendix B also states:
Based on this estimate and a twelve (12) week full production schedule (February 1, 1999 to May 1, 1999), ASI Cartotech estimates its "reasonable" case scenario cost at $130,000.
Using these labor estimates ASI Cartotech will assign five (5) maintenance technicians to this project. Should the estimate of one (1) hour per map book page prove to be inaccurate, ASI Cartotech can allocate more resources to the project upon request.
ASI contends that the language of § 5.1 and Appendix B amount to a fee for services contract. Under the Agreement, ASI contends it was entitled to bill Green Bay Water for services performed using the hourly rates set forth in Appendix B, subject to the ceiling of $130,000. That much appears not to be disputed, and in any event cannot reasonably be disputed in light of the plain language of the Agreement.
To avoid the legal consequences of the explicit price ceiling, however, ASI argues that the Agreement left undefined the scope of the required work. In effect, ASI contends, the parties agreed to start on the project with a price ceiling in place, to refine later the scope of the actual work to be performed, and to make any needed adjustments in price ceiling and schedule at a later point. Parties are of course free to agree to such flexible arrangements, but the undisputed facts show otherwise with respect to the scope of work and the parties' expressed intentions in this case.
The Scope of Work: Section 4.2 of the Agreement provides: "CONTRACTOR (ASI) agrees to commence WORK on the PROJECT within the guidelines specified in Article 3 and complete the WORK and deliver all GOODS AND SERVICES in accordance with the project schedule."
The capitalized terms are all defined terms in the Agreement. The term PROJECT is defined as follows:
PROJECT shall include all GOODS AND SERVICES as defined within this AGREEMENT which includes the STATEMENT OF WORK and RFE (listed in order of precedence) as Appendices A and C respectively, and associated activities and obligations on the part of the OWNER and CONTRACTOR as are specified in the CONTRACT DOCUMENTS.
The phrase GOODS AND SERVICES is in turn defined to mean "all products and professional services to be performed and delivered by CONTRACTOR to OWNER specified in the CONTRACT DOCUMENTS." The term CONTRACT DOCUMENTS is defined in terms of "all documents listed in Article 2 of this AGREEMENT," which includes, in order of precedence: change orders and amendments, the Agreement itself "and its Appendices attached hereto and incorporated herein by reference," namely, Appendix A: "The STATEMENT OF WORK," Appendix B: "The Pricing Schedule," and Appendix C: "The RFE."
The "Statement of Work" was a portion of ASI's response to Green Bay Water's request for estimates. The Statement of Work describes how work will be performed but does not actually address the issues disputed here, i.e., whether ASI agreed to provide a GIS update for the entire Green Bay Water operation.
The actual signed copy of the Agreement apparently did not include any Appendix C, which was the RFE or request for estimates issued by Green Bay Water. There can be no doubt, however, as to which document the parties were referencing. The RFE was the key document in which Green Bay Water described the services it needed and invited proposals from contractors.
The RFE makes clear that the scope of work includes the entire Green Bay Water system. The "Project Deliverables" expected from the contractor include 18 "sample plots" and "sample digital data" for an initial "acceptance plan," and then include "Main Service plots for remaining area" and "Digital Landbase and Water data for remaining area." See RFE at 5-6. There is no indication in the RFE that Green Bay Water was interested in a GIS update for only a portion of its system. Instead, the "Maintenance Area Index" contemplates four deliveries for portions comprising the entire system: Green Bay East, Green Bay West, Outlining [sic] Areas, and the Lake Line. RFE at 9. In short, the RFE defined sufficiently the scope of work required from the contractor, and the scope included a GIS update for the entire Green Bay Water system.
Thus, the original Agreement between the parties required ASI to complete the entire GIS update project for a price of no more than $130,000. Although ASI had initially proposed not to provide a fixed price for the entire project, the final contract documents indicate that ASI later agreed to the price ceiling for the entire project.
ASI contends, however, that the parties agreed to amend the contract so as to provide for a total price on the entire project about 75 percent higher than the $130,000 price ceiling in the original Agreement. ASI's theory of a contract amendment fails as a matter of law. The amendment lacked any new consideration from Green Bay Water. Under the unambiguous terms of the original Agreement, Green Bay Water was entitled to insist on the complete project for $130,000. Even if the court assumes that the exchange of correspondence between Green Bay Water's attorney and ASI's project director (neither of whom was identified in the Agreement as authorized to agree to any contract amendments) would otherwise have been sufficient to amend the Agreement, the lack of new consideration means the amendment could not have been valid under Indiana law. See Contempo Design, Inc. v. Chicago N.E. Ill. Dist. Council of Carpenters, 226 F.3d 535, 550 n. 9 (7th Cir. 2000) (en banc) (applying federal common law of contracts to collective bargaining agreement, and collecting cases on need for consideration to support contract amendment); Stack v. Allstate Ins. Co., 606 F. Supp. 472, 478 (S.D.Ind. 1985) (applying Indiana law); Napier Iron Works v. Caldwell Drake Iron Works, 110 N.E. 714, 715-16 (Ind.App. 1915) (holding amendment invalid because not supported by consideration); see generally Henthorne v. Legacy Healthcare, Inc., 764 N.E.2d 751, 759 (Ind.App. 2002) (modification of a contract requires all the elements of a contract, including consideration); Hamlin v. Steward, 622 N.E.2d 535, 539 (Ind.App. 1993) (same).
ASI makes much of the fact that Green Bay Water's attorney agreed in writing to the alleged amendment. In the absence of consideration, however, even such explicit agreement to an amendment cannot be rendered valid and enforceable. It does not take much consideration to support a contract amendment, but it takes at least something. See United States v. Stump Home Specialties Mfg., Inc., 905 F.2d 1117, 1121 (7th Cir. 1990) (applying Indiana law, noting that consideration requirement is intended to avoid coercive modifications, but finding that consideration supported amendment); Hamlin v. Stewart, 622 N.E.2d at 539 (court does not inquire into adequacy of consideration for amendment). In light of the original Agreement's unambiguous price ceiling for the entire project, there was no consideration here.
Thus, the undisputed facts show that ASI did not provide a complete GIS update for the entire Green Bay Water system, as required by the contract. As a result, Green Bay Water is entitled to judgment as a matter of law on both ASI's claim for breach of contract and Green Bay Water's counterclaim for breach of contract. ASI's motion for summary judgment must be denied. Green Bay Water's motion for summary judgment is granted, but it does not resolve the issue of damages on the counterclaim. The court will hold a conference on Friday, January 10, 2003 at 8:30 a.m. in Room 330, U.S. Courthouse, Indianapolis, Indiana, to set a trial date on the remaining issues.
So ordered.