Opinion
CIVIL ACTION NO. 02-0311; SECTION "C" (5)
October 20, 2003
ORDER AND REASONS
Before the Court is Defendant's, Master Builders, Inc., Motion for Partial Summary Judgment, made pursuant to Rule 56 of the Federal Rules of Civil Procedure, seeking dismissal of "all of [Plaintiff's] allegations in paragraphs XXXIII-XXXVIII of the Complaint." (Rec. Doc. 67, p. 2). After a thorough review of the law, the record, the motion, and the memoranda filed in support and in opposition to that motion, the Defendant's Motion for Partial Summary Judgment is DENIED.
I. BACKGROUND AND PROCEDURAL HISTORY
This suit arises out of a commercial dispute between Plaintiff, Specialty Diving of Louisiana, Inc., and Defendant, Master Builders, Inc. Plaintiff is a construction contractor. Defendant is the manufacturer and supplier of the Advanced Pile Encapsulation System (hereinafter referred to as APE System), a technology for the structural repair and corrosion control of marine and land-based structures. (Rec. Doc. 1, p. 2; Rec. Doc. 3, p. 4). On February 5, 2002, Plaintiff brought suit against Defendant alleging various theories of recovery arising out of two construction projects in which both parties were involved, the France Road Project and the Causeway B Project. (Rec. Doc. 1). Defendant's present motion seeks to dismiss or strike all of Plaintiffs allegations contained within Plaintiffs complaint that relate to the Causeway B Project, specifically paragraphs XXXIII through XXXVIII. (Rec. Doc. 67, p. 2).
The parties do not dispute the following facts. The Port of New Orleans, desiring to restore its France Road Terminal, sought contractors to submit bids on the restoration project (hereinafter referred to as "France Road Project"). (Rec. Doc. 1, p. 3, ¶ IX; Rec. Doc. 3, p. 5, ¶ IX). Plaintiff, having submitted a bid lower than the other contractors bidding on the France Road Project, was awarded the project by the Port of New Orleans. (Rec. Doc. 1, p. 3, ¶ X; Rec. Doc. 3, p. 5, ¶ X).
At some point thereafter, there seems to have been some sort of agreement whereby Defendant would provide Plaintiff with the APE System to accomplish the job. (Rec. Doc. 1, p. 3, ¶ XI; Rec. Doc. 3, p. 5, ¶ XI). From this point, the facts are highly disputed. Plaintiff claims that the APE System was defective — specifically, Plaintiff claims the product could not pump at the specified rate set forth in the Port of New Orleans request for bids — causing delay to the France Road Project and, in turn, allegedly causing Plaintiff a great deal of economic hardship. (Rec. Doc. 1). While not admitting the existence of any defect in the APE System, Defendant claims the contract between the parties prevents Plaintiff from recovering for any defects in the product as Plaintiff accepted the APE System 'as is' and 'where is' waiving all warranties. Defendant claims that Plaintiff owes Defendant a certain sum of money under the France, Road Project contract for the use of the APE System. (Rec. Doc. 43, exhibit J; Rec. Doc. 3).
While the existence of that agreement does not seem to be disputed, the terms, warranties, effects, and other consequences of that agreement are highly disputed. That dispute forms the central theme of this litigation as it pertains to the France Road Project. Nevertheless, that dispute is only tangentially relevant to the current Motion for Partial Summary Judgment.
The Plaintiff's complaint asserts the following allegations relating to the Causeway B Project, which Defendant seeks to strike:
"XXXIII.
Master Builders, despite having marketed their APE System to be included in bid specifications for jobs by the Greater New Orleans Causeway Commission, Norfolk Southern, L A and Johnson Brothers, Master Builders, on or about September 5, 2001, informed Specialty Diving that they would not agree to sell their product to them for these jobs, effectively eliminating Specialty Diving's ability to bid for these jobs and/or requiring it to withdraw from those contracts awarded to it.
XXXIV.
On information and belief, Master Builders has intentionally frustrated Specialty Diving's ability to perform jobs using its APE System in order to provide a competitive advantage to a competitor of Specialty Diving and former salesman of and for distribution of Master Builders, Madcon Corporation (hereinafter "Madcon").
XXXV.
In a further effort to give a competitive advantage to Specialty Diving's competitor, Madcon, Master Builders has authorized Madcon to own and/or have exclusive use to, one or more pumps for its APE System.
XXXVL
On information and belief, Madcon is the only company so authorized by Master Builders. This enables Madcon to bid jobs at a lower cost than all others, including Specialty Diving, which are obligated to lease their pumps from Master Builders at a specified rate.
XXXVIL
The above practice constitutes an unfair trade practice under La.R.S. 51:1401 et seq., entitling plaintiff to recover all damages, penalties consisting of an amount three times its actual damages, and attorney fees.
XXXVIIL
As a result of the aforesaid acts, Specialty Diving has been caused significant harm and damage, including loss of jobs, resulting profit and damage to reputation."
(Rec. Doc. l, pp. 10-11).
Plaintiff asserts that these allegations give rise to claims under the Louisiana Unfair Trade Practices Act and the Louisiana law of conventional obligations. Defendant argues that it is entitled to partial summary judgment on these claims because Plaintiff cannot prove that (1) Plaintiff is a business competitor to give Plaintiff standing to bring a claim under the Louisiana Unfair Trade Practices Act; (2) that Defendant's activity was egregious enough to fall within the scope of the Louisiana Unfair Trade Practices Act; (3) that Defendant is contractually bound to Plaintiff to provide Plaintiff with Defendant's APE System after Plaintiff was awarded the Causeway B Project by the Greater New Orleans Expressway Commission (hereinafter referred to as "GNOEC"); (4) even if Defendant is contractually bound to Plaintiff to provide Plaintiff with Defendant's APE System, that Defendant's breach caused Plaintiffs loss; or (5) that Defendant's price quote to Plaintiff constitutes a representation upon which Plaintiff could reasonably rely.
The GNOEC was sometimes referred to by the parties as the Greater New Orleans Causeway Commission.
II. STANDARD OF REVIEW
A district court can grant a motion for summary judgment only when the "'pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed.R.Civ.P. 56(c)). When considering a motion for summary judgment, the district court "will review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court must find u[a] factual dispute . . . [to be] 'genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party . . . [and a] fact . . . [to be] 'material' if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248(1986)).
"If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial." Engstrom v. First Nat'l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995) (citing Celotex, 477 U.S. at 322-24, and Fed.R.Civ.P. 56(e)). The mere argued existence of a factual dispute will not defeat an otherwise properly supported motion. See Anderson, 477 U.S. at 248. "If the evidence is merely colorable, or is not significantly probative," summary judgment is appropriate. Id. at 249-50 (citations omitted).
III. LAW AND ANALYSIS
A. Plaintiff's Louisiana Unfair Trade Practices Claim
The Plaintiff has alleged in his complaint that the Defendant's aforementioned conduct pertaining to the Causeway B Project constitutes a violation of Title 54, sections 1401 through 1420 of the Louisiana Revised Statutes, popularly referred to as the Louisiana Unfair Trade Practices Act (hereinafter referred to as "LUTPA"). LA.REV.STAT. ANN. § 54:1401-1420 (West 2003). To establish a cause of action under LUTPA, a plaintiff must show, first, that he has standing and, secondly, that the defendant has engaged in unfair or deceptive trade practices which caused the plaintiff a loss. Hamilton v. Business Partners, Inc., 938 F. Supp. 370, 374 (E.D. La. 1996). Defendant seeks dismissal of the LUTPA claims on the grounds that (1) Plaintiff cannot create a genuine issue of material fact as to whether he has standing to bring an action under LUTPA because Plaintiff is not a business competitor or a consumer of Defendant and (2) Plaintiff cannot create a genuine issue of material fact as to whether Defendant's activities are unfair or deceptive as required by LUTPA. (Rec. Doc. 67).
This case provides a thorough review of the development of Louisiana and Federal case law regarding the issue of standing under the LUPTA.
Specifically, the Defendant argues that Plaintiff's "allegations do not rise to the level of unfair trade practices [sic] within the meaning of the LUTPA." (Rec. Doc. 67, p. 3).
1. Standing
In Title 54, section 1409, LUTPA itself purports to create a broad private cause of action. LA.REV.STAT. ANN. § 54:1409 (West 2003). Specifically, section 1409 creates a cause of action for "[a]ny person who suffers any ascertainable loss of money or movable property . . . as the result of the use or employment by another person of an unfair or deceptive method, act or practice." LA.REV.STAT. ANN. § 54:1409(A) (West 2003). To further the purported expansive nature of the act, LUTPA provides that the word "person" includes natural persons and any legal entity. LA.REV.STAT. ANN. § 54:1402(8) (West 2003).
Despite the virtually all-encompassing language contained in LUTPA, nearly every Louisiana Circuit Court of Appeal has limited the cause of action by requiring that plaintiff show that he is a consumer, business competitor, or potential business competitor of the defendant. Morris v. Rental Tools, 435 So.2d 528, 533 (La.App. 5th Cir. 1983); Gil v. Metal Serv. Corp., 412 So.2d 706, 707 (La.App. 4th Cir. 1982). Only the Louisiana First Circuit Court of Appeal has interpreted LUTPA more broadly. Plaquemine Marine, Inc. v. Mercury Marine, 2003-1036 (La.App. 1st Cir. 7/25/03), 2003 WL 21714065, at *6-7; Capital House Preservation Co. v. Perryman Consultants, 98-1196 (La.App. 1st Cir. 6/1/99), 725 So.2d 523, 530; Jarrell v. Carter, 577 So.2d 120, 124 (La.App. 1st Cir. 1991). The State's highest court, the Louisiana Supreme Court, has yet to address the issue. Plaquemine Marine, Inc., 2003 WL 21714065, at *6.
When applying state law under the Erie doctrine, Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78 (1938), federal courts must "look to final decisions of the highest court of the state." Labiche v. Legal Sec. Ins. Co., 31 F.3d 350, 351 (5th Cir. 1994). As is the case here, "[w]hen there is no ruling by the state's highest court, it is the duty of the federal court to determine as best it can, what the highest court of the state would decide." Id.
Accordingly, the United States Fifth Circuit Court of Appeals has addressed the issue of standing under LUTPA holding that a plaintiff "must demonstrate that it is either a consumer or business competitor of [the defendant]." Tubos de Acero de Mexico, S.A. v. Am. Int'l Inv. Corp., Inc., 292 F.3d 471, 480 (5th Cir. 2002); Gardes Directional Drilling v. U.S. Turnkey Exploration Co., 98 F.3d 860, 868 (5th Cir 1996); Delta Truck Tractor v. J.I. Case Co., 975 F.2d 1192, 1205 (5th Cir. 1992). This holding is in accordance with a majority of the Louisiana Circuit Courts of Appeal having addressed this issue. Moreover, other Federal District Courts sitting in the Eastern District of Louisiana have concurred. Cashman Equip. Corp. v. Acadian Shipyard, Inc., 2002 WL 1433876, at *2 (E.D. La. June 28, 2002); Bollinger v. Tanner Cos., LP, 2003 WL 1824836, at *3 (E.D. La. April 7, 2003).
Neither of the parties in the present action argue that Plaintiff is a consumer of Defendant in regard to the Causeway B Project. Therefore, Plaintiff must present some evidence which shows that Defendant is its business competitor.
The parties do not contest that Madcon is a competitor of Plaintiff. In fact, it appears uncontested from the record that Madcon was awarded the Causeway B Project after Plaintiff and GNOE C agreed that any contracts between them be terminated.
Plaintiff submits that Defendant, by acting in concert with Madcon, became a business competitor. Roustabouts, Inc. v. Earner, 447 So.2d 543 (La.App. 1st Cir. 1984). Plaintiff offers no evidence to suggest that Defendant was in the same business that Plaintiff was in, namely, contracting. Additionally, Plaintiff offers no evidence to suggest Defendant and Madcon were the same entity or were owned by the same entity.
This case provides legal support for Plaintiffs position that standing under LUTPA may be established by evidence that Defendant and Madcon engaged in a conspiracy against Plaintiff.
What Plaintiff does offer is an agreement, the term of which the parties do not contest has expired, which, on its face, purports to be "a technical and marketing alliance." (Rec. Doc. 74, exhibit F). Plaintiff also offers an e-mail from Steve Tysl, an officer of Defendant, to Bruce Trader, an officer of Madcon, citing rates substantially lower to Madcon than to other bidders on the Causeway B Project. (Rec. Doc. 74, exhibit O; Rec. Doc. 74, exhibit E). For example, while Defendant offered a rental rate on the APE System of $5,000 per month or $1,500 per week to other bidders (Rec. Doc. 74, exhibit E, p. 4), it offered the same system to Madcon at a rental rate $3,000 per month. (Rec. Doc. 74, exhibit O). Moreover, Defendant offered Madcon a 6% discount on all materials Madcon purchased from Defendant. (Rec. Doc. 74; exhibit O).
While, at first, this evidence could be construed to indicate nothing more than old business friends exchanging favors, when reviewed most favorably to Plaintiff, the bitter relationship between Plaintiff and Defendant casts this exchange of favors in a somewhat different light. The seeming beneficiary of Defendant's refusal to sell or rent its equipment to Plaintiff was Madcon.
The Court is aware that Plaintiffs position regarding the issue of standing is very tenuous given the sparse facts upon which Plaintiff relies to create a factual issue regarding this alleged 'conspiracy'. However, the Court does find that Plaintiff has presented a genuine issue of material fact as to whether Defendant was in fact acting in close enough alignment with a competitor so as to grant Plaintiff standing under LUTPA.
2. Unfair or Deceptive Practices
In a capitalist and free society, a government is limited in what restraints it may place on citizens, business entities, and the pursuit of economic gain. In fact, a time existed not so long ago when any restraint upon a citizen or a business entity's freedom to contract was deemed unconstitutional. Lochner v. New York, 198 U.S. 45 (1905). While times have changed ((see West Coast Hotel Co. v. Parrish, 300 U.S. 379 (1937)), the legislative bodies authorizing and courts applying either the Federal Trade Commission Act, 15 U.S.C. § 45 (hereinafter referred to as "FTCA"), or LUTPA, which is based on the FTCA, have implicitly recognized some limitation on the acts, which disallows courts from trampling upon the economic freedoms of citizens and business entities. Federal Trade Comm'n v. Raladam Co., 283 U.S. 643 (1931) (construing the FTCA). As stated by the United States Fifth Circuit in Turner v. Purina Mills, Inc., "LUTPA does not prohibit sound business practices, the exercise of permissible business judgment, or appropriate free enterprise transactions." Turner v. Purina Mills, Inc., 989 F.2d 1419, 1422 (5th Cir. 1993). The statute does not prohibit a business to do what everyone knows a business must do: make money. Id. Businesses in Louisiana are still free to pursue profit, even at the expense of competitors, so long as the means used are not egregious. Id.
To this end, while, under LUTPA, the definition of what may constitute an unfair act or practice is broad and subjective, (See Omnitech Int'l, Inc., 11 F.3d at 1332 ((citing Roustabouts, Inc. v. Hamer, 447 So.2d 543, 548 (La.App. 1st Cir. 1984))), courts have determined what is a LUTPA violation on a case-by-case basis employing a jurisprudentially created two-prong test, finding a practice unfair when: (1) it offends established public policy and (2) it is unethical, oppressive, unscrupulous, or substantially injurious. Omnitech Int'l Inc., 11 F.3d at 1332 (citing Monroe Medical Clinic, Inc. v. Hospital Corp. of America, 522 So.2d 1362, 1365 (La.App. 2d Cir. 1988)).
Although Defendant contends that its decision not to provide its services to Plaintiff was a simple "business decision" based upon Plaintiff's "refusal/inability to pay [Defendant] for the goods and services provided to them on the France Road Project" (Rec. Doc. 67, exhibit A), Plaintiff contends that Defendant's conduct was the result of the alleged conspiracy between Defendant and Madcon. Plaintiff contends that Defendant, in an effort to ensure that Madcon would get the Causeway B Project, even after the project was awarded to Plaintiff, refused to provide Plaintiff with any services. Plaintiff also contends that Defendant's motive was not solely to aid its business partner but to punish Plaintiff for the disintegration of the France Road Project.
Plaintiff offers the evidence previously submitted to support its theory of standing along with a pertinent section of the Quotation which provides that only bidders who have successfully completed three other projects using the APE System may use the System without the aid and cost of an onsite representative of Defendant. (Rec. Doc. 74, exhibit E, p. 4). This extra cost would allegedly not be incurred by Madcon due to its prior relationship with Defendant but, as Plaintiff contends, would be by virtually everyone else bidding on the contract. Plaintiff also offers the affidavit of Deborah Wallace, president of Plaintiff, in which she testifies that the identical provision is found in the France Road Project, indicating a pattern in which Madcon is given an unfair competitive advantage on every project in which Defendant's products are pre-approved. (Rec. Doc. 74, exhibit A). Last, as reviewed more pertinently below, Defendant may have actually solicited GNOEC to put the questionable provision in the Quotation. (Rec. Doc. 74, exhibit N, p. 83-88).
The Court, therefore, finds that Plaintiff has created a genuine issue of material fact as to whether Defendant's behavior constituted an unfair or deceptive trade practice.
B. Plaintiff's Contractual Claims
Defendant next contends that Plaintiff cannot create a genuine issue of material fact as regards its contractual claims arising out of the Causeway B project. Specifically, Defendant argues that (1) Plaintiff cannot show a genuine issue of material fact as to whether the parties' consented to any agreement; (2) even if Plaintiff can show that a conventional obligation, or contract, was created, Plaintiff cannot show that Defendant's breach of that obligation caused Plaintiff's alleged loss; and (3) Plaintiff cannot show that it reasonably relied on the representations of the Defendant to its detriment.
1. Consent
Against Plaintiff's contractual theories arising from the Causeway B Project, Defendant first argues that no contract was formed as the parties did not agree to bind themselves. A contract is an agreement by two or more parties whereby obligations are created, modified, or extinguished. LA. CIVIL CODE ANN. art. 1906 (West 1987). In Louisiana, the four elements of a valid contract are that (1) the parties must possess the capacity to contract, (2) the parties' mutual consent must be freely given, (3) the contract must have a lawful cause, and (4) there must be a certain object for the contract. LA. CIVIL CODE ANN. art. 1918 (West 1987); LA. CIVIL CODE ANN. art. 1927 (West 1987); LA. CIVIL CODE ANN. art. 1966—67 (West 1987); LA. CIVIL CODE ANN. art. 1971 (West 1987). Of the aforementioned elements, Defendant only disputes that Plaintiff can show that the parties' mutual consent was freely given.A contract is formed by the consent of the parties established through offer and acceptance. LA. CIVIL CODE ANN. art. 1927. Unless the law prescribes a certain formality for the intended contract, offer and acceptance may be made orally, in writing, or by action or inaction that under the circumstances is clearly indicative of consent. Id. Unless otherwise specified in the offer, there need not be conformity between the manner in which the offer is made and the manner in which the acceptance is made. Id.
Also relevant to the discussion, since scant evidence exists to suggest that Plaintiff and Defendant agreed to anything as between themselves, are the two Civilian concepts of the stipulation pour autrui, contained in LA. CIV. CODE ANN. art. 1978 (West 1987), and the promesse de porte-fort, contained in LA. CIV. CODE ANN. art. 1977 (West 1987).
First, a stipulation pour autrui, or, in the common law parlance, a third party beneficiary contract, could have been formed between GNOEC and Defendant with Plaintiff as the third-party beneficiary. As the Code provides, a contracting party may stipulate a benefit for a third person called a third party beneficiary. LA. CIV. CODE ANN. art. 1978. Once the third party has manifested his intention to avail himself of the benefit, the parties may not dissolve the contract by mutual consent without the beneficiary's agreement. Id.
Second, GNOEC and Plaintiff may have agreed to a promesse de porte-fort whereby Defendant would be responsible for providing services to Plaintiff upon his consent. The Code states that the object of a contract may be that a third person will incur an obligation or render a performance. LA. CIV. CODE ANN. art. 1977. The party who promised that obligation or performance is liable for damages if the third person does not bind himself or does not perform.
While this theory would not in this case produce a different result to Defendant's defense that it did not consent to provide Plaintiff with materials and equipment, it is, nevertheless, included to suggest a theory not specifically argued by the parties themselves. However, it seems that Plaintiff would not be able to avail itself of the liability potentially imposed on GNOEC due to a settlement agreement Plaintiff and GNOEC entered. See Rec. Doc. 67, exhibit F-IO. Plaintiff seems to have, at least implicitly, come to the same conclusion as evidenced by its failure to join GNOEC in this suit. The Court does not draw any conclusions based on Plaintiffs failure to join GNOEC in this suit.
Defendant claims that GNOEC's pre-approval and inclusion of Defendant's APE System into GNOEC's request for bids does not constitute an offer. To support this conclusion, Defendant offers the deposition testimony of Steven Phillippi, an officer of Krebs Lasalle, the engineering firm that decides the specifications for the Causeway B Project, in which he states that Defendant did not draft the specifications. (Rec. Doc. 67, exhibit D, p. 14). Also, he states that the reason that Defendant's products were pre-approved was due to Defendant's "reputation and experience . . . worldwide." (Rec. Doc. 67, exhibit D, p. 16). Also, Defendant has attached examples of equipment rental agreements suggesting that, until Plaintiff and Defendant manifest their intent to be bound by signing one of those agreements, the parties are not bound. (Rec. Doc. 67, exhibits E-I, E-2, E-3).
The Court notes Defendant's assertion that Mr. Phillippi stated that Defendant had nothing to do with the bid proposal or the specifications pertaining to approved products. (Rec. Doc. 67, p. 5). Mr. Phillippi stated merely that he did not recall that Defendant had drafted any of the specifications. (Rec. Doc. 67, exhibit D, p. 14). Whether it is true that Defendant had nothing to do with the bid proposal or the specifications remains to be seen.
Plaintiff argues that, by accepting GNOEC's offer, Plaintiff accepted Defendant's offer to provide it with services. Plaintiff argues, in essence, that Defendant made an offer to any party that was awarded the contract for the Causeway B Project to rent Defendant's goods and services for the stated price. By making the lowest bid based upon Defendant's price quotes without submitting an alternative supplier of the necessary equipment and, in turn, by being awarded the contract, Plaintiff accepted Defendant's offer which remained in effect throughout the bidding process.
To this end, Plaintiff offers a fax transmission directly from Steve Tysl, an officer of Defendant, to contractors bidding on the Causeway B Project quoting prices for its projects. (Rec. Doc. 74, exhibit E). Also, Plaintiff offers other relevant excerpts from the deposition of Stephen Phillippi
Q: In this case, Krebs Lasalle and GNOEC were solicited by [Defendant] to include their products in the bid specifications for the causeway job; were they not?
A: No, that's not a fact at all. I can't agree that [Defendant] solicited us to include their product.
Q: Isn't it a fact that [Defendant's] salesman has come to Krebs Lasalle with its? A: So have 14 or 15 others.
Q: Why do you think they came to see you, sir?
A: [GNOEC was] getting ready to spend 15 million dollars in piling repair.
Q: Did you anticipate or suspect that the reason they came to you was to get you to use their product on this job?
A: Absolutely.
Q: And were they hoping that you would include their product in the bid specifications?
A: Generally, that's correct.
Q: You have no reason to suspect that this was [Defendant's] motive in seeing?
A: That's correct.
Q: And in fact, based on your investigation, that was specified as the approved product throughout the bid specifications for the piling restoration project, correct, sir?
A: That's correct, based on performance not salesman's conversations.
Q: I understand. Now, when a company such as [Defendant] comes to you and suggests that they would like to have you use their product and you do testing and whatever and conclude that that's a good product to specify, do you anticipate that the manufacturer will make that product available to whatever contractor is awarded the bid?
A: Yes.
Q: And is that, if not expressly stated by the manufacturer's representative, certainly implied by the very fact that they come to you and ask that their product be included in the bid specification; is that correct, sir?
A: Yes.
Q: When you issued your request for piling restoration project B, you certainly assumed that whoever was awarded the contract, whether it was [Plaintiff] or Madcon or whoever else bid on the project, the [Defendant]'s products specified by you in that contract as the approved product would be sold to them by [Defendant], correct, sir?
A: Or another qualified product, yes, sir.
Q: Of Course, the qualified product had to be preapproved prior to issuance of the bid?
A: That's correct.
Q: So in this case when the bids were all taken in, there were no preapproved products, were there?
A: No, there were none.
Q: Once the bids were submitted, whoever was awarded that contract was going to have to use [Defendant]'s products?
A: That's correct. And as a point, although I shouldn't do it, no other products were offered by any of the bidders.
Q: Okay. Sitting here today, you don't know how Specialty Diving would have been able to complete that job after being awarded the contract if Master Builders would not agree to sell them their product?
A: Essentially, that's correct.
Q: Was it your belief that the specification requiring a pump to pump three gallons per minute could be waived by you or the owner?
A: Could be waived by the owner, yes. Q: And what is the basis for your opinion?
A: It's a technical specification in the — any of the technical specifications that are terms of the contract can be waived if mutually agreed by the owner and the contractor or by change order.
Q: But it cannot be waived by the owner without the consent of the contractor, can it?
A: Not normally, 'cause the change order form would require the acceptance by the contractor.
(Rec. Doc. 74, exhibit N5 p. 85).
Not only does Mr. Phillippi's testimony create a genuine issue of material fact as to whether a contract was formed between Plaintiff and Defendant, it seems to specifically suggest that either a stipulation pour autrui or a promesse de porte-fort actually was formed as the incidents of a contract of that type (e.g., GNOEC could not change the specifications after Plaintiff was awarded the bid without Plaintiffs approval) are present. While Plaintiff has presented other evidence to create a genuine issue of material fact, it is unnecessary to examine that evidence, at least not in an attempt to find a factual issue as regards consent. However, the Court does point out that Defendant sent its Quotation only to the bidders on the Causeway B Project and actually referred to the Causeway B Project in the Quotation, perhaps, making the quotation something more than a mere advertisement, as Defendant contends.
2. Causation
Next, Defendant argues that, assuming a valid and enforceable contract was formed by Plaintiff and Defendant, then Plaintiff cannot show that its damages were caused by Defendants' breach because the Plaintiff would have withdrawn from the project absent Defendants' breach.
An obligation may give the obligee the right to recover damages for the obligor's failure to perform, or his defective or delayed performance. LA. CIVIL CODE ANN. art. 1758 (West 1987). An obligor is liable for the damages caused by his failure to perform a conventional obligation." LA. CIVIL CODE ANN. art. 1994 (West 1987) (emphasis added). A failure to perform results from nonperformance, defective performance, or delay in performance. Id.
Defendant argues that, even if Plaintiff and Defendant formed a contract consummated by Plaintiff's successful bid on the Causeway B Project, Defendant is still not liable because Plaintiff was unable to perform the job for other reasons — namely, (1) Plaintiff underestimated the cost of the original project in calculating its bid and, after recalculation, Plaintiffs cost to complete the project would have been $300,000 greater than the original bid, in essence, making Madcon the lowest bidder and (2) that Plaintiff could not have obtained the necessary insurance as required by GNOEC's request for bids.
It is unnecessary to examine Defendant's attached exhibits in support of its first argument regarding causation that Plaintiff underestimated the cost of the Causeway B Project as this Court finds no legal merit within that argument. If Plaintiff had a valid contract with Defendant, then it must have had a valid contract with GNOEC as GNOEC's acceptance of Plaintiff s bid was, as discussed previously, the moment at which Plaintiff and Defendant's contract was perfected. If Plaintiff had a valid contract with GNOEC to complete the Causeway B Project, then Plaintiff could have been compelled to render that performance and suffer the burden of its miscalculation or, at least, pay to GNOEC damages for the costs GNOEC would have incurred above and beyond the price arrived at earlier by Plaintiff as physically manifested as the bid. LA. Civ. CODE ANN. art. 1758. Regardless of the remedy GNOEC would have chosen, Plaintiff still would have required the products of Defendant. While Defendant's argument would not be without merit if raised in the context of calculating the quantum of damages Defendant allegedly owes Plaintiff flowing from the Causeway B Project, they are without merit as it affects causation.
Secondly, Defendant argues that, even if Plaintiff and Defendant had formed a contract, Defendant's refusal to abide by the terms of that contract — that is, provide Plaintiff with the necessary equipment — still did not cause Plaintiffs loss since Plaintiff caused that loss by not obtaining the necessary insurance to complete the job.
Defendant maintains that, before Plaintiff could have begun the project, it would have required an opinion letter from Risk Concepts of Louisiana, the company that GNOEC employed to ascertain whether the bidders had obtained the necessary insurance, that Plaintiff had obtained all the necessary insurance. (Rec. Doc. 67, exhibit C). Defendant offers that the deposition testimony of Ralph Peterson, an agent of Risk Concepts of Louisiana, stating that at no time was Plaintiff in full compliance with the insurance requirements such that Risk Concepts could offer such an opinion letter. (Rec. Doc. 67, exhibit I, pp. 15-16).
Plaintiff, on the other hand, offers the affidavit of Nigel Gladwell, an insurance broker with USI Gulf Coast, Inc., an insurance brokerage firm, a firm which Ralph Peterson admits is "an excellent facility", (Rec. Doc. 67, exhibit I, p. 14). In the affidavit, Nigel states that "it is his belief that Specialty Diving had complied with all insurance requirements for the project" and that "in the event that they were not in complete compliance, they would have been brought in compliance prior to commencement of the Contract." (Rec. Doc. 74, exhibit R).
Plaintiff has created a genuine issue of material fact as regards the issue of causation.
3. Detrimental Reliance
Last, Defendant argues that Plaintiff cannot show that it reasonably relied on the representations of Defendant to its detriment.
A party may be obligated by a promise when he knew or should have known that the promise would induce the other party to rely on it to his detriment and the other party was reasonable in so relying. LA. CIVIL CODE ANN. art. 1967.
As stated earlier, the Court finds that Plaintiff created a genuine issue of material fact as to whether Defendant's Quotation constituted an offer, which is a promise. Because the Court finds that Plaintiff has created a genuine issue of material fact as to whether the parties consented to an actual contract, the Court also finds Plaintiff has created a genuine issue of material fact as to (1) whether Defendant knew or should have known that the Quotation would cause Plaintiff to rely upon the Quotation and (2) whether it was reasonable for Plaintiff to rely upon Defendant's Quotation to his detriment.
IV. CONCLUSION
Therefore, the Defendant's Motion for Partial Summary Judgment, made pursuant to Rule 56 of the Federal Rules of Civil Procedure is DENIED.