Fletcher Harlee Corp v. Pote Concrete

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
4-5-2007
Fletcher Harlee Corp v. Pote Concrete
Precedential or Non-Precedential: Precedential
Docket No. 06-2199
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2007
Recommended Citation
"Fletcher Harlee Corp v. Pote Concrete" (2007). 2007 Decisions. Paper 1171.
http://digitalcommons.law.villanova.edu/thirdcircuit_2007/1171
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2007 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 06-2199
FLETCHER-HARLEE CORP.,
Appellant
v.
POTE CONCRETE CONTRACTORS, INC.
Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 05-cv-02589)
District Judge: Honorable Jerome B. Simandle
Submitted Under Third Circuit LAR 34.1(a)
March 8, 2007
Before: SLOVITER and AMBRO, Circuit Judges
POLLAK,* District Judge
*
Honorable Louis H. Pollak, Senior United States District
Judge for the Eastern District of Pennsylvania, sitting by
designation.
(Opinion filed: April 5, 2007)
John A. Greenhall, Esquire
Cohen, Seglias, Pallas, Greenhall & Furman, P.C.
30 South 17th Street, 19th Floor
Philadelphia, PA 19103
Counsel for Appellant
Thomas A. Clark, Esquire
Karen M. Murray, Esquire
Cureton Caplan
3000 Midlantic Drive, Suite 200
Mount Laurel, NJ 08054
Counsel for Appellee
OPINION OF THE COURT
AMBRO, Circuit Judge
This is a cautionary tale of offer, acceptance,
commercial practice, and how to amend a complaint. In the
construction industry, general contractors compete for work by
submitting bids detailing how they will complete the project,
the materials they will use, the time it will take, and the price
they will charge. To prepare these bids, general contractors in
2
turn solicit bids from more specialized subcontractors. It is well
understood in the industry that bids at both levels are “firm
offers;”1 in other words, subcontractors submit bids expecting
to be held to their terms if selected. General contractors rely on
subcontractors’ bids to create a single-priced package of work.
A subcontractor’s subsequent refusal to honor its bid wreaks
havoc on the general contractor’s bid—and can quickly turn a
profitable project into a financial “black hole.”
Since the advent of legal realism, building the law
around commercial practice has been a goal of common law
courts. It stems from principles of judicial restraint: judges
recognize that the repeat players in an industry often are more
capable of setting the industry’s ground rules than they are.
Thus, we use relevant commercial practice to aid us in
interpreting contracts. See Restatement (Second) of Contracts
§ 202 (1981).
As this case demonstrates, however, there is a contract-
law principle more powerful than commercial practice: we
interpret documents in accord with their plain language. Id. at
§ 203(b) (“[E]xpress terms are given greater weight than . . .
usage of trade.”). When the text of a subcontractor’s bid, which
1
See Restatement (Second) of Contracts § 87(1)(a) & cmt. a
(1981) (defining the common law requirements of a firm offer);
see also U.C.C. § 2-205 (defining the requirements for a firm
offer in the sale of goods).
3
would typically be a firm offer, specifically states that it is not
one, we must follow that text. Therefore, we cannot allow a
general contractor who purports to accept such a bid to sue for
breach of contract or for promissory estoppel.
I.
Fletcher-Harlee Corp., a general contractor, solicited bids
from subcontractors on various aspects of a building project for
which it intended to compete. In keeping with industry custom,
Fletcher-Harlee’s solicitation letter stipulated that bids must be
held open for a minimum of 60 days and that subcontractors
must agree to be accountable for the prices and proposals
submitted. In response, Pote Concrete Contractors, Inc.
submitted a written price quotation for providing the concrete
for the project. Pote’s “bid,” however, did not conform to
Fletcher-Harlee’s terms; rather, it stipulated that its price
quotation was for informational purposes only, did not
constitute a “firm offer,” and should not be relied on. Pote’s
response further stated that Pote did not agree to be held liable
for any of the terms it submitted.
The terms that Pote submitted were the most favorable,
and, for reasons not apparent from the record, Fletcher-Harlee
relied on them in preparing its general bid despite Pote’s stated
4
limitations.2 Pote was quite serious about those limitations, and,
when Fletcher-Harlee won the bid and tried to reduce Pote’s
terms to a written contract, it raised the price. This increase
pushed Pote’s bid above the next lowest one, and so Fletcher-
Harlee ended up using a different concrete subcontractor and
spending over $200,000 more than expected.
Fletcher-Harlee sued Pote in District Court3 for breach
of contract and promissory estoppel. Determining that the facts
pled did not support either theory of liability, the District Court
granted Pote’s motion, and Fletcher-Harlee now appeals to us.
Besides its arguments on the merits, it now claims that the
District Court sua sponte should have extended it the
opportunity to amend its complaint. For the reasons that follow,
we affirm.4
2
The disclaimer language was in normal print in the last
paragraph of Pote’s one-page submission letter. Fletcher-Harlee
does not argue that it was worded or presented in a deceptive
manner.
3
The District Court’s jurisdiction was based on diversity of
citizenship and an amount in controversy above $75,000. 28
U.S.C. § 1332.
4
We have jurisdiction under 28 U.S.C. § 1291. We exercise
plenary review over dismissals for failure to state a claim, and
we affirm only when the facts pled in the complaint are
insufficient to support liability. Children’s Seashore House v.
5
II.
As any first-year law student knows, an offer and its
acceptance are required to form a contract, and so we must
decide how to characterize each of the communications between
the parties.
Fletcher-Harlee solicited a bid from Pote. In its
solicitation letter, Fletcher-Harlee stipulated that bids should be
held open for 60 days and that the subcontractor would be held
liable for the terms of the bid. Was this letter an offer?
Probably not. The document itself is not in the record, but we
suspect that it was merely a request to submit an offer. “An
offer is the manifestation of willingness to enter into a bargain,
so made as to justify another person in understanding that his
assent to that bargain is invited and will conclude it.”
Restatement (Second) of Contracts § 24 (1981). Here, a
subcontractor would understand that submitting a bid would not
“conclude” the matter; rather, the general contractor would have
to accept the bid to do so. The Restatement and New Jersey
caselaw5 characterize solicitations like this one not as offers, but
as invitations to make offers. Restatement (Second) of
Contracts § 26 cmt. d (1981); see also M.A. Stephen Const. Co.,
Inc. v. Borough of Rumson, 308 A.2d 380, 383 (N.J. Super. Ct.
Waldman, 197 F.3d 654, 658 (3d Cir. 1999).
5
The parties agree that New Jersey law governs this case.
6
A.D. 1973); cf. Schlitchman v. N.J. Highway Auth., 579
A.2d 1275, 1277–78 (N.J. Super. Ct. L. Div. 1991).
Second, Pote submitted to Fletcher-Harlee the terms on
which it could complete the work. Was this an acceptance?
Obviously not. Even if the Fletcher-Harlee communication
were an offer, Pote’s response could be no more than a
counteroffer because its terms were materially different from
those in the solicitation letter. Mortin v. 4 Orchard Lane Trust,
849 A.2d 164, 170–71 (N.J. 2004); Restatement (Second) of
Contracts § 59 (1981) (“A reply to an offer which purports to
accept it but is conditional on the offeror’s assent to terms
additional to or different from those offered is not an
acceptance but is a counter-offer.”). More importantly, because
the submission expressly disclaimed Pote’s intention to be
bound, it could not be an offer. As quoted above, an offer is
made when the offeree is justified in thinking that “his assent .
. . will conclude” the deal. Restatement (Second) of Contracts
§ 24 (1981). Here, the very terms of Pote’s letter state that
Fletcher-Harlee’s assent would not.
No offer and no acceptance mean no contract. The
District Court properly dismissed Fletcher-Harlee’s breach of
contract claim.
III.
Fletcher-Harlee also alleges that Pote is liable for altering
7
its bid on a promissory estoppel theory. A key element of
promissory estoppel, however, is reasonable reliance, Pane v.
RCA Corp., 868 F.2d 631, 638 (3d Cir. 1989), and here
Fletcher-Harlee has alleged nothing that would render its
reliance on Pote’s submission reasonable. While New Jersey
courts often use industry practice to determine what is
reasonable, cf. SASCO 1997 NI, LLC v. Zudkewich, 767 A.2d
469, 478 (N.J. 2001), that alone cannot justify relying on a
submission that specifically directs the recipient not to rely on
it. Without alleging any facts to undercut the force of Pote’s
disclaimer, we must conclude that any reliance on the terms of
Pote’s submission was unreasonable as a matter of law. See
Sovereign Bank v. BJ’s Wholesale Club, 427 F. Supp. 2d 526,
535 (M.D. Pa. 2006).
IV.
In the alternative, Fletcher-Harlee argues that it should
be allowed to amend its complaint to correct any deficiency.
Before the District Court, it did not request leave to amend;
rather, it opposed Pote’s motion to dismiss on the merits.
Fletcher-Harlee now argues that it was reversible error for the
District Court not to offer this unrequested relief sua sponte.
Our precedent supports the notion that in civil rights
cases district courts must offer amendment—irrespective of
whether it is requested—when dismissing a case for failure to
state a claim unless doing so would be inequitable or futile.
8
This “amendment rule” emerged in reaction to our requirement
that civil rights cases be pled with heightened particularity, thus
giving rise to pleading errors in otherwise colorable
cases—particularly those with pro se plaintiffs. See Darr v.
Wolfe, 767 F.2d 79, 80–81 (3d Cir. 1985); Kauffman v. Moss,
420 F.2d 1270, 1276 (3d Cir. 1970). Thus, in Darr and
Kauffman, we required that district courts exercise their
discretion to allow pro se plaintiffs to amend their claims to
avoid dismissal. Darr, 767 F.2d at 80–81; Kauffman, 420 F.2d
at 1276.
In District Council 47 v. Bradley, 795 F.2d 310, 316 (3d
Cir. 1986), we used a footnote from Borelli v. City of Reading,
532 F.2d 950 (3d Cir. 1976) (per curiam), and our decision in
Darr, to create a rule that district courts in civil rights cases
must extend the plaintiff an opportunity to amend—irrespective
of whether it was requested and irrespective of whether the
plaintiff was counseled—before dismissing a complaint.
Bradley, 795 F.2d at 316 (citing Borelli, 532 F.2d at 951 n.1;
Darr, 767 F.2d at 81). In the Borelli footnote, we had
“suggest[ed]” that district courts expressly give plaintiffs leave
to amend when dismissing their complaints “without prejudice.”
Id. at 951 & n.1. Borelli’s holding did not reach a district
court’s discretion to dismiss a case with prejudice when a
plaintiff fails to request leave to amend. Then-Chief Judge
Aldisert dissented from the opinion in Bradley, arguing that a
district court should not be faulted for failing to grant relief that
the plaintiff did not request. 795 F.2d at 321–22. In any event,
9
the Bradley Court, invoking Darr, appeared to limit its holding
to civil rights cases. Id. at 316.
In 1993, the Supreme Court struck down the heightened
pleading requirement for civil rights cases. See Leatherman v.
Tarrant County Narcotics Intelligence & Communication Unit,
507 U.S. 163, 168 (1993) (“We think that it is impossible to
square the ‘heightened pleading standard’ . . . with the liberal
system of ‘notice pleading’ set up by the Federal Rules [of Civil
Procedure].”); Abbott v. Latshaw, 164 F.3d 141, 148 (3d Cir.
1998) (recognizing that Leatherman mandates the acceptance
of a § 1983 civil rights complaint that meets the standards for
notice pleading). Despite the demise of the heightened pleading
requirement, we have continued to apply the amendment rule in
civil rights cases, citing Borelli for the proposition that leave to
amend must be granted sua sponte before dismissing these
complaints. See Alston v. Parker, 363 F.3d 229, 235 (3d Cir.
2004); Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d
Cir. 2002); Shane v. Fauver, 213 F.3d 113, 116 (3d Cir. 2000)
(“The Federal Rules of Civil Procedure do not address the
situation in which a deficiency in a complaint could be cured by
amendment but leave to amend is not sought. Circuit case law,
however, holds that leave to amend must be given in this
situation as well.”) (citing Borelli, 532 F.2d at 951 n.1).
Standing in tension with the long-standing amendment
rule is our longer-standing rule that, to request leave to amend
a complaint, the plaintiff must submit a draft amended
10
complaint to the court so that it can determine whether
amendment would be futile. Indeed, we have held that a failure
to submit a draft amended complaint is fatal to a request for
leave to amend. Ranke v. Sanofi-Sythelabo, Inc., 436 F.3d 197,
206 (3d Cir. 2006); Ramsgate Court Townhome Ass’n v. West
Chester Borough, 313 F.3d 157, 161 (3d Cir. 2002); Lake v.
Arnold, 232 F.3d 260, 274 (3d Cir. 2000); Kelly v. Del. River
Joint Comm’n, 187 F.2d 93, 95 (3d Cir. 1951). In Ranke,
Ramsgate, and Lake, we affirmed dismissals for failure to state
a claim and denials of leave to amend because the plaintiffs had
not submitted their proposed amendments. Doing so, we
implicitly rejected any argument that, outside of civil rights
cases, district courts must sua sponte grant leave to amend
before dismissing a complaint for failure to state a claim. Thus,
we held that a district court need not worry about amendment
when the plaintiff does not properly request it.
In Kelly we set out how district courts should deal with
motions to dismiss filed in lieu of answers in ordinary civil
litigation. We held that a motion to dismiss is not a responsive
pleading and that Rule 15(a), therefore, allows one amendment
as a matter of right up to the point at which the district court
grants the motion to dismiss and enters final judgment. Kelly,
187 F.2d at 95. After judgment dismissing the complaint is
entered, a party may seek to amend the complaint (and thereby
disturb the judgment) only through Federal Rules of Civil
Procedure 59(e) and 60(b). Id. This holding comports with the
text of the Federal Rules, and it has not been superseded or
11
overturned in the over half-century since it was issued.
We have rarely applied the sua sponte amendment rule
outside of the context of a civil rights case, and we will not do
so here.6 In non-civil rights cases, the settled rule is that
properly requesting leave to amend a complaint requires
submitting a draft amended complaint. Here, Fletcher-Harlee
has not done that, and its failure to do so is fatal to its request.
Perhaps more fundamentally, absent exceptional circumstances,
issues not raised before the district court are waived on appeal.
Brenner v. Local 514, United Bhd. of Carpenters & Joiners,
927 F.2d 1283 (3d Cir. 1991) (“It is well established that failure
to raise an issue in the district court constitutes waiver of the
argument.”). Here, Fletcher-Harlee did not ask the District
Court for leave to amend its complaint, and so it can hardly
fault the Court for not granting relief it never requested. If
Fletcher-Harlee had knowledge of facts that would cure the
defects in its complaint, it should have asserted them before
now.7
6
Our “alternative” holding in In re Westinghouse Sec. Litg.,
90 F.3d 696, 718 n.25 (3d Cir. 1996), that the District Court
should have granted leave to amend is ambiguous because it was
unnecessary to the main holding (that the complaint was
sufficient on its face) and because it is unclear whether the
plaintiff requested leave.
7
Even on appeal Fletcher-Harlee is vague about what facts
it might allege that would allow it to state a claim. It references
12
In sum, we hold that in ordinary civil litigation it is
hardly error for a district court to enter final judgment after
granting a Rule 12(b)(6) motion to dismiss when the plaintiff
has not properly requested leave to amend its complaint. This
holding does not impose any undue burden on civil plaintiffs,
nor does it risk plaintiffs suffering final judgment on the basis
of a technical pleading defect. Here, Flecther-Harlee was not
caught unaware by the Court’s entry of judgment, as it had
notice of Pote’s motion and every opportunity to amend its
complaint beforehand. In any event, after final judgment was
entered against Fletcher-Harlee, Rule 59(e) gave it a ten-day
window in which to seek to reopen the judgment and amend the
complaint.8 Under our Court’s precedent, leave to amend
within this window should, as Federal Rule of Civil Procedure
15(a) puts it, “be freely given when justice so requires.”
Federal R. Civ. P. 15(a); see Adams v. Gould, Inc., 739 F.2d
858, 868–69 (3d Cir. 1994) (reversing denial of motion for
leave to amend after summary judgment entered in defendant’s
“allegations concerning meetings between Pote and Fletcher-
Harlee that took place after Pote placed its bid [that led]
Fletcher-Harlee to believe that Pote’s bid was valid” without
elaborating on the content of those meetings. Appellant’s Br. at
16.
8
Rule 59 motions have the added benefit of tolling the 30-
day window for filing a notice of appeal. See CTC Imports &
Exports v. Nigerian Petroleum Corp., 951 F.2d 573, 576 n.1. (3d
Cir. 1991); see also Fed. R. App. P. 4(a)(4)(A)(v).
13
favor) (citing Dussouy v. Gulf Coast Inv. Co., 660 F.2d 594,
597–98 & n.1 (5th Cir. 1981)). Barring that, Rule 60(b) gave
it a year in which to move to reopen judgment and amend the
complaint for good cause. Having done none of those things,
Fletcher-Harlee can hardly complain about the entry of final
judgment.
V.
While Pote may have exhausted any goodwill it had by
bucking industry custom, the language of the disclaimer is so
plain that we have no choice but to enforce it. Moreover,
because Fletcher-Harlee never properly requested that the
District Court allow it to amend its complaint, the Court did not
err in dismissing the case with prejudice, as it had no duty here
even to consider allowing a right to amend. We thus affirm the
District Court’s dismissal of Fletcher-Harlee’s complaint.
14