Weitz Co. v. Hands, Inc.

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
07/22/2016 09:07 AM CDT
- 215 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
Weitz Company, LLC, v. H ands, Inc.,
doing business as H & S Plumbing
and H eating, appellant.
___ N.W.2d ___
Filed July 22, 2016. No. S-15-581.
1. Equity: Estoppel. Although a party can raise estoppel claims in
both legal and equitable actions, estoppel doctrines have their roots
in equity.
2. Equity: Appeal and Error. In reviewing judgments and orders dispos-
ing of claims sounding in equity, an appellate court decides factual
questions de novo on the record and reaches independent conclusions on
questions of fact and law. But when credible evidence is in conflict on
material issues of fact, an appellate court considers and may give weight
to the fact that the trial court observed the witnesses and accepted one
version of the facts over another.
3. Forbearance: Estoppel. A claim of promissory estoppel requires a
plaintiff to show: (1) a promise that the promisor should have reason-
ably expected to induce the plaintiff’s action or forbearance, (2) the
promise did in fact induce the plaintiff’s action or forbearance, and (3)
injustice can only be avoided by enforcing the promise.
4. ____: ____. A plaintiff claiming promissory estoppel need not show a
promise definite enough to support a unilateral contract, but it must be
definite enough to show that the plaintiff’s reliance on it was reasonable
and foreseeable.
5. Contracts. Usages of trade are strong evidence of the foreseeability of
reliance on a promise.
6. Estoppel. Evidence that a promisee had little time to act on the promise
shows that the promisee’s reliance was foreseeable.
7. Contracts: Contractors and Subcontractors. A general contractor can
reasonably rely on a subcontractor’s bid even if the general contractor
and subcontractor contemplate signing a formal subcontract with addi-
tional standard terms after the bidding process ends.
- 216 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
8. Contractors and Subcontractors. A general contractor cannot demand
that a subcontractor agree to unusual and onerous terms while still hold-
ing the subcontractor to its original bid.
9. ____. If a subcontractor’s bid is so low that a mistake should be appar-
ent, a general contractor cannot reasonably rely on the bid.
10. Estoppel: Damages. No single measure of damages applies in every
promissory estoppel case.
11. ____: ____. The damages that the promisor ought to pay under promis-
sory estoppel are those that justice requires.
12. Damages: Proof. A plaintiff’s burden is to prove his or her damages to
a reasonable certainty, not beyond all reasonable doubt.
13. Election of Remedies. The election of remedies doctrine is an affirma-
tive defense.
14. Pleadings. A party must specifically plead an affirmative defense for the
court to consider it.
Appeal from the District Court for Douglas County: Joseph
S. Troia, Judge. Affirmed.
Brian S. Kruse, of Rembolt Ludtke, L.L.P., for appellant.
Gregory C. Scaglione, Kristin M.V. Krueger, and Patrice D.
Ott, of Koley Jessen, P.C., L.L.O., for appellee.
Heavican, C.J., Wright, Connolly, Cassel, Stacy, and
K elch, JJ.
Connolly, J.
I. SUMMARY
The Weitz Company, LLC (Weitz), a general contractor,
received an invitation to bid on a planned nursing facility.
Hands, Inc., doing business as H & S Plumbing and Heating
(H&S), submitted a bid to Weitz for the plumbing work, as
well as the heating, ventilation, and air conditioning (HVAC)
parts of the job. Weitz’ bid to the project owner incorporated
the amount of H&S’ bid. After the owner awarded the project
to Weitz, H&S refused to honor its bid. Weitz completed the
project with different subcontractors at greater expense.
At trial, Weitz sought to enforce H&S’ bid under promis-
sory estoppel. The court determined that Weitz reasonably
- 217 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
and foreseeably relied on H&S’ bid, and it therefore estopped
H&S from reneging. The court measured Weitz’ damages as
the difference between H&S’ bid and the amount Weitz paid
to substitute subcontractors. H&S appeals. We affirm the judg-
ment and the amount of damages.
II. BACKGROUND
1. Weitz Is Invited to Bid
In 2011, the Evangelical Lutheran Good Samaritan
Society (Good Samaritan) invited four “prequalified General
Contractors,” including Weitz, to bid on a proposed nursing
facility in Beatrice, Nebraska. Good Samaritan chose the four
prequalified general contractors based on “prior relationships”
recommendations from its architect and its own research.
Good Samaritan is a “big player” in the retirement living
market. Weitz is a “dominant contractor” in the same market.
Alan Kennedy, a Weitz executive, said that Weitz had sought
to build a relationship with Good Samaritan that would lead
to “negotiated work,” meaning that Good Samaritan would
work with Weitz without inviting other general contractors
to bid. Kennedy testified that negotiated work is “one of the
best places to be as a contractor.” When Good Samaritan
invited Weitz to bid on the Beatrice project, Weitz knew
of another potential project with Good Samaritan in Sarpy
County, Nebraska.
Good Samaritan’s “Invitation to Bid” stated that it would
not consider bids received after 2 p.m. on August 30, 2011
(bid day). The invitation incorporated certain “Instructions
to Bidders,” which provided that Good Samaritan and its
architect could object to a general contractor’s proposed sub-
contractors. The invitation stated that “[n]o bids may be with-
drawn for a period of 60 days after opening of bids.” If a gen-
eral contractor refused to enter into a contract, the instructions
provided to bidders state that the general contractor would
forfeit its bid security as liquidated damages. A bid security
is a bond that “assures the owner that [it] can rely upon the
- 218 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
bids.” But Good Samaritan did not ask for bid securities,
because it prequalified the general contractors.
2. Bid -Day M adness
Before bid day, Weitz assigned “lead person[s]” to the dif-
ferent categories of work on the project, referred to as “tick-
ets.” The ticket leaders reviewed the project specifications and
created a “scope checklist” that described the work for each
ticket. Weitz prepared scope checklists because subcontractors
sometimes excluded certain work from their bid.
On bid day, Weitz assembled its people in a conference
room to collect and organize the hundreds of bids from sub-
contractors. Ticket leaders called out the bids after comparing
them with the scope checklist. Weitz then added the numbers to
a “bid day spreadsheet.”
Subcontractors in the mechanical, engineering, and plumb-
ing fields typically submit their bids within 15 minutes of the
deadline. As a result, Weitz is often “at the wire turning in [its]
number to an owner.” Brian Mahlendorf, a project executive
for Weitz, oversaw Weitz’ bid for the Good Samaritan project.
Mahlendorf said that Weitz received H&S’ bid “less than 15
minutes or so” before the 2 p.m. deadline.
Kennedy, who had been involved in “well over a hundred
bids,” testified that it was “customary for general contractors
to rely on bids submitted by subcontractors” and that subcon-
tractors submit bids because they want the job. Mahlendorf,
who had more than 20 years of experience in the construction
industry, testified that it was customary for Weitz to rely on
subcontractors’ bids, that subcontractors knew that Weitz relied
on their bids, and that subcontractors submitted bids because
they wanted to procure work. Mahlendorf said it was “very
rare” for a subcontractor to refuse to honor its bid.
3. H&S Submits a Bid
to Weitz
On bid day, H&S sent Weitz a bid for the plumbing and
HVAC parts of the project. H&S’ base bid was $2,430,600. For
- 219 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
alternate duct and radiant heating work, H&S quoted $39,108
and $52,500, respectively. H&S also sent Weitz a “revised”
base bid of $2,417,000, but Weitz received the revised bid too
late to use in its bid to Good Samaritan.
Kennedy and Mahlendorf would confirm a subcontractor’s
bid if it looked “funny” or “off,” but H&S’ bid did not seem
unusual to them. Weitz had estimated what each ticket would
cost based on historical data, and H&S’ bid was above Weitz’
estimate. Mahlendorf was also comfortable with H&S because
Weitz had worked with H&S before. Furthermore, Mahlendorf
assumed that H&S was “actually looking at [its] number”
because it sent Weitz a revised bid. Two of the other four
prequalified general contractors stated that they planned to use
H&S for the plumbing and the HVAC work.
Kennedy and Mahlendorf testified that the market for con-
struction services was weak in 2011. Subcontractors were
“aggressively seeking work” and making low bids to “keep
their people busy.” Kennedy said that subcontractors’ bids had
“ranges that you hadn’t traditionally seen in the marketplace.”
A difference of 15 percent between the lowest and second-
lowest bids was not uncommon.
4. Weitz Submits Its Bid
to Good Samaritan
Mahlendorf said that Weitz used H&S’ bid in its own bid to
Good Samaritan. Weitz chose H&S’ bid because it included the
“complete scope with the lowest cost.” Mahlendorf said that
H&S’ bid was “comprehensive” and that Weitz was “willing to
take it as is.” Mahlendorf added H&S’ base bid to Weitz’ bid-
day spreadsheet for the plumbing and HVAC tickets.
On bid day, Weitz sent Good Samaritan a base bid of
$9.2 million. Kennedy and Mahlendorf testified that Weitz’
base bid of $9.2 million included H&S’ $2,430,600 bid. Weitz
promised Good Samaritan that it would execute a contract for
its base bid if offered the project within 60 days. Weitz’ bid to
Good Samaritan included a list of “Major Sub-Contractors.”
- 220 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
For the plumbing subcontractor, Weitz wrote “HEP or H&S.”
For the HVAC subcontractor, Weitz wrote “Falcon or H&S.”
Mahlendorf explained that he used a disjunctive list of
major subcontractors because H&S’ bid “came in late enough
after this form had been basically ready to send out, and we
had to add [its] name to those two line items.” Mahlendorf
said that Weitz did not use the bids of the other plumbing and
HVAC subcontractors, “HEP” and Falcon Heating and Air
Conditioning (Falcon), to reach its $9.2 million base bid. Even
if Weitz could have used HEP and Falcon instead of H&S,
Mahlendorf said that Weitz intended to use H&S.
5. Good Samaritan Awards
the P roject to Weitz
On September 1, 2011, Weitz received “early indications”
that Good Samaritan would select its bid. Weitz received
“[f]inal notification” on September 2. Mahlendorf called H&S
on September 6 and told the head of H&S’ engineering depart-
ment that Weitz had won the bidding and had “carried the
H & S number.” He said that he told H&S that “we used [its]
number in our bid, and we were prepared to enter into a con-
tract with [H&S] and move forward.”
Usually, after the owner of a project accepted Weitz’ bid,
Weitz asked its subcontractors to sign a “subcontract” estab-
lishing the “[e]xact contract terms” between Weitz and the
subcontractor. Weitz had used a similar subcontract for more
than a dozen years. H&S’ chief executive officer testified that
in the 10 or 15 times that H&S had worked with Weitz, Weitz
had always accepted H&S’ revisions to the subcontract.
Weitz signed a contract with Good Samaritan for the
base bid of $9.2 million plus six additional areas of work
not included in the base bid. The opening paragraph of
the contract states that it was “made and entered” on, and
has an “Effective Date” of, September 7, 2011. But “Date:
9-19-11” appears below the signature of Good Samaritan’s
representatives.
- 221 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
Under the contract, Good Samaritan and its architect had
the right to reject Weitz’ proposed subcontractors. But Good
Samaritan did not veto H&S or any of Weitz’ other subcon-
tractors. Good Samaritan’s architect could not recall having a
“conversation of significance” about subcontractors. Despite
an owner’s reservation of the right to veto subcontractors,
Mahlendorf said that “[i]n the real world,” a general contractor
treats an owner’s silence as an approval and that owners are
usually silent.
6. H&S R eneges on Its Bid
Hugh Sieck, Jr., H&S’ owner and chief executive officer,
was fishing in Alaska on bid day. Sieck testified that he told
his team of estimators before he left for Alaska not to send a
bid to Weitz. He had “bitter feelings” for Weitz because it had
a “history of bid shopping,” meaning that Weitz would “get
a bid, . . . look at it, and [it] will go to another contractor to
get a lower number.” Sieck said every general contractor “bid
shops,” but he thought Weitz did more than most.
John Sampson, who worked for one of the other prequali-
fied general contractors, called Sieck on bid day and suggested
that Sieck review H&S’ bid. Sampson noticed a “considerable
difference” between H&S’ bid and the other subcontractors’
bids, although he did not say what the difference was or
whether the scope of the subcontractors’ bids differed. Asked
what might prompt him to confirm a bid with a subcontractor,
Sampson said a difference of 10 or 15 percent between bids
might be enough “if I had to pull a number out of the air,”
but “when it gets 20 or 30 percent then you really start get-
ting concerned.”
According to Sieck, he ordered a member of H&S’ estimat-
ing team to “[p]ull your bid” after Sieck spoke with Sampson.
But when Sieck returned to H&S’ offices on September 6,
2011, he learned that his employees had, contrary to orders,
submitted a bid to Weitz and had failed to withdraw the bid.
He “surmised” that H&S’ bid contained errors, so he “told
[his] team to go out and find a mistake.”
- 222 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
Lloyd Ness, the person responsible for preparing the plumb-
ing and piping parts of H&S’ bid, said that Sieck was upset
after bid day because H&S “left too much money on the
table.” Ness testified that H&S’ estimating team reviewed its
bid after Sieck returned but concluded there “was not a hair
out of place.” So, according to Ness, Sieck told him to “lie to
Weitz and tell Weitz that we forgot travel time and we missed
showers.” Ness refused to lie and resigned because of the
incident. Sieck denied asking Ness to lie. Another member of
H&S’ estimating team, Thomas Santillan, Jr., said that Sieck
did not ask him to lie.
Sieck personally took a hand in looking for a mistake
and ultimately landed on a miscalculation involving shower
units. He told Santillan to inform Weitz of H&S’ “‘belief of
the mistake.’”
On September 8, 2011, Santillan sent an e-mail with a let-
ter attachment to Mahlendorf stating that H&S had found two
errors after “thoroughly reviewing” its bid: (1) a miscalculation
of the cost of shower installation and (2) the omission of travel
time from the cost of labor. The collective magnitude of the
claimed errors exceeded $250,000.
Santillan later took another look at H&S’ bid and concluded
that the original calculation of the cost for shower installation
was, in fact, correct. But Santillan maintained that H&S had
underbid travel costs. And Santillan said that H&S eventually
unearthed “numerous mistakes” in its bid. Specifically, “the
material was just not accurate,” “the dollar amount did not
appear to be accurate,” and “there wasn’t enough material.”
Mahlendorf came to H&S’ offices for a meeting on September
9, 2011. According to Sieck, Mahlendorf mentioned, “‘I’ve got
to get to Beatrice because I haven’t got all my shopping done.’”
Sieck understood Mahlendorf’s statement to mean that “as per
usual, they are out shopping the bids.”
But Mahlendorf said that Sieck’s recollection did not “com-
port with [Mahlendorf’s] memory.” Asked if Weitz would ever
“carry one number but you continue negotiating and replace it
- 223 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
with a different bidder,” Mahlendorf said he was “sure that has
happened for some reason or another.” But he said that Weitz
did not intend to shop H&S’ bid. H&S’ bid was “comprehen-
sive,” and Weitz was “willing to take it as is.”
Weitz and H&S could not come to terms. The magnitude
of H&S’ error kept growing and eventually ballooned to more
than $430,000. In October 2011, Weitz informed H&S that it
would use other subcontractors.
7. Weitz Honors Its Bid
to Good Samaritan
Weitz did not try to withdraw its bid from Good Samaritan
because of its dispute with H&S. Instead, it completed the proj-
ect with other plumbing and HVAC subcontractors. Kennedy
and Mahlendorf testified that the bidding documents prohibited
Weitz from withdrawing or modifying its bid for 60 days. And
the contract between Weitz and Good Samaritan was “already
in progress” by the time Weitz learned that H&S would not
honor its bid.
Business reasons also prevented Weitz from abandon-
ing the project. Kennedy testified that the “integrity of our
bids” was particularly important if the owner selected Weitz
as a prequalified general contractor. Mahlendorf explained
that backing out would have harmed Weitz’ reputation in
its industry:
On a project like this where the architect and owner have
preselected general contractors, if we wouldn’t honor our
bid, we would be at risk for future work from the design
firm that did it and in addition to the owner group. From
a business standpoint, we do a lot of [business with]
senior living [clients], and it would be detrimental if we
were starting to be excluded from senior living clients
like the Good Samaritan Society.
Withdrawal would have also lowered Weitz’ standing with
Good Samaritan’s architect, with which Weitz had an “ongoing
business relationship.”
- 224 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
8. Weitz Measures Its Losses
After H&S made it clear that it would not stand by its
bid, Weitz asked for bids from other subcontractors. Weitz
selected the subcontractors Falcon and “MMC” for the plumb-
ing and HVAC portions of the project because their bids had
the “lowest cost complete scope that we could obtain.” The
amount Weitz paid Falcon and MMC under their subcontracts
was $1,187,900 and $1,626,800, respectively. The subcontract
prices did not include any “change orders,” which could have
affected the total amount Weitz ultimately paid to the subcon-
tractors. H&S’ bid did not include change orders either.
To calculate Weitz’ damages, Mahlendorf added Falcon’s
and MMC’s subcontract prices for the sum of $2,814,700.
From that sum, Mahlendorf subtracted H&S’ base bid of
$2,430,600 and its bids of $39,108 and $52,500 on optional
work which Good Samaritan ultimately asked Weitz to per-
form. The difference is $292,492.
9. Procedural History
Weitz pleaded two causes of action in its complaint against
H&S. First, Weitz alleged that H&S breached a contract formed
by Weitz’ acceptance of H&S’ bid. Second, Weitz argued that
promissory estoppel bound H&S to its bid because Weitz rea-
sonably and foreseeably relied on the bid.
A few years after H&S filed its answer—which did not
affirmatively allege an election of remedies defense—it moved
for an “Order requiring [Weitz] to elect between its claim for
breach of contract and promissory estoppel.” The court over-
ruled H&S’ motion.
After a bench trial, the court determined that the parties had
not formed a contract. But it enforced H&S’ bid under promis-
sory estoppel. The court awarded Weitz damages of $292,492.
III. ASSIGNMENTS OF ERROR
H&S assigns, restated, that the court erred by (1) enter-
ing a judgment for Weitz on its promissory estoppel claim,
(2) “awarding breach of contract damages instead of reliance
- 225 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
damages for promissory estoppel,” and (3) overruling H&S’
pretrial motion to require Weitz to elect between its contract
and promissory estoppel claims.
IV. STANDARD OF REVIEW
[1,2] Although a party can raise estoppel claims in both
legal and equitable actions, estoppel doctrines have their roots
in equity.1 In reviewing judgments and orders disposing of
claims sounding in equity, we decide factual questions de novo
on the record and reach independent conclusions on questions
of fact and law.2 But when credible evidence is in conflict on
material issues of fact, we consider and may give weight to the
fact that the trial court observed the witnesses and accepted
one version of the facts over another.3
V. ANALYSIS
1. Promissory Estoppel
H&S argues that the court should not have enforced its
bid under promissory estoppel. Courts often use promissory
estoppel to hold a subcontractor to its bid until the general
contractor has had a reasonable length of time to accept the
bid after receiving the prime contract.4 The leading case is
1
deNourie & Yost Homes v. Frost, 289 Neb. 136, 854 N.W.2d 298 (2014).
2
Id.
3
Id.
4
See, e.g., Matherne Contractor v. Grinnell Fire Protec. Sys., 915 F. Supp.
818 (M.D. La. 1995); Ferrer v. Taft Structurals, 21 Wash. App. 832, 587
P.2d 177 (1978); 4 Richard A. Lord, A Treatise on the Law of Contracts by
Samuel Williston § 8:8 (4th ed. 2008); 1 Steven G.M. Stein, Construction
Law § 2.05[3][b] (2014); Avery Katz, When Should an Offer Stick? The
Economics of Promissory Estoppel in Preliminary Negotiations, 105 Yale
L.J. 1249 (1996); Janine McPeters Murphy, Note, Promissory Estoppel:
Subcontractors’ Liability in Construction Bidding Cases, 63 N.C. L.
Rev. 387 (1985). See, also, Restatement (Second) of Contracts § 87(2) &
comment e., illustration 6 (1981). But see Home Electric Co. v. Hall and
Underdown Heating and Air Cond. Co., 86 N.C. App. 540, 358 S.E.2d 539
(1987).
- 226 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
Drennan v. Star Paving Co.5 There, the California Supreme
Court held that because the general contractor was bound
by its bid, fairness required that the general contractor have
an opportunity to accept the subcontractor’s bid after receiv-
ing the prime contract. Drennan has had a “very broad
following.”6
[3,4] In Nebraska, a claim of promissory estoppel requires
a plaintiff to show: (1) a promise that the promisor should
have reasonably expected to induce the plaintiff’s action or
forbearance, (2) the promise did in fact induce the plaintiff’s
action or forbearance, and (3) injustice can only be avoided
by enforcing the promise.7 The promise need not be definite
enough to support a unilateral contract, but it must be definite
enough to show that the plaintiff’s reliance on it was reason-
able and foreseeable.8 Here, we start our review of the court’s
judgment by asking if H&S’ bid was a promise on which it
should have foreseen reliance.
(a) H&S’ Bid Was a Promise on Which
Reliance Was Foreseeable
H&S’ bid was a promise to perform the work described in
the bid. H&S said it was “bidding the Plumbing, Hydronic
Piping, & HVAC portion” of the Good Samaritan project and
specifically listed the work that it was willing to perform. H&S
asked for the general contractors’ “consideration” and hoped to
“be of service” to them.
[5,6] And H&S should have foreseen that Weitz would rely
on its bid. Kennedy and Mahlendorf testified that subcontrac-
tors generally expect (and hope) that general contractors will
rely on their bids. Usages of trade are strong evidence of the
5
Drennan v. Star Paving Co., 51 Cal. 2d 409, 333 P.2d 757 (1958).
6
4 Lord, supra note 4, § 8:8 at 183.
7
See deNourie & Yost Homes v. Frost, supra note 1.
8
See id.
- 227 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
foreseeability of reliance.9 Furthermore, Weitz received H&S’
bid about 15 minutes before the 2 p.m. deadline. Evidence that
a promisee had little time to act on the promise shows that
the promisee’s reliance was foreseeable.10 And, as noted, H&S
expressly asked Weitz to consider its bid. Having determined
that H&S should have expected Weitz to rely on its bid, our
next question is whether Weitz in fact relied on the bid and, if
so, whether its reliance was reasonable.
(b) Weitz Reasonably Relied
on H&S’ Bid
Weitz relied on H&S’ bid by including the base amount of
H&S’ bid in Weitz’ own bid to Good Samaritan. Mahlendorf
testified that he slotted H&S’ bid into the plumbing and HVAC
tickets, which is reflected in the bid-day spreadsheet. Although
Weitz disjunctively listed the major subcontractors in its bid
to Good Samaritan, the evidence shows that Weitz actually
relied on H&S’ bid. Both Kennedy and Mahlendorf testified
that Weitz’ $9.2 million base bid incorporated H&S’ base bid
of $2,430,600.
We further conclude that Weitz’ reliance on H&S’ bid was
reasonable. The evidence shows that general contractors cus-
tomarily rely on subcontractors’ bids. Mahlendorf testified
that it was “very rare” for a subcontractor to refuse to honor
its bid. In particular, Weitz had worked with H&S 10 or 15
times before without incident. Weitz’ reliance was also rea-
sonable because it had only 15 minutes to review H&S’ bid.11
Weitz could not independently verify every item in H&S’ bid
in a quarter of an hour. How could competitive bidding func-
tion at all if general contractors did not rely on subcontrac-
tors’ bids?
9
Pavel v. A.S. Johnson, 342 Md. 143, 674 A.2d 521 (1996).
10
See Cass County Bank v. Dana Partnership, 275 Neb. 933, 750 N.W.2d
701 (2008).
11
See id.
- 228 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
H&S marshals a number of arguments why Weitz did not
reasonably rely on its bid, which we consolidate into five that
merit discussion. First, H&S argues that the bidding docu-
ments “absolutely precluded any reliance.”12 Specifically,
H&S emphasizes that Good Samaritan had the right to veto
subcontractors.
But the bare fact that Good Samaritan could have, in theory,
rejected H&S’ bid did not make Weitz’ reliance on H&S’ bid
unreasonable. Good Samaritan did not object to any of Weitz’
subcontractors. Mahlendorf testified that despite an owner’s
reservation of the right to veto subcontractors, owners gen-
erally do not exercise that right “[i]n the real world.” If the
chance that Good Samaritan would nix H&S were significant,
Weitz’ reliance on H&S’ bid might not have been reasonable.
But the record lacks this evidence.
We similarly reject H&S’ second argument, which is that
Weitz’ reliance was unreasonable because Weitz “did not
require any quotation be kept open for any period of time
as a precondition to its consideration.”13 General contractors
customarily rely on subcontractors’ bids, as discussed above,
and the record lacks any evidence that prudent general con-
tractors turn away bids that do not have such a provision. We
cannot find any authority that conditions promissory estoppel,
as a matter of law, on a demand by the general contractor that
subcontractors insert such clauses into their bids. The only
case that H&S cites is from a jurisdiction that allowed parties
to use promissory estoppel only as a defense.14 That case is
an outlier.15
12
Brief for appellant at 23.
13
Id. at 22.
14
See Home Electric Co. v. Hall and Underdown Heating and Air Cond. Co.,
supra note 4.
15
See Joseph C. Kovars & Michael A. Schollaert, Truth and Consequences:
Withdrawn Bids and Legal Remedies, 26 Constr. Law. 5 (Summer 2006).
- 229 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
H&S’ third argument is that Weitz did not reasonably rely
on its bid because it could have pulled out of the project
without any consequences. H&S notes that, although the invi-
tation to bid required Weitz to hold its bid open for 60 days,
Good Samaritan did not ask for a bid security. Furthermore,
Weitz knew that H&S had cold feet before Weitz and Good
Samaritan formally signed a contract.
But H&S could not expect Weitz to abandon the project
because H&S decided its bid was too low. Weitz promised
Good Samaritan that it would hold its bid open for 60 days,
and breaking that promise would have sullied Weitz’ reputa-
tion. In particular, Good Samaritan might have been reluctant
to work with Weitz again. Losing Good Samaritan’s business
would have been a significant loss to Weitz because Weitz
and Good Samaritan are both active in the retirement living
market. Pulling out of the project would also have jeopard­
ized Weitz’ preexisting relationship with the project architect.
Good Samaritan selected the prequalified general contractors
based, in part, on the architect’s recommendations. Weitz did
not have to tell Good Samaritan that, as things turned out,
it would not build the facility because of a squabble with a
plumbing and HVAC subcontractor.
The fourth reason why, according to H&S, Weitz did not
reasonably rely on its bid is that Weitz “attempted to accept
quotations on materially different terms.”16 H&S argues,
restated, that Weitz did not rely on its subcontractors’ bids,
because it later asked subcontractors to sign a subcontract
that did not mirror the terms of the subcontractors’ bids. H&S
backed out before Weitz could send it a subcontract. But H&S
suggests that Weitz would have sent it a subcontract similar to
the one that Weitz sent to its other subcontractors and that this
hypothetical subcontract would have been materially different
from H&S’ bid.
16
Brief for appellant at 16.
- 230 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
[7,8] A general contractor can reasonably rely on a subcon-
tractor’s bid even if the general contractor and subcontrac-
tor contemplate signing a formal subcontract with additional
standard terms after the bidding process ends.17 But a general
contractor cannot demand that a subcontractor agree to unusual
and onerous terms while still holding the subcontractor to its
original bid.18 For example, in Hawkins Constr. Co. v. Reiman
Corp.,19 a general contractor demanded that a subcontractor
agree to multiple “nonstandard additional conditions which
could be considered onerous.” After the subcontractor refused
to accept the terms, the general contractor tried to enforce the
subcontractor’s bid under promissory estoppel. We held that
the general contractor’s reliance was not reasonable because
it could not assume that the subcontractor would acquiesce to
onerous nonstandard terms.
But differences between a subcontractor’s bid and the sub-
contract do not matter if they are an “afterthought” raised by
a subcontractor that wants to avoid its promise for other rea-
sons.20 Here, H&S reneged because its bid was too low, and
it did so before Weitz sent it a subcontract. So, H&S’ dispute
with the terms of the subcontract is even less than an after-
thought: It is imaginary. Plus, Sieck testified that Weitz had
always accepted H&S’ revisions to the subcontract.
17
See, Preload Technology v. A.B. & J. Const. Co., Inc., 696 F.2d 1080 (5th
Cir. 1983); Debron Corp. v. National Homes Construction Corp., 493 F.2d
352 (8th Cir. 1974); Saliba-Kringlen Corp. v. Allen Engineering Co., 15
Cal. App. 3d 95, 92 Cal. Rptr. 799 (1971).
18
APAC-Southeast, Inc. v. Coastal Caisson Corp., 514 F. Supp. 2d 1373
(N.D. Ga. 2007); Haselden-Langley Const. v. D.E. Farr, 676 P.2d 709
(Colo. App. 1983).
19
Hawkins Constr. Co. v. Reiman Corp., 245 Neb. 131, 136, 511 N.W.2d
113, 117 (1994).
20
Reynolds v. Texarkana Construction Co., 237 Ark. 583, 586, 374 S.W.2d
818, 820 (1964).
- 231 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
Finally, we reach H&S’ fifth argument as to why Weitz
did not reasonably rely on its bid: It was so low that Weitz
was on notice that H&S had made mistakes. Differences
between the scope of H&S’ bid and the scopes of the other
bids make a dollar-for-dollar comparison difficult, but H&S
asserts that its bid was “considerably lower” than the those of
its rivals.21
[9] We conclude that H&S’ bid was not so low that Weitz’
reliance on it was unreasonable. If a bid is so low that a mis-
take should be apparent, a general contractor cannot reason-
ably rely on the bid.22 But H&S’ bid was higher than what
Weitz had budgeted based on historical data. Furthermore,
the market for construction services was weak in 2011 and
subcontractors were bidding aggressively. Kennedy and
Mahlendorf testified that bids during this period could be
unusually low compared to years in which the market was
more robust.23 H&S sent its bid to all four of the prequalified
general contractors. Two of the general contractors, including
Weitz, chose H&S without first checking to see if H&S had
made a mistake.
So, H&S’ bid was a promise on which reliance was fore-
seeable and Weitz reasonably relied on the bid. One question
remains: Did the court have to enforce H&S’ bid to pre-
vent injustice?
(c) Enforcement of H&S’ Bid Was
Necessary to Prevent Injustice
We conclude that the court could avoid injustice only
by enforcing H&S’ bid. As discussed above, many courts
21
Brief for appellant at 30.
22
See, e.g., Diede Const. v. Monterey Mechanical Co., 125 Cal. App. 4th
380, 22 Cal. Rptr. 3d 763 (2004); Stein, supra note 4.
23
See Powers Constr. Co., Inc. v. Salem Carpets, Inc., 283 S.C. 302, 322
S.E.2d 30 (1984).
- 232 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
have recognized the unfairness of allowing a subcontractor to
renege after the general contractor has relied on the subcon-
tractor’s bid in the general contractor’s own successful bid
to the owner. H&S argues that it is not fair to enforce its bid,
because it made mistakes. But Weitz should not have to bear
the cost of H&S’ errors: “As between the subcontractor who
made the bid and the general contractor who reasonably relied
on it, the loss resulting from the mistake should fall on the
party who caused it.”24
H&S argues that we should not enforce its bid, because
Weitz engaged in the “unethical practice of bid shopping.”25 A
general contractor bid shops by taking the lowest subcontrac-
tor’s bid to other subcontractors and asking them to undercut
it.26 Courts are reluctant to use promissory estoppel if the
general contractor bid shopped, either because bid shopping
shows that the general contractor did not rely on the bid, or
because injustice no longer requires enforcement of the bid,
or both.27
But the record does not show that Weitz shopped H&S’
bid. Sieck testified that he had “bitter feelings” about an
24
Drennan v. Star Paving Co., supra note 5, 51 Cal. 2d at 416, 333 P.2d at
761.
25
Brief for appellant at 19.
26
See, Preload Technology v. A.B. & J. Const. Co., Inc., supra note 17;
Constructors Supply v. Bostrom Sheet Metal Works, 291 Minn. 113, 190
N.W.2d 71 (1971); 1 E. Allan Farnsworth, Farnsworth on Contracts § 3.25
(3d ed. 2004).
27
See Preload Technology v. A.B. & J. Const. Co., Inc., supra note 17;
Complete Gen. Constr. Co. v. Kard Welding, 182 Ohio App. 3d 119,
911 N.E.2d 959 (2009); Pavel v. A.S. Johnson, supra note 9; Michael
L. Closen & Donald G. Weiland, The Construction Industry Bidding
Cases: Application of Traditional Contract, Promissory Estoppel, and
Other Theories to the Relations Between General Contractors and
Subcontractors, 13 J. Marshall L. Rev. 565 (1980). But see Saliba-
Kringlen Corp. v. Allen Engineering Co., supra note 17.
- 233 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
earlier project in which Weitz bid shopped. That project, how-
ever, involved a bidding process different from the com-
petitive proc­ess used by Good Samaritan. The only direct
evidence that Weitz bid shopped during the Beatrice project
is Sieck’s testimony about Mahlendorf’s aside about “shop-
ping” in Beatrice. Mahlendorf did not remember making that
statement. He testified that Weitz had no intent to shop H&S’
bid. In a credibility battle, Mahlendorf has the better of the
admittedly bitter Sieck, who candidly testified about “toy-
ing with” his memory of the communications between H&S
and Weitz.
In conclusion, H&S’ bid was a promise on which reliance
was foreseeable. Weitz actually and reasonably relied on the
bid. And justice required the court to enforce H&S’ bid. So the
court did not err by entering a judgment for Weitz on its prom-
issory estoppel claim.
2. Damages
H&S does not agree with the amount of damages. It argues
that the court erred by “awarding benefit of the bargain /
­contract damages rather than reliance damages.”28 H&S further
contends that Weitz did not prove its damages with reasonable
certainty and that its damages are necessarily zero, because
Good Samaritan did not ask for a bid security.
[10,11] No single measure of damages applies in every
promissory estoppel case.29 The commentary to the Restatement
(Second) of Contracts30 explains that the ultimate standard
for enforcing the promise—the prevention of injustice—also
28
Brief for appellant at 18.
29
See, e.g., Dynalectric v. Clark & Sullivan Construct., 127 Nev. 480, 255
P.3d 286 (2011); 3 Eric Mills Holmes, Corbin on Contracts § 8:8 (Joseph
M. Perillo ed., rev. ed. 1996).
30
See Restatement, supra note 4, § 90 & comment d. See, also, Restatement
(Second) of Contracts § 349, comment b. (1981).
- 234 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
guides the measurement of damages. The damages that the
promisor ought to pay are those that justice requires.31 In some
cases, justice requires only reliance damages.32
For example, we approved of reliance damages in Rosnick
v. Dinsmore.33 There, we held that contract law’s “definite-
ness” requirement does not apply to promissory estoppel.34
To explain this distinction, we stated that promissory estoppel
provides for damages as justice requires, rather than damages
based on the benefit of the bargain.35 In the “usual” case, we
anticipated that courts would award damages measured by the
promisee’s reliance.36 We note that if a promise is indefinite,
the theoretical availability of damages measured by the prom-
ise’s value might be moot.37
We did not limit damages to the extent of the promisee’s
reliance in every promissory estoppel case. As we said in
Rosnick, promissory estoppel provides for damages as justice
requires. Remedial flexibility is consistent with promissory
estoppel’s equitable roots.38 Justice does not require the same
measure of damages in every context.
31
See, Dynalectric v. Clark & Sullivan Constuct., supra note 29; US
Ecology, Inc. v. State, 129 Cal. App. 4th 887, 28 Cal. Rptr. 3d 894 (2005);
Hunter v. Hayes, 533 P.2d 952 (Colo. App. 1975).
32
See, e.g., Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69 (2d
Cir. 1989). But see Skebba v. Kasch, 297 Wis. 2d 401, 724 N.W.2d 408
(Wis. App. 2006).
33
Rosnick v. Dinsmore, 235 Neb. 738, 457 N.W.2d 793 (1990). See, also,
Goff-Hamel v. Obstetricians & Gyns. P.C., 256 Neb. 19, 588 N.W.2d 798
(1999).
34
Rosnick v. Dinsmore, supra note 33, 235 Neb. at 749, 457 N.W.2d at 800.
35
Id. But see Garwood Packaging, Inc. v. Allen & Co., Inc., 378 F.3d 698,
703 (7th Cir. 2004) (calling premise in Rosnick v. Dinsmore, supra note
33, “mistaken”).
36
Rosnick v. Dinsmore, supra note 33, 235 Neb. at 749, 457 N.W.2d at 800.
37
See Mary E. Becker, Promissory Estoppel Damages, 16 Hofstra L. Rev.
131 (1987).
38
See deNourie & Yost Homes v. Frost, supra note 1.
- 235 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
In the construction bidding context, courts have “consist­
ently and uniformly” measured the general contractor’s dam-
ages as the difference between the reneging subcontractor’s
bid and the amount the general contractor paid to replacement
subcontractors.39 Here, the court measured Weitz’ damages
in a consistent manner. It is “plain that justice required this
measure of damages.”40
[12] We reject H&S’ argument that Weitz did not prove
its damages with enough exactitude. A plaintiff’s burden is
to prove his or her damages to a reasonable certainty, not
beyond all reasonable doubt.41 Nor were Weitz’ damages zero
simply because Good Samaritan did not ask for a bid security.
As we explained above, H&S could not demand that Weitz
walk away from the project because H&S was unhappy with
its bid.
3. Election of R emedies
[13,14] Finally, H&S waived its argument that the court
should have required Weitz to elect between its contract and
promissory estoppel claims. The election of remedies doctrine
is an affirmative defense.42 A party must specifically plead an
39
Dynalectric v. Clark & Sullivan Construct., supra note 29, 127 Nev. at
486, 255 P.3d at 290. See, Preload Technology v. A.B. & J. Const. Co.,
Inc., supra note 17; Janke Const. Co., Inc. v. Vulcan Materials Co., 527
F.2d 772 (7th Cir. 1976); Matherne Contractor v. Grinnell Fire Protec.
Sys., supra note 4; Double AA Builders v. Grand State Const., 210 Ariz.
503, 114 P.3d 835 (Ariz. App. 2005); Riley Bros. Constr., Inc. v. Shuck,
704 N.W.2d 197 (Minn. App. 2005); Alaska Bussell Elec. v. Vern Hickel
Const., 688 P.2d 576 (Alaska 1984); Becker, supra note 37; Kovars
& Schollaert, supra note 15; Comment, Once More into the Breach:
Promissory Estoppel and Traditional Damage Doctrine, 37 U. Chi. L.
Rev. 559 (1970).
40
Dynalectric Co. v. Clark & Sullivan Construct., supra note 29, 127 Nev. at
487, 255 P.3d at 291.
41
See Dutton-Lainson Co. v. Continental Ins. Co., 279 Neb. 365, 778
N.W.2d 433 (2010).
42
Port. v. Smith, 240 Neb. 928, 486 N.W.2d 846 (1992).
- 236 -
Nebraska Supreme Court A dvance Sheets
294 Nebraska R eports
WEITZ CO. v. HANDS, INC.
Cite as 294 Neb. 215
affirmative defense for the court to consider it.43 H&S did not
specifically plead election of remedies as a defense, so we will
not consider it.
VI. CONCLUSION
We affirm the judgment for Weitz on its promissory estop-
pel claim. H&S’ bid was a promise, and it should have fore-
seen that Weitz, as was usual in the construction industry,
might rely on the bid. Weitz reasonably relied on the bid
by incorporating it in Weitz’ own bid to the project owner.
And the court could avoid injustice only by enforcing H&S’
bid. We further conclude that the court correctly measured
Weitz’ damages.
A ffirmed.
Miller-Lerman, J., not participating.
43
See Linscott v. Shasteen, 288 Neb. 276, 847 N.W.2d 283 (2014). See, also,
Neb. Ct. R. Pldg. § 6-1108(c).