BUNKOFF GENERAL CONTRACTORS INC v. DUNHAM ELECTRIC INC

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Supreme Court, Appellate Division, Third Department, New York.

BUNKOFF GENERAL CONTRACTORS, INC., Respondent, v. DUNHAM ELECTRIC, INC., Appellant.

Decided: December 26, 2002

Before:  CREW III, J.P., CARPINELLO, MUGGLIN, ROSE and KANE, JJ. Delaney & Granich, Albany (Michael P. Delaney of counsel), for appellant. Couch White, Albany (Jeremy M. Smith of counsel), for respondent.

Appeal from an order of the County Court of Albany County (Lamont, J.), entered December 3, 2001, which affirmed an order of the Albany City Court denying defendant's motion for summary judgment.

Plaintiff was the successful bidder as general contractor for a local renovation project.   In preparing its bid, plaintiff incorporated a quotation for electrical work submitted by defendant.   According to plaintiff, before submitting its bid to the owner, its representatives contacted defendant's president to confirm the quotation and informed him that if it was awarded the project, the electrical work would be awarded to defendant.1  Prior to awarding the bid to anyone, however, the owner importuned plaintiff, and apparently all other bidders, to come up with cost reduction suggestions.   Plaintiff, in turn, contacted each of its subcontractors, including defendant, for their input on the issue.

Defendant thereafter made two written proposals containing various cost reductions, which plaintiff passed on to the owner.   According to plaintiff, before finalizing its own status as the successful bidder for the general contract, its president informed defendant's president that the electrical quotation as amended was being used to bid the project and again reiterated that, if awarded, defendant would be given the electrical subcontract (but see n. 1).   After plaintiff was formally awarded the contract, but before any written subcontract was executed between them, defendant refused to perform the electrical work on the project.2  Plaintiff secured another electrical subcontractor for a higher price and then commenced this action in City Court sounding in promissory estoppel to recover the difference between defendant's bid and the amount paid to the substitute subcontractor.   Defendant unsuccessfully moved for summary judgment, prompting an appeal to County Court, which affirmed.   Defendant now further appeals to this Court.

 As an initial matter, we reject defendant's prefatory argument that the doctrine of promissory estoppel is not a legally cognizable cause of action in disputes of this type (i.e., construction contract bids) (see Nory Constr. Co. v. Genesee Le Roy Stone Corp., 207 A.D.2d 969, 616 N.Y.S.2d 835;  King & Son v. De Santis Constr. No. 2 Corp., 97 Misc.2d 1063, 413 N.Y.S.2d 78, mod. 65 A.D.2d 695, 410 N.Y.S.2d 2;  see also D.A. Elia Constr. Corp. v. Lyco, 1991 WL 128733, Elfvin, J., affd. 963 F.2d 1521;  compare P.J. Carlin Constr. Co. v. Whiffen Elec. Co., 66 A.D.2d 684, 411 N.Y.S.2d 27, appeal dismissed 46 N.Y.2d 1075;  Rochester Plumbing Supply Co. v. A. Burgart, 49 A.D.2d 78, 370 N.Y.S.2d 716;  S.J. Groves & Sons Co. v. L.M. Pike & Son, 41 A.D.2d 584, 340 N.Y.S.2d 230;  Rouse Constr. Corp. v. Albany Acoustical Corp., 9 A.D.2d 38, 189 N.Y.S.2d 532;  Edward Joy Co. v. Noise Control Prod., 111 Misc.2d 64, 443 N.Y.S.2d 361).   While the Court of Appeals has itself never explicitly applied the doctrine of promissory estoppel (see Schwartz, The Second Circuit “Estopped”:  There is No Promissory Estoppel in New York, 19 Cardozo L. Rev. 1201 [1997] ), the Court has also never explicitly rejected it as an independent basis for recovery.   Moreover, this Court has indeed recognized and applied promissory estoppel as a viable cause of action generally (see e.g. Fleet Bank v. Pine Knoll Corp., 290 A.D.2d 792, 796-797, 736 N.Y.S.2d 737;  Scott v. KeyCorp, 247 A.D.2d 722, 725, 669 N.Y.S.2d 76;  Fourth Branch Assoc. Mechanicville v. Niagara Mohawk Power Corp., 235 A.D.2d 962, 964, 653 N.Y.S.2d 412;  Freedman & Son v. A.I. Credit Corp., 226 A.D.2d 1002, 641 N.Y.S.2d 429;  Nicit v. Nicit, 160 A.D.2d 1213, 1214, 555 N.Y.S.2d 474;  Silver v. Mohasco Corp., 94 A.D.2d 820, 822, 462 N.Y.S.2d 917, affd. 62 N.Y.2d 741, 476 N.Y.S.2d 822, 465 N.E.2d 361).   Thus, in our view, the weight of controlling, recent authority compels the conclusion that the doctrine can be asserted as a viable cause of action in this state (see e.g. id.;   see also Cyberchron Corp. v. Calldata Sys. Dev., 47 F.3d 39;  Management Inv. Funding Ltd. v. Merrill Lynch, Pierce, Fenner & Smith, 2000 WL 145461, Sand, J., revd on other grounds sub nom.  Compagnie Financiere De Cic Et De L'UNION Europeenne v. Merrill Lynch, Pierce, Fenner & Smith, 232 F.3d 153;  but see Schwartz, The Second Circuit “Estopped”:  There is No Promissory Estoppel in New York, supra ) and in this particular type of commercial transaction (see Nory Constr. Co. v. Genesee LeRoy Stone Corp., supra;  King & Son v. De Santis Constr. No. 2 Corp., supra;  D.A. Elia Constr. Corp. v. Lyco, supra;  see also;  Preload Tech. v. A.B. & J. Constr. Co., 696 F.2d 1080;  Debron Corp. v. National Homes Constr. Corp., 493 F.2d 352;  Drennan v. Star Paving Corp., 51 Cal.2d 409, 333 P.2d 757;  Pavel Enters. v. A.S. Johnson Co., 342 Md. 143, 674 A.2d 521;  but see Baird Co. v. Gimbel Bros., 64 F.2d 344).3

 We next reject defendant's alternative contention that it is entitled to summary judgment.   As aptly stated in Gellerman v. Oleet (164 Misc.2d 715, 718, 625 N.Y.S.2d 831), “the concept of promissory estoppel provides a remedy for persons who detrimentally rely upon the promises of others and are injured thereby.”   Thus, in order to prevail in the instant action, plaintiff must demonstrate that defendant “made a clear and unambiguous promise, upon which the former reasonably relied, to its detriment” (Freedman & Son v. A.I. Credit Corp., supra at 1003, 641 N.Y.S.2d 429).   Upon our review of the documentary and testimonial evidence in the record, we find that questions of fact exist concerning whether defendant indeed made a clear and unambiguous promise to plaintiff when it submitted its quote and amended quote and also whether plaintiff reasonably relied upon defendant in submitting its own bid to the project owner (cf. LAHR Constr. Corp. v. Kozel & Son, 168 Misc.2d 759, 765-766, 640 N.Y.S.2d 957).

ORDERED that the order is affirmed, with costs.

FOOTNOTES

1.   To be sure, defendant's president disputes this point, claiming that no representative of plaintiff ever informed him that if plaintiff “got the job,” defendant “got the job.”

2.   Indeed, it appears that defendant refused to do the work before it received the written subcontract from plaintiff.   Thus, defendant's claim that it rejected the project because the subcontract contained terms which were not agreed upon appears specious.

3.   The issue of whether the doctrine of promissory estoppel should be applied in construction bidding cases has been widely and continuously debated for nearly seven decades (see e.g. Schneider, Maryland's Application of Promissory Estoppel in Construction Industry Bidding Disputes:  Eliminating Further Confusion, 30 U. Balt. L. Rev. 171 [2000];  Siegfried & Lawrence, Home Electric v. Hall & Underdown Heating & Air Conditioning:  Mutuality Remains the Only Solution to the Construction Bidding Problem, 9 Construction Law 3 [1989];  Murphy, Promissory Estoppel:  Subcontractors' Liability in Construction Bidding Cases, 63 N.C. L. Rev. 387 [1985];  Bishop, The Subcontractor's Bid:  An Option Contract Arising through Promissory Estoppel, 34 Emory L. J. 421 [1985];  Closen & 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, 583 [1980];  Schriber, Construction Contracts-The Problem of Offer and Acceptance in the General Contractor-Subcontractor Relationship, 37 U. Cinn. L. Rev. 798 [1980];  Schultz, The Firm Offer Puzzle:  A Study of Business Practice in the Construction Industry, 19 U. Chi. L. Rev. 237, 239 [1952];  Note, Contracts-Promissory Estoppel, 20 V.A.L. Rev. 214 [1933] ).

CARPINELLO, J.

CREW III, J.P., MUGGLIN, ROSE and KANE, JJ., concur.

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