Double AA Builders v. Grand State Construction

Arizona Court of Appeals · Contracts

ContractsPromissory EstoppelConstruction BidsStatute of FraudsAttorneys' Feespromissory estoppelsubcontractor bidgeneral contractor reliance

Facts

Double AA, a general contractor, solicited subcontractor bids for work on a Home Depot project and received Grand State's written but unsigned faxed bid of $115,000 to install EIFS, stating that its price was good for 30 days. Double AA used that bid in calculating and submitting its overall project bid, then after being awarded the project mailed Grand State a subcontract within 24 days of the bid. Grand State refused to sign or perform, explaining that because of its schedule and other contracts it would not enter the contract. Double AA hired a replacement subcontractor for $131,449 and sued for the $16,449 difference under promissory estoppel.

Issue

May a general contractor enforce a subcontractor's bid under promissory estoppel when the general contractor relied on the bid in submitting its own successful project bid? Also, did the statute of frauds bar recovery, and may attorneys' fees be awarded under A.R.S. § 12-341.01(A) on a promissory estoppel claim?

Rule

Promissory estoppel may be applied to subcontractor bids to general contractors if the subcontractor made a promise, should reasonably have foreseen that the general contractor would rely on it, the general contractor in fact relied on it, and the general contractor had a justifiable right to rely; if those elements are proven, the promise is binding if injustice can be avoided only by enforcing it. For a mixed goods-services transaction, the statute of frauds turns on whether the predominant purpose of the contemplated contract is the sale of goods or the rendition of services. A recovery based on promissory estoppel does not arise out of an express or implied contract within A.R.S. § 12-341.01(A), and even if treated as contractual it is at most implied in law, not implied in fact.

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Pine Mesa Contractors in Tucson solicited bids for masonry work on a library project. Rosa Vega, owner of Desert Arch Masonry, sent a written quote stating the project name, the wall scope, a price of $94,000, progress-payment terms, and that the "price is firm for 21 days," but the quote was not signed.

If Pine Mesa used Rosa's quote in its successful prime bid and Rosa later refused to perform because she found more profitable work, which argument by Pine Mesa is strongest?

Explanation. The majority held that a subcontractor's written quotation can constitute a promise when it identifies the job, scope of work, price, and terms, and states the price is good for a specified period. The absence of a signature did not prevent the court from treating the communication as a promise for promissory-estoppel purposes. Pine Mesa's strongest point is therefore that Rosa made an unequivocal promise to perform at the stated price for the stated time. (Derived from Double AA Builders v. Grand State Construction (n.d.).)