New England Insulation Co. v. General Dynamics Corp.

Massachusetts Appeals Court · Contracts

Contractsbidding solicitationspromissory estoppelimplied contractmisrepresentationRule 12(b)(6)motion to dismissfailure to state a claim

Facts

General Dynamics invited the plaintiff to submit bids to insulate liquified-natural-gas spheres and tanker holds, and represented that submissions would be kept in a locked file and opened only after bid closing dates. The plaintiff alleged it submitted bids in reliance on those representations, but that before bid closing dates General Dynamics officers disclosed the plaintiff's prior bids and confidential engineering and design work to Frigitemp. The complaint further alleged General Dynamics knew or should have known its officers were participating in a kickback scheme with Frigitemp officers, solicited additional bids from the plaintiff even though Frigitemp had already been or would be selected regardless of price or qualifications, and intended to induce the plaintiff to participate in a sham bidding process. The plaintiff sought damages including lost profits.

Issue

Whether the complaint against a private bid solicitor should have been dismissed under Rule 12(b)(6) where the plaintiff alleged that the solicitor's representations induced it to submit bids, that the solicitor disclosed confidential bid information and design work to a favored competitor, and that the bidding process was a sham. More specifically, the question was whether those allegations could support any form of relief under theories such as implied promise, promissory estoppel, misrepresentation, or c. 93A.

Rule

A complaint may not be dismissed under Rule 12(b)(6) unless it appears beyond doubt that the plaintiff can prove no set of facts entitling it to relief; the allegations and favorable inferences must be taken as true, and dismissal is improper merely because the plaintiff advances a new theory of liability. Although requests for bids are ordinarily nonbinding invitations for offers and the solicitor need not accept any bid, a private solicitor may nevertheless limit its freedom to act by making representations in its solicitation that it knew or should have known bidders would reasonably rely on, including representations concerning confidentiality or fair treatment of bids.

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Cascade Thermal Systems, a private manufacturer in Portland, Maine, invited specialty contractors to submit bids for cryogenic piping work. Its written solicitation stated that all bids would be kept confidential until the deadline, but Orion Mechanical alleges Cascade shared Orion's pricing model with a favored rival before the deadline and never intended to consider Orion fairly; Orion's complaint labels the claim only as "breach of contract."

Cascade moves to dismiss, arguing that the complaint should fail because Orion pleaded the wrong legal theory and requests for bids are generally nonbinding. How should the court rule?

Explanation. The governing pleading rule is highly forgiving. On a Rule 12(b)(6) motion, the court takes the allegations and favorable inferences as true and asks whether the plaintiff may be entitled to any form of relief. The majority stressed that dismissal is improper merely because the plaintiff advances a new or imperfectly labeled theory. Although bid requests are ordinarily nonbinding invitations for offers, that does not foreclose relief where the solicitor allegedly made representations it knew or should have known bidders would rely on.