CITIROOF, COPR. v. Tech Contracting Co.

SHARER, J. In this dispute between a general contractor and a potential subcontractor, judgment was entered in favor of the former, appellee Tech Contracting Company, Inc., (“Tech”) against the latter, Citiroof Corporation, (“Citiroof’) appellant. The judgment, entered following a bench trial in the Circuit Court for Baltimore City, has prompted this appeal, in which Citiroof presents for our review one question which, as slightly recast, is: Was the circuit court clearly erroneous in finding that Tech had proven the elements of detrimental reliance? We find no error, and shall affirm. Factual History In March 2000, Tech, a general contractor, in response to a request for bids, submitted a bid to Baltimore County for construction of the Winfield Police Athletic League Center project (“the project”).

As part of the process of calculating prices and assembling its bid, Tech solicited proposals from potential subcontractors. In that context, Tech received bids for the roofing portion of the project, including a bid from appellant Citiroof, a contracting company that performs both general contracting and subcontracting services. ⁵⁸² At the time, Paul Welch was Citiroofs project estimator. Welch received plans and partial specifications for two similar Baltimore County construction projects, one of which was the project. That information was supplied not by Tech, but by another general contractor who was also a potential bidder.

Welch did not have plans and specifications for the entire project, only the specifications for the roofing and a roof plan without dimensions. Based upon the information available to him, Welch, on March 16, 2000, faxed unsolicited bids to a number of general contractors, including Tech. Citiroofs price for the work was $32,200, which, as we shall discuss, was in error. Because the original bid day was postponed by Baltimore County, Tech did not immediately look closely at Citiroofs bid until the rescheduled bid day, March 21, 2000.

On March 21, 2000, Tech received a second bid of $62,803 for the roofing subcontract work from Jottan, Inc. Richard Chapolini, 1 Tech’s president, testified that he realized, given the difference between the two prices, that “somebody has got to be right, and somebody has got to be wrong [sic].” While Chapolini recognized that one of the bids was “grossly” wrong, he did not know then whether it was Citiroofs or Jottan’s. Chapolini telephoned Welch and informed him that Citiroofs price was “rather low.” The only factor affecting the price that was discussed between Chapolini and Welch during that call was the wage scale. Square footage was not discussed. Until that time, Welch was unaware that the project was subject to a Davis-Bacon wage scale. 2 When informed of this fact, Welch recalculated the price to include the higher ⁵⁸³ wage rates.

He then faxed Citiroofs amended bid to Tech on March 21, 2000, increasing the price by $6,700. Chapolini then asked Welch if he “had everything included in the bid .. . and [if he] was comfortable with it ... [because] if his price held up,” Tech planned to use it in its bid to the owner. By “held up,” Chapolini confirmed that he meant, if Citiroof was the lowest bidder, Tech would incorporate Citiroofs price into its bid. Welch testified that during this same conversation, he asked Chapolini how Citiroofs revised bid stood in comparison to the other roof subcontract bids.

Chapolini responded that Citiroofs revised bid was “more in line,” When Tech’s bid was submitted to the owner, it included the price quoted by Citiroof for the roofing phase of the project. Chapolini testified that, based upon Welch’s assurance that he was “comfortable” with Citiroofs figures, Tech used Citiroofs price. The Means Construction Guide is a construction industry publication that is used by contractors to estimate prices for construction projects. Witnesses for both parties testified to their general reliance on the Means Guide.

Chapolini told the court that, after the Tech bid was submitted to Baltimore County, he consulted the Means Guide to reconcile the large disparity between the Jottan and Citiroof bid numbers. In doing so, he determined that Jottan’s final price was “fair and reasonable.” Timothy Maloney, president of Citiroof, was qualified as an expert 3 and told the court that a reasonably prudent contractor, upon receiving two bids with a disparity of such magnitude, should contact the subcontractors to advise of the disparity. The discussion should include the dominant unit measure of square footage and other aspects of the submitted price. ⁵⁸⁴ He also testified that the general contractor ought to obtain additional bids, or if time did not permit such verification or substantiation, the exceptionally low bid should be disregarded. Maloney also provided an opinion that the disparity would indicate to a reasonably prudent general contractor that there was an error in square footage used in the calculation of the low bid.

Chapolini testified that on March 22, the day after submitting Tech’s bid to the County, Welch came to his (Chapolini’s) office. 4 He recounted the visit: Well, he obviously was anxious to know what was going to happen with the bid. I told him that we were the low bidder, but that’s really about all we knew at that point. There’s so many variables in awarding a contract that we have to wait and see exactly what the County is going to do .... all of the documents have to be reviewed by their Contracts Administration Department, and we typically don’t comment on a bid until we get some positive reaction from the owner. At that time, Chapolini said nothing about awarding the contract to Citiroof.

On March 28, 2000, Tech received notification from Baltimore County that its bid was low and that it would be awarded the contract. Tech faxed a standard “Letter of Intent” to Citiroof, dated April 19, 2000, stating: This letter of intent will be subject to your successful execution of our contract which will be forwarded to you as soon as possible. This letter of intent supersedes all previous contracts and or proposals and does not include any exclusions, terms or conditions of any previous contracts or proposal otherwise indicated. On April 25, 2000, at Citiroof s request, Tech forwarded a full set of drawings and specifications to Citiroof.

Although Citiroof received the drawings and plans on April 25, 2000, they were not reviewed until just before the final submittals were due on May 8,2000. ⁵⁸⁵ It was that review that caused Welch to realize that the roof plan upon which he calculated Citiroof s bids was “half sized.” 5 He immediately informed Maloney, who agreed that, because the wrong scale had been used, only half the square footage had been calculated, and the price was approximately one-half what it should have been. Maloney then did his own analysis for the project, consulting the Means Guide, and determined the proper price for the work ought to have been $57,000. Maloney also determined the price quoted to Tech would not cover Citiroof s direct costs of performing the work, which he calculated to be $42,000, exclusive of the Davis-Baeon wage adjustment. After discovering the error, Maloney faxed a letter on May 8, 2000, to Tech advising that Citiroof was withdrawing its bid.

Citiroof made no mention in this letter of any mistake or miscalculation in its bid. The next day Tech sent a letter to Citiroof asking it to reconsider its withdrawal. During his discussions with Chapolini, Maloney explained that Citiroof would not do the work because of the gross mistake on the bid that was not discovered until after Citiroof had received a full set of plans and specifications. Maloney testified that, in his experience, Baltimore County would allow a general contractor to withdraw its bid if it was determined that it was based upon an erroneous subcontractor’s price.

After Citiroof declined to perform, Tech sent a letter of intent to Jottan on July 14, 2000, stating that it would contract with Jottan for the roofing at a price of $59,196, 6 and did so on July 18, 2000. The Litigation Tech filed a civil action in the District Court of Maryland for Baltimore City, seeking damages based on the difference ⁵⁸⁶ between the price quoted by Citiroof (upon which it based its bid to the owner) and the cost of the roofing work performed by Jottan. Citiroof demanded a jury trial, resulting in transfer to the circuit court, after which the parties jointly waived trial by jury. The case was tried before the court on November 5, 2003.

The court rendered a judgment in favor of Tech, finding that the evidence was sufficient to satisfy the elements of detrimental reliance. The court made the following findings: In Pavel, [7] and I don’t think that there is clearly established here a binding contractual obligation between the parties. I think the analysis has to fall on the issue of whether there was reasonable reliance by the general contractor of [the] bid that was submitted by the subcontractor, and whether they combined then under the four criteria that are [set] forth in the restatement, and adopted by the Court of Appeals in the Pavel decision. [With regard to the third element in Pavel, reasonable reliance] It says there are many different ways to establish it I suppose, and they made several observation[s]. And last was, that [if] a sub bid is so low that a reasonably prudent general contractor would not rely upon it; the trier of fact may infer that the general contractor did not, in fact, rely upon the erroneous bid.

And I have no problem with that observation. Under the facts of this ease however, I’m not convinced that it fits. Because there was not a wide spectrum of subcontract bids, there were two. One was at almost $60,000.00 and one was at $32,200.00.

And Mr. Chapellini’s [sic] testimony was he knew there was something wrong, but that does not prove that he knew a mistake had been made by Tech. And unlike in Pavel, we have evidence here the subcontractor was told that there was something wrong. And if you look at Mr. Welch’s ⁵⁸⁷ notes, he says in recording what happened in this conversation; discussed certain items to verify specs only because were significantly lower. Well, that’s a pretty strong clue that there’s something amiss.

And then, of course, the conversation turns to the scale wages and he fixes on that, and assumes that’s the problem, and must have been satisfied ... once he changed that, that that [sic] was putting him more in line. I don’t know that there’s any obligation, nobody cited me any authority that there’s an obligation on the part of the general to indicate exactly what he might believe is the problem. Even if he had a sense that it might have been the square footage, I don’t know that he’s under any obligation to say that. There was a lot of talk about various obligations, and I think the most honest answer came from Mr. Maloney ... when asked ... whether he knew a lot of subs that would drop their price once the general was in a squeeze.

And [Maloney] said nobody he knows in his industry is likely to do that. I think that’s pretty much the way the industry works. To suggest that they had [an] obligation to withdraw their bid and lose the job because there was a mistake on the part of the sub, I don’t know that that’s the industry standard by anybody’s means. The actual knowledge of what Means [Construction Guide] would have shown the appropriate bid number, the range for it to be in, the testimony and evidence as it came to Mr. Chapellini [sic] well after he knew they were withdrawing, not before he knew they were withdrawing.

And at that point, when he checked it and saw that they were off, and that Jotten was closer to the actual number, I don’t think it’s unreasonable for him to then try and negotiate the best number he can with the only bidder he’s got once he knows that they’re in the appropriate range. It’s unfortunate for the original sub