LeCesse v. Kozel

NY: Supreme Court, Monroe
168 Misc. 2d 759, 640 NYS 2d 957 (1996)

ELI5:

Rule of Law:

A general contractor is precluded from enforcing a subcontractor's bid under the doctrine of promissory estoppel if, after being awarded the prime contract, the general contractor attempts to renegotiate the terms of the bid or engage in 'bid chiseling' rather than accepting the original offer.

Facts:

LeCesse, a general contractor, was preparing a bid for the Omega Upgrade Project at the University of Rochester.
In response to a solicitation, Kozel, a subcontractor, submitted a written bid for Division 3 reinforcing steel work and a separate oral bid of $55,000 for Division 5 structural steel work.
LeCesse incorporated Kozel's oral bid for the Division 5 work into its final bid for the general contract.
LeCesse was subsequently awarded the general contract by the University of Rochester.
After the award, a LeCesse employee called Kozel and stated he 'would like to talk to them about doing a deal for both the reinforcing and the structural steel,' admitting he did not state that Kozel had been awarded the subcontract.
Shortly thereafter, a Kozel vice-president called LeCesse and stated that Kozel would not perform the Division 5 work.
LeCesse then sent Kozel a letter of intent to enter into a contract that included new terms not in the original bid, such as a waiver of mechanic's lien rights and a requirement to purchase additional insurance.
Kozel refused to sign the letter with the new terms and again notified LeCesse that it would not perform the work, leading LeCesse to hire another subcontractor at a higher price.

Procedural Posture:

LeCesse, a general contractor, filed a complaint against Kozel, a subcontractor, in the New York Supreme Court for Monroe County, a trial-level court.
The complaint sought damages under theories of breach of contract and promissory estoppel.
Kozel, the defendant, moved for summary judgment to have the complaint dismissed.

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does a general contractor's attempt to renegotiate the terms of a subcontractor's bid after being awarded the prime contract preclude the general contractor from enforcing the original bid under a theory of promissory estoppel?

Opinions:

Majority - Kenneth R. Fisher, J.

Yes. A general contractor cannot enforce a subcontractor's bid under promissory estoppel if the general contractor attempts to renegotiate the bid's terms after winning the prime contract. To establish a claim for promissory estoppel, a plaintiff must show a clear and unambiguous promise, reasonable and foreseeable reliance on that promise, and an injury resulting from that reliance. While LeCesse may have initially relied on Kozel's bid when submitting its own prime bid, its subsequent actions negated that reliance. Instead of accepting Kozel's bid, LeCesse attempted to 'do a deal' to consolidate two separate work divisions and change the price and scope. This conduct, known as 'bid chiseling,' is inconsistent with the good-faith reliance that the doctrine of promissory estoppel requires. By reopening negotiations and attempting to impose new, more onerous terms, LeCesse demonstrated it was no longer relying on the original bid, thereby forfeiting its right to enforce it.

Analysis:

This case clarifies a significant limitation on the doctrine of promissory estoppel within the context of construction bidding in New York. While the doctrine can protect a general contractor who reasonably relies on a subcontractor's bid, this decision establishes that such protection is not absolute. The ruling holds that a general contractor's reliance is broken if they engage in post-award negotiations or 'bid chiseling.' This prevents general contractors from using a subcontractor's bid as a binding floor while simultaneously attempting to negotiate a more favorable deal, thus promoting fair dealing in the bidding process and preventing the doctrine from being used as a tool for unfair leverage.

Gunnerbot

AI-powered case assistant

Loaded: LeCesse v. Kozel (1996)

Try: "What was the holding?" or "Explain the dissent"