Weitz Company, LLC v. Hands, Inc.
294 Neb. 215 (2016)
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Rule of Law:
Under the doctrine of promissory estoppel, a subcontractor's bid is an enforceable promise if a general contractor reasonably relies on that bid to formulate and submit its own successful prime bid. The subcontractor is liable for the difference between its bid and the cost of a replacement subcontractor if it refuses to honor the bid.
Facts:
- Evangelical Lutheran Good Samaritan Society invited The Weitz Company, LLC (Weitz), a general contractor, to bid on a nursing facility project.
- Just 15 minutes before Weitz's bid deadline, Hands, Inc. (H&S) submitted a bid of $2,430,600 to Weitz for the project's plumbing and HVAC work.
- Weitz determined H&S's bid was comprehensive and reasonable for the market, and incorporated that amount into its own $9.2 million master bid to the project owner.
- The project owner accepted Weitz's bid and awarded it the contract for the nursing facility.
- Weitz promptly notified H&S that its bid had been used and that Weitz had been awarded the project.
- The owner of H&S, Hugh Sieck, Jr., learned his employees had submitted the bid against his prior instructions and directed them to find a mistake in the bid.
- H&S then informed Weitz it had made errors in its bid exceeding $250,000 and refused to perform the work for the bid price.
- To fulfill its contractual obligation to the owner, Weitz was forced to hire different subcontractors at a higher price to complete the plumbing and HVAC work.
Procedural Posture:
- Weitz filed a complaint against H&S in the District Court for Douglas County, Nebraska, alleging breach of contract and promissory estoppel.
- H&S filed an answer to the complaint.
- H&S later filed a motion requesting the court to require Weitz to elect between its two claims, which the trial court overruled.
- After a bench trial, the trial court found that no contract existed but entered judgment in favor of Weitz on the promissory estoppel claim, awarding damages of $292,492.
- H&S, as the appellant, appealed the trial court's judgment to the Nebraska Supreme Court.
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Issue:
Does the doctrine of promissory estoppel bind a subcontractor to its bid when a general contractor relies on that bid to formulate and submit its own successful bid for a construction project?
Opinions:
Majority - Justice Connolly
Yes. A subcontractor's bid constitutes an enforceable promise under the doctrine of promissory estoppel when a general contractor reasonably relies upon it in submitting its own prime bid. The court found all three elements of promissory estoppel were met. First, H&S made a promise—its bid—that it should have reasonably expected to induce Weitz's reliance, as it is customary in the construction industry for general contractors to rely on subcontractor bids, especially those submitted close to a deadline. Second, Weitz did in fact rely on the bid by incorporating its value into its own successful master bid to the project owner. This reliance was reasonable because H&S's bid was not so low as to suggest an obvious mistake, Weitz had only 15 minutes to review it, and industry practice supports such reliance. Third, injustice could only be avoided by enforcing the promise, as Weitz was contractually bound to the project owner and would otherwise have to absorb the loss caused by H&S's mistake. The loss resulting from the mistake should fall on the party who caused it—H&S.
Analysis:
This decision affirms the application of the rule from Drennan v. Star Paving Co. in Nebraska, reinforcing promissory estoppel as a vital legal tool for maintaining fairness and predictability in construction bidding. It establishes that a subcontractor's bid is not a mere offer that can be revoked at will but an irrevocable promise for a reasonable time once the general contractor has detrimentally relied on it. The ruling protects general contractors from being caught between their binding prime contract and a subcontractor who reneges, placing the risk of a mistaken bid squarely on the party that made the error.
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