Skyrise Construction Group, LLC v. Annex Construction, LLC, 2019 BL 55071 (E.D. Wis. Feb. 20, 2019)
Subcontractor Skyrise Construction, Inc. (“Skyrise”) sued general contractor Annex Construction, Inc. (“Annex”) for breach of contract, promissory estoppel, negligent misrepresentation, and violations of Wisconsin and Illinois trade practices statutes. Skyrise primarily based its claims on an assertion that the parties entered into a subcontract, which Annex breached when it removed Skyrise from the project and completed the work with an alternative subcontractor. Both Skyrise and Annex filed motions for summary judgment. The District Court denied Skyrise’s motion and granted Annex’s motion.
Skyrise submitted a $970,000 bid to Annex to perform rough framing and window installation work for a student housing project. Skyrise then revised its bid to $950,000, and Annex sent Skyrise a letter of intent, stating that it was “the intention of Annex Construction, LLC to enter into a contract with Skyrise Construction Group, LLC for rough carpentry work associates with the [project],” and that Annex “will work on getting [Skyrise] contract documents in the near future.” Annex next mailed a proposed subcontract to Skyrise, and Skyrise responded the next day that it was “still reviewing the contract.”
In the meantime, Annex signed and returned Skyrise’s revised bid proposal and it stated that the contract terms were still to be finalized. Skyrise next sent Annex the proposed subcontract with its handwritten edits, but Annex never signed it. The parties then discussed expanding Skyrise’s project scope, and Skyrise submitted a revised proposal.
Annex ultimately became unhappy with Skyrise’s performance, and notified Skyrise that it was rejecting Skyrise’s amended proposal. Annex also informed Skyrise that it did not agree with Skyrise’s edits to the subcontract, and that it intended to use an alternative subcontractor.
The Court cited to Wisconsin law that provides that a contract requires offer, acceptance and consideration; and that an acceptance that varies the terms of the offer constitutes a rejection and a counteroffer. The Court also stated that “the status of a document as a contract depends on what the parties express to each other… [and] the binding force of the document depends on public or shared expressions.” The court then determined that Annex’s response to Skyline’s revised bid was not an unequivocal acceptance, and thus constituted a rejection and counteroffer. Further, the Court determined that Annex’s signing of Skyline’s proposal did not create a contract, as the communication made it clear that the contract terms were still being considered by both parties. The Court also found that Skyrise’s signing of the marked-up contract did not constitute a contract, as the parties had not agreed to the altered terms. Because the parties did not mutually agree on the contractual documents communicated between the parties, no contract was formed. Thus, Annex did not breach any agreement.
Skyrise also alleged a promissory estoppel claim, based on its assertion that Annex promised it a contract and this promise induced Skyrise to forgo other work from October 2017 to March 2018. The Court noted that Annex wanted to enter into a contract, but that Annex asked Skyline to revise its proposal and did not promise that an agreement would be reached. The Court said that Skyline should have known that the contract negotiations could fall apart without an agreement, and thus the promise should not have induced any forbearance from Skyrise. Wisconsin law also does not support a subcontractor’s reliance on the general contractor entering into a subcontract merely because the subcontractor submits a bid, and so the Court held that Skyline was not entitled to an equitable remedy.
The Court also held that because Annex never promised to enter into a contract, Annex could not be liable on a claim for negligent representation. On similar grounds, the Court dismissed Skyline’s claims for Deceptive Trade Practices and violation of the Illinois Consumer Fraud Act, as Skyline could not demonstrate that Annex was deceptive. Ultimately, the Court denied Skyrise’s motion for summary judgment, and granted Annex’s motion for summary judgment.
To view the full text of the court’s decision, courtesy of Bloomberg Law, click here.