Opinion
Case No. 1:00-CV-787
May 21, 2002
Kevin B. Even/Michael J. Gardner, for Plaintiffs.
Matthew J. Malleis/David W. Neeb/William D. Howard, Defendants.
ORDER
In accordance with the Opinion filed this date,
IT IS HEREBY ORDERED that Defendants' Motion For Partial Summary Judgment (docket no. 40) is GRANTED.
IT IS FURTHER ORDERED that Plaintiff's Motion for Partial Summary Judgment (docket no. 39) is DENIED.
As set forth in the Court's Opinion, as a matter of law, the parties' agreement was a time and materials agreement at the rates set forth in Bay Shipbuilding Company's Price Schedule and there was no $4 million not-to-exceed agreement. In addition, because the Price Schedule governed, Plaintiff's defective coatings claim is barred as untimely.
OPINION
Plaintiff. Lake Michigan Contractors. Inc. ("LMC"), has sued Defendants, The Manitowoc Company, Inc. ("Manitowoc") and Bay Shipbuilding Company ("BSC"), alleging that Defendants breached an agreement to construct a dredge (the "Dredge") by failing to adhere to the schedule, failing to perform the work in an enclosed facility, and failing to perform the work in a timely, cost effective manner. Now before the Court is LMC's motion for partial summary judgment and Defendants' motion for partial summary judgment.
In its motion, LMC requests summary judgment on its claim that BSC agreed to build the Dredge for a not-to-exceed price of $4 million or, in the alternative, on its claim under the doctrine of promissory estoppel for enforcement of the alleged $4 million not-to-exceed price. in their motion. Defendants request summary judgment on their contention that the parties' contract was a time and materials agreement that was governed by BSC's Price Schedule. Defendants also ask the Court to hold that LMC's claim for defective coatings is bred by the express terms of the Price Schedule. For the reasons set forth below, the Court will grant Defendants' motion and deny LMC's motion.
I. Facts and Procedural History
LMC is a Florida corporation with its principal place of business in Holland, Michigan. LMC is a small company engaged in the business of dredging in the Great Lakes region and in Florida primarily for the Army Corps of Engineers. LMC has a fleet of five dredges it uses in its operations. BSC is based in Sturgeon Bay, Wisconsin, and is engaged in the construction and repair of vessels. In 1999, LMC became interested in acquiring a dredge with deeper dredging capability to enable LMC to obtain maintenance dredging work created as a result of Congress' passage of the Water Resources Development Act. (Walsh Dep. at 62-63, Pl.s Mem. Supp. Ex. 1.) In September 1999, LMC sent letters to shipyards located on the Great Lakes and Gulf of Mexico soliciting interest in performing work to convert the barge WESTERN BRAVE, which LMC owned, into a dredge. BSC and other shipyards expressed an interest in performing the work.
On October 8, 1999, BSC representatives Patrick O'Hern ("O'Hern") and Todd Thayse ("Thayse") met with LMC representatives Joseph Walsh ("Walsh"), Jim Bundt, and Mary Van Dyke ("Van Dyke") at LMC's offices in Holland, Michigan. During the meeting, the parties discussed the work necessary to modify the barge WESTERN BRAVE into a dredge. O'Hern and Thayse examined the WESTERN BRAVE and determined that it could be successfully converted to a dredge, subject to certain limitations. (Thayse Dep. at 7-8, Pl.s Mem. Supp. Ex. 4.) Because LMC did not have any plans or specifications for the work to be performed, BSC was unable to submit a conventional bid or proposal for the work. (O'Hern Aff. ¶ 3, attached to Defs.' Br. Supp.) However, O'Hern and Walsh did discuss the possibility of BSC doing the work on a time and materials ("T M") basis. Id.) During the meeting. Walsh and/or other LMC representatives expressed concern that adverse weather conditions in the Great Lakes area could adversely affect the work. Walsh Aff. ¶ 10, attached to Defs.' Br. Supp. O'Hern stated that the work could be done in BSC's heated fabrication shop. thus allowing the work to be completed without hindrance from the weather. Id. ¶ 10) The parties did not reach any definite agreement at the conclusion of the meeting, although it appears that they anticipated that BSC would perform at least some of the work. (Thayse Dep. at
Following the October 8 meeting. O'Hern sent Walsh a letter along with BSC's current Price Schedule and Equipment Charge List the "Price Schedule"). The letter stated. "Should you consider simple T M arrangement, the rates within these schedules would apply" (Letter from O'Hern to Walsh of 10/11/99, Pl's Mem. Supp. Ex. 6.) The letter also gave a rough estimation of $900,000 for the "defined work", including extension of the hull, removal from and replacement into the water, deck strapping, and exterior paint.
In late October or early November 1999. LMC delivered the WESTERN BRAVE to BSC's facility in Sturgeon Bay, Wisconsin. Representatives of LMC and BSC met at BSC's facility in early November to discuss the scope of the work to be performed. On November 4. after Further discussions regarding the cost and suitability of the WESTERN BRAVE for the intended purpose, LMC decided to construct an entirely new cutter dredge (the "Dredge") instead of converting the WESTERN BRAVE to a dredge. Tim Graul ("Graul"), a naval architect hired by LMC, attended the meetings. On November 5, Graul produced a drawing to BSC showing the dimensions of the Dredge to ensure that it would fit inside BSC's fabrication shop. Based upon the drawing, BSC offered to construct the hull of the Dredge for $1.00 per pound and the deck house for $1.15 per pound, and LMC accepted the offer. The parties also agreed that the hull would be built in BSC's covered fabrication shop. Because the drawing was very basic, there was no agreement on additional work. However, it was understood that if LMC chose to have BSC perform additional work, it would be done on a T M basis. Whether the parties discussed the rates that would apply to the T M work is subject to dispute. O'Hern and Peter Delong, who handled the dredging equipment aspects for LMC, both testified that the participants understood that BSC's standard rate of $36 per hour plus a 15% mark-up on materials, as set forth in the Price Schedule, would apply. (O'Hern Dep. at 39-41; Delong Dep. at 88-90, Malleis Aff. Ex. A, attached to Defs.' Br. Supp.) On the other hand, Walsh testified that there was no discussion about the labor rates that would apply to T M work. (Walsh Dep. at 243-45.) BSC began the work in December 1999, after LMC wired it $1 million.
Although LMC made the decision to construct a new dredge instead of using the WESTERN BRAVE, there appears to be a dispute about which party determined that construction of an entirely new vessel would he more efficient and cost effective, O'Hern indicates that Walsh made the decision based upon input from LMC's advisors and representatives that construction of a new vessel would be more efficient and cost effective, O'Hern Dep. at 29-30 Pl's Mem. Supp. Ex. 4: O'Hern Aff. ¶ 7, Walsh indicates that BSC suggested that construction of a new vessel would be more cost effective (Walsh Aff. ¶ 13.) Resolution of this issue, however, is not material to the Court's determination of the instant motions.
On or about January 21, 2000, Walsh made a visit to B SC's facility to view the construction of the Dredge. During that visit, O'Hern recommended to Walsh that, due to the large number of changes in the design, he consider having the hull and the deckhouse built on a T M basis in order to avoid the delay and additional expense involved in having BSC price out all the additional change orders. (O'Hern Aff. ¶ 11; Walsh Dep. at 155-59.) Walsh agreed to the proposal, and from that point on, BSC billed LMC strictly on a T M basis. Shortly after the work was converted to a T M basis, BSC began providing Customer Tracking Reports ("CTR's"), which contained the rates and detailed the number of hours and materials spent on a particular job number relating to the project, to Donald Rossetti ("Rossetti"). LMC's on-site representative and project manager. (O'Hern Aff. ¶ 3.) BSC also sent CTR's directly to LMC from May 2000 until completion of the Dredge. Rossetti used the CTR's to determine whether the amount charged for the work performed was reasonable. Rossetti 5/29/01 Dep. at 61-62. Malleis Aff Ex. C.)
In March 2000. BSC decided to move the Dredge out of the covered fabrication shop and into the graving dock. (Walsh Dep. at 216-20.) When Walsh learned of this decision. Walsh voiced his objection to LMC because BSC had agreed to construct the barge entirely within the covered shop. (Id. at 203.) In mid-April. Walsh went to BSC's facility to review the progress of the construction as well as to discuss BSC's decision to move the Dredge from the fabrication shop. As a result of those discussions. BSC agreed to keep the Dredge inside the fabrication shop until mid-May. (Id. at 225-230.)
There is some dispute regarding the reason for BSC's decision to move the Dredge. LMC claims that BSC moved the Dredge in order to commence construction of a new vessel for another customer. BSC claims that it decided to move the Dredge due to size and/or weight concerns. It has also been suggested that when BSC first agreed to construct the Dredge in the covered shop. it was expected that the Dredge would he completed by April 2000 and that due to LMC's changes and additions to the design. the project was delayed to the point that it began to interfere with BSC's other work to be performed in the covered shop. In any event, the reason for the move is not material to the instant motions.
Shortly before his April trip to BSC. Walsh obtained time and material rates from McNally. a Canadian shipyard. for completion of the work on the Dredge. (Id. at 284-85.) Walsh also had Rossetti and David Anderson, another LMC representative at BSC's facility, determine the total number of hours required to complete the work as well as the total cost based upon the rates provided by McNally. (Id. at 285: Fax from Ashworth to Walsh of 4/15/00. Pl's Mem. Supp. Ex. 21.) At that point. LMC had paid BSC approximately $2.4 million. (Walsh Dep. at 282.) Rossetti estimated that the cost of completion at McNally would be about $3.6 to $3.8 million based upon an estimate of 25,000 to 28,000 man hours. (Id. at 287; Ashworth Fax at LMC 000883.) At some point during Walsh's visit to BSC in mid-April, Walsh and O'Hern had a discussion regarding the cost to complete the Dredge. During the discussion, O'Hern told Walsh that BSC could complete the Dredge for $4 million. (Walsh Dep. at 290-302; O'Hern Dep. at 95-97.) Walsh claims that the $4 million figure was a not-to-exceed price offered by O'Hern in order to persuade LMC not to remove the Dredge from BSC to another shipyard. (Walsh Dep. at 290-93.) O'Hern claims that the he gave Walsh the $4 million figure as an estimate based upon an undefined scope of work after being pressured by Walsh for a total cost to complete the Dredge. (O'Hern Dep. at 96-97; O'Hern Aff. ¶ 14.)
On June 15, 2000, Bruce Shaw of BSC told Kemma Walsh, Walsh's wife and president of LMC, that the cost to complete the Dredge would exceed $6 million. (Letter from Kemma Walsh to Shaw of 6/26/00 at 2, O'Hern Aff. Ex. C.) By July 7, 2000, BSC had billed LMC $5.4 million, and by August 3, 2000, BSC had billed LMC more than $6.5 million. (Letter from Kemma Walsh to Shaw of 7/7/00, Neeb Aff. Ex. H, attached to Defs.' Reply Br.; O'Hern Aff. ¶ 17.) BSC continued to bill LMC on a T M basis until September 2000, when BSC completed its work on the Dredge. (O'Hern Aff. ¶¶ 11, 15.) By the time BSC completed its work, it had billed LMC approximately $7.7 million. LMC paid this amount to BSC without ever claiming that O'Hern, on behalf of BSC, had agreed to complete the Dredge for $4 million in April.
LMC filed a five-paragraph complaint against Defendants on September 29, 2000, alleging that BSC agreed it "would build a dredge in a timely, cost effective manner, and build that dredge in [BSC's] enclosed construction facility," but that it "failed to adhere to schedule, failed to prosecute the work in the enclosed facility and [1 failed to perform the work in a timely, cost effective manner." (Compl. ¶¶ 4. §.) On December 2000. Defendants filed a motion to transfer venue. In support of its opposition to that motion. LMC submitted an affidavit from Walsh setting forth the details of the parties' dispute. Walsh stated in his affidavit that "O'Hern stated that the total cost to [LMC} would not exceed $4,000,000" but did not assert that this statement amounted to a not-to-exceed agreement limiting LMC's cost to 54 million. (Walsh 12/15/00 Aff. ¶ 21. attached to Defs. Br. Supp.) The Court ultimately denied the motion in its February [6, 2000. Order. LMC made its initial Rule 26(a)(1) pretrial disclosure in early January 2001. setting forth damages of $1,650,000 for BSC overcharges. $475,000 for LMC direct costs, $340,000 for LMC extended overhead, and $445,000 for LMC lost profits. LMC did not identify damages based upon the alleged $4 million agreement in the initial disclosure, nor did it do so in its first and second supplemental disclosures made on January 10. 2001. and May s. 2001 In fact. LMC did not indicate that it was seeking damages based upon the alleged $4 million not-to-exceed price until February 21, 2002. when it made its third supplemental pretrial disclosure.
II. Summary Judgment Standard
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. Material facts are facts which are defined by substantive law and are necessary to apply the law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). A dispute is genuine if a reasonable jury could return judgment for the non-moving party. Id.
The court must draw all inferences in a light most favorable to the non-moving party, but may grant summary judgment when "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Agristor Financial Corp. v. Van Sickle, 967 F.2d 233, 236 (6th Cir. 1992) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986)).
III. Discussion
A. The $4 Million Agreement
LMC contends that it is entitled to judgment as a matter of law that O'Hern agreed to complete the Dredge for a total (not-to-exceed) price of $4 million. In the alternative, LMC contends that it is entitled to partial summary judgment on a promissory estoppel theory based upon O'Hern s alleged $4 million promise. BSC contends that there was no such agreement and that the evidence demonstrates that the parties' agreement was for work to be performed on a T M basis pursuant to the terms of BSC's Price Schedule. BSC further argues that LMC's breach of contract and promissory estoppel claims are barred because LMC did not seek leave to amend its complaint within the time set forth in the Scheduling Order.
1. LMC's $4 Million Claim Is Barred By Its Failure To Amend
BSC argues that LMC is barred from asserting any claim based upon the alleged $4 million agreement because it did not allege such a claim in its complaint and LMC has never requested leave to assert such a claim. LMC responds that its complaint gave BSC sufficient notice of the claim. LMC has also requested the opportunity to amend its complaint if the Court determines that an amendment was required. LMC asserts that it should be allowed to amend because BSC has had sufficient notice throughout this case of LMC's assertion of a claim based upon the $4 million agreement.
Rule 8(a) of the Federal Rules of Civil Procedure requires only that a pleading set forth "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Under this rule, [a] complaint need not set down in detail all the particularities of a plaintiff's claim against a defendant." Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir. 1976). All that is required is a short and plain statement of the claim that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Leatherman v. Tarrant County Narcotics Intelligence Coordination Unit, 507 U.S. 163, 168, 113 S.Ct. 1160. 1163 (1993) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103 (1957)). A complaint alleging a breach of contract claim meets Rule 8(a)'s liberal pleading requirements if it alleges the existence of the contract and describes the breach. See Native Am. Arts, Inc. v. Adobe Moon Arts, Inc., No. 00 C 5267, 2001 WL 55544, at *4 (N.D. Ill. Jan. 18, 2001) (holding that an allegation that a defendant failed to indemnify under an indemnification agreement gave the defendant sufficient notice of the claim); Textil RV Ltd A v. Italuomo, Inc., No. 92 Civ. 526 (P1 (PKL), 1993 WL 118503, at *3 (S.D.N.Y Apr. 13, 1993) (holding that the counterclaim provided sufficient notice where it alleged that the parties entered into a contract for the production and delivery of goods and that the counter-defendant breached the contract by failing to commence operation of a product line and was responsible for inexcusable delays in shipment of the merchandise). On the other hand, a complaint which does not allege sufficient details about the contract, such as the parties. its substance, or how it was breached, fails to provide proper notice. Hardin v. DuPont Scandinavia (Ara-Jet), 731 F. Supp. 1202, 1205 (S.D.N.Y. 1990).
Even under the liberal pleading standards of Rule 8(a), LMC's complaint does not give BSC notice that LMC is claiming that BSC contracted to construct the Dredge for a not-to-exceed price of $4 million (regardless of whether that number was inclusive or exclusive of changes or modifications after April 2000) and that BSC breached that agreement by charging LMC more than $4 million. LMC alleges only that BSC agreed to build the Dredge "in a timely, cost effective manner" in BSC's "enclosed construction facility." (Compl. ¶ 4.) The alleged breaches are limited to BSC's "fail[ure] to adhere to schedule, fail[ure] to prosecute the work in the enclosed facility and fail[ure] to perform the work in a timely, cost effective manner." (Id. ¶ 5.) Because LMC's claim is based upon an oral rather than a written contract that could simply be attached to the complaint or identified by reference, the substance of the contract, including a $4 million promise, would be especially helpful in understanding the claim and the grounds upon which it rests. LMC's complaint does not come close to satisfying the notice requirement with respect to the promissory estoppel claim. The complaint does not give so much as a hint of the elements of, let alone refer to, a promissory estoppel claim. Thus, amendment is required for LMC to present those claims.
Under Rule 15(a) of the Federal Rules of Civil Procedure, once a responsive pleading has been filed, "a party may amend the party's pleading only by leave of court or by written consent of the adverse party." Fed.R.Civ.P. 15(a). Rule 15(a) also provides that "leave shall be freely given when justice so requires." Id. The mandate that "leave shall be freely given" embodies "the principle that cases 'should be tried on their merits rather than the technicalities of the pleadings.'" Moore v. City of Paducah, 790 F.2d 557, 559 (6th Cir. 1986) (per curiam) (quoting Tefft v. Seward, 689 F.2d 637, 639 (6th Cir. 1982)). However, because a Rule 16 order has been entered in this case, the Court can consider whether LMC has satisfied the more liberal standards of Rule 15(a) only if LMC makes the showing required by Rule 16(b) for modification of a scheduling order. W. Va. Hous. Dev. Fund v. Ocwen Tech. Xchange, Inc., 200 F.R.D. 564, 566 (SD. W. Va. 2001). Rule 16(b) states that "[a] schedule shall not be modified except upon a showing of good cause."
Rule 16(b)'s good cause standard is much different than the more lenient standard contained in Rule 15 (a). Rule 16(b) does not focus on the bad faith of the movant. or the prejudice to the opposing party. Rather, it focuses on the diligence of the party seeking leave to modify the scheduling order to permit the proposed amendment. Properly construed. "good cause means that scheduling deadlines cannot be met despite a party's diligent efforts
Dilmar Oil Co. v. Federated Mut. Ins. Co., 986 F. Supp. 959. 980 (D.S.C. 1997) (citations omitted); see also United States v. Boyce, 148 F. Supp.2d 1069, 1078 (S.D. Cal. 2001) (noting that Rule 16(b)'s "good cause" inquiry focuses upon the diligence of the party seeking the amendment)s Scheidecker v. Arvig Enters., Inc., i93 F.R.D. 630, 631 (D. Minn. 2000)("The 'good cause' standard is an exacting one, for it demands a demonstration that the existing schedule "cannot reasonably be met despite the diligence of the party seeking the extension." (quoting Federal Rules of Civil Procedure, Advisory Comm. Notes — 1983 Am.)).
LMC cannot meet Rule 16(b)'s good cause requirement because it did not act diligently in seeking a modification of the scheduling order. This is not a situation where LMC could have learned of the basis for its claim only through discovery. Instead, LMC had all the evidence necessary to assert the existence of the alleged 84 million promise in its possession from the very beginning of the case, as demonstrated by the Walsh affidavit it submitted in opposition to the motion to transfer venue. LMC has offered no explanation for failing to seek a modification of the scheduling order at an earlier date, although it does assert that BSC had notice of the claim and would not be prejudiced by the amendment. The Court disagrees with LMC's notice argument. however, because even though LMC did mention that O'Hern said the Dredge could be completed for 84 million, LMC has not cited any instance prior to its final supplemental Rule 26 disclosure where it claimed that O'Hern agreed to a not-do-exceed price of 84 million.
Finally, even if the Court determined that LMC's request for leave to amend should considered under the more liberal standard of Rule 15(a), the Court would still deny leave because the amendment would be futile. As set forth below, amendment would be futile because the claim would not survive a motion for summary judgment. State Mut. Life Assurance Co. of Am. v. Deer Creek Park, 612 F.2d 259, 270 (6th Cir. 1979).
2. LMC's Evidence Fails To Prove A Binding $4 Million Promise
Under Wisconsin law, the elements of a valid contract are an offer, an acceptance, and consideration. NBZ, Inc. v. Pilarski, 185 Wis.2d 827, 837, 520 N.W.2d 93, 96 (Wis.Ct.App. 1994). An enforceable contract is created only where there is a meeting of the minds between the parties on all the essential terms of the contract. Shetney v. Shetney, 49 Wis.2d 26, 38-39, 181 N.W.2d 516, 522 (Wis. 1970); Carlson v. Grimsrud, 223 Wis. 561, 561, 270 N.W. 50, 51 (Wis. 1936). If the parties do not intend to contract, there can be no meeting of the minds. Household Utilities, Inc. v. Andrews Co., 71 Wis.2d 17, 29, 236 N.W.2d 663, 669 (Wis. 1976). When an oral contract is at issue, "[t]he intent of the parties . . . must necessarily be derived from a consideration of their words, written and oral, and their actions.' Id.; see also Karp v. Coolview of Wis., Inc., 25 Wis.2d 299, 303, 130 N.W.2d 790, 792 (Wis. 1964)("In a breach of contract action . . . an individual course of dealing between two parties may be proven as having probative value to show the intention of the parties to a contract or on what the parties had a right to depend in their dealing."). In addition, the essential terms of a contract must be definite. "To be enforceable a contract must be definite and certain as to its basis terms and requirements. It must spell out the essential commitments and the obligations of each party with reasonable certainty." Witt v. Realist. Inc., 18 Wis.2d 282. 297, 118 N.W.2d 85. 93 (Wis. 1962).
The parties have agreed that Wisconsin law applies to this case.
Whether the terms of a contract are too indefinite to enforce may be either a question of fact for the jury or a question of law for the court. Mgmt. Computer Servs., Inc. v. Hawkings, Ash. Baptie Co., 206 Wis.2d 158, 178, 557 N.W.2d 67, 75 (Wis. 1996).
A court cannot enforce a contract unless it can determine what it is. It is not enough that the parties think that they have made a contract; they must have expressed their intentions in a maimer that is capable of understanding. It is not even enough that they have actually agreed. if their expressions. when interpreted in the light of accompanying factors and circumstances, are not such that the court can determine what the terms of that agreement are. Vagueness of expression. indefiniteness and uncertainty as to any of the essential terms of an agreement. have often been held to prevent the creation of a contract.
Shetney. 49 Wis.2d at 38-39, 181 N.W.2d at 522 (quoting 1 Corbin on Contracts § 95 (3d ed.)).
LMC contends that it has presented evidence showing an oral agreement that contains all of the elements necessary for an enforceable contract. LMC asserts that O'Hern offered to complete the Dredge for 54 million, and LMC accepted the offer by leaving the Dredge at BSC for completion rather than moving it and having it completed by another shipyard. In addition. LMC argues that the agreement was supported by sufficient consideration because BSC benefitted by the 84 million payment and LMC suffered a detriment by foregoing the opportunity to have another shipyard complete the Dredge. Finally. LMC argues that O'Hern's offer was sufficiently definite because Graul had finished almost all of his drawings for the Dredge and the scope of the remaining work was reasonably well-defined. LMC points out that the parties knew BSC's charges to date and were able to make a reasonable estimate of the remaining work.
LMC's claim fails because the evidence regarding the parties' objective manifestations demonstrates that there was no meeting of the minds between Walsh and O'Hern on a not-to-exceed agreement. LMC's best evidence supporting its claim is O'Hern's alleged statement to Walsh that BSC would complete the Dredge for a total price of $4 million. LMC buttresses its claim by presenting evidence that shortly before the time Walsh and O'Hern had this conversation, Walsh asked Rossetti to estimate the cost of completing the Dredge at the McNally shipyard. LMC further asserts that Walsh shared this information, or at least his intention to move the Dredge to another shipyard for completion, as a means of obtaining a final cost of completion from BSC. The primary shortcoming of LMC's claim is that while Walsh and O'Hern discussed the $4 million figure, LMC cannot identify with any precision the particulars of the alleged agreement. For example, in his deposition, Walsh confirmed that O'Hern made a "final agreement" to complete the Dredge for $4 million without any mention of compensation for subsequent changes or additions LMC might make to the Dredge. (Walsh Dep. at 17, 291, 298-99.) In its brief in support of its motion for summary judgment, LMC maintains, alternatively, that the agreement was to complete the Dredge for a not-to-exceed price of $4 million and that the agreement was to complete the Dredge or a not-to-exceed price of $4 million plus charges for any changes or modifications by LMC after April of 2000. (Pl.'s Br. Supp. at 7 7 fn.8.) LMC fails to cite any evidence for the latter formulation of the agreement. These are not the only versions, however. On May 8, 2000, Mary Van Dyke, LMC's office manager, sent a fax to O'Hern regarding BSC's total charges to date. Van Dyke informed O'Hern that Walsh "thought that both of you were in mutual agreement that LMC will have spent approximately 4 million at [BSC] by the time [the Dredge] is moved out of the graving dock." (Fax from Van Dyke to O'Hern of 5/8/00, O'Hern Aff. ¶ 15 Ex. B.) Thus, under this version of the agreement, the $4 million figure was limited to work performed in the covered fabrication shop and did not apply to work performed after May 13, 2000, when the Dredge was moved from the fabrication shop into the graving dock. Given LMC's own uncertainty regarding the agreement, there is no basis For concluding that there was a meeting of the minds between Walsh and O'Hern. who asserts that the $4 million figure was only an estimate.
The statements in Van Dyke's fax are admissible under Federal Rule of Evidence 801(d)(2) because they are statements by LMC agents acting within the scope of their employment. EEOC v. HBE Corp., 135 F.3d 543, 552 (8th Cir. 1998).
The parties' words and conduct following the April conversation between Walsh and O'Hern further refute LMC's claim of an agreement. As set forth above, once LMC made the decision to construct a new dredge, the parties agreed that BSC would build the hull for a price of S 1.00 per pound and the deckhouse for $1.15 per pound. based upon Graul's initial drawing. In January 2000. after construction had been underway for several weeks, LMC and BSC agreed that the work would be performed on a T M basis, and thereafter, BSC billed and LMC paid on a T M basis. If, as LMC contends, the parties reached the not-to-exceed agreement, it would be reasonable to expect a change in the parties' conduct. For example, BSC would have ceased billing LMC on a T M basis and would have stopped billing altogether after late May or early June 2000, when BSC's billings reached 54 million. Similarly. it would be reasonable to expect LMC to object to any billings in excess of 54 million and to refuse to pay those amounts. There is no dispute. however. that BSC's billings reached and continued beyond the $4 million level and that LMC continued to pay those bills without once asserting that BSC could not charge LMC more than $4 million. In fact, the evidence demonstrates that the parties' course of conduct did not change because they knew that the $4 million figure was only an estimate and was not intended as a not-to-exceed price. In her May 8, 2000, fax to O'Hern, Van Dyke indicated that Walsh's concern was "that the Vortex is far from being ready to be moved and already you are at 3, 5-i- million and closing in on the 4 million dollar mark," and requested that O'Hern call Walsh "if the estimation is no longer accurate." On June 26. 2000, Kemma Walsh sent a letter to Bruce Shaw of BSC regarding BSC's "performance." After recounting the background of the pricing agreement, Kemma Walsh stated:
On April 17, 2000 I visited your facility and asked you how much it would cost for the total job. At that point, the project was approximately 65% complete. Lake Michigan had discharged the marine architect and the scope of the work was fixed. You stated that the total cost to Lake Michigan would not exceed $4,000,000.
On June 15, 2000, you stated that the cost to complete would exceed $6,000,000.
(Letter from Kemma Walsh to Shaw of 6/26/00 at 1-2.) Kemma Walsh also demanded "a full accounting for the manhours expended and charged to Lake Michigan on this project," requested a number of documents from BSC, and concluded by stating that LMC would "conduct an analysis of [BSC's] means, methods sequencing, scheduling and performance" and would "not pay [BSC] for [its] inefficiencies, poor planning or defective work." (Id. at 2-3.) On August 3, 2000, Kemma Walsh wrote a letter to O'Hern regarding the ongoing payment dispute, in which she stated:
With regard to contract performance, Lake Michigan has repeatedly stated that it will pay you for the work you performed. Our dispute with your company concerns your inefficiencies and added charges which were incurred solely to benefit Bay Shipbuilding Company, e.g. moving the dredge our (sic) of the building before the dredge was ready for the move, poor scheduling and poor manning. Interestingly, since our June 22 complaint, you have made significant improvements in planning and executing the work.
(Letter from Kemma Walsh to O'Hern of 8/3/00, O'Hern Aff. ¶ 17 Ex. D (italics added).) At the time Kemma Walsh sent her August 3 letter, BSC had billed LMC over $6.5 million. Kemma Walsh's concerns expressed in her August 3 letter as well as those expressed in her June 26 letter regarding inefficiencies and poor planning are consistent with the understanding expressed in Van Dyke's May 8 fax that the $4 million figure was an estimate because if LMC did in fact believe that BSC had agreed to a not-to-exceed price. BSC's inefficiencies would be of no concern to LMC.
Kemma Walsh sent many other letters to BSC raising issues of BSC's inefficiencies, poor planning, overbilling, and defective work. None of those letters made any reference to the alleged $4 million not-to-exceed agreement. (Letter from Kemma Walsh to Shaw of 6/29/00. Neeb Aff Ex. K, attached to Def.'s Br. Opp'n.: Letter from Kemma Walsh to Shaw of 7/7/00. Neeb Aff. Ex. M; Letter from Kemma Walsh to Shaw of 7/19/00, Neeb Aff. Ex. N; Letter from Kemma Walsh to Shaw of 7/26/00. Neeb All Ex. O; Letter from Kemma Walsh to Shaw of 8/2/00. Neeb Aff Ex. P; Letter from Kemma Walsh to Shaw of 8/9/00. Neeb Aff. Ex. R; Letter from Kemma Walsh to Shaw of 8/17/00. Neeb Aff. Ex. 5; Letter from Kemma Walsh to Shaw of 9/15/00. Neeb Aff. Ex. T.)
Walsh's after-the-fact testimony that O'Hern agreed to a 54 million not-to-exceed price is insufficient to create a genuine issue of material fact sufficient to defeat BSC's motion for summary judgment. All of the evidence occurring between November 1999 and September 2000. when the Dredge was being constructed, shows that both parties knew that they were operating under a T M agreement and that LMC fully understood that the $4 million figure Walsh and O'Hern discussed was nothing more than an estimate. Walsh's contradictory assertion in his deposition is analogous to that of a party who attempts to contradict her prior deposition testimony by tiling an affidavit in response to a motion for summary judgment. See Reid v. Sears. Roebuck Co., 790 F.2d 453, 459-60 (6th Cir. 1986). Here, Walsh's deposition testimony contradicts his words and conduct during construction of the Dredge an admission no different than an oral admission in a deposition — and cannot serve as a means of defeating B SC's motion for summary judgment. Moreover, Walsh's testimony contradicts LMC's admission in its answer to BSC's counterclaim that "the parties later agreed that construction of the cutter dredge would be completed on a time and materials basis." (Pl.'s Answer Affirmative Defenses To Defs.' Counterclaim ¶ 6.)
LMC also supports its claim by pointing to the fact that after O'Hern made the alleged agreement. Walsh instructed Rossetti to stop preparing cost reports. In light of the substantial evidence showing that Walsh and LMC understood that the $4 million figure was an estimate and that BSC's costs and efficiency remained a concern to LMC and to Rossetti long after BSC's charges reached the $4 million level, that evidence is insufficient to raise a genuine issue of material fact. LMC cites two letters as showing that Kemma Walsh did raise the issue of a not-to-exceed agreement with BSC. On June 29, 2000, Bruce Shaw wrote a letter to Kemma Walsh in which he stated: "There was no agreement on a not to exceed cost and on that basis we went forward." (Letter from Shaw to Kemma Walsh of 6/29/00, Pl.'s Reply Br. Ex. 2.) The same day, Kemma Walsh wrote back stating "Lake Michigan disagrees with the factual allegations in your letter dated June 29, 2000." (Letter from Kemma Walsh to Shaw of 6/29/00, Pl.'s Reply Br. Ex. 3.) LMC reads these two statements together as an assertion by Kemma Walsh that there was a not-to-exceed agreement. This argument must be rejected because it takes Shaw's statement out of context. It is clear that Shaw was referring to the agreement to convert from the per pound price agreement to a T M basis, not the alleged $4 million agreement:
While the parties did originally agree on a per pound price for the basic hull as defined at that time, numerous customer changes during design and construction caused the hull to become considerably more complex. It was therefore no longer appropriate to use the original fixed price and the parties agreed to proceed on a time and material basis. There was no agreement on a not to exceed cost and on that basis we went forward.
(Letter from Shaw to Kemma Walsh of 6/29/00.) Finally, LMC explains that it continued to pay BSC after the cost reached $4 million because LMC had no other choice but to continue to pay for the work in the face of BSC's threat to cease work entirely if it was not paid. This contention must be rejected because the evidence shows that LMC always had the option of ordering BSC to stop work, paying it for the work performed, and moving the Dredge to another shipyard for completion. This was especially true in the latter part of May or the early part of June. when the billings reached the $4 million limit. Even at that point. LMC could have removed the Dredge and paid another shipyard the additional $3-4 million (or less as LMC contends) it paid to BSC to complete the Dredge. In any event, regardless of BSC's threats to stop work, LMC was never precluded from asserting that BSC's billings were contrary to the $4 million agreement.
According to the May 8, 2000. fax from Van Dyke, Walsh and O'Hern were in agreement that BSC's charges would have been about $4 million by the time the Dredge was moved out of the fabrication shop to the graving dock. The Dredge was moved on or about May 13. and the billings reached $4 million within a couple of weeks after that time. At that point. Walsh had two options: "Plan A [wa]s take it to the graving dock and finish it at [BSC], and Plan B [wa]s I pay my bill and I can take this vessel anywhere else in this country I want or anywhere I want and finish it anywhere else" (Walsh Dep. at 235-36.)
The Court also agrees with BSC that Walsh's failure to mention the alleged agreement in his December 15. 2000. affidavit further undercuts LMC's claim that there was an agreement. LMC contends the omission is unremarkable because the affidavit was filed in opposition to a motion to transfer venue. This argument ignores the fact that Walsh's affidavit set forth many of the significant facts regarding the parties' dealings, such as the initial per-pound pricing agreement and the agreement to convert to a T M basis. The alleged $4 million not-to-exceed agreement would clearly be the most significant event to LMC in this litigation, and it is unlikely that Walsh's failure to mention the agreement was a mere oversight.
Apart from a lack of a meeting of the minds, LMC's claim fails because the alleged agreement was too indefinite with respect to the work included in the $4 million price. LMC contends that as of April. Graul was finished with most of his drawings and the scope of work was sufficiently defined to enable BSC to determine what work would be necessary to complete the Dredge. Despite its assertion that it would be a "simple matter" to determine what items were covered by the alleged agreement. (Pl's Reply Br. at 8), LMC has failed to submit any evidence showing which items were covered by the agreement and which were not. Moreover, LMC does not dispute BSC's evidence that LMC continued to make substantial changes and submit new job orders after the date of the alleged agreement. (O'Hern Aff. ¶ 14 (stating that "the estimate did not take into consideration the scores of changes and major new tasks ordered by LMC"); Letter from O'Hern to Kemma Walsh of 7/6/00, Neeb Aff. Ex. L ("Job orders are being modified and added daily at the direction of your representatives."); Report of C. Leonard Willis, P.E. of 2/20/01 at 14, Neeb Aff. Ex. H ("Instead of issuing a set of drawings and/or specifications defining the required work and calling upon BSC to plan and perform the work accordingly, LMC elected to alter the work required by BSC as the final Dredge design evolved concurrently with its construction. BSC was also directed to meet unforseen requirements to alter, modify, adapt, and/or repair LMC-furnished equipment and/or components.").)
3. There Is No Basis For LMC's Promissory Estoppel Claim
In order to establish a claim for promissory estoppel, a plaintiff must show: (1) a promise which the promissor should reasonably expect to induce action or forbearance of a definite and substantial nature by the promisee; (2) the promise in fact induced action or forbearance; and (3) injustice can only be avoided by enforcement of the promise. Hoffman v. Red Owl Stores, Inc., 26 Wis.2d 683, 698, 133 N.W.2d 267, 275 (Wis. 1965). LMC's claim fails because, as set forth above, LMC cannot prove that BSC agreed to complete the Dredge for a not-to-exceed price of $4 million. Thus, there was no promise upon which LMC could rely. Furthermore, even if LMC could prove the alleged promise, the Court would still reject the claim because LMC cannot show that its reliance on the promise was reasonable — a factor to be considered in determining whether the promise should be enforced. See U.S. Oil Co. v. Midwest Auto Care Servs., Inc., 150 Wis.2d 80, 91-92, 440 N.W.2d 825, 829 (Wis.Ct.App. 1989) (citing Restatement (Second) of Contracts § 139(2) (1981)). In spite of LMC's assertion that the scope of the work was reasonably well defined, the evidence shows that the scope of the required work was far from reasonably well defined. The evidence also shows that LMC itself was uncertain about what the promise entailed. Under these circumstances, LMC's reliance could not have been reasonable. Finally, LMC's claim must fail because it has not submitted any evidence to prove that it relied to its detriment. LMC claims that by keeping the Dredge at BSC it gave up the opportunity to have the Dredge completed elsewhere at less cost. LMC has not presented any evidence that another shipyard could have completed the Dredge under the same conditions for less than BSC charged. Thus. LMC has not shown that it suffered a detriment.
B. The BSC Price Schedule
Having concluded that there was no agreement that BSC would complete the Dredge for $4 million, the Court now turns to BSC's claim that its Price Schedule applied to the parties' agreement. It is undisputed that the agreement was a T M agreement. (Pl's Answer Affirmative Defenses To Def.'s Counterclaim ¶ 6 ("Plaintiff admits that the parties later agreed that construction of the cutter dredge would be completed on a time and materials basis.").) However, LMC contends that the Price Schedule did not govern the T M agreement. Although the parties did not expressly agree in writing that the Price Schedule would apply, BSC contends that the undisputed evidence shows that the parties understood that the Price Schedule applied to the work BSC was performing.
Wisconsin, like most other states, recognizes that although the terms of an agreement may be vague or unclear, they may become clear by examination of the words and conduct of the parties showing the interpretation they have adopted.
Even though the parties have expressed an agreement in terms so vague and indefinite as to be incapable interpretation with a reasonable degree of certainty, they may cure this defect by their subsequent conduct and by their own practical interpretation. . . . If the expressions used leave the subject matter, or the price or the time or any other element of the performance incapable of determination, the rendition of a part or all of the performance may make clear the meaning that should be given to those expressions.
Nelson v. Farmers Mut. Auto. Ins. Co., 4 Wis.2d 36, 51, 90 N.W.2d 123, 131 (Wis. 1958) (quoting 1 Corbin on Contracts § 101 (1st ed. 1950)).
The evidence shows that on October 11, 1999, O'Hern sent a letter to Walsh enclosing a copy of the Price Schedule and stating, "Should you consider a simple T M arrangement, the rates within these schedules would apply." (Letter from O'Hern to Walsh of 10/11/99.) LMC does not deny receipt of this letter. Thus, LMC was aware of the Price Schedule and BSC's intent that it would apply to any T M arrangement early on in the parties' relationship. There is also substantial evidence that the parties discussed the Price Schedule during the November meetings and understood that if LMC chose to have BSC perform additional work beyond the construction of the hull and the deckhouse, the rates in the Price Schedule would apply. For instance, Peter Delong, who designed the dredging machinery aspects of the Dredge for LMC, testified that during those meetings the parties agreed that BSC would build the hull for $1.00 per pound and the deckhouse for $1.15 per pound and acknowledged that any additional work by BSC would be performed on a T M basis at the rates set forth in the Price Schedule. (Delong Dep. at 89-90.) Delong also testified that someone had a copy of the Price Schedule during those meetings and LMC and its representatives all understood that the Price Schedule would apply to any T M work. (Id.) O'Hern gave similar testimony. While O'Hern acknowledged that the only agreement reached during the November meetings was the per pound pricing for construction of the hull and the deckhouse, he stated that it was understood by the participants that if LMC chose to give additional work to BSC, that work would be performed on a T M basis at the rates set forth in the Price Schedule. (O'Hern Dep. at 40-41.) O'Hern testified that except for mentioning the $36 labor rate and the 15% materials markup set forth in the Price Schedule, the parties did not go through the Price Schedule in "precise detail," but he is sure that it was discussed. (Id. at 39-40). Likewise, Thayse, another BSC representative present at the meetings, testified:
My understanding of the agreement was that we would build the hull as was described by the drawing, by the preliminary drawing, in that detail for a fixed price that him and Pat had negotiated, and that all other services would be purchased at time and material or to be priced out later upon his request. That was my understanding, and that was fairly clear.
(Thayse Dep. at 16.) In January 2000, the parties agreed to convert the fixed price agreement for construction of the hull and deckhouse to a T M basis, so that a/I work after that point would be performed on a T M basis. From that point until completion of the Dredge, BSC charged LMC for labor and materials based upon the rates set forth in the BSC Price Schedule, and LMC paid those charges without asserting that some other rate applied. (O'Hern Aff. ¶ 11.) When the agreement was converted to a T M basis, BSC began furnishing CTRs to Rossetti, LMC's on-site representative, at Rossetti's request. The CTRs detailed the number of hours and materials for each job as well as the amounts being billed for those items. Rossetti used the CTRs to keep track of the labor and material charges for each of the separate job tasks being performed. (Rossetti 5/29/01 Dep. at 62, Malleis Aff Ex. C, attached to Defs.' Br. Supp.) Rossetti testified mat when the parties switched to the T M arrangement. Walsh told him to get the "cost schedule" from BSC to use in reviewing the CTRs. (Rossetti 10/16/01 Dep. at 106-08, Malleis Aff. Ex. D.) Thus, Rossetti was aware from the CTRs as well as the information provided by BSC of rates that applied to the work by BSC.
LMC contends that in spite of B SC's evidence, there remains a genuine issue of material fact with regard to whether the Price Schedule applied to the T M agreement. LMC points out that Walsh testified in his deposition that there was no discussion at the November meetings regarding the labor rates that would apply for T M work. (Walsh Dep. at 243-45, Pl.'s Mem. Opp'n Ex. 3.) LMC also argues that the Court should not consider Delong's testimony because he was not an LMC employee whose testimony could bind LMC and he did not explain how he knew that LMC understood the Price Schedule would govern. In addition, LMC contends that Walsh and Thayse both gave testimony that was contradictory to Delong's testimony because Walsh and Thayse testified that the per pound agreement for construction of the hull and deckhouse was the only agreement reached during the November meetings. (O'Hern Dep. at 38; Thayse Dep. at 16.) Finally, LMC has presented an affidavit from Rossetti for the purpose of clarifying his prior deposition testimony about the Price Schedule. Rossetti states that although he was asked questions in his deposition about the Price Schedule, he was actually referring to a list containing daily rental rates for equipment and labor rates provided by Julie Koch of BSC rather than the Price Schedule. (Rossetti Aff. ¶¶ 4-5, 9 Pl.'s Mem. Opp'n Ex. 4.) In fact, Rossetti states that Julie Koch did not provide the Price Schedule to him and that he did not receive the Price Schedule at all, nor was he aware of it, between November 1999 and September 2001. (Id. ¶ 10.)
The Court concludes that BSC has presented sufficient evidence to establish as a matter of law that the Price Schedule applied to the T M agreement, and LMC has failed to present evidence sufficient to create a genuine issue of fact. BSC provided the Price Schedule to Walsh early on in the relationship and expressly stated that the terms in the Price Schedule would apply if LMC agreed to a T M arrangement. While the initial agreement was a fixed unit price agreement for construction of the deck ($1.00 per pound) and the hull ($1.15 per pound), there is no dispute that both parties understood that any additional work would be performed on a T M basis. There is also no dispute that the parties changed their agreement to a T M basis in January 2000, and at that point BSC began billing LMC on a T M basis at the rates set forth in the Price Schedule. Moreover, it is undisputed that LMC paid BSC's charges at the rates set forth in the Price Schedule without once ever asserting that it had never agreed to those rates or that some other rate applied.
There is also ample evidence that all LMC representatives understood and agreed that the Price Schedule was in effect. For example. Walsh testified that during his April visit to BSC's facility, Shaw, the president of BSC, offered to reduce the labor rate of $36 per hour to $32 per hour and not to charge the usual 15% mark-up for owner furnished equipment as a concession for moving the Dredge out of the covered shop. (Walsh Dep. at 226-28, 246-50.) In fact. Walsh testified that the $36 per hour labor rate — the rate in the Price Schedule wasn't a big surprise. (Id. at 247.) In addition. Walsh stated in his affidavit filed in response to Defendants' motion to transfer venue that he agreed to convert to a T M agreement "at a fixed rate of $32.50 per hour for all classifications of workers." (Walsh Aff. ¶¶ 14-16.) The $32.50 rate is the rate in the Price Schedule for all trade classifications. (O'Hern Aff. ¶ 12.) Regardless of whether he had received or knew about the Price Schedule. Rossetti also was aware of the applicable rates. On July 22, 2000, Rossetti made a claim against Ameron, a vendor of paint used on the Dredge. Rossetti used the same $36 per hour rate contained in the Price Schedule. (Mem. from Rossetti to Stratton of 7/22/00, Neeb Aff. Ex. D, attached to Defs.' Reply Br.) In her June 26 letter to Shaw, Kemma Walsh also acknowledged the existence of "a time and materials contract at a fixed rate of $36 per hour for all classifications of workers." (Letter from Kemma Walsh to Shaw of 7/26/00 at 1.) Finally, Leonard Willis ("Willis"), the expert witness retained by LMC, states in his report that he visited BSC's facility in July 2000 to observe the work on the Dredge and was advised by the parties that "the Dredge was being constructed under an oral, time and materials, contract between LMC and BSC." (Willis 2/20/01 Report at 3-4, Neeb Aff. Ex. A, attached to Defs.' Reply Br.) Willis cited the Price Schedule, used it as the basis for various damage calculations, and attached a copy to his report. (Id. at 6-8, 19, Ex. 3.)
LMC does not assert that there was an actual agreement to reduce the rate to $32 per hour and not to charge the usual 15% mark-up for owner furnished equipment. In fact, in her June 26 letter to Shaw, Kemma Walsh reviewed the history of the parties' agreement. noting that the parties agreed to convert from the fixed price agreement for the hull and deckhouse to a T M arrangement at $36 per hour for all classifications of work. She did not mention any agreement to reduce the rate to $32 per hour.
The effective labor rate under the Price Schedule is $36 per hour, which includes one hour of supervision at $35 per hour for every ten hours of labor billed at $32.50 per hour. Thus, ten hours of labor ($325) plus an hour of supervision ($35) produces a blended labor rate of $36 per hour ($360/10 hours $36/hour). (Price Schedule at 6. O'Hern Aff. Ex. A; id. ¶ 12.)
The facts in this case are analogous to those in Nelson v. Farmers Mut. Auto. Ins. Co., 4 Wis.2d 36, 90 N.W.2d 123 (Wis. 1958). There, the plaintiff and the defendant entered into an oral agreement appointing the plaintiff as the district supervisor for the defendant for a defined territory. As part of the agreement, the plaintiff was responsible for recruiting and training his own sales force but would own the sales force. The plaintiff was also permitted to develop his own personal local agency and would receive overwriting commissions on sales by other agents within the territory. After several years, the defendant sought to modify the terms of the arrangement by requiring the plaintiff to devote all of his time to his duties as district supervisor. The plaintiff objected and signed an agreement with another insurance company to serve as its district supervisor. The plaintiff filed suit alleging breach of contract when the defendant terminated the plaintiff as its district supervisor. The defendant argued that the oral agreement was too vague and indefinite to be enforced, particularly with respect to the rate of commissions. The court rejected this argument, stating:
Whatever the rate was, [the defendant] paid it to [the plaintiff] and [the plaintiff] accepted it. The parties lived under this contract for six years before [the defendant] made the first attempt to modify it; proof of the payment of [the plaintiffs] overwriting commissions is in evidence. We can see no lack of mutuality in that respect.
Id. at 50, 90 N.W.2d at 131. While the course of dealing in Nelson (six years) was longer than the course of dealing in this case (approximately 9 months), there is more certainty here because BSC notified LMC that the Price Schedule would apply if LMC elected to proceed on a T M basis, BSC applied the rates in the Price Schedule after the parties converted the agreement to a F M basis. and LMC paid the charges with full knowledge of the applicable rates without ever objecting to the rates. The fact that Walsh asserts that the parties never discussed the labor rates for T M work in the November meetings is immaterial because his conduct and statements demonstrated that he was well aware of the rates that applied to the T M work. Therefore. BSC is entitled to summary judgment on this issue
C. The Defective Coatings Claim
BSC contends that it is entitled to summary judgment on LMC's claim that the coating system on the Dredge is defective because the claim was not timely asserted under the terms of the Price Schedule. The Price Schedule states: "Claims for defective workmanship or materialso must be made in writing upon discovery. [BSC] shall not be responsible for claims made more than 30 (thirty) days after completion of the work involved or after redelivery of the vessel, whichever is later." (Price Schedule at 4.) LMC's initial notice to BSC regarding its defective coating system claim was made by LMC's counsel in a letter to BSC's counsel dated January 11, 2001, several months after BSC delivered the Dredge to LMC and several months after LMC filed this case. (Letter from Gardner to Neeb of 1/11/01, O'Hern Aff. Ex. E.) LMC essentially concedes that if the Price Schedule applies, its defective coating system claim is barred. (Pl's Reply Br. at 12-13.) Therefore, BSC is entitled to summary judgment on this claim.
Conclusion
For the foregoing reasons, the Court will grant Defendants motion for summary judgment and deny LMC's motion for summary judgment.