Opinion
Civil Action No.: 1:07cv342.
November 14, 2007
MEMORANDUM OPINION
In this diversity action removed from the Circuit Court of Prince William County, Virginia, P J Arcomet, LLC ("Plaintiff") seeks damages from Perini Corporation ("Defendant"), for breach of contract. The case was tried before the Court sitting without a jury. The Court considered the exhibits and the testimony of the witnesses in making the following findings of fact and conclusions of law. For the reasons set forth herein, the Court finds that there was no offer and no acceptance, therefore Defendant is not liable for breach of contract.
While most of the findings of fact are recited in Section I of the opinion, the Court has included findings of fact in the conclusions of law where appropriate. All findings of fact are made by a preponderance of the evidence.
I. Finding of Facts
Though there were factual disputes, the Court is persuaded that these are the relevant facts Defendant has proven.
Plaintiff is a Virginia limited liability company that sells, rents, and repairs tower cranes, and is an authorized dealer of Terex cranes. Plaintiff is located in Manassas, Virginia, and is the North American affiliate of The Arcomet Group, which is a large international owner and operator of tower cranes. Defendant is a general contractor in the construction industry. Defendant was incorporated in Massachusetts and is qualified to do business in Virginia.
In September 2006, Defendant learned that it was the low bidder for a large construction project to build the Croton Water Treatment Plant ("Croton Project") in the New York City area. Defendant began to contact suppliers to acquire the equipment and resources necessary to complete the Croton Project, so that Defendant could move forward if Defendant was awarded the Croton Project contract. Among the equipment necessary for the Croton Project were four tower cranes.
In the normal course of Defendant's business, the Estimating Department prepares bids for Defendant to send out in connection with potential construction projects. When Defendant needs to acquire equipment for a project, the Estimating Department contacts Timothy Boland ("Mr. Boland") and advises him of the equipment needed for the project. Mr. Boland is Defendant's Equipment Manager and has been employed by Defendant for two and a half years. His responsibilities include recommending equipment purchases for Defendant to make, and overseeing repairs and maintenance of Defendant's equipment. Mr. Boland is authorized to spend up to $10,000.00 for equipment repairs and up to $25,000.00 for short term equipment rentals without prior approval.
After the Estimating Department notifies Mr. Boland of needed equipment, Mr. Boland contacts different vendors to discuss the available products and options that the vendor has to offer. (Pl.'s Ex. 5). Mr. Boland also solicits a price quote and available delivery dates from each vendor. (Pl.'s Ex. 5). During Mr. Boland's discussions with various vendors, he prepares and updates a spreadsheet that summarizes the price quotes, delivery dates, and available options from all of the vendors with whom he has been dealing. (Pl.'s Ex. 5). After reviewing the price quotes and delivery dates, Mr. Boland makes a recommendation to Defendant's President for the purchase Mr. Boland believes would be the best fit for Defendant. After Defendant's President selects the particular equipment to purchase, a short or long form purchase order is prepared. A short form purchase order is used for any equipment under $25,000.00 (Pl.'s Exs. 15-17), and a long form purchase order is used for any equipment $25,000.00 or more (Pl.'s Ex. 26).
After the appropriate purchase order is prepared, Mr. Boland takes the purchase order back to Defendant's President for signature. If the cost of the equipment to be purchased exceeds $100,000.00, Defendant's CEO must also approve and sign off on the purchase order. After obtaining the appropriate approval and signatures, Mr. Boland then sends the purchase order to the vendor for its signature.
In September 2006, the Estimating Department told Mr. Boland that Defendant needed to acquire four Terex tower cranes in connection with its bid for the Croton Project. The Estimating Department specified that Defendant needed two cranes in May 2006 and two cranes in June 2006. Consistent with his responsibilities as Defendant's Equipment Manager, Mr. Boland contacted Terex vendors to obtain price quotes and delivery dates for tower cranes to be used in connection with the Croton Project.
In early October 2006, Mr. Boland learned of Plaintiff's business after a search of Plaintiff's website revealed that Plaintiff sold Terex tower cranes. Mr. Boland called Plaintiff and spoke with Thomas Prozinski ("Mr. Prozinski"), Plaintiff's Vice President in charge of renting, selling, and servicing cranes. Consistent with Mr. Prozinski's handwritten notes memorializing this conversation, Mr. Boland described the Croton Project to Mr. Prozinski, informed Mr. Prozinski that Defendant was the low bidder on the Croton Project at that time, and indicated that Defendant needed to purchase four Terex tower cranes for the Croton Project. (Pl.'s Ex. 2). This conversation was later followed up with a meeting between Mr. Boland, Mr. Prozinski, and Peter Jehle, Plaintiff's President and CEO, which took place at one of Defendant's work sites in New Jersey.
The purpose of the meeting in New Jersey was to introduce Plaintiff to Mr. Boland, and to discuss the particulars of the Croton project, so that Plaintiff could prepare a quote for Defendant. At the meeting, Mr. Prozinski and Peter Jehle discussed the history of Plaintiff's company, discussed other projects with which Plaintiff had been involved, and provided informational brochures to Mr. Boland. Mr. Boland described to Mr. Prozinski and Peter Jehle the size of the Croton Project, when the Croton Project was expected to begin, the dates Defendant would need the cranes for the Croton Project, that is two cranes in May 2007 and two cranes in June 2007, and he informed them that Defendant was the low bidder on the Croton Project.
Soon after their meeting and in furtherance of preparing a proposal for Defendant, Plaintiff contacted American Crane Corporation ("Terex Cranes"), a Terex crane manufacturer located in Wilmington, North Carolina. After Plaintiff's inquiry, Terex Cranes sent Plaintiff a price quote on October 16, 2006, for four SK575 cranes with delivery in June 2007, which was valid for thirty days. (Def.'s Ex. 1). Based on this proposal from Terex Cranes, Plaintiff prepared a proposal for Defendant that would meet their crane purchase needs for the Croton Project.
On October 25, 2006, Mr. Prozinski faxed Plaintiff's proposal to Mr. Boland, which included a thank you to Mr. Boland for his time in meeting with him and Peter Jehle to discuss the Croton Project. (Def.'s Ex. 2). The proposal included, inter alia, the following: a per unit price of $805,245.00 for each Terex Peiner SK575 crane, a total price of $3,220,980.00 for four Terex Peiner SK575 cranes, a warranty for 12 months or 2000 hours, whichever occurs first, a delivery date of two cranes in May 2007 and two cranes in June 2007, and several optional items associated with the cranes that Defendant may add for an additional cost. (Def.'s Ex. 2).
In November 2006, soon after Plaintiff sent Defendant the proposal, Plaintiff learned that Terex Cranes was proposing a 16.87% across the board price increase for its cranes, effective immediately. (Def.'s Ex. 5). On November 28, 2006, Dirk Theyskens ("Mr. Theyskens"), Managing Director of The Arcomet Group and a member of Plaintiff's Board of Directors, got involved to try to remedy the situation and save the possible contract with Defendant. Mr. Theyskens emailed Terex Cranes to ask for a favor, that the 16.87% price increase not be applied to Plaintiff. (Def.'s Ex. 5). Mr. Theyskens referenced Defendant's status in the Croton Project as LOI (letter of intent, not yet having received the contract), indicated that Plaintiff was in competition with several others crane vendors, and asked Terex Cranes to help Plaintiff so that Plaintiff could make the deal with Defendant as soon as Defendant was awarded the Croton Project contract. (Def.'s Ex. 5). Mr. Theyskens then forwarded a copy of this email to Stephen Jehle, Plaintiff's Senior Vice President, and said they should both keep their fingers crossed. (Def.'s Ex. 5).
After several other communications between Plaintiff and Terex Cranes, Terex Cranes agreed to a 3% increase in price, rather than a 16.87% increase in price for Plaintiff in this deal. Consistent with this agreement, Terex Cranes sent a new proposal to Plaintiff on November 29, 2007. (Def.'s Ex. 8). The new proposal, however, was for the purchase of five cranes, and the delivery dates were scheduled for one in June, one in July, and three in August 2007. (Def.'s Ex. 8).
While the negotiations between Plaintiff and Terex Cranes were going on in November 2006, Mr. Boland and Mr. Prozinski also spoke on the telephone several times regarding Plaintiff's proposal. During their conversations, Mr. Boland would inquire of Mr. Prozinski if the pricing on Plaintiff's proposal was still good, despite the fact that the October 25, 2006, proposal stated that the price quote was only valid for thirty days. Mr. Prozinski would, in turn, inquire of Mr. Boland if Defendant had been awarded the Croton Project, to which Mr. Boland always responded, not yet.
In late December 2006, during one of their telephone conversations, Mr. Boland informed Mr. Prozinski that if Defendant was indeed awarded the Croton Project, Defendant intended to enter into a contract to purchase the cranes from Plaintiff because Plaintiff had the lowest price and met Defendant's delivery time frame. Despite Mr. Prozinski's excitement for having facilitated what would hopefully be Plaintiff's largest sale in the company's history, it was becoming increasingly difficult for Plaintiff to maintain their price quote. The expiration of Terex Crane's price quote to Plaintiff, which had been extended by the involvement of Mr. Theyskens, was imminent. Plaintiff would then have to purchase the cranes with the 16.87% price increase, essentially extinguishing profitability of this deal for Plaintiff.
In hopes of extending Plaintiff's price quote a few more weeks, expecting that Defendant would soon be awarded the Croton Project, Mr. Prozinski asked Mr. Boland for a purchase order number. Mr. Boland contacted Gary Webb in Defendant's Purchasing Department, explained that he needed a purchase order number to hold the pricing of the Terex cranes, and Gary Webb provided Plaintiff with a short form purchase order number. Internally, Gary Webb made handwritten notes on the short form purchase order form that corresponded to the number given to Mr. Boland, which described the item as tower cranes, and noted that he would have to prepare a long form purchase order because of the amount of the purchase. (Pl.'s Ex. 6). The actual short form purchase order never left Defendant's office, and Defendant never created a long form purchase order. Additionally, Mr. Boland never made any recommendation to Defendant's President that Defendant purchase the cranes from Plaintiff.
After he obtained the purchase order number, Mr. Boland turned to the second page of the proposal sent by Plaintiff on October 25, 2006, and handwrote several things at the bottom of Plaintiff's proposal including: selections of several optional items and the corresponding prices, a final price per crane after adding the options, the total price for four cranes with the additional options, the purchase order number he obtained from Gary Webb, po# S17789, and he signed his name. (Pl.'s Ex. 7). On January 17, 2007, Mr Boland faxed Plaintiff's original proposal with the handwritten notes he added on the second page to Mr. Prozinski. (Pl.'s Ex. 7). The very next day, Mr. Boland received a fax from Stephen Jehle, with whom he had not previously been acquainted, which stated in pertinent part:
"Tom Prozinski is out of the office today and asked me to forward you the attached [Equipment] Sales Agreement. I have attached a copy of the Agreement, your original signed proposal, our bank information and an invoice for the down payment for your records.
I have ordered your four cranes and will be expecting confirmation in the next week or so." (Pl.'s Ex. 8).
Refers to Plaintiff's October 25, 2006, proposal sent to Defendant with Mr. Boland's handwritten notes, handwritten purchase order number, and signature at the bottom of the second page.
The Equipment Sales Agreement dated January 18, 2007, is P J Arcomet's standard sales agreement form that has been customized to Defendant's order. (Pl.'s Ex. 8). The first page of the Equipment Sales Agreement is as follows: P J Arcomet, LLC will use its best efforts to meet the delivery date but shall in no event be liable to Buyer for damages resulting from delay in delivery. This Agreement is not binding unless countersigned by a P J Arcomet, LLC corporate officer.
"In consideration of the mutual promises contained herein, P J Arcomet, LLC (Seller) and Buyer hereby covenant and agree as follows. Seller hereby agrees to sell the equipment described below to Buyer subject to the terms and conditions contained herein. Buyer: Perini Corporation Billing Address: 1022 Lower South Street Peekskill, NY 10566 Equipment: Four (4) new Terex-Peiner SK575 Tower Cranes serial numbers 075, 076, 077 078, year of manufacture 2007. Each crane will be sold complete with full jib (L9) and eight (8) TS213 tower sections, one (1) TSK213 twoer (sic) section, one (1) set of S60 anchor stools and one (1) complete set of poured counter weights. Price: U.S. $3,462,060.00 All sales/use taxes, duties and port fees are additional, and are the sole responsibility of Buyer. Payment Terms: 25% down payment ($865,515.00) with purchase order, 50% ($1,731,030.00) 2 months prior to delivery, 25% ($865,515.00) upon delivery. Delivery: F.O.B. Your desired location on the U.S. East Coast Approximate Date: August 2007 Perini Corporation By: _______________ Title: __________ ___ corporation ___ partnership ___ sole partnership P J Arcomet, LLC By: _______________ Title: __________ (Pl.'s Ex. 8). The second page of the Equipment Sales Agreement sets forth the Terms and Conditions of Sale which provides, inter alia, that the Equipment Sales agreement supercedes all prior negotiations between the parties, Defendant is only entitled to a six month warranty from the date of delivery, any disputes shall be resolved by binding arbitration, and that Seller is not liable for damages for failure to timely deliver. (Pl.'s Ex. 8).Mr. Boland received the fax from Stephen Jehle which appeared to be consistent with all of the discussions he had over the course of several months with Mr. Prozinski. Namely, Plaintiff was to hold the price of the cranes for a couple more weeks in hopes that Defendant soon received the Croton Project contract.
The next communication between Plaintiff and Defendant was on February 6, 2007. The Estimating Department decided that Defendant needed a different type of crane for the Croton Project, and notified Mr. Boland of this change. The Estimating Department instructed Mr. Boland to look into Terex Comedil cranes instead of the Terex Peiner SK575. Mr. Boland then called Mr. Prozinski to inquire about the Terex Comedil crane. Mr. Prozinski told Mr. Boland that he could not change to a different type of crane, and it was at this time that Mr. Boland realized there was a problem. Mr. Boland immediately went to his supervisor, Art Folster ("Mr. Folster") to explain the situation. Mr. Folster dictated a letter for Mr. Boland to immediately fax to Plaintiff which stated:
"As you know your proposal of 10/25/06 was contingent upon Perini receiving the Award of the Croton Project Contract. Unfortunately, that contract has not yet been Awarded, the 30 day validity of your proposal has expired, and Perini is unable to execute the proposed Equipment Sales Agreement of 1/18/07.
Perini Corporation may reconsider the possibility of entering an agreement with P J, when and if the Croton Project is awarded, but not at this time. Any actions taken by P J In (sic) this regard are for your account only." (Pl.'s Ex. 11).
Plaintiff received Mr. Boland's faxed letter and responded the same day with a faxed letter which stated in pertinent part:
"Per your telephone conversation today with Mr. Tom Prozinski I have been informed that Perini Corporation would like to cancel your contract to purchase (4) SK575s and instead purchase (4) Terex Comedil CTT561s.
I must inform you that P J Arcomet has already placed a Purchase Order (number 201800) for these crane (sic) with the manufacturer. This Purchase Order was placed because we have a signed contract received from you on January 17, 2007 and a Purchase Order form (sic) you (number S17789).
As a result P J Arcomet may be placed in a position in which we must enforce the terms of our contract on Perini Corporation as the cranes have already been ordered.
In an effort to resolve this situation I have already begun dialogue with the manufacturer and I am attempting to have them accept a transfer in your order from Peiner to Comedil product (Terex Corporation owns both companies). It will likely take a few days until I have a clear answer on if/or how we can do this.
After talking with Terex if we are able to accommodate your request and switch your order from Peiner to Comedil tower cranes we would required the following; (sic)
1) Perini Corporation purchase these cranes through P J Arcomet or the original contract will be fully enforced.
2) Perini Corporation will be required to sign a three way agreement (Perini, P J and Terex) that the order is only being transferred and not cancelled and all other terms (except pricing of course) are in full force and effect and the parties would have no other obligation to deliver or manufacturer (sic) or purchase the SK575s. Perini would also make note that delivery may be delayed due to the change.
Once we have gotten the situation cleared by Terex I will get back to you and let you know if we are able to make this change. Should this be the case I will then immediately
require and change (sic) order signed by you and acceptance of the new terms and pricing." (Pl.'s Ex. 10).
Plaintiff and Defendant's relationship further deteriorated, which is what brought this matter before the Court.
II. Jurisdiction and Applicable Law
Pursuant to 28 U.S.C. § 1441(a), Defendant removed this civil action from the Circuit Court of Prince William County, Virginia. Removal was proper as this Court has jurisdiction in this case, pursuant to the provisions of 28 U.S.C. § 1332(a), in that there is diversity of citizenship between Plaintiff and Defendant, and the amount in controversy exceeds $75,000, exclusive of interests and costs.
The dealings between Plaintiff and Defendant involve the proposed sale of tower cranes which are commercial goods. Accordingly, the Uniform Commercial Code ("UCC"), as codified in the Virginia Code Section 8.2-201, et seq. applies in this case.
III. Breach of Contract
The question before the Court is whether the handwritten purchase order number written on the second page of Plaintiff's proposal for the purchase of four Terex Peiner SK575 cranes, faxed to Plaintiff on January 17, 2007, was an offer that was in turn accepted by the return fax of Plaintiff on January 18, 2007, attaching the Equipment Sales Agreement, thereby forming a valid contract which Plaintiff alleges Defendant breached. The greater weight of the evidence establishes that no contract was formed between Plaintiff and Defendant, therefore Defendant is not liable for breach of contract.
A. Offer
Plaintiff contends that Mr Boland's handwritten purchase order number and signature written on the second page of Plaintiff's October 25, 2006, proposal, transmitted to Plaintiff on January 17, 2007, constitutes an offer. "Under the [Uniform Commercial] Code, buyers and sellers may freely exchange purchase orders, faxes, and telephone calls relating to a proposed transaction without incurring contractual obligations unless and until the essential requirement for contract is satisfied-i.e. that there be an objective manifestation of mutual assent by the parties (sometimes referred to as a "meeting of the minds")." Audio Visual Associates, Inc. v. Sharp Electronics Corp., 210 F.3d 254, 258 (4th Cir. 2000) (citations omitted). "The manifestation of mutual assent ordinarily takes the form of an offer by one party followed by an acceptance by the other party." Id. "[T]he determination whether an offer inviting acceptance has been made is controlled by the expressed intention of the offeror." Kraft Foods N. America, Inc. v. Banner Eng'g Sales, Inc., 446 F. Supp. 2d 551, 569 (E.D. Va. 2006) (citations omitted).
The evidence presented to the Court establishes that Plaintiff and Defendant were engaged in contract negotiations related to the potential sale of four Terex Peiner SK575 tower cranes, but that no offer was made by Defendant. Neither of the negotiating parties, Mr. Prozinski on behalf of Plaintiff, and Mr. Boland on behalf of Defendant, had authority to enter into contracts that would bind their respective employers. Further, both Plaintiff and Defendant are sophisticated parties that have procedures in place for entering into contracts. Defendant's procedure for a purchase of this magnitude requires a long form purchase order signed by both the President and the CEO of the company.
In the wake of the imminent price increase by Terex Cranes, Mr. Prozinski requested a purchase order number from Mr. Boland so that, as Mr. Prozinski explained, Plaintiff could hold the price quote a few more weeks. In response to Plaintiff's request, Mr. Boland acquired a short form purchase order number, which he handwrote on the second page of Plaintiff's October 25, 2006, proposal, and faxed it to Mr. Prozinski. He did so for the sole purpose of holding the price of the cranes for a few more weeks in hopes that Defendant would be awarded the Croton Project contract. This transmittal was merely a continuing negotiation between Mr. Prozinski and Mr. Boland which lacked "an objective manifestation of mutual assent," as Mr. Boland had no intention to enter into a contract with Plaintiff at that time. See Audio Visual Associates, Inc., 210 F.3d at 258. Plaintiff did not have an objectively reasonable belief that this transmittal was an offer.
The record is devoid of any evidence that would suggest that Plaintiff and Defendant had a meeting of the minds or an intent to enter into a contract. On Plaintiff's part, Mr. Prozinski's handwritten notes spanning from Mr. Boland's initial contact with him, through February 6, 2007, do not contain any entries indicating that the Croton Project contract had been awarded to Defendant, or that Plaintiff had just made the largest sale in the company's history. (Pl.'s Ex. 2). There was also no correspondence to Mr. Theyskens, the Managing Director of The Arcomet Group and member of Plaintiff's Board of Directors, to inform him that Defendant had received the Croton Project contract and was proceeding ahead with the Plaintiff's proposal, after Mr. Theyskens had clearly taken an interest in this potential contract between Plaintiff and Defendant. There was no correspondence from Mr. Theyskens congratulating Plaintiff on their biggest sale yet. On Defendant's part, Mr. Boland never made a recommendation to Defendant's President for the purchase of Terex cranes from Plaintiff. The appropriate long form purchase order for the Terex cranes was never prepared. Mr. Boland neither obtained the signature and approval from Defendant's President, nor Defendant's CEO, which both would have been required for this purchase. While it is indeed the law in this Circuit that "a purchase order is generally an offer which may then be accepted or rejected by a seller," Defendant never transmitted a purchase order to Plaintiff. See Roanoke Cement Co., L.L.C. v. Falk Corp., 413 F.3d 431, 433 (4th Cir. 2005) (quoting J.B. Moore Elec. Contractor, Inc. v. Westinghouse Elec. Supply Co., 221 Va. 745, 273, 273 S.E.2d 553, 556 (Va. 1981)).
Defendant did, however, prepare and transmit several contingent purchase orders, consistent with the company's normal practice and procedure, in preparation of acquiring the equipment and resources necessary to complete the Croton Project, though none of those were to Plaintiff. A purchase order in the amount of $335,000.00, dated December 11, 2006, was prepared on a long form purchase order, signed by Defendant's CEO, and transmitted to the seller. (Pl.'s Ex. 26; Def.'s Ex. 22). This long form purchase order specifically stated that it is for use in connection with the Croton Project. (Pl.'s Ex. 26; Def.'s Ex. 22). The purchase order also required that the seller accept the terms of Defendant's purchase order and acknowledge such acceptance by signing and returning the long form purchase order, which seller did on January 29, 2007. (Pl.'s Ex. 26; Def.'s Ex. 22). Also consistent with Defendant's normal practice and procedure, Defendant prepared a long form purchase order for the purchase of concrete and concrete delivery trucks dated December 6, 2006. (Def.'s Ex. 21). This purchase order in the amount of $29,526,500.00, was signed by Defendant's CEO and also contained language which indicated that the goods were to be used in connection with the Croton Project. (Def.'s Ex. 21). Mr. Boland testified that ideally, Plaintiff would have agreed to sign a contingent purchase order, such as the aforementioned purchase orders, however, Plaintiff was unwilling to do so because Defendant did not know when, or if Defendant would be awarded the Croton Project contract. Locking Plaintiff into selling the cranes for a certain price, for an unknown period of time, while Defendant was awaiting an award of the Croton Project contract could have been detrimental to Plaintiff's profits and business, according to Mr. Prozinski, therefore Plaintiff was unwilling to make such a commitment. Instead, Mr. Boland and Mr. Prozinski continued their negotiations.
The Court gives great weight to Mr. Boland's testimony. Not only was Mr. Boland's testimony credible and consistent with the evidence presented to the Court, his testimony regarding his dealings with Plaintiff was, for the most part, entirely corroborated by Mr. Prozinski's testimony. Both Mr. Boland and Mr. Prozinski testified that they discussed the status of the Croton Project. They both also wanted to make sure that the pricing reflected on Plaintiff's proposal was still good during the course of their negotiations. It is possible that Mr. Prozinski misunderstood his telephone conversation with Mr. Boland at the end of December, when Mr. Boland told him that Plaintiff was the low bidder, and that if Defendant was awarded the Croton Project contract, Defendant would purchase the cranes from Plaintiff. However, objectively, and in light of all of the facts presented that establish that Mr. Prozinski knew that the purchase was contingent on Defendant being awarded the Croton Project contract, Mr. Prozinski knew, or should have known, that transmittal of the purchase order number was for the limited purpose of holding the price a few more weeks awaiting the Croton Project contract award.
The greater weight of the evidence establishes that transmittal of the purchase order number to Plaintiff was not an offer. Mr. Prozinski and Mr. Boland, having not had a meeting of the minds, and having not manifested an intention to be bound, were merely engaging in continuing, non-binding negotiations, in the hopes of entering into a contract if Defendant was awarded the Croton Project contract.
B. Meeting of the Minds
Though the Court has already found that Defendant's transmittal to Plaintiff of a purchase order number did not constitute an offer by Defendant, even if it had been an offer, there was no manifestation by Defendant to be bound by any contract until the contingency of the Croton Project contract occurred. "While it is true that the U.C.C. has greatly modified the rigors of the common-law rules governing the formation of contracts, it remains a prerequisite that the parties' words and conduct must manifest an intention to be bound." Flowers Baking Co. of Lynchburg, Inc., 329 S.E.2d at 465.
Defendant's negotiations with Plaintiff were entirely contingent on the Croton Project contract coming to fruition. As early as Mr. Boland's first conversation with Mr. Prozinski as a representative of Plaintiff, Mr. Boland described the details of the Croton Project. In fact, Mr. Prozinski's handwritten notes, written contemporaneously with his initial conversation with Mr. Boland, reflect that Mr. Boland told Mr. Prozinski about the Croton Project. (Pl.'s Ex. 2). Even Mr. Theyskens, Managing Director of The Arcomet Group and a member of Plaintiff's Board of Directors, knew in late November that Defendant's purchase was contingent on receiving the Croton Project contract. (Def.'s Ex. 5).
As discussed above, there is no evidence in the record that would suggest that Plaintiff was notified that the contingency of Defendant being awarded the Croton Project contract occurred. The contingency, in fact, never occurred because Defendant ultimately withdrew its bid for the Croton Project. Further, Defendant's course of conduct with several other vendors all had the same contingency of Defendant being awarded the Croton Project contract. (Def.'s Exs. 21-22).
The greater weight of the evidence establishes that Defendant did not manifest an intent to be bound by a contract because, had Defendant's transmission of a purchase order number actually been an offer, Defendant's intent to be bound by a contract was conditioned upon Defendant being awarded the Croton Project contract.
C. Acceptance
The Court has found that transmittal of the purchase order number did not constitute an offer. Had it been an offer, however, it was not accepted by Plaintiff because the document containing the handwritten purchase order number was not signed by Plaintiff, and instead, Plaintiff sent a separate agreement with materially different terms and conditions.
"Typically, a seller's price quotation is an invitation for an offer, and the offer usually takes the form of a purchase order, providing product choice, quantity, price, and terms of delivery. Audio Visual Assoc., Inc., 210 F.3d at 259. Assuming Defendant made an offer to Plaintiff, though the facts in this case establish that Defendant did not make an offer, Plaintiff had to accept that offer for a contract to be formed. "A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. Va. Code § 8.2-207(1).
On January 17, 2007, Mr. Boland faxed Plaintiff's original proposal which included the handwritten purchase order number and his signature at the bottom of the second page to Mr. Prozinski. (Pl.'s Ex. 7). Though Mr. Boland had not previously been acquainted with Stephen Jehle, and all of Mr. Boland's negotiations to date were conducted with Mr. Prozinski, Mr. Boland received a fax from Stephen Jehle on January 18, 2007. (Pl.'s Ex. 8). Stephen Jehle's fax stated that Mr. Prozinski was out of the office, but that he had asked him to forward a copy of the Equipment Sales Agreement to Mr. Boland. (Pl.'s Ex. 8). Included in this fax transmission was the proposal Defendant faxed to Plaintiff the previous day, bearing Mr. Boland's signature below the handwritten purchase order number. Notably, Stephen Jehle, a person with authority to bind Plaintiff, did not countersign the document which he purports was a purchase order. Instead, Stephen Jehle sent a copy of the document unsigned to Mr. Boland. Stephen Jehle did ultimately sign this document at a later unknown date, however this signed document was never transmitted to Defendant.
Stephen Jehle made a deliberate decision not to send a countersigned copy of what he argues was a purchase order, and instead, he sent the Equipment Sales Agreement. (Pl.'s Ex. 8).
Stephen Jehle's fax transmission to Defendant lacks a "definite and seasonable expression of acceptance." See Va. Code § 8.2-207(1). Nowhere in the January 18, 2007, fax transmission does Stephen Jehle specifically accept what he contends was an offer by Defendant. Instead, Stephen Jehle says "Tom Prozinski is out of the office today and asked me to forward you the attached [Equipment] Sales Agreement." (Pl.'s Ex. 8). The next paragraph in Stephen Jehle's fax is as follows: "I have ordered your four cranes and will be expecting confirmation in the next week or so." (Pl.'s Ex. 8) (emphasis added). In a vacuum, this statement could be interpreted as an acceptance by Plaintiff. This statement, however, is not an acceptance. The statement is entirely consistent with every communication up to this point between Mr. Boland and Mr. Prozinski; namely, that Defendant was to provide Plaintiff with a purchase order number so that Plaintiff could hold the price of the cranes for a few more weeks while Defendant awaits an award of the Croton Project contract.
Not only do Stephen Jehle's words fail as a "definite and seasonable expression of acceptance," his purported acceptance is "expressly made conditional on assent to the additional or different terms" as set forth in the Equipment Sales Agreement. See Va. Code § 8.2-207(1). An invoice (like the Equipment Sales Agreement) does not operate as an acceptance under the UCC when it is "subject to and expressly conditioned upon . . . assent to the terms and conditions provided for in the invoice." See Costal Native Plant Specialties, Inc. v. Engineered Textile Products, Inc., 139 F. Supp. 2d 1326, 1334 (N.D. Fla. 2001). The Equipment Sales Agreement states that it "supersede[s] all prior negotiations, representations and proposals, whether written or oral." (Pl.'s Ex. 8). It also requires that "[a]ny modifications to the agreement, to be binding on the parties . . . must be in writing and signed by both parties." (Pl.'s Ex. 8). It further states that Plaintiff "agrees to sell the equipment described below to Buyer subject to the terms and conditions contained herein." "If a seller does make its acceptance `expressly conditional' on the buyer's assent to any additional or divergent terms in the seller's invoice, the invoice is merely a counteroffer, and a contract is formed only when the buyer expresses its affirmative acceptance of the seller's counteroffer." PCS Nitrogen Fertilizer, L.P. v. Christy Refractories, L.L.C., 225 F.3d 974, 979 (8th Cir. 2000).
Not only were the conditions contained in the Equipment Sales Agreement materially different from several of the fundamental portions of Plaintiff's original proposal containing the purchase order number, but it also added new, material terms to the purported offer which required Defendant's acceptance by signing and agreeing to all of the terms in the Equipment Sales Agreement. The Equipment Sales Agreement sets an approximate delivery date for August of 2007. (Pl's Ex. 8). This is months after the date that Defendant needed the cranes, which was two in May 2007 and two in June 2007. The Equipment Sales Agreement changed the warranty terms from twelve months or 2000 hours, which ever occurs first, to a six month limited warranty on parts only, specifically excluding any labor costs. (Pl.'s Ex. 8). The Equipment Sales Agreement also required Defendant to assent to binding arbitration, which has been held to be a material alteration to the contract, thus prohibiting contract formation under the UCC. See PCS Nitrogen Fertilizer, L.P., 225 F.3d at 977. Additionally, the Equipment Sales Agreement exempted Plaintiff from any liability for damages resulting from a delay in delivery, contained a general disclaimer from liability, and exempted Plaintiff from any incidental, special, punitive, or consequential damages. (Pl.'s Ex. 8). Most notably, the Equipment Sales Agreement stated that it "is not binding unless countersigned by P J Arcomet, LLC corporate officer." (Pl.'s Ex. 8).
Plaintiff's transmission to Defendant on January 18, 2007, that included the Equipment Sales Agreement, was not an acceptance because it proposed materially different terms, additional terms, and it made the acceptance expressly conditional on Defendant's assent to the additional and different terms. The record is clear that Defendant neither consented to the materially different terms, nor consented to the additional terms proposed by Plaintiff, because Defendant never signed or transmitted the Equipment Sales Agreement back to Plaintiff for Plaintiff's countersignature.
IV. Conclusion
Defendant's January 17, 2007, fax to Plaintiff of Plaintiff's original proposal adding a handwritten purchase order number, was not an offer by Defendant. If the faxed proposal had been an offer, the offer was contingent on Defendant being awarded the Croton Project Contract, which never came to fruition. Further, Plaintiff did not accept the offer, had there actually been an offer to accept. Instead, Plaintiff made an offer to Defendant which was never accepted. Accordingly, the Court finds that there was no contract between Plaintiff and Defendant, therefore Defendant is not liable for breach of contract.
The Court, having found Defendant not liable for breach of contract, declines to address the issues of damages and ability to perform.