HANDLE CONST. CO., INC. v. Norcon, Inc.
2011 Alas. LEXIS 115
Alaska2011Background
- Norcon solicited a bid from Handle for concrete work on the Fort Greely project; Norcon provided drawings and a bid schedule; Stoops assigned estimating to Michael, who did not receive the email with attachments.
- The drawings indicated double-pier L2 foundations; the bid schedule contemplated single-pier units, creating a discrepancy between documents.
- Handle submitted a bid based on the schedule and drawings and was awarded the subcontract; work commenced September 15, 2008 and was completed to Norcon's satisfaction.
- Handle later discovered, in October 2008, a discrepancy between the bid schedule and drawings and sought a change order totaling about $139,648; Norcon refused.
- In February 2009 Handle sued for damages associated with the bid error and related delays; Norcon moved for partial summary judgment on the damages, which the superior court granted.
- The superior court held Handle committed a unilateral mistake, allocated the risk to Handle, and entered final judgment for Norcon; Handle appealed challenging waiver and the unilateral-mistake ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of implied warranty claim | Handle argues implied warranty of adequate specifications. | Norcon contends claim is waived; plans not in record. | Waived; plans not in record and warranty theory not applicable. |
| Unilateral mistake and risk allocation | Handle contends unilateral mistake applies and risk not properly allocated to Handle. | Norcon argues proper application of unilateral-mistake theory and risk allocated to Handle. | Superior court's unilateral-mistake ruling affirmed; Handle bore the risk of mistake. |
| August 19, 2008 email's effect on contract terms | Email created ambiguities; should determine bid interpretation. | Email is extrinsic context; contract interpretation permitted without ambiguity finding. | Court used email to interpret terms; no reversible error in not incorporating email into contract. |
| Duty to inquire given large bid gap | Norcon should have inquired due to 35% bid gap. | No duty to inquire; risk of mistake allocated to Handle. | No duty to inquire; Handle bore the risk of mistake under Restatement §154. |
Key Cases Cited
- Northern Corp. v. Chugach Electric Ass'n, 523 P.2d 1243 (Alaska 1974) (implied warranty when defective specifications render performance possible or impossible)
- Chugach Electric Ass'n v. Northern, 523 P.2d 1243 (Alaska 1974) (design/specification defect affecting performance)
- L.K. Comstock & Co. v. United Engineers & Constructors Inc., 880 F.2d 226 (9th Cir. 1989) (Spearin-like doctrine and implied warranty context)
- Stuyvesant Dredging Co. v. United States, 834 F.2d 1576 (Fed. Cir. 1987) (design vs. performance specifications distinction)
- AAB Joint Venture v. United States, 75 Fed. Cl. 414 (Fed. Cl. 2007) (examples of defective specifications and related contract considerations)
- Kingik v. State, Dep't of Admin., Div. of Retirement & Benefits, 239 P.3d 1243 (Alaska 2010) (Restatement-based approach to contract interpretation and mistake)
- Wasser & Winters Co. v. Ritchie Bros. Auctioneers (America), Inc., 185 P.3d 73 (Alaska 2008) (burden of proof and related contract principles in Alaska)