SKYRISE CONSTRUCTION GROUP, LLC, Plаintiff-Appellant, v. ANNEX CONSTRUCTION, LLC, Defendant-Appellee.
No. 19-1461
United States Court of Appeals For the Seventh Circuit
ARGUED SEPTEMBER 25, 2019 — DECIDED APRIL 21, 2020
Before RIPPLE, ROVNER, and BRENNAN, Circuit Judges.
Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:18-cv-00381 — Nancy Joseph, Magistrate Judge.
I.
In the early summer of 2017, Annex Construction, LLC (“Annex“), issued a request for bids from subcontractors for a project to construct housing units near the University of Wisconsin-Oshkosh (“Project“). Skyrise Construction Group, LLC (“Skyrise“) answered that call for bids by submitting a proposal on July 7, 2017, to supply the rough framing carpentry labor for the Project at a price of $899,662. Skyrise submitted a second bid that same day for $970,000, revised to include a charge for “stick building.”1 Annex rejected the July 7 bids, and Skyrise followed up with a July 19 bid for $950,000. The July 19 bid caught Annex‘s interest, and Tom Tomaszewski, the President of Annex, responded that same day with an emailed “Letter of Intent” (“Letter“) to John Trojan, Skyrise‘s project manager. In that Letter, Tomaszewski expressed “the intention of Annex” to “enter into a contract with Skyrise” for the rough carpentry work for the Project, and informed Skyrise that Annex would “work on getting you contract documents in the near future.” R. 19, at 12. On the basis of that Letter, Skyrise immediately blocked out the Project on its calendar and declined to pursue or accept other work during the period that it expected the Project to proceed.
Skyrise believed that the framing wоrk was scheduled to begin in the first week of October, but the subcontractor delayed signing and returning the Proposed Contract.2 More than a month later, on September 6, Annex again emailed the Proposed Contract to Skyline. The next day, Trojan sent an
Annex requested that Skyrise personnel attend a meeting at the construction site on October 9, and Skyrise complied. Skyrise personnel saw that the project was not ready for framing, and the parties began to discuss a possible expanded role for Skyrise in getting the Project completed on schedule. A few days later, on October 11, Tomaszewski received an email containing the Proposed Contract, signed by Garcia and marked with handwritten edits to the payment terms and also to two items involving the scope of the work to be completed.3 Garcia later asserted that Tomaszewski had orally agreed to the edits regarding payment terms, and that Garсia was merely fixing errors in the terms related to the scope of work. Annex never signed this revised version of the Proposed Contract.
We are going to go ahead and pass on this guys. I appreciate the hard work however I am going to bring in a large framing company we have a very good relationship with and can meet our timeframe and schedule at a much lower cost.
I will have our council [sic] get you a letter on the original contract that you signed in the near future.
R. 19, at 62. The very next day, Annex‘s general counsel sent by email and overnight mail a letter formally rejecting Skyrise‘s October 31 proposal and also stating that Annex “will not be accepting and countersigning the Agreement as marked-up by Subcоntractor and is therefore null and void.” R. 19, at 63.
Skyrise then filed this diversity suit against Annex, seeking damages for breach of contract, promissory estoppel, negligent misrepresentation, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act,
II.
On appeal, Skyrise cоntends that fact disputes preclude judgment on every count. On the breach of contract claim, Skyrise asserts that a contract was formed either on September 22, when Tomaszewski signed the July 19 bid, or on October 10 when Skyrise signed and returned Annex‘s contract. In the alternative, Skyrise seeks damages for promissory estoppel, contending that it reasonably relied on the Letter of Intent and Annex‘s oral representations over the next two months when it decided to block off its schedule for the Project and decline other work during the period that it expected to be working on the Project. For the three remaining claims, Skyrise relies on the same core of facts in arguing that Annex made misrepresentations and engaged in deceptive conduct on which Skyrise relied to its detriment.
We review the district court‘s grant of summary judgment de novo, examining the record in the light most favorable to Skyrise and construing all reasonable inferences from the evidence in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Yahnke v. Kane County, Ill., 823 F.3d 1066, 1070 (7th Cir. 2016). Summary judgment is appropriate when there are no genuine disputes of material fact and the movant is entitled to judgment as a matter of law.
Although federal law governs procedure in a case in which federal court jurisdiction is premised on diversity of citizen-
A.
We begin with Skyrise‘s claim for breach of contract. The first step in evaluating a breach of contract claim is to determine whether a valid contract exists. Steele v. Pacesetter Motor Cars, Inc., 672 N.W.2d 141, 144 (Wis. Ct. App. 2003). Creation of a contract requires an offer, an acceptance, and consideration. Marks v. Houston Cas. Co., 881 N.W.2d 309, 328 (Wis. 2016); Paul R. Ponfil Trust v. Charmoli Holdings, LLC, 935 N.W.2d 308, 311 (Wis. Ct. App. 2019). “The existence of an offer
Skyrise maintains that a contract was formed either when Annex signed the July 19 bid on September 22, or when Skyrise signed and returned the Proposed Contract on October 10. Neither theory succeeds under Wisconsin law. At the time that Annex signed the July 19 bid, the undisputed record demonstrates that neither party believed or intended that the signed bid would create a contract. In Wisconsin, the party seeking to enforce a contract must dеmonstrate that there was a “meeting of the minds,” that is, that the parties intended to form a contract. Household Utilities, Inc. v. Andrews, 236 N.W.2d 663, 669 (Wis. 1976); Skycom Corp. v. Telstar Corp., 813 F.2d 810, 814 (7th Cir. 1987). The intent of the parties is generally “derived from a consideration of their words, written and oral, and their actions.” Household Utilities, 236 N.W.2d at 669. Wisconsin takes an objective view of “intent,” and therefore “[s]ecret hopes and wishes count for nothing.” Skycom, 813 F.2d at 814.
The status of a document as a contract depends on what the parties express to each other and to the world, not on what they keep to themselves. It is therefоre unimportant whether [the plaintiff] ex-
pected this [document] to be the definitive agreement; the binding force of the document depends on public or shared expressions.
When Tomaszewski signed the July 19 bid, he did so at Trojan‘s request and at the assurance of Garcia, through Trojan, that Garcia was still reviewing Annex‘s Proposed Contract. With that understanding, Tomaszewski marked the signed bid, “Contract exhibit A” to indicate that he intended for it to become part of the final agreement, not a contract in and of itself. Although Garcia later averred that he considered the signing of the bid to signal Annex‘s commitment to the deal, his external action of contemporaneously communicating that he was still reviewing the Proposed Contract, and Tomaszewski‘s unmistakable indication that the bid was simply an exhibit to the larger agreement under review, contradict this subjective interpretation of Tomaszewski‘s signature on the bid. See American Nat‘l Property & Cas. Co. v. Nersesian, 689 N.W.2d 922, 928 (Wis. Ct. App. 2004) (where the parties understand that preliminary writings are to be followed by a formal contract containing additional material provisions and signed by the parties, no binding or completed contract will be found). Both parties clearly viewed the July 19 bid as a preliminary writing that was to be followed by the formal Proposed Contract, which contained roughly twenty pages of additional, material terms. When the “public or shared expressions” of the parties are not in dispute, and those expressions objectively demonstrate that the parties have not yet reached an agreement, summary judgment is appropriate. In the undisputed circumstances presented here,
Nor was a contract created when Skyrise signed and returned a marked-up version of the Proposed Contract on October 11. “[M]aking material revisions to a contract offer and then signing the revised contract offer does not constitute an acceptance of the offer, but rather creates a counteroffer that the other party must affirmatively accept before there is an agreement.” Disciplinary Hearings Against Nora, 909 N.W.2d 155, 163 (Wis. 2018). See also Fricano v. Bank of Am. NA, 875 N.W.2d 143, 153–54 (Wis. Ct. App. 2015) (an acceptance that varies the terms of the offer constitutes a rejection and a counteroffer, and no contract is formed until the counteroffer is accepted). In this case, Garcia made handwritten alterations to the Proposed Contract before signing and returning it. First, in Article 2 of the document titled “Agreement Bеtween Contractor and Subcontractor,” Garcia struck out the terms “roofing felt” and “adhesives” from lists of items to be installed as part of the Project. He contended that he was simply correcting errors in making this change. It is difficult to determine on this record whether those alterations could be described as material. Construing the facts in favor of Skyrise, we will therefore treat those alterations as non-material for the purposes of the appeal.
But in Article 4 of that same document, Garcia struck out eight lines of an eleven-line paragraph titled “Progress Payments.” This paragraph supplied the terms for the timing of payments and the conditions under which payments would be made. Skyrise cannot plausibly claim that this alteration was
B.
Skyrise argues in the alternative that, if no contract existed, it is entitled to damages under the doctrine of promissory estoppel. Wisconsin adopted that doctrine as it is set forth in the Restatement First of Contracts. Hoffman v. Red Owl Stores, Inc., 133 N.W.2d 267, 274 (Wis. 1965).
A claim of promissory estoppel involves three elements: (1) whether the promise is one which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee; (2) whether the promise induced such action or forbearance; and (3) whether injustice can be avoided only by enforcement of the promise.
The promise on which Skyrise claims to have relied was that “on July 19, 2017, Annex committed to Skyrise that it was selected as the framing and windоw installation subcontractor for the ... Project.” Plaintiff‘s Brief at 38. In support of this “commitment,” Skyrise cites Tomaszewski‘s email that day which stated, “thanks look forward to working together,” and the attached Letter which professed, “it is the intention of Annex ... to enter into a contract with Skyrise.” On appeal, Skyrise also points to subsequent events as forming the basis of its reliance. In particular, Skyrise cites Tomaszewski‘s September 22 signing of the bid, and Skyrise‘s attendence at
the reliance that makes the promise legally enforceable must be induced by a reasonable expectation that the promise will be carried out. A promise that is vague and hedged about with conditions may nevertheless have a sufficient expected value to induce a reasonable person to invest time and effort in trying to maximize the likelihood that the promise will be carried out. But if he does so knowing that he is investing for a chance, rather than relying on a firm promise that a reasonable person would expect to be carried out, he cannot plead promissory estoppel.
Cosgrove v. Bartolotta, 150 F.3d 729, 733 (7th Cir. 1998). See also C.G. Schmidt, 825 F.3d at 809 (conditional promises are not a reasonable basis for reliance). Such was the situation here as both parties understood it on July 19 and throughout the months of negotiations and discussions that followed.
Annex was interested in Skyrise‘s bid and expressed that interest with the Letter of Intent. But contemporaneously, Annex placed significant conditiоns on its interest. Those conditions took the form of approximately twenty pages of fine
C.
The three remaining counts seek damages for the tort of negligent misrepresentation, violation of the Illinois Act, and violation of the Wisconsin Act. Negligent misrepresentation “requires a showing that defendant made a misrepresentation of fact upon which the plaintiffs relied to their detriment.” Green Spring Farms v. Kersten, 401 N.W.2d 816, 822 (Wis. 1987). See also Malzewski v. Rapkin, 723 N.W.2d 156, 163 (Wis. Ct. App. 2006) (the elements of negligent misrepresentation are that the defendant made a representation of fact; that the representation was untrue; that the defendant was negligent in making the representation; and that the plaintiff believed that the representation was true and relied on it). Similarly, to make out a claim under the Wisconsin Act, a plaintiff must demonstrate that the defendant made a “representation or statement of fact which is untrue, deceptive or misleading.”
- a deceptive act or practice by the defendant,
- the defendant‘s intent that the plaintiff rely on the deception,
- the occurrence of the deception in a course of conduct involving trade or commerce, and
- actual damage to the plaintiff that is (5) a result of the deception.
De Bouse v. Bayer, 922 N.E.2d 309, 313 (Ill. 2009). See also
As is apparent, each of these claims requires that the plaintiff demonstrate a false statement of fact or deceptive conduct by the defendant. Skyrise asserts for each count that the misleading or decеptive statement was that Skyrise “had the framing work,” Plaintiff‘s Brief at 44, 47, 53. As the district court correctly concluded, however, the record evidence does not show that Annex ever represented to Skyrise that it had the framing subcontract.
Skyrise relies on the same evidence that it supplied in support of its claims for breach of contract and promissory estoppel: the Letter of Intent and accompanying email;
There is some irony in Skyrise‘s claim that it was falsely led to believe that it had a firm deal when Skyrise itself held onto the Proposed Contract for two months, twice assuring Annex that it was still reviewing the draft agreement, and then altering it in a material manner before returning it. Because Skyrise has failed to provide evidence of any misleading statement or deceptive conduct by Annex, the district court
AFFIRMED.
