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Badger Sheet Metal Works of Green Bay, Inc. v. Process Partners, Inc.

United States District Court, E.D. Wisconsin

June 13, 2017

BADGER SHEET M WORKS OF GREEN BAY, INC., Plaintiff,
v.
PROCESS PARTNERS, INC., Defendant.

          DECISION AND ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

          WILLIAM C. GRIESBACH, CHIEF UNITED STATES DISTRICT JUDGE.

         Plaintiff Badger Sheet M Works of Green Bay, Inc., a Wisconsin corporation located in Green Bay, Wisconsin, sued Defendant Process Partners Inc., a Michigan corporation located in Zeeland, Michigan advancing claims of breach of contract, promissory estoppel, and unjust enrichment. The action was commenced in Brown County Circuit Court, but Process Partners removed the matter to federal court. The parties are citizens of different states, and the amount in controversy exceeds $75, 000. Federal jurisdiction therefore exists under 28 U.S.C & 1332. The case is presently before the court on Process Partners' motion for summary judgment. For the reasons set forth below, Process Partners' motion will be denied.

         BACKGROUND

         Process Partners, a company that designs food production processes, placed a bid to construct an Iowa food production plant in October 2013. (Defendant's Proposed Findings of Fact (DPFOF) ¶¶ 5, 12.) Part of the plant's construction included creating an egg cooker oven. (Id. ¶ 14.) Process Partners and Badger Sheet M had previously collaborated in 2011 on a similar project which entailed constructing an oven in a different plant. (Id. ¶ 13.) Based on its previous dealings with Badger Sheet Metal, Process Partners contacted the company again to provide oven components for the egg cooker portion of the food production plant. (Id. ¶¶ 12-14.)

         To better gauge the estimated total for its bid, Process Partners' lead designer Mike Raymond sent Badger's representative Paul Weyers a drawing of an oven created by another manufacturer to demonstrate the type of oven Badger would be contracted to build if Process Partners was awarded the plant construction contract. (Id. ¶ 15.) Weyers submitted a budgetary proposal for the oven to Raymond, which was nearly identical to the model drawing. (Id. ¶¶ 15-17.) Although the proposal did not contain exact specifications, it listed the price of the oven at $424, 000, including labor and materials, but failed to mention whether the contract was a fixed contract or time and materials contract. (Id. ¶ 17.) This distinction is important: a fixed price contract allows parties to negotiate a lump sum for the work performed on a project, with the possibility of price adjustments based on changes or delays made by one party. 2 Bruner & O'Connor Construction Law §6:71 (2016). A time and materials contract, in contrast, allows a contractor to be reimbursed for labor at an hourly rate that includes profit and overhead. Id. § 6:83.

         Several months after Weyers submitted the proposal to Raymond, Process Partners was awarded the contract to build the processing plant, which prompted Raymond to send Weyers a purchase order for the oven in the amount of $400, 000. (DPFOF ¶¶ 18-19, 22.) Weyers responded to the purchase order with a "Quotation Response Form" and "Order Verification" form that referenced the purchase order and set the purchase price at $400, 000.11. (Id. ¶ 23.) The two documents created by Weyers included the language "budgetary proposal contains labor and materials" from the original budgetary proposal and added the statement "individual sections of project will be bid as drawings become available." (Id.) It thus appears that even at this time, the parties still had not formally agreed whether they were entering into a fixed contract or time and materials contract.

         Although there were inconsistencies in the purchase price, the $400, 000 figure was used on multiple occasions, including all progress billing invoices sent by Badger. (Id. ¶ 26.) Process Partners asserts Weyers, the primary Badger contact for Process Partners, always understood the contract to be a fixed price contract, though he had represented to other Badger employees, through internal documentation containing specific phrases like "budgetary proposal" and oral communications, that the contract was for time and materials. (Pis.' Response to DPFOF ¶ 26.)

         On August 26, 2014, Weyers created a spreadsheet detailing the change orders made during the construction process, which totaled $25, 762.50. (DPFOF ¶¶ 42-43.) The spreadsheet listed the original contract price as $424, 000 and did not mention whether the contract was calculated based on a fixed or time and materials basis. (Id. ¶ 43.) Weyers presented the spreadsheet to Raymond in an August 28, 2014 meeting and emailed Raymond the spreadsheet on September 3, 2014. (Id. ¶¶ 46-47.)

         Weyers created a second spreadsheet with additional line items and presented it to Raymond on September 15, 2014. (Id. ¶49.) This second spreadsheet echoed the same information contained in the first spreadsheet but increased the change order and stated that the "project total with change order requests" equaled $457, 952.91. (Id. ¶ 50.) During this September 15, 2014 meeting, Raymond agreed to the $457, 952.91 price. (Id. ¶ 51.)

         After an internal meeting at Badger on September 15, 2014, Weyers' supervisor, Samuel Thomas, informed Raymond that the contract price would increase. (Id. ¶ 53.) On September 16, 2014, Badger sent Raymond a third spreadsheet with an increased project total of $603, 000. (Id. ¶ 54.) This third spreadsheet was calculated on a time and materials analysis. (Id.) Raymond immediately rejected the new price and instead reviewed all the change order documentation and calculations. (Id. ¶¶ 56-57.) Upon review, Raymond concluded an additional $6, 172.51 should be added to the price agreed upon at the September 15, 2014 meeting, making the new total $464, 125.42. (Id. ¶ 57.)

         Over the next several months, Badger and Process Partners attempted to reach a resolution but did not resolve the dispute. (Id. ¶ 60.) In a final attempt to settle the dispute, Raymond sought to pay the remainder of the $464, 125.42 Process Partners agreed to pay. (Id. ¶ 61.) Believing Process Partners had paid $300, 000 in progress payments (rather than the actual payment of $350, 000), Raymond authorized a check for $164, 125.42 to be issued to Badger. (Id. ¶ 62.) In other words, Process Partners paid $514, 125.42 for the project. (Id. ¶ 63.) Process Partners alleges it inadvertently overpaid $50, 000 on the $464, 125.42 bill. (Id.) Badger alleges an additional $88, 874.58 is due on the contract based on the $603, 000 purchase price.

         LEGAL STANDARD

         Summary judgment is appropriate when the moving party shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). On the outset, the moving party has the initial burden of proving summary judgment should be granted. Celotex Corp. v. Catrett, Ml U.S. 317, 323 (1986). All reasonable inferences are construed in favor of the nonmoving party. Foley v. City of Lafayette, 359 F.3d 925, 928 (7th Cir. 2004). The party opposing the motion for summary judgment must "submit evidentiary materials that set forth specific facts showing that there is a genuine issue for trial." Siegel v. Shell Oil Co. , 612 F.3d 932, 937 (7th Cir. 2010) (citations omitted). "The nonmoving party must do more than simply show that there is some metaphysical doubt as to the material facts." Id. For a fact to be considered "material, " the fact under dispute must be outcome-determinative under governing law. Contreras v. City of Chicago,119 F.3d 1286, 1291 (7th Cir. 1997). Summary judgment is properly entered against a party "who fails to make a showing ...


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