Case Name: SIPCO SERVICES MARINE, INC. F/K/A Sipco Services, Inc., Appellant, v. WYATT FIELD SERVICE COMPANY, Appellee
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 1993-03-25
Citations: 857 S.W.2d 602
Docket Number: No. 01-91-00916-CV
Parties: SIPCO SERVICES MARINE, INC. F/K/A Sipco Services, Inc., Appellant, v. WYATT FIELD SERVICE COMPANY, Appellee.
Judges: COHEN, J., concurs.
Reporter: South Western Reporter Second Series
Volume: 857
Pages: 602–612

Head Matter:
SIPCO SERVICES MARINE, INC. F/K/A Sipco Services, Inc., Appellant, v. WYATT FIELD SERVICE COMPANY, Appellee.
No. 01-91-00916-CV.
Court of Appeals of Texas, Houston (1st Dist.).
March 25, 1993.
Rehearing Denied April 1, 1993.
J. Ben Shapiro, Jr., Shapiro, Fussell, Wedge & Smotherman, Atlanta, GA, Miles 0. Smith, Houston, for appellant.
C. Aldine Hammaker, Hutcheson & Grundy, Houston, for appellee.

Opinion:
OPINION ON REHEARING
SAM BASS, Justice.
After a nonjury trial, the judge ruled for appellee (Wyatt) on its contract claim and awarded damages of $40,488 plus attorney's fees. We reform the judgment to make the award of attorney's fees to Wyatt on appeal to the supreme court con ditional on Sipco's appeal being unsuccessful, and as reformed, we affirm.
FACTS
In early July of 1987, Wyatt solicited bids from various subcontractors for the external painting and internal lining of two storage tanks to be constructed at the Shell — Deer Park plant. On July 10, 1987, Wyatt telephoned appellant (Sipco) and asked Sipco to submit a bid immediately. Based on information provided by Wyatt, Sipco submitted a written bid of $477,700 on July 13, 1987.
Six contractors originally submitted bids, and two were lower than Sipco's. However, Wyatt contended at trial that it relied on Sipco's bid because the lower bidders were financially unstable, had questionable performance records, or were unacceptable to the owner. Sipco argued that the two lower bids were acceptable because both contractors offered to obtain performance and payment bonds, and one offered an extended warranty on the project.
Wyatt used Sipco's $477,700 bid to calculate its bid for its own work on the project, and submitted its bid to S.I.P., the general contractor. S.I.P. orally awarded the contract to Wyatt on August 14, 1987. Sipco knew Wyatt had used its bid in Wyatt's own project estimates, and also knew Wyatt was awarded the project. Wyatt signed a written contract with S.I.P. on September 8, 1987. Wyatt's engineers then finalized the storage tank's design sketches.
Around September 11, 1987, Wyatt provided all bidders the final, detailed drawings of the storage tanks and requested a "confirmation" of the subcontractor's respective bids. Wyatt's agent testified that this resolicitation was meant to prevent changes in the bids submitted. Sipco argues that Wyatt's request or resolicitation of new bids was a rejection of the original bids, and that these final drawings introduced complex new requirements that Sip-co had not anticipated when preparing its original bid.
After receiving the updated drawings, Sipco did not rebid, but did propose a price reduction from its original bid if a less expensive lining was used. Wyatt understood this correspondence to be a reconfirmation of Sipco's $477,700 bid from July. Sipco, on the other hand, argued that its failure to rebid a new (higher) price was not a confirmation of its old bid. Instead, Sipco argued no bid was made because the new requirements would have increased Sipco's bid, and Sipco believed that Wyatt already considered Sipco's July bid to be too high. To show its reliance, Wyatt argued at trial that it never expressly rejected Sipco's July offer, but a Wyatt employee testified that while The main goal of the September resolicitation was to maintain the July price of $477,700, Wyatt hoped to receive a lower bid.
On November 11,1987, Wyatt telephoned Sipco and orally awarded Sipco the painting/lining project. The trial judge found that the several months between the bidding and the November phone call was a reasonable period of time. Also on November 11, Wyatt sent the proposed subcontract to Sipco. Wyatt argued that this written contract was a mere formality, as the contract was formed when Wyatt orally awarded the bid to Sipco. Sipco argued that there was never any oral or written contract formed due to the complex changes and cost increases the new drawings involved.
The parties met on November 18, 1987, to discuss their differences. At this meeting, Sipco requested an additional $156,467 to cover increases in labor and material costs (for a total bid of $634,167). After discussing this price increase, Sipco agreed to absorb the extra work costs if Wyatt would pay $82,500 for the increased cost of the tank lining material, Plasite 4300, amounting to a revised bid of $560,200. (Sipco claimed the price of the material had risen during the time between its bid and Wyatt's acceptance.) Wyatt asked S.I.P. to authorize and accept the $82,500 increase, but because Sipco had failed to provide verification of this alleged price increase for the Plasite 4300, S.I.P. refused.
On December 3, 1987, Wyatt received confirmation of a bid from another subcontractor, TIPCO, to do the work for $518,-188. On December 30, 1987, Wyatt asked S.I.P. to allow TIPCO to replace Sipco, and perform the painting and lining work. S.I.P. approved, but required Wyatt to absorb the difference between TIPCO's replacement bid of $518,188 and Sipco's original bid of $477,700, a total of $40,488. In late January of 1988, Wyatt notified Sipco that Wyatt would hold Sipco responsible for that $40,488 difference.
Sipco and Wyatt met in February of 1988 to discuss Sipco's obligation to perform the work as bid in July. At this meeting, Sipco indicated its continued interest in the project, but complained of the drafted subcontract prepared by Wyatt in November of 1987. Sipco contended that several key provisions materially changed the original specifications on which Sipco had based its July bid. Wyatt claimed that the drafted subcontract contained no material changes and was but a mere formality anyway, as a contract had already been formed on the basis of promissory estoppel.
In March of 1988, Wyatt and TIPCO contracted for the painting/lining work. After completion of the work in December 1988, Wyatt demanded payment of $40,488, and then brought this suit.
I. Points of error one, three, and six.
In its first point of error, Sipco asserts it deserved a directed verdict because Wyatt waived its promissory estoppel claim by engaging in "bid shopping" and "bid chiseling." In its third point of error, Sipco asserts it deserved a directed verdict because Wyatt did not reasonably rely on Sipco's bid. In its sixth point of error, Sipco asserts it deserved a directed verdict because Wyatt failed to prove its damages.
A. Was promissory estoppel waived by "bid shopping" and "bid chiseling?"
Sipco contends Wyatt waived its promissory estoppel claim by "bid shopping" or "bid chiseling."
The elements of promissory estop-pel are; (1) a promise, (2) foreseeability of reliance by the promisor, and (3) substantial reliance by the promisee to its detriment. English v. Fischer, 660 S.W.2d 521, 524 (Tex.1983); Adams v. Petrade Int'l, Inc., 754 S.W.2d 696, 707 (Tex.App. — Houston [1st Dist.] 1988, writ denied). The promise will be enforced if necessary to avoid injustice. Adams, 754 S.W.2d at 707. Reliance on the promise must be reasonable. Douglas v. Aztec Petroleum Corp., 695 S.W.2d 312, 317 (Tex.App — Tyler 1985, no writ); Thate v. Texas & Pac. Ry., 595 S.W.2d 591, 595-96 (Tex.Civ.App. — Dallas 1980, writ dism'd).
Sipco argues that Wyatt's "bid shopping" and "bid chiseling" show that Wyatt did not rely on Sipco's bid. Sipco relies on Preload Technology, Inc. v. A.B. & J. Construction Co., 696 F.2d 1080 (5th Cir.1983), but that case cites no Texas authority holding that bid shopping/chiseling limits the equitable estoppel doctrine.
One Texas case discusses briefly bid shopping and bid chiseling. Traco, Inc., v. Arrow Glass Co., 814 S.W.2d 186 (Tex.App. — San Antonio 1991, writ denied). In Traco, a subcontractor (Arrow) sued a supplier (Traco) for Traco's failure to supply doors at the quoted price. Id. at 187. After a bench trial, the judge ruled for Arrow on promissory estoppel grounds. Id. Tra-co claimed it had conclusively proved that Arrow engaged in bid chiseling and thus had unclean hands. Id. at 188. The appellate court concluded that there was sufficient evidence to uphold the trial court's findings. Id. at 193. There is little guidance in Traco regarding whether or how bid shopping can defeat a claim based on equitable estoppel.
In Preload, a general contractor sued a subcontractor, alleging breach of contract and promissory estoppel after the subcontractor refused to perform the work as he had bid. Preload, 696 F.2d at 1083-84. At trial, the general contractor (Preload) won on both the breach of contract and estoppel claims. Id. at 1084. In affirming judg ment, the court discussed limitations on the promissory estoppel doctrine, including bid shopping and chiseling. Id. at 1088-91.
The Preload court referred to "bid shopping" as "a general contractor's seeking of bids from subcontractors other than the one whose bid amount the general used in calculating its own bid, and often involves the general's informing the other subcontractors of the amount of the low bid and inviting them to undercut it." Id. at 1089.
The evidence conflicts on whether Wyatt solicited bids from other contractors for the purpose of undercutting Sipco's bid. Wyatt's representative admitted that getting lower bids was one reason for the resolicitation of bids; however, he claimed the changes made in the final sketches and the lapse of time were also reasons for the September resolicitation. Moreover, Sipco did not prove that Wyatt told other subs of the Sipco bid. Nor did Sipco prove that Wyatt invited other subcontractors to undercut the Sipco bid of $477,700. Thus, Sipco failed to prove "bid shopping" conclusively, as a matter of law.
The Preload court defined "bid chiseling" as "a general contractor's attempt to negotiate a lower price than that bid from the subcontractor whose bid figure the general employed in calculating its own bid, frequently by threatening to subcontract the work to a third party." Preload, 696 F.2d at 1089. Thus, to establish "bid chiseling," Sipco had to show (1) Wyatt attempted to get Sipco to lower its bid, and (2) Wyatt threatened to hire another company if Sipco would not reduce its bid.
There was evidence that Wyatt sought bids from Sipco and others for less than $477,700. However, the evidence was in dispute regarding whether Wyatt threatened to hire another painting subcontractor unless Sipco lowered its bid. Sipco's evidence created a fact issue for the judge to resolve, but Sipco did not conclusively prove either bid shopping or bid chiseling as a matter of law. Thus, the judge correctly denied the motions for directed verdict and for judgment.
B. Was Wyatt's reliance reasonable?
In its third point of error, Sipco claims Wyatt failed to prove that its reliance on Sipco's bid was reasonable. Sipco contends Wyatt's reliance was unreasonable because Sipco was not the lowest responsible bidder.
Two other subcontractors, Corrosion Eliminators and SSPC, submitted lower bids than Sipco in July 1987. The evidence conflicts, however, regarding whether these companies could adequately perform the jobs.
Evidence showed that Corrosion Eliminators was financially weak. Also, Wyatt was unfamiliar with Corrosion Eliminator's performance and reputation as a lining contractor. Further, Wyatt had not solicited a bid from Corrosion, and Wyatt later learned that the customer would not allow Corrosion Eliminators to work on the job.
SSPC was also in financial trouble. Moreover, a Wyatt representative who knew SSPC's work testified it was unsatisfactory.
Sipco offered evidence that Wyatt stated its bid was too high and that Wyatt had two lower bids. Sipco also argued the two lower bids were acceptable to Wyatt because both Corrosion Eliminators and SSPC had offered to obtain performance and payment bonds, and Corrosion Eliminators was willing to extend its warranty on the project. Sipco contends that, as a matter of law, it was unreasonable for Wyatt to rely on its bid because Wyatt had lower bids. We disagree.
Neither a performance bond nor a payment bond nor a warranty is a substitute for good performance. Wyatt needed a good job, not a good bond or a good warranty. We decline to hold that a contractor is barred from invoking the estoppel doctrine except against the lowest bidder, without regard for quality, financial stability, customer satisfaction, and other factors that weigh heavily in selecting a subcontractor.
An instructed verdict was required only if Sipco proved its right to judgment as a matter of law. The evidence here is open to more than one interpretation and fails to conclusively prove, as a matter of law, that Wyatt engaged in "bid shopping" or "bid chiseling," especially when viewed in a light most favorable to Wyatt. Additionally, there was probative evidence that Wyatt's reliance on Sipco's bid of $477,700 was reasonable. We hold the trial judge did not err in denying Sipco's motion for judgment. We further hold that the trial judge's refusal to find Wyatt engaged in bid shopping or chiseling is not so against the great weight of the evidence as to be manifestly unjust. Cropper v. Caterpillar Tractor Co., 754 S.W.2d 646, 652 (Tex.1988). Nor is a finding that Wyatt reasonably relied on Sipco's bid against the great weight and preponderance of the evidence.
Sipco's first and third points of error are overruled.
C. Damages.
Sipco's sixth point of error contends that, as a matter of law, Wyatt proved no damages. Sipco complains that Wyatt presented no evidence of an executed subcontract between itself and TIPCO, Sipco's replacement, nor did Wyatt prove the amount it paid to TIPCO.
Evidence showed that TIPCO bid $518,-188, which is $40,488 more than Sipco's July bid. The judge awarded that amount as damages. Wyatt's contract administrator, Gerald Cato, testified that Wyatt had to hire TIPCO to perform the work at a cost higher than Sipco's July bid. We hold this is legally sufficient evidence. Sherman v. First Nat'l Bank, 760 S.W.2d 240, 242 (Tex.1988); Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex.1987).
The sixth point of error is overruled.
II. Points of error two, four, and five.
In its second, fourth, and fifth points of error, Sipco asserts the trial court erred in not finding: 1) that Wyatt's actions in requesting additional and/or new bids after it was awarded the contract by S.I.P. amounted to a rejection of Sipco's bid; 2) that Sipco had the right to refuse to perform because Wyatt's proposed subcontract form was unacceptable to Sipco; and 3) that Wyatt voluntarily broke off subcontract negotiations with Sipco and entered into a subcontract with TIPCO.
The facts in this case were complex; the parties' relationship was ambiguous; and the evidence was conflicting. Whether and when a contract was formed, renegotiated, and terminated was difficult to discern. Some evidence supported Sipco on these points, but it was far from conclusive. The facts above show that a different fact finder might have reached a different conclusion, but they do not show that a rational trier of fact could have ruled only for Sip-co. We hold the trial judge did not abuse her discretion and Sipco did not prove its contentions as a matter of law.
Points of error two, four, and five are overruled.
III. Points of error seven, eight, and nine.
In its seventh point of error, Sipco complains the trial judge erred in awarding attorney's fees of $16,250 because she failed to ascertain whether such fees were customary and reasonable.
The findings of fact entered are silent as to the reasonableness and customary nature of the attorney's fees; however, after the trial judge granted Wyatt's request to enter additional findings of fact setting attorney's fees, Sipco never requested any additional or amended findings on this issue. Under these circumstances, the omitted findings are presumed in support of the judgment. Tex.R.Civ.P. 299.
Point of error seven is overruled.
The eighth point of error asserts the trial judge erred in awarding attorney's fees to Wyatt unconditionally, if Sipco appeals. We agree.
In Siegler v. Williams, 658 S.W.2d 236 (Tex.App. — Houston [1st Dist.] 1983, no writ), we held that a trial judge may not penalize a party for taking a successful appeal. Id. at 241. Thus, Wyatt's award of attorney's fees must be conditioned upon Sipco's unsuccessful appeal. Id. An un conditional award of attorney's fees is improper. Id.
The error is harmless so far because Sipco's appeal has not succeeded here. However, to the extent this point of error applies to the unconditional award of attorney's fees on appeal to the Texas Supreme Court, it is sustained.
The ninth point of error states that awarding appellate attorney's fees before the appeal occurs denies due process and equal protection rights under the United States and Texas Constitutions. This contention was rejected in Pullman v. Brill, Brooks, Powell & Yount, 766 S.W.2d 527, 530 (Tex.App. — Houston [14th Dist.] 1988, no writ), and we reject it for the same reasons.
The ninth point of error is overruled.
We reform the judgment to provide Wyatt will receive attorney's fees on appeal to the Texas Supreme Court only if Sipco does not prevail in that court. As reformed, the judgment is affirmed.
COHEN, J., concurs.
JONES, J., not participating in the opinion on rehearing.
. We withdraw our prior opinion.