Opinion ID: 527147
Heading Depth: 2
Heading Rank: 4

Heading: Estoppel Argument

Text: 38 Although estoppel is a defense under the Miller Act, Forrester, 441 F.2d at 783; Glassman, 397 F.2d at 11; United States v. James Stewart Co., 336 F.2d 777, 779 (9th Cir.1964); Moyer v. United States, 206 F.2d 57, 60-61 (4th Cir.1953), courts are hesitant to estop suppliers from recovery under a surety bond absent a supplier's fraud or negligence. United States v. Aetna Ins. Co., 831 F.2d at 983 & n. 3 (a finding of estoppel should not come lightly and only where the supplier's irresponsibility is sufficiently great); Moyer, 206 F.2d at 60-61 (materialman's fraud in providing false receipts to subcontractor estops recovery). The remedial nature of the Miller Act requires that a general contractor asserting an estoppel defense do everything it reasonably can to protect itself short of completely taking over the operation of the subcontractor. Id. 39 The equitable estoppel doctrine precludes a litigant from asserting a claim or defense that might otherwise be available to him against another party who has detrimentally altered his position in reliance on the former's misrepresentation or failure to disclose a material fact. FDIC v. Harrison, 735 F.2d 408,410 (11th Cir.1984). Estoppel requires (1) words, acts, conduct or acquiescence causing another to believe in the existence of a certain state of things; (2) wilfulness or negligence with regard to the acts, conduct or acquiescence; and (3) detrimental reliance by the other party upon the state of things so indicated. Id. at 413. Under the Miller Act, the party claiming an estoppel, however, must show he has been misled to his detriment. U.S. ex rel. Aurora Painting, Inc. v. Fireman's Fund Ins. Co., 832 F.2d 1150, 1154 (9th Cir.1987) (finding no detriment); Forrester, 441 F.2d at 783 (finding no detriment); Glassman, 397 F.2d at 11 (finding no detriment); Graybar Elec. Co., 387 F.2d at 59 (finding prejudice); James Stewart Co., 336 F.2d at 779 (9th Cir.1964) (finding prejudice); Moyer, 206 F.2d at 60-61 (finding no detriment). 40 For instance, in James Stewart Co., a subcontractor's materialman had promised to tell the general contractor if the subcontractor failed to pay for materials. The general contractor continued paying the subcontractor for materials and the subcontractor subsequently went bankrupt. The materialman, however, had failed to tell the general contractor that the subcontractor had not paid for materials. The Ninth Circuit upheld the district court's holding that the materialman was estopped from recovery under the Miller Act because the general contractor had relied to its detriment on the materialman's promise. 336 F.2d at 779. The detriment in James Stewart Co. was clear: the general contractor paid funds to the subcontractor to which the materialman would have been entitled had the materialman complied with its agreement with the general contractor. 41 In this action, however, there is no record evidence that Whitehurst-Lassen has suffered any detriment. The basis of Whitehurst-Lassen's estoppel claim is that Trane allegedly misled Whitehurst-Lassen into believing that Trane's request for a purchase order for the air conditioning equipment constituted Trane's entire claim for all equipment Trane would provide on the Montevallo job. Thus, the detriment which Whitehurst-Lassen alleges it has suffered is a $15,600 settlement overpayment to Adams & Kilgore for the chiller. The record, however, is devoid of evidence that Whitehurst-Lassen paid Adams & Kilgore for the chiller--Whitehurst-Lassen therefore has not suffered any legal detriment. 42 Further, the evidence fails to establish that Trane misrepresented any matter or failed to disclose a material fact. Trane did not represent that the purchase order was for all the air-conditioning equipment including the chiller. Trane simply requested the additional security of a purchase order from Whitehurst-Lassen for the air conditioning equipment because of Adams & Kilgore's then current financial instability. Faulkner testified that Trane contemplated further dealings with Adams & Kilgore and sent the chiller to the Montevallo job site only after Adams & Kilgore brought its account forward (but before Trane knew that Whitehurst-Lassen term nated Adams & Kilgore). Thus, Trane is not estopped because it did not misrepresent its intentions. 43 Trane also had a legitimate belief that Whitehurst-Lassen knew or should have known that the $9,952.00 purchase order did not cover all of the equipment Trane was required to provide. A party asserting an estoppel theory must have neither knowledge of, nor a reasonable means or opportunity of obtaining knowledge of, the facts in dispute. Myers v. Fidelity & Cas. Co. of New York, 759 F.2d 1542, 1548 n. 9 (11th Cir.1985). Here, the parties dispute whether Whitehurst-Lassen knew, or should have known, that the chiller was part of the Montevallo job. Trane's position is that Whitehurst-Lassen, as the general contractor, had the opportunity to know what equipment Trane was providing by simply looking at Adams & Kilgore's itemized bid. Despite thirty-five years of construction experience, however, Whitehurst disclaimed any knowledge regarding what equipment was necessary for the Montevallo job. He denied any knowledge about the equipment involved and stated that he had not seen an equipment list for the job. He testified, however, that a mechanical engineer reviewed and approved the equipment Trane was required to provide to the job and that a general contractor generally receives a submittal list containing the approved equipment. Based on Whitehurst's testimony, it may be reasonable to conclude that Whitehurst, and thus Whitehurst-Lassen, were unfamiliar with the details of Adams & Kilgore's arrangements with their suppliers. Nonetheless, Whitehurst-Lassen cannot hide behind its professed ignorance about the Montevallo job to support an estoppel against Trane particularly when Whitehurst-Lassen knew, or should have known, that a chiller was required to complete the Montevallo job. The Miller Act, and the Alabama Public Works statute, place a sometimes heavy burden of care on general contractors and their sureties. United States v. Glassman, 397 F.2d 8, 10 (4th Cir.1968). Whitehurst-Lassen cannot meet their burden through pleas of ignorance about business matters with which they should be familiar. 44 Finally, much of the confusion in this case arose because Whitehurst-Lassen failed to inform Trane of its decision to terminate Adams & Kilgore. Trane certainly would not have shipped and billed the chiller to Adams & Kilgore had it known Whitehurst-Lassen had terminated Adams & Kilgore--Trane would have instead billed Whitehurst-Lassen or the new subcontractor. It is irrelevant that Trane originally shipped and billed the chiller to Adams & Kilgore without notifying Whitehurst-Lassen because Trane was unaware of Whitehurst-Lassen's termination of Adams & Kilgore. Whitehurst-Lassen cannot use its failure to inform Trane about Adams & Kilgore's termination to support its estoppel claim. Similarly, as the general contractor, Whitehurst-Lassen had a duty to ensure that it paid Adams & Kilgore only what was due to Adams & Kilgore on its termination date. Whitehurst-Lassen failed to make any efforts to contact Trane, a known supplier, to inform Trane of Adams & Kilgore's termination or to inquire whether any additional balances were due Trane. Whitehurst-Lassen therefore failed to meet the heavy burden of care necessary to establish its estoppel defense. Glassman, 397 F.2d at 10.