Court Opinion

ID: 4797149
Source: CourtListenerOpinion
Date Created: 2021-08-20 21:01:07.575369+00
Date Added: 2024-06-11T08:10:01.252225
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                                File Name: 21a0393n.06

                                           No. 20-1858

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT
                                                                                    FILED
AVERTEST, LLC, dba Averhealth,                       )                        Aug 20, 2021
                                                     )                    DEBORAH S. HUNT, Clerk
       Plaintiff-Appellant,                          )
                                                     )       ON APPEAL FROM THE UNITED
v.                                                   )       STATES DISTRICT COURT FOR
                                                     )       THE EASTERN DISTRICT OF
LIVINGSTON COUNTY, MICHIGAN,                         )       MICHIGAN
                                                     )
       Defendant-Appellee.                           )

       BEFORE: ROGERS, WHITE, and MURPHY, Circuit Judges.

       MURPHY, Circuit Judge. When negotiating a service contract, a business might engage

in costly preparatory work so that it can start providing the services if the contract comes to

fruition. But who should pay for this work if the parties ultimately cannot agree on a formal written

contract? This case should make one thing clear for such a business: Without the written contract,

it will generally bear the risk of loss for the preparatory costs unless it has obtained an unwritten

agreement covering all material terms or at least some type of definite promise from the other side.

       Avertest, LLC, which goes by “Averhealth,” conducts drug and alcohol testing. It sought

to contract with a Michigan county for testing services. After a county employee indicated that

the county had “approved” Averhealth’s proposed testing location and would send a contract in

the “near future,” Averhealth signed a pricey lease for this location. But the county had second

thoughts about the relationship five days into Averhealth’s testing and ended the deal without ever

signing a contract. Averhealth sued, alleging breach-of-contract and promissory-estoppel claims.
No. 20-1858, Avertest v. Livingston Cnty., Mich.

       Averhealth is right that Michigan contract law sometimes enforces an unwritten agreement

even when the parties contemplate (but fail to sign) a written one. Yet the parties must have agreed

on all of the material terms, such that the anticipated written contract represented a mere record of

an agreement already reached elsewhere. Here, however, no reasonable jury could find that the

parties had agreed to all material terms despite their failing to execute the written contract.

       Averhealth is also right that Michigan promissory-estoppel law sometimes permits a party

to enforce another entity’s noncontractual promise when the party acts in reasonable reliance on

it. But the promise must have been clear and definite. And the county’s promise that a “contract”

would come in the “future” left too many of the promised terms unknown for a reasonable jury to

find this element met. We thus affirm the grant of summary judgment to the county.

                                                  I

       Livingston County sits a short distance to the northwest of Detroit, Michigan. Its courts

often require defendants and probationers to take drug and alcohol tests. In early April 2018,

county employees issued a “Request for Proposals” asking vendors to propose plans to provide

this testing. The county expected a vendor to offer testing at the vendor’s location during business

hours and to have staff on hand for emergency testing at the courthouse. Under a section entitled

“Required Types of Tests,” the Request for Proposals indicated that a vendor must perform

“GC/MS” confirmation testing (we take the acronym to mean gas chromatography/mass

spectrometry). It also anticipated that the parties would enter into a “fully executed contract”

before the vendor would perform any work and noted that the contents of both the Request for

Proposals and the winning proposal would “become contractual obligations if a contract ensues.”

RFP, R.25-2, PageID 132. The county sought to have the testing start on June 2, 2018. It requested

a 16-month term from that date until September 30, 2019.

                                                  2
No. 20-1858, Avertest v. Livingston Cnty., Mich.

       Livingston County told vendors to submit any questions about its request by April 23. The

county posted its answers a day later. One vendor had asked if the county would accept “LC-

MS/MS” confirmation testing (we take this acronym to mean liquid chromatography/mass

spectrometry). The county responded that “GC/MS is the federal standard and is the preferred

confirmation method.” Resp., R.25-2, PageID 146.

       Averhealth provides drug and alcohol testing to over 1,000 courts in about 20 states. It

submitted a proposal to Livingston County. Averhealth’s proposal tied its testing price to the

number of tests that Livingston County ordered; the price decreased as the tests increased. The

proposal, for example, suggested a price of $21 per test if the county ordered 1,000 tests per month

and a price of $12.50 per test if it ordered 2,000 tests per month. The proposal also suggested that

Averhealth would perform a “standard confirmation test” without identifying the type.

       Livingston County selected Averhealth as a finalist and interviewed the company in early

May. During the interview, Averhealth identified two possible locations for its testing site. One

was only a half mile from the courthouse. After interviewing the finalists, county employees

recommended to the Livingston County Board of Commissioners that the county pick Averhealth.

       On May 21, the Board adopted a resolution authorizing the county to enter into a contract

with Averhealth at specified pricing for the period from June 2, 2018 to September 30, 2018. The

proposed pricing had been amended upward so that Averhealth’s basic test would cost $19.25 if

the county ordered 2,000 tests per month. The resolution authorized the Board’s chairman to sign

all contracts and amendments.

       The next day, Averhealth hit a snag. It could not finalize its lease at the location near the

courthouse. County employees expressed concern with this development. They had selected

Averhealth based on this location’s convenience and the company’s assurances that it could start

                                                 3
No. 20-1858, Avertest v. Livingston Cnty., Mich.

testing on June 2. Sara Applegate, the county’s court programs liaison, had also already emailed

court officials about the transition to Averhealth and the (now incorrect) new location.

       Averhealth quickly identified a new building about a mile from the courthouse and told the

county that this change would not affect its start date. The company agreed to terms with the

building’s owner on May 24. It did not want to sign a lease, however, without further assurances

from the county. In an email to Applegate, Averhealth’s CEO indicated: “Before executing the

lease, we need approval on the location and the contract from Livingston County.” Email, R.29-

10, PageID 493. Averhealth asked for the county’s approval and the contract by the next day so

that it could start preparing the location for the June 2 start date. Applegate responded the next

day: “Per our conversation today, we are approving the new location and have attached the

resolution to show that it was approved and a contract will follow in the near future.” Email, R.25-

14, PageID 232. Averhealth entered into a five-year lease.

       Averhealth began providing testing services on June 2. Disputes between the parties

emerged in early June. County employees at some point became concerned that Averhealth was

performing LC-MS/MS (not GC/MS) confirmation testing. These employees also sought a price

of $10 for a specific type of test, not the $19.95 that the parties had agreed to for Averhealth’s

more comprehensive test. Lastly, many test-takers immediately began complaining about the

invasive nature of Averhealth’s testing.

       By June 5, Applegate informed Averhealth that the county was uncomfortable sending

individuals to the company until the parties could work through various issues and finalize a

contract. Two days later, another county employee told Averhealth that the county would “not be

contracting with Averhealth for drug testing services.” Email, R.25-11, PageID 223. This email

explained that the Request for Proposals had required GC/MS testing, but Averhealth used LC-

                                                 4
No. 20-1858, Avertest v. Livingston Cnty., Mich.

MS/MS testing. It identified this problem among “several other inaccuracies, concerns and

inabilities to meet our needs” as the reason for ending the deal. Id. The county directed Averhealth

to send a bill for the testing since June 2.

        Averhealth sent the county a bill for $112,547.99. This amount included $1,741.25 in

testing costs (for testing and transportation of samples). It also included about $86,000 in costs

for acquiring and constructing the testing location and $23,000 in costs for training employees.

The county paid Averhealth only $1,741.25 for the tests.

        Averhealth sued. It alleged breach-of-contract and promissory-estoppel claims, among

others. The district court granted summary judgment to the county. Avertest, LLC v. Livingston

County, 2020 WL 4437458, at *9 (E.D. Mich. Aug. 3, 2020). It held that the parties never entered

into a contract and that the Board of Commissioners’ resolution only allowed its chairman to do

so. Id. at *5–6. It next rejected Averhealth’s equitable claims, including its promissory-estoppel

claim. The court reasoned that Applegate’s email approving the testing location acknowledged

that the parties had not agreed to a contract, so Averhealth could not rely on this email to believe

that they had done so. Id. at *8.

                                                 II

        Averhealth challenges the dismissal of its breach-of-contract and promissory-estoppel

claims. We review the district court’s decision de novo, applying the Michigan law that governs

this dispute. See Sroka v. Wal-Mart Stores East, LP, 785 F. App’x 324, 328 (6th Cir. 2019).

                                        A. Breach of Contract

        Averhealth argues that Livingston County breached the parties’ contract. This claim faces

an obvious obstacle: The company cannot identify a traditional “contract” in which the parties

incorporated all of their agreed-upon terms into a written document signed by both sides. Not only

                                                 5
No. 20-1858, Avertest v. Livingston Cnty., Mich.

that, the Request for Proposals anticipated that the parties would execute such a formal contract.

Averhealth nevertheless argues that a genuine dispute of fact exists over whether the parties’

interactions in May and June 2018 created an unwritten contract.

       Averhealth’s argument is at least possible under Michigan contract law. Parties who have

reached an unwritten agreement may form a binding contract even when they anticipated (but

failed to complete) a “written memorial” of the agreement in a formal document. Scholnick’s

Importers-Clothiers, Inc. v. Lent, 343 N.W.2d 249, 253 (Mich. Ct. App. 1983); see Remark, LLC

v. Adell Broad. Corp., 702 F.3d 280, 283 (6th Cir. 2012); Restatement (Second) of Contracts § 27

(Am. L. Inst. 1981). For this rule to apply, however, the parties must have agreed on all of the

material terms, such that the contemplated written document was designed merely to memorialize

the terms that they had already accepted. No binding contract exists if some of those terms

remained disputed when one party decided not to go through with the written agreement. See Pro.

Facilities Corp. v. Marks, 131 N.W.2d 60, 63 (Mich. 1964); Cent. Warehouse Operations, Inc. v.

Riffel, 2015 WL 1314634, at *4 (Mich. Ct. App. Mar. 24, 2015) (per curiam).

       Yet Averhealth’s argument fails on the facts. No reasonable jury could find that the parties

entered into an “express agreement” on all material terms. Remark, 702 F.3d at 284 (quoting

Restatement (Second) of Contracts § 27 cmt. c). A few examples prove the point.

       What were the agreed-upon prices? As late as June 1, the day before Averhealth started

testing, the parties continued to negotiate the price. The county sought a price of $10 for a specific

type of test, not the $19.95 standard price for Averhealth’s comprehensive test. Averhealth

responded that it could provide the specific test but for $19.95. That price, the county complained,

would cause probation officers to send probationers to other testing agencies. If the probation

officers did so, Averhealth rejoined, its prices might increase because the standard price depended

                                                  6
No. 20-1858, Avertest v. Livingston Cnty., Mich.

on the quantity ordered. On June 2, Averhealth proposed a “call to discuss possible solutions” to

this disagreement, but no evidence suggests that the parties resolved it. Email, R.25-6, PageID

203. This price negotiation belies the claim that the parties made an unwritten contract covering

all material terms.

        In response, Averhealth argues that a jury could find that the county’s $10 price request

was an attempt to amend a pricing agreement that the parties had reached when the Board of

Commissioners authorized the county to contract with Averhealth. The Board’s resolution

approved entering into a contract at the “attached rates” included in a memo accompanying the

resolution. But that memo did not identify a single price. It expressed “uncertainty” over the

county’s testing volume and proposed different prices for different quantities (such as $19.25 for

2,000 monthly tests). It also did not even list the price that the parties later identified as the default

($19.95) during their June negotiations. Besides, the Board’s resolution did not itself “accept” any

particular contract terms.     It merely authorized county employees to negotiate within the

resolution’s general parameters and gave the chairman authority to execute a final contract

containing the specific terms.

        What quantity of tests did the county agree to send Averhealth? Neither the Request for

Proposals nor the later negotiations stated that the parties were entering into an exclusive

relationship or agreeing to a minimum number of monthly tests. A county employee even told

Averhealth that probation officers might send probationers to other testing agencies if Averhealth

did not reduce its prices—a warning that would make no sense if the parties contemplated an

exclusive deal. Averhealth’s response to this warning also did not suggest that competition from

other testing agencies would breach any contract term. If, however, the parties did not agree to an

                                                    7
No. 20-1858, Avertest v. Livingston Cnty., Mich.

exclusive relationship or a minimum quantity, the county would have had every right to stop

sending tests to Averhealth at any time.

       What kind of tests would Averhealth perform? The Request for Proposals required vendors

to provide GC/MS confirmation testing, but Averhealth offers LC-MS/MS confirmation testing.

Emails from June show the county raising concerns about the LC-MS/MS testing. This dispute

also disproves an agreement on all material terms.

       Averhealth responds that a jury could find that the county had agreed to LC-MS/MS testing

in May before raising complaints in June. During the bidding process, an unidentified vendor

asked whether the county would accept LC-MS/MS testing, and the county responded by calling

GC/MS the “preferred” (not required) method. Resp., R.25-2, PageID 146. In addition, when

Sara Applegate emailed court officials in May announcing the change to Averhealth, she attached

Averhealth’s sheet of frequently asked questions. In this sheet, Averhealth noted, among other

things, that its “confirmation testing is conducted via LC-MS/MS.” Email, R.29-2, PageID 446.

Averhealth relies on this sheet to prove that it brought the testing issue to the county’s attention

and that the county consented to the nonpreferred method before later objecting to it.

       This evidence, however, would not allow a reasonable jury to conclude that Livingston

County affirmatively accepted as a contract term that Averhealth would perform LC-MS/MS

confirmation testing. If Averhealth had forthrightly flagged this issue for the county during the

negotiations, it could have easily presented that evidence. Yet Averhealth offers no affidavits from

employees explaining how or when it informed the county that it would undertake a type of

confirmation testing different from the one listed as a requirement in the Request for Proposals.

Averhealth’s proposal was, at best, misleading on the point. The proposal stated the Averhealth

“provides all of the ‘Required Types of Drug Test’ services” listed on the specific page of the

                                                 8
No. 20-1858, Avertest v. Livingston Cnty., Mich.

Request for Proposals that required GC/MS testing and noted later that it would perform only a

“standard confirmation test.” Likewise, Averhealth’s slide presentation during the interview with

the county did not mention LC-MS/MS testing. Averhealth also introduced no emails from the

county “approving” this testing like the email it received approving the location change. A jury

would have to engage in rank speculation to find that the county consented to its unpreferred testing

method based on a document attached to an internal county email that was not part of the parties’

negotiations. See K.V.G. Props., Inc. v. Westfield Ins. Co., 900 F.3d 818, 823 (6th Cir. 2018).

        What was the contract’s length? The Request for Proposals suggested that it would run

for 16 months from June 2, 2018 to September 30, 2019. Yet the Board’s resolution authorized

the county to enter into an agreement that ran for only 4 months from June to September 2018.

Although Averhealth calls the Board’s 4-month term a “typographical error,” it points to no

evidence in which any county agent later accepted any particular term, let alone the longer one. In

addition, the Request for Proposals made clear that the county could “terminate this contract at

any time” with 30 days’ written notice if it found the vendor’s work unsatisfactory. RFP, R.25-2,

PageID 132. Averhealth does not say whether this opt-out provision made it into the unwritten

contract that it claims exists.

        What about the other terms?       The Request for Proposals included “many details.”

Restatement (Second) of Contracts § 27 cmt. c.           It required the vendor to agree to an

indemnification clause holding the county harmless for damages caused by the vendor’s agents. It

barred the vendor from discriminating against its employees on the basis of identified traits. It

prohibited the vendor from subcontracting any work without permission. It mandated that the

vendor obtain several types of insurance. And it anticipated that the vendor would perform its

work “in compliance with the negotiated contract,” RFP, R.25-2, PageID 132, suggesting that a

                                                 9
No. 20-1858, Avertest v. Livingston Cnty., Mich.

formal agreement was itself a material term. Cf. Farrow Grp., Inc. v. Detroit Land Bank Auth.,

2019 WL 2194972, at *2 (Mich. Ct. App. May 21, 2019) (per curiam). As these terms show, the

parties were contemplating a “complex” deal requiring more than a standard-form contract.

Remark, 702 F.3d at 284. One would objectively expect this type of deal to be “put in writing[.]”

Restatement (Second) of Contracts § 27 cmt. c. The nature of the deal further rebuts any claim

that a jury could use an email snippet here or a phone conversation there to fill in all of the terms

of an unwritten agreement. See Skycom Corp. v. Telstar Corp., 813 F.2d 810, 816 (7th Cir. 1987).

       All of this leaves one fact that does support Averhealth. Averhealth did not just take

“action in preparation for performance during the negotiations” (it signed the lease and prepared

the testing location); it also provided services for a few days in June. Restatement (Second) of

Contracts § 27 cmt. c. But the county paid for all testing performed. And Averhealth signed the

lease knowing that it had yet to enter into a long-term contract. That is why it requested to see a

contract before signing it. Apart from accepting the proposed location, however, Applegate

responded by saying the contract would follow later. Thus, rather than demanding an executed

contract before signing the lease, Averhealth took the risk that the parties would complete the

formal deal later. They never did. And too many material terms are in dispute to allow a

reasonable jury to find that the parties had entered into any long-term unwritten contract. See Pro.

Facilities Corp., 131 N.W.2d at 63.

                                      B. Promissory Estoppel

       Even assuming the parties did not form a contract, Averhealth alternatively argues,

Livingston County should at least be on the hook for Averhealth’s costs in setting up its testing

site under a promissory-estoppel theory. Promissory estoppel permits one party to enforce a

promise made by another party even when the promise did not generate a binding contract under

                                                 10
No. 20-1858, Avertest v. Livingston Cnty., Mich.

the usual contract-law rules. See State Bank of Standish v. Curry, 500 N.W.2d 104, 107 (Mich.

1993); Restatement (Second) of Contracts § 90(1). To ensure that this equitable doctrine does not

effectively eliminate the normal legal elements for a contract, however, Michigan courts apply it

with caution. See, e.g., Bodnar v. St. John Providence, Inc., 933 N.W.2d 363, 377 (Mich. Ct. App.

2019); Barber v. SMH (US), Inc., 509 N.W.2d 791, 797 (Mich. Ct. App. 1993) (per curiam).

       A Michigan plaintiff must prove four elements. See Leila Hosp. & Health Ctr. v. Xonics

Med. Sys., Inc., 948 F.2d 271, 275 (6th Cir. 1991); Farrow Grp., Inc. v. Detroit Land Bank Auth.,

2021 WL 70649, at *5 (Mich. Ct. App. Jan. 7, 2021) (per curiam). The defendant must have made

a promise (a bank, for example, might promise to lend funds to farmers). See State Bank of

Standish, 500 N.W.2d at 106, 110. The defendant next must have reasonably expected that the

plaintiff would take an action in reliance on this promise (the bank’s conversations with the

farmers, for example, should have led it to expect that its promised loan would induce them to

keep the farm rather than apply for a government buyout). See id. at 106, 110–11. The plaintiff

must actually take the detrimental action (the farmers, for example, must have opted to keep the

farm because of the bank’s promise). See id. Lastly, given that estoppel is an equitable doctrine,

enforcement of the promise must be necessary to avoid an “injustice” (such as the farmers’

predicament caused by the bank’s later refusal to lend the money). See id.

       This case concerns the “promise” element. Because Michigan courts cautiously apply

promissory estoppel, they have held that not just any “promise” will do. Rather, the doctrine

applies only if the defendant has made a “clear and definite” promise. State Bank of Standish, 500

N.W.2d at 108; DBI Invs., LLC v. Blavin, 617 F. App’x 374, 385–86 (6th Cir. 2015). As one

treatise puts it, the promise must be “sufficiently specific so that the judiciary can understand the

obligation assumed and enforce the promise according to its terms.” 28 Am. Jur. 2d Estoppel and

                                                 11
No. 20-1858, Avertest v. Livingston Cnty., Mich.

Waiver § 52, Westlaw (database updated Aug. 2021); see McMath v. Ford Motor Co., 259 N.W.2d

140, 142–43 (Mich. Ct. App. 1977) (per curiam). Michigan courts thus will not enforce vague or

general promises that require speculation about the promiser’s actual duties under the promise.

See State Bank of Standish, 500 N.W.2d at 108–09; McMath, 259 N.W.2d at 142–43.

       A comparison of State Bank of Standish and McMath illustrates the divide between clear

and opaque promises. In State Bank of Standish, the Michigan Supreme Court held that a bank’s

promise to enter into a loan could be “sufficiently clear and definite” if the court could identify the

“material terms of the loan,” including such things as the loan amount and interest rate. 500

N.W.2d at 109–10. Yet the court clarified that these terms need not be expressed in the promise

itself; they can be established by all of the parties’ actions and statements. Id. So when the bank

repeatedly lent funds to the borrowers on the same basic terms, the court held that a reasonable

jury could objectively conclude that the terms of the promised future loan matched the terms from

the parties’ “previous course of dealing[.]” Id. at 110.

       In McMath, by contrast, the Michigan Court of Appeals held that promises lacking “the

required specificity” cannot support an estoppel claim. 259 N.W.2d at 143. There, a pilot who

worked for both a private company and the military opted to resign from the military when the

company promoted him to chief pilot. Id. at 141. Because he lost income from the decision, he

decided to resign only after receiving the company’s assurances that it “would take care of him”

and ameliorate any future economic concerns. Id. When the company later fired him, he brought

a promissory-estoppel claim. Id. at 142. The court rejected the claim because the company’s

vague promises were not “definite enough” to justify any reliance on them. Id. at 143.

       Which side of this line does Livingston County’s alleged promise fall? It is closer to the

one in McMath than in State Bank of Standish. Recall that when Averhealth asked for a contract

                                                  12
No. 20-1858, Avertest v. Livingston Cnty., Mich.

before signing the lease, Applegate responded: “Per our conversation today, we are approving the

new location and have attached the resolution to show that it was approved and a contract will

follow in the near future.” Email, R.25-14, PageID 232. Averhealth argues that Applegate’s email

“promised that a written contract ‘will follow in the near future’” and that it relied on this

statement. Reply Br. 19. But the suggestion that the county would send a contract in the future

did not include “the required specificity” for a reasonable jury to find that the county made an

actionable promise. McMath, 259 N.W.2d at 143. As the Michigan Supreme Court has explained,

a promise of a future contract is insufficiently specific if the “material terms of the agreement are

lacking[.]” State Bank of Standish, 500 N.W.2d at 108 (citation omitted). And Applegate’s email

said nothing about those terms (apart from the testing location).

       Indeed, Applegate’s general promise of a future contract is nearly identical to a promise

that the Michigan Court of Appeals has already rejected in a surprisingly similar case. See Farrow,

2021 WL 70649, at *4–6. In Farrow, a municipal agency issued a request for proposals to

demolish dilapidated homes, and the plaintiff demolition company alleged that it had proposed the

winning bid. Id. at *1. The municipal agency later indicated that the agency would need to issue

another round of bidding. Id. But it did so only after the demolition company had bought some

$700,000 worth of equipment in preparation. Id. The company claimed that it relied on promises

from the agency when buying this equipment. Id. at *5. An agency employee allegedly told the

company that it should “procure the necessary equipment,” that it should “‘gear up’ to start the

work,” and that the contracts “would be coming next week.” Id. Farrow held that these statements

could not support a promissory-estoppel claim, reasoning that they did “not constitute a clear and

definite promise.” Id. If the employee’s general assurance of a future contract did not suffice in

Farrow, Applegate’s general assurance of a future contract cannot suffice in this case.

                                                 13
No. 20-1858, Avertest v. Livingston Cnty., Mich.

       Unlike in State Bank of Standish, moreover, we cannot fill in the gaps of Applegate’s

generic promise using the parties’ other statements or conduct—at least not in a way that is

anything but “speculative.” McMath, 259 N.W.2d at 142 (citation omitted). The parties, for

example, had no prior course of dealing, so we cannot objectively identify the terms of the

promised contract based on the terms of prior contracts. State Bank of Standish, 500 N.W.2d at

110. The parties’ negotiations also left too many contract terms a mystery. Would the promised

contract require Averhealth to perform LC-MS/MS or GC/MS confirmation testing? Would it run

for 4 months or 16 months? Would the testing price be a constant $19.95 or could some tests cost

$10? As explained, the record does not answer these questions. Cf. United States ex rel. Guzall

v. City of Romulus, 743 F. App’x 574, 583 (6th Cir. 2018).

       Considering the issue from a slightly different perspective reaffirms this point. The

requirement that a promise be clear and definite is necessary to allow courts to answer whether the

plaintiff could have reasonably relied on it. See State Bank of Standish, 500 N.W.2d at 107–08;

E. Sav. Bank v. Monroe Bank & Tr., 2002 WL 31941034, at *7 (Mich. Ct. App. Nov. 26, 2002)

(per curiam). In this case, for example, suppose that the parties planned to enter into an exclusive

relationship. If that term were impliedly within Applegate’s promise, perhaps it may have been

reasonable for Averhealth to rely on the promise when signing a five-year lease. Suppose instead

that the parties intended to allow the county to withdraw from the contract at any time. If that term

were impliedly within Applegate’s promise, Averhealth’s reliance on an “at-will” relationship as

the basis for signing the lease looks a lot more unreasonable. Cf. Tyler v. Tsurumi (Am.), Inc., 425

F. App’x 702, 705 (10th Cir. 2011). Yet how can we answer this reliance question if we do not

even know the basic outlines of the alleged promise? See McMath, 259 N.W.2d at 143.

                                                 14
No. 20-1858, Avertest v. Livingston Cnty., Mich.

       In sum, Averhealth took a risk that its relationship with the county would blossom into a

multiyear collaboration providing a steady stream of tests (and revenue). That the relationship did

not pan out as planned provides no basis to shift its costs to the county on this record.

       We affirm.

                                                 15
No. 20-1858, Avertest v. Livingston Cnty., Mich.

       HELENE N. WHITE, Circuit Judge, concurring in part and dissenting in part. I agree that

the district court properly granted summary judgment to Livingston County on Averhealth’s

breach-of-contract claim because the RFP provided that a written contract was necessary, but no

written contract was executed. See, e.g., Farrow Grp., Inc. v. Detroit Land Bank Auth., No.

341822, 2019 WL 2194972, at *2 (Mich. Ct. App. May 21, 2019) (per curiam) (affirming summary

disposition on a breach-of-contract claim “because the RFP clearly indicated that a written contract

would have to be entered into” but “no contract was entered into”). However, because a reasonable

jury could find that Averhealth’s reliance on Sara Applegate’s promise of a forthcoming contract

was reasonable, I would reverse the grant of summary judgment on Averhealth’s promissory-

estoppel claim.

       As the majority explains, promissory estoppel has four elements: (1) a clear and definite

promise, which (2) the promisor should have reasonably expected the promisee to act on, (3) the

promisee did in fact rely on, and (4) must be enforced to avoid injustice. See State Bank of Standish

v. Curry, 500 N.W.2d 104, 106-07 (Mich. 1993). Given the facts in this case, viewed in the light

most favorable to Averhealth, a reasonable jury could find that the promise was sufficiently

definite and that Averhealth reasonably relied on that promise to its detriment.

       The context of the promise is important. The parties were preparing for the commencement

of testing services on June 2—a date set in the RFP and emphasized in discussions between the

parties as critical to the County. On May 18, Applegate, the County’s main point of contact for

Averhealth, confirmed via email that she had “distributed letters to all specialty court probation

officers” informing them that they should send participants to Averhealth as of June 2. R. 29-2,

PID 445. On May 21, the Livingston County Board of Commissioners adopted a resolution

authorizing the County to contract with Averhealth at its proposed prices, with testing to begin on

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No. 20-1858, Avertest v. Livingston Cnty., Mich.

June 2. On May 23, after Averhealth’s initial testing location fell through, Averhealth proposed a

new location and stated that the “change will not delay the June 2 start date.” R. 29-9, PID 488.

After not receiving a response, Averhealth sent another email on May 24 stating that it had reached

an agreement for another testing location but that it needed approval and the contract before it

would sign the lease. The next day, just eight days before commencement of testing, Applegate

responded: “Per our conversation today, we are approving the new location and have attached the

resolution to show that it was approved and a contract will follow in the near future.” R. 29-11,

PID 498. She also requested “a copy of the lease agreement once it [was] signed” so she could

“let everyone know about the new testing location.” Id.

       Given this context, I disagree with the majority that the promise was not sufficiently

definite or that reliance on this promise was unreasonable. In reaching the opposite conclusion,

the majority concludes that there were too many unresolved material terms for the promise to be

definite. At the time the promise was made, however, none of these disputes had materialized,

and a jury could find that Averhealth reasonably believed based on the communications between

the parties that all material terms had been agreed upon.

       Livingston County argued that there were disagreements regarding some essential terms,

citing the type of confirmation testing (GC/MS vs. LC-MS/MS), pricing, and Averhealth’s testing

procedures. Regarding the type of confirmation testing, the RFP stated that GC/MS was required,

but during the bidding process, in response to a question asking specifically whether LC-MS/MS

was acceptable, the County merely indicated a preference for GC/MS. Further, on May 18, prior

to the Board approving a contract with Averhealth, Applegate distributed information about

Averhealth to court officials, which stated that Averhealth provided LC-MS/MS confirmation

testing. Three days later, the Board approved a contract with Averhealth. Because County officials

                                                17
No. 20-1858, Avertest v. Livingston Cnty., Mich.

were aware that Averhealth would use LC-MS/MS testing before the Board approved a contract

with Averhealth, a reasonable jury could conclude that there was agreement as to this term.

         For the testing prices, the Board approved a contract with Averhealth “at the attached

rates,” rates which set a price for a ten-panel test plus certain specialty tests based on the volume

of tests per month. R. 29-4, PID 451. Livingston County points to a dispute about a standalone

price for one of the included specialty tests, which it raised seven days after Applegate’s promise

that a contract was forthcoming. There is no indication in the record that this issue had been raised

before, and Averhealth’s price proposal, approved by the Board, explained that it offered a single

price point for a defined set of tests, and its perspective on the cost benefits of pricing its services

in this manner.        Nor is there any evidence that certain testing procedures employed by

Averhealth—procedures that were questioned only after Averhealth began providing services to

the County—were in dispute prior to services commencing. Thus, a reasonable jury could find

that these terms were agreed upon at the time Applegate made her promise.

         I would not rely on other terms cited by the majority (i.e., quantity of tests, contract length,

indemnification, insurance, discrimination, and subcontracting) because these terms were not

raised by Livingston County in its summary-judgment motion.1 Although it may be appropriate

to decide an issue not raised below in some instances, I would not do so when the record is

incomplete or the result is unclear. In this case, neither party provided enough evidence to decide

other issues. Rather, the parties appeared to include only as much evidence as necessary to support

the specific factual statements and arguments it made in its briefing (sometimes, as the district

court noted, failing even to do that). Aside from the bid documents, we have only a few pages

from two deposition transcripts and a handful of emails to fill in the gaps about the parties’

         1
           In any event, most of these terms are dictated by the RFP, and there is no indication that any of these terms
that were set forth in the RFP were unacceptable to Averhealth.

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No. 20-1858, Avertest v. Livingston Cnty., Mich.

communications. And it is apparent from those materials that there were further discussions

between the parties about which this record sheds little light. Rather than use both parties’

omissions against Averhealth, as the majority does, I would allow the district court and the parties

to address these issues in the first instance. See In re Oakland Physicians Med. Ctr., LLC, 836 F.

App’x 342, 348 n.4 (6th Cir. 2020) (“Had Simon specifically raised these issues in his summary-

judgment briefing, the parties may have been able to flesh out these issues by submitting additional

portions of deposition transcripts, or it would have alerted Singhal of the necessity to gather further

evidence, if available, to address these issues.”).

       The majority’s reliance on Farrow Group, Inc. v. Detroit Land Bank Authority, 2021 WL

70649 (Mich. Ct. App. Jan. 7, 2021) (per curiam), to support its conclusion that Applegate’s

promise was insufficiently definite is misplaced. The court in Farrow explained, as the majority

highlights, that statements made by an agency employee that the plaintiff, Farrow, should “procure

the necessary equipment,” should “gear up to start the work,” and that another employee was

“working on the contracts” that “would be coming next week,” were insufficiently definite on their

own. Id. at *5 (internal quotation marks omitted). The court held, however, that these statements

in addition to evidence that the agency “awarded the demolition work to Farrow on the basis of

Farrow’s particular bid (as evidenced by the entries in the [agency]-managed database), and

prevented Farrow from lodging any new bids as a result of having been awarded the demolition

work at issue,” would allow “[a] jury [to] find . . . that [the agency] had promised to give the

demolition work to Farrow, the terms of which could be objectively determined from the nature

of the accepted bid and the allegedly customary practices of awarding work packages through the

[agency]-managed database.” Id. at *6. A reasonable jury could conclude similarly here based on

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No. 20-1858, Avertest v. Livingston Cnty., Mich.

the terms of the RFP, Averhealth’s proposal, the Board’s resolution authorizing a contract with

Averhealth at specified prices, and Applegate’s assurance that a contract was forthcoming.

       The court in Farrow, however, affirmed the grant of summary disposition (in this case,

what federal courts would call a motion to dismiss) against Farrow on its promissory-estoppel

claim because Farrow should have known that a contract was still pending due to the fact that “the

RFP clearly outlined the process necessary to formalize an accepted bid into a contract” and that

several steps needed to be completed before a contract could be finalized, including formal

issuances of notices to proceed on the demolition sites. Id. at *6. The circumstances here are

distinguishable. As Averhealth argues, it is unclear what, if any, additional steps needed to occur

prior to issuance of a contract. There is no testimony indicating whether the Board needed to

further sign off on the written contract, and Averhealth reasonably argues that the Resolution

approving a contract with Averhealth merely required the ministerial task of the Board Chairman

signing a contract containing the terms approved by the Board. This interpretation is backed up

by Applegate’s instructing Averhealth to sign a lease and instructing probation departments to

begin sending test-takers there on June 2. And as discussed above, by the time Averhealth began

expending substantial sums of money to perform by June 2, which was a mere eight days after

Applegate told Averhealth to secure the lease, none of the disputes about the terms of the contract

had arisen. In contrast, in Farrow, there is no indication that the start date for the contracts was

imminent and no indication that anyone at the agency specifically instructed the plaintiff to

purchase the more than $700,000 worth of equipment it claimed as reliance damages.

       In sum, although the more prudent course for Averhealth would have been to insist on a

written contract before binding itself to a lease and expending a substantial sum of money in

preparatory costs, a reasonable jury could find that Averhealth’s reliance here was reasonable.

                                                20
No. 20-1858, Avertest v. Livingston Cnty., Mich.

I would therefore reverse and remand on the promissory-estoppel claim to allow a jury to make

that determination.

       Finally, I agree with the majority that certain terms in the RFP make some of the reliance

damages Averhealth claims appear unreasonable. Most problematically, the RFP provided that

the County had the right to terminate the contract “at any time, with a minimum thirty (30) days

written notice to the vendor in the event that the services of vendor are deemed by the County to

be unsatisfactory, or upon failure to perform any of the terms and conditions contained in this

agreement.” R. 25-2, PID 132. Signing a five-year lease under these circumstances is likely

unreasonable, but that does not mean that Averhealth is entitled to none of its reliance damages. I

would allow the jury to make that determination as well.

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