Court Opinion

ID: 9461269
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:10:13.982676+00
Date Added: 2024-06-11T17:36:58.589916
License: Public Domain

MERRILL, Circuit Judge, with whom BROWNING, Circuit Judge, joins,
concurring :
I concur in Judge Real’s opinion for additional reasons.
California law controls this diversity case.1 The California courts have recognized the principles of the original section 90 in holding that when a contractor (promisee), in submitting a construction bid, relies upon the offer of a subcontractor (promisor) to perform part of the work, that reliance makes the subcontractor’s offer irrevocable, see Drennan v. Star Paving Co., 51 Cal.2d 409, 333 P.2d 757 (1958), at least for a reasonable time, see H. W. Stanfield Co. v. Robert McMullan & Son, Inc., 14 Cal.App.3d 848, 92 Cal.Rptr. 669 (1971).
So far, however, the California courts have been cautious in applying the principle of section 90 to third party beneficiaries. Where third parties have been permitted to assert rights flowing from a promise, the third party has been either an alter ego of the promisee, see Aronowicz v. Nalley’s, Inc., 30 Cal.App.3d 27, 106 Cal.Rptr. 424 (1973), or the recipient of substantially the same promise as was made by the promisor with knowledge that the promisee would pass the promise along to a third party. See Burgess v. California Mut. Bldg. & Loan Ass’n, 210 Cal. 180, 186-187, 189, 290 P. 1029, 1031, 1032 (1930); Peterson Tractor Co. v. Orlando’s Snack-Mobile Corp., 270 Cal.App.2d 787, 790-791, 76 Cal.Rptr. 221, 224 (1969). Moreover, in applying the principles of revised section 90 and extending the rules of promissory estoppel to third parties the California courts in my judgment would construe the revised section in a way consistent with analogous rules applicable to contracts for ordinary consideration. See Cal.Civ.Code § 1559 (West 1954); Restatement (Second) of Contracts §§ 135, 147 (Tent. Draft No. 3, 1967), 133 (Tent.Draft No. 4, 1968). Thus I believe that they would hold that only when a promisor knows that a third party may reasonably rely on his offer, and only when the third party so relies, may the third party enforce the promise, other requisites being satisfied.
In limiting the beneficiaries who may enforce a promise, California courts in my view would require that the promisor intend his offer to reach the third party without undergoing change en route; that it must be the offer of the promisor and not some intervening elaboration or modification on which the third party relies. If the promise has, with the promisor’s knowledge, prompted the promisee to make his own more comprehensive or simply different promise to the third party, the third party could not claim to be entitled to enforce the promisor’s offer. Cf. Restatement (Second) of Contracts § 133, comment e & illus. 16, 18 (Tent.Draft No. 4, 1968). Courts of California have so held in the case of contracts supported by ordinary consideration. See Southern California Acoustics Co. v. C. V. Holder, Inc., 71 Cal.2d 719, 727-728, 79 Cal.Rptr. 319, 326, 456 P.2d 975, 982 (1969); Neptune *324Gunite Co. v. Monroe Enterprises, Inc., 229 Cal.App.2d 439, 40 Cal.Rptr. 367 (1964).
Whatever the result might be had Topeo known in making its offer to Lowe that Lowe would merely repeat the offer to a contractor without offering to perform other duties and without changing the terms of Topco’s offer, this is not such a case. Here Topeo had no reason to believe that Lowe would submit an offer identical to that made by Topeo. In fact Lowe not only changed the terms on which equipment for stations 7 and 9 was offered but also bid on an additional pumping station.
Topeo, then, did not intend or reasonably expect that Fedrick would rely on the promise Topeo made to Lowe. Accordingly, in my judgment, California would not extend the promissory estop-pel principles of section 90 to Fedrick.
As Judge Real has indicated, this does not necessarily leave Fedrick without remedy. Assuming promises enforceable by the promisee under section 90 to have been made, Fedrick may well have a claim against Lowe and Lowe may well have a claim against Topeo, with the extent of recovery by Fedrick and Lowe depending on the specifics of the promises made to them.

. The result would be the same should California, faced with a choice of law problem, choose to apply the law of Nevada, where performance of the promise to supply equipment would make itself felt. Nevada law is consistent with that of California on the general scope of the original Section 90, see American Sav. & Loan Ass’n v. Stanton-Cu-dahy Lumber Co., 85 Nev. 350, 455 P.2d 39 (1969), and permits a third party, intended by a promisor to be a beneficiary of an offer, to recover from the promisor, see Lear v. Bishop, 86 Nev. 709, 476 P.2d 18 (1970). The Nevada courts would accord weight to California decisions in areas where Nevada law is yet unclear.