Court Opinion

ID: 9856721
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:56:04.349321+00
Date Added: 2024-06-11T09:40:26.684655
License: Public Domain

BISTLINE, Justice,
specially concurring.
I concur with the majority’s conclusion that the summary judgment should be reversed. My views in the contractual count, however, differ from those of the majority and it is appropriate that they be set forth.
For certain this is an unusual case. Unless one adopts the theory that under the “naming statute” Mitchell’s use of the Siqueiros bid was a conditional acceptance of that bid, needing only an award of the general contract to Mitchell to ripen into a full-bloom contract, Mitchell would seem to be without a contractual remedy. If it is the law, however, that Siqueiros, while not contractually bound, is legally precluded from withdrawing his bid for a reasonable period of time after Mitchell relies upon it in making his own bid for the general contract, it would seem necessarily to follow that there is indeed some type of legal relationship between these transacting parties. Here, no sooner was Mitchell awarded the contract, than he was precluded from going through the formality of giving notice of acceptance by the singular fact that Siqueiros turned out to be improperly licensed. I think it could be successfully argued that the legal relationship is such that Mitchell has a right to hold Siqueiros accountable for breach thereof, in which event, Siqueiros, though unable to work on the project, is estopped from defending on the basis that he is not properly licensed— provided all of the elements of estoppel in pais can be established. Having submitted a bid to do work that only a properly licensed subcontractor can legally perform, he is not to be heard contending that his improper license is an excuse for his inability to live up to his bid.
Because I see that the majority’s discussion may result in uncertainty in the law of construction industry bidding and contract formation, some clarification is required. The classic doctrine of construction industry contract formation was stated in James Baird Co. v. Gimbel Brothers, 64 F.2d 344 (2d Cir. 1933). In that case, a subcontractor had, by mistake, underestimated his bid and, upon discovering the mistake, attempted to revoke it. Meanwhile, the general contractor had relied on the bid in submitting his own bid and had been awarded the contract. Judge Learned Hand held that the subcontractor was free to revoke his bid because no consideration had as yet been given; the subcontractor’s bid was only an offer to form a bilateral contract and did not become binding until the general contractor accepted it by a return promise. Thus, as the majority correctly notes, the principle became enshrined that the general contractor’s use of the subcontractor’s bid does not, without more, amount to acceptance.
The result of this holding in James Baird was that the legal relationship existing between the general and the sub from the time the general contractor receives bids until the time he formally accepts one, was left largely undefined and the parties thereto were left largely unprotected. See Note: Another Look at Construction Bidding and Contracts at Formation, 53 Virginia L.Rev. 1720 (1967). This unsatisfactory situation prevailed until 1958 when the California Supreme Court handed down its landmark decision in Drennan v. Star Pacing Co., 51 Cal.2d 409, 333 P.2d 757 (1958). That case involved another subcontractor’s attempt to withdraw his mistaken bid after the general *403had used it in winning the main contract but before he could communicate his formal acceptance to the sub. Judge Traynor, relying upon the doctrine of promissory estoppel, Restatement of Contracts, § 90,1 held that because the subcontractor, in submitting a bid, knows that the general contractor will rely on it in drawing up his own bid, justice requires that the subcontractor keep his offer open long enough for the general to accept it after being awarded the main contract.
It is important to note the precise theory, effect and function of the doctrine of promissory estoppel. Analytically, the doctrine treats the justifiable reliance of the general contractor as a substitute for the requirement of consideration. The effect is to create an option contract: the law treats the subcontractor’s bid as containing a subsidiary promise to hold his offer irrevocable for a reasonable length of time.2 The doctrine functions only to protect the general by preventing a subcontractor who discovers he has made an improvident offer from withdrawing it once the general had relied upon it to his detriment.
The result of Drennan has been to alleviate one-half of the injustice in post-award dealings between general contractors and subcontractors. An Asymmetry remains. The general is fully protected but the sub remains vulnerable if the general, after winning the bid, engages in the unethical practice of bid shopping (using the low bid already received to pressure other subcontractors into submitting even lower bids). Despite universal disapproval by the commentators, this would appear to be the present state of the law in construction industry contracts. It is therefore important to distinguish — and the majority opinion does not do so — the body of case law m which the general sues the sub from that in which the sub sues the general. The rights of the two parties in the post-award situation are quite different.
It is at this point that attention may properly focus on naming statute provisions. In the limited context of public works contracts, a naming statute presents a possible avenue of redress for subcontractors. The general contractor, of course, needs no such redress because he is already fully protected by the doctrine of promissory estoppel. In this situation, a court may wish to construe the state’s naming statute so as to provide a similar “lock-in” protection to the subcontractor who has gone to the expense of preparing his bid in expectation that it will be used by the general if the latter is awarded the main contract. There is much to recommend such a construction and it is one that I would adopt were the question properly before the Court in this case. Such, it seems to me, is the clear meaning of the Idaho naming statute, I.C. § 67-2310, which provides that
the general contractor shall be required to include in his bid the name, or names and address, or addresses, of the subcontractors who shall, in the event the contractor secures the contract, subcontract the plumbing, heating and air-conditioning work, and electrical work under the general contract . . . (Emphasis supplied.)
Moreover, as we stated in the Neilson case, the purpose of our naming statute is “to invite effective competition, prevent fraud, and to secure subcontractors who were capable of satisfactorily performing the work and furnishing supplies at the lowest overall cost.” 96 Idaho at 766, 536 P.2d at 1116. *404If there is no “lock-in” provision, then the general is free, after winning the bid, to engage in bid shopping with all its attendant evils. Competition is reduced because reputable subs will not submit bids if they know they will not be honored. Honest general contractors are put at a competitive disadvantage because others can submit artificially low bids in the knowledge that they intend to bid shop after the contract is awarded. A subcontractor is motivated to submit a padded or artificially inflated bid in the knowledge that it may be driven down later by an unscrupulous general. Finally, a sub may face the Hobson’s choice of either doing the job at a profit margin lower than he had anticipated or cutting corners in quality so as to recoup the losses inflicted upon him. See Comment: Bid Shopping and Peddling in the Subcontract Construction Industry, 18 U.C.L.A. L.Rev. 389 (1970). I would hold, therefore, that Idaho’s naming statute should be construed so as to protect the public’s interest in honest, competitive bidding and safe, reputable work by guaranteeing that the subcontractor named be the one who performs the work, in the event the naming general secures the contract.
Such is the position which has evolved in California. There, as the majority correctly notes, a district court of appeals once held that the naming statute served only to regulate relations between the general and the awarding authority, leaving undisturbed the common law relations between generals and subs. Klose v. Sequoia Union High School Dist., 118 Cal.App.2d 636, 258 P.2d 515 (1953). Contrary to what is implied by the majority opinion, however, the Supreme Court of California later reached a different result under a different statute. In Southern Cal. Acoustics Co., Inc. v. C. V. Holder, Inc., 71 Cal.2d 719, 79 Cal.Rptr. 319, 456 P.2d 975 (1969), Justice Traynor reiterated the common law doctrine that the mere use of a subcontractor’s bid does not, without more, bind the general to its acceptance. He held further that a subcontractor could not argue a reverse promissory estoppel so as to force the general to accept the sub’s bid because of the sub’s own detrimental reliance by incurring expenses in preparation of the bid. Nonetheless, the subcontractor was not left remediless. Justice Traynor held that the subcontractor’s complaint stated a cause of action based upon violation of the naming statute when the general attempted to replace the named sub with one who was willing to undercut the original sub-bid. The approach of the California Supreme Court, it seems to me, is sound and deserves adoption by this Court.
Again, I repeat, the provision is not applicable to the facts of this case, where we are not presented with allegations of bid shopping or of an attempt, by either party, to renege on an enforceable promise.

. “A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.”

. Under the Second Restatement, courts have available an even more direct approach to the problem:
An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.
Restatement (Second) of Contracts § 89B(2) (Tent. Draft No. 2, 1965).