Federal appellate judges have upheld a lower court’s decision to dismiss a general contractor’s lawsuit alleging a subcontractor had improperly backed out of a bid to provide a glass curtain wall for Milwaukee’s 833 East high-rise project.
The appeals court’s decision stems from a federal lawsuit that Milwaukee-based C.G. Schmidt filed in 2014 against Permasteelisa North America over a dispute involving the 833 East office building in the city’s downtown. Permasteelisa, also known as PNA, is a Windsor, Conn.-based company specializing in building exteriors and curtain walls.
C.G. Schmidt was the general contractor for the $52 million 833 East project, an 18-story office building standing at the corner of Cass and Michigan streets. In April 2013, C.G. Schmidt solicited bids for a custom glass curtain wall for the project. A few months later, it accepted PNA’s offer to do the work for $12.7 million.
By the following summer, though, PNA was backing out of the project. PNA representatives blamed the political situation in Thailand, where the company maintains a production plant. Thai officials had declared martial law and imposed a curfew that interfered with the plant’s hours of operation.
C.G. Schmidt initially responded to the news by replacing PNA with a different subcontractor, one that had put in a higher bid. By December of that year, though, C.G. Schmidt had taken the matter to court.
The company’s lawsuit alleged that PNA had breached its contract. C.G. Schmidt argued its acceptance of PNA’s bid was tantamount to entering into an enforceable contract that PNA breached when it left the project. The general contractor contended that subsequent negotiations only modified that existing contract rather than reopening.
C.G. Schmidt officials also argued that PNA’s bid constituted a promise to deliver a curtain wall for a certain price. C.G. Schmidt had used that price when compiling its own bid to be chosen by the owner of 833 East to be general contractor for project.
Rick Schmidt, president and chief executive of C.G. Schmidt, declined to comment on the case Thursday.
The company’s arguments failed to win over J.P. Stadtmueller, judge for the U.S. District Court for the Eastern District of Wisconsin. In a ruling handed down in October, Stadtmueller found that although C.G. Schmidt had chosen PNA to provide the curtain wall, there was in fact no contract between the two companies. Stadtmueller noted that C.G. Schmidt and PNA were in the midst of negotiating a final written subcontract when PNA backed out.
Stadtmueller also found that C.G. Schmidt’s acceptance of PNA’s bid did not constitute a promise.
Turning to the appellate courts for a second attempt at a favorable outcome, C.G. Schmidt was once again unsuccessful. In a ruling handed down on June 16, the 7th Circuit Court of Appeals agreed with the district court that the two firms never entered a binding contract and that no promise had been made.
The court pointed out that C.G. Schmidt delayed accepting PNA’s bid and continued negotiating with PNA even after it had signed a contract with the project owner. C.G. Schmidt, the appellate judges found, should at least have known that, in the absence of a binding contract, its dealings with PNA could fall apart, according to the decision.
Steve Slawinski, attorney for PNA, said Thursday his client was pleased with the result of the case.
“Permasteelisa believes that the decisions of both the district court judge and the 7th Circuit were the correct decisions,” he said. Follow @erikastrebel