FACTS: In 2011, Heritage Constructors Inc., a general contractor that specializes in building water treatment plants, was preparing a bid to become the general contractor for the TexAmericas Center-East wastewater treatment plant improvement project. Heritage estimated that the project would take about 19 months to complete and intended to complete eighty to eighty-five percent of the project itself, but the projects electrical work necessitated the use of a subcontractor. Before Heritages bid was due, Heritage was contacted by two electrical companies attempting to bid on a subcontract for the electrical work. Electrique Corporation bid $886,400 to perform electrical work on the project, and Chrietzberg Electric bid $704,857. With Chrietzberg being the lower bidder, Heritage took that bid and included Chrietzberg on the bid to TexAmericas. TexAmericas eventually awarded the bid to Hertitage, and Heritage and Chrietzberg congratulated each other on the successful bid. After receiving an executed contract from TexAmericas, Heritage sent Chrietzberg a proposed subcontract. Shortly thereafter, Chrietzberg notified Heritage that it was withdrawing its bid. Heritage asked Chrietzberg to reconsider, without success, and so Heritage accepted Electriques more expensive contract after accepting certain conditions of Electriques. Heritage sued Chrietzberg for breach of contract, promissory estoppel, and negligent misrepresentation. The trial court ruled in favor of Heritage, but awarded Heritage only twenty-eight percent of the fees it had asked for. Heritage appealed, and Chrietzberg cross-appealed, claiming that all of Heritages causes of action were barred by the statute of frauds.

QUESTION: Were Heritages claims of breach and promissory estoppel invalid due to the statute of frauds?

REASONING: This case primarily revolved around the requirement that contracts that cannot be completed in under a year must be in writing is The Court reviewed the original project proposal, which indicated that the agreement between Heritage and Chrietzberg began December 31, 2011, and also indicated a projected project completion date of July 31, 2013. The Court ruled that the agreement would have required more than a year to complete and thus fell under the statute of frauds.

Next, the Court had to determine whether the agreement was enforceable under the statute of frauds. The Court found a precedent for this case in a similar case, Cohen v. McCutchin. In that case, the United States Supreme Court had ruled that because there was no writing that identified the plaintiff as a party to the agreement in question, the agreement did not satisfy the statute of frauds. Similarly, in the bid documents, which is where the agreement between Heritage and Chrietzberg supposedly laid, Chrietzberg was not once mentioned as a party to the agreement. Heritage also failed to point out any actions it took that are unequivocally referable to its agreement with Chrietzberg. The agreement fell under the statute of frauds but failed to satisfy it, thus the Court ruled that Chrietzberg cannot be held liable for breach of the agreement.

The Court then determined that there was no evidence that distinguished any of the damages supposedly caused by breach from damage caused by promissory estoppel. Therefore, because Chrietzberg was not liable for breach damages, it was also not liable for promissory estoppel damages. Similarly, the negligent misrepresentation damages were indistinguishable from the other damages and so too were denied.

DECISION: The Court reversed the trial courts ruling on Heritages breach of contract and promissory estoppel claims and affirmed their denial of of negligent misrepresentation claims.

SIGNIFICANCE: This case exhibits the statute of frauds in action and demonstrates the significance of keeping all important agreements in detailed writing.

Here is a question: Notice that the court relied on an analogy in coming to its decision that the writing was insufficient. Do you think the analogy is strong? Why or why not? Can you think of any other argument that Heritage might have made to obtain compensation in this case?