BANKSTON CONSTRUCTION INC V CITY OF DETROIT
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STATE OF MICHIGAN
COURT OF APPEALS
BANKSTON CONSTRUCTION, INC.,
UNPUBLISHED
June 29, 2004
Plaintiff-Appellant,
V
No. 241988
Wayne Circuit Court
LC No. 00-000691-CK
CITY OF DETROIT,
Defendant-Appellee.
Before: Wilder, P.J., and Griffin and Cooper, JJ.
PER CURIAM.
Plaintiff appeals as of right from an order granting defendant’s motion for summary
disposition under MCR 2.116(C)(10). We affirm.
I
In 1997, the Detroit Water and Sewage Department (DWSD) opened a bidding process
for the hauling of solidified stabilized sludge1 from its wastewater treatment facility. Plaintiff’s
bid was identified as the low bid in July of 1997, and the contract was formally awarded when it
was approved by the Detroit City Council in April of 1998. Prior to the formal awarding of the
contract to haul solidified stabilized sludge to plaintiff, and again in January 1999, DWSD
solicited bids for the hauling and disposal of raw sludge on what it contended was an emergency
effort to remain in compliance with the requirements of its NPDES permit. Each of these
emergency contracts was awarded to another company named City Management.
In January 2000, plaintiff filed its complaint against defendant alleging that the awarding
of these emergency contracts to City Management constituted a breach of plaintiff’s contract
1
Sludge is a solid waste product removed from wastewater before the treated wastewater is
released into the Detroit River (pursuant to the requirements of a National Pollution Discharge
Elimination System permit governing the wastewater treatment plant). Sludge is either
incinerated and hauled away as ash, hauled away and disposed of as raw sludge (otherwise
referred to as “sludge cake”), or hauled away to landfills in a solidified, stabilized form. Sludge
is solidified and stabilized by adding lime or similar substances to raw sludge to raise its pH.
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with defendant. Specifically, plaintiff asserted that its offer to haul solidified stabilized sludge
was implicitly accepted by the defendant after it submitted the low bid in July 1997, and that
because the offer was accepted it was entitled to begin hauling solidified stabilized sludge
immediately thereafter. Plaintiff contends that it had an output contract with defendant that
entitled it to haul a specific amount of sludge, and that defendant’s award of emergency contracts
to City Management in 1997 and 1999 to haul raw sludge breached its contract with defendant
by reducing the sludge available for plaintiff to haul to an amount less than that established by
the contract, causing damages to it by diminishing the revenues that plaintiff was able and
entitled to earn under the terms of the contract. Plaintiff also asserts that because the language of
the contract required plaintiff to be ready and able to haul up to 2000 tons of solidified stabilized
sludge per day, defendant’s failure to make that amount available for plaintiff to haul constituted
a breach of an implied covenant of good faith and dealing.
Defendant moved for summary disposition under MCR 2.116(C)(10) and also moved for
sanctions, asserting that there was no contract between plaintiff and defendant until the Detroit
City Council formally awarded the contract in April 1998, that the contract between plaintiff and
defendant was not an output contract and that there was no guarantee under the contract that
there would be a specific amount of solidified stabilized solidified sludge for plaintiff to haul,
and that defendant neither breached the express language of the contract or any requirement of
good faith dealing with the plaintiff. The trial court granted defendant’s motion for summary
disposition, finding that there was no contract between plaintiff and defendant until April 1998,
and that defendant had not breached the contract in any respect. The trial court denied
defendant’s motion for sanctions.
II
We review de novo the grant of a motion for summary disposition under MCR
2.116(C)(10), considering the facts in the light most favorable to the nonmoving party. Dressel v
Ameribank, 468 Mich 557, 561; 664 NW2d 151 (2003). “A motion under MCR 2.116(C)(10)
must be supported by affidavits, depositions, admissions, or other documentary evidence. The
adverse party may not rest on mere allegations or denials of a pleading, but must, by affidavits or
other appropriate means, set forth specific facts to show that there is a genuine issue for trial. All
supporting and opposing material submitted must be considered by the court.” Cole v Ladbroke
Racing Michigan, Inc, 241 Mich App 1, 7; 614 NW2d 169 (2000) (citations omitted).
III
On appeal, plaintiff first asserts that the trial court erred in finding that there was not an
implied contract between plaintiff and defendant prior to formal approval of the contract by the
Detroit City Council in April 1998. We disagree. It is a well known principle of contract law
that “[b]efore a contract can be completed, there must be an offer and acceptance.” Eerdmans v
Maki, 226 Mich App 360, 364; 573 NW2d 329 (1997). In this regard (and as this Court has
previously noted), contracting with municipal governments can be especially risky:
“It is fundamental that those dealing with public officials must take notice
of the powers of the officials. Persons dealing with a municipal corporation
through one of its officers must at their peril take notice of the authority of the
particular officer to bind the corporation. If the officer’s act is beyond the limits
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of his or her authority, the municipality is not bound.” [Booker v Detroit, 251
Mich App 167; 650 NW2d 680 (2002) rev’d in part on other grounds, remanded
in part on other grounds ___ Mich ___; 668 NW2d 623 (Docket Nos. 121712,
121856, decided September 18, 2003) (quoting Johnson v Menominee, 173 Mich
App 690, 693-694; 434 NW2d 211 (1988).]
Both plaintiff and defendant, below and on appeal, acknowledge that Detroit Ordinance
570-H applies to this case. The ordinance states, in relevant part, that “[t]he following contracts
and amendments thereto shall not be entered into without city council approval: Goods and
services over the value of five thousand dollars.” Detroit Ordinance 570-H § 1. It is undisputed
that the contract was not formally awarded until its approval by the Detroit City Council in April,
1998. Under Booker, supra, and Ordinance 570-H, it is clear that there could be no acceptance
of plaintiff’s bid absent city council approval. Accordingly, the trial court correctly rejected
plaintiff’s assertion that there was an implied contract before April 1998.
Plaintiff next argues that the trial court erred in concluding that its contract with
defendant was not an output contract, and that plaintiff was not entitled to haul a minimum
tonnage of stabilized solidified sludge under the terms of the contract. Again, we disagree.
“When the terms of a contract are unambiguous, the meaning of the contract is interpreted from
the language alone.” Dignan v Michigan Public Sch Employees Retirement Bd, 253 Mich App
571, 578-579; 659 NW2d 629 (2002). The relevant language of the contract states:
As needed, the Contractor agrees to furnish operators and equipment 24 hours per
day, 365 days a year in sufficient quantity to load and haul up to 2000 wet tons
per 12 hour day and deliver such amounts to designated landfills.
*
*
*
Unless otherwise directed by DWSD, all material solidified and stabilized
between the hours of 3:30 p.m. to 3:30 a.m. shall be loaded and hauled off the
Wastewater Plant site between the hours of 3:30 a.m. to 3:30 p.m. . . . . The
quantity of solidified stabilized material that the Contractor may receive for
loading and hauling from this 12 hour production period is expected to vary from
zero wet tons to 1000 wet tons. This quantity is indefinite and not guaranteed and
the City will not assume responsibility or accept blame of any kind if the quantity
to be removed proves to be greater or less than the amounts stated.
Unless otherwise directed by DWSD, all material solidified and stabilized
between the hours of 3:30 a.m. to 3:30 p.m. shall be loaded and hauled off the
Wastewater Plant site by 3:30 p.m. of the same day . . . . The quantity of solidified
stabilized material that the Contractor may receive for loading and hauling from
the 3:30 a.m. to 3:30 p.m. production is also expected to vary from zero wet tons
to 1000 wet tons. This quantity is indefinite and not guaranteed and the City will
not assume responsibility or accept blame of any kind if the quantity to be
removed proves to be greater or less than the amounts stated.
*
*
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*
The Contractor acknowledges and agrees that DWSD has and reserves the
right to let other contracts of a similar nature to this Contract. The necessity of
letting any other contracts will be determined solely by the Director or his
Designee.
*
*
*
The City reserves the right to let other contracts for the loading,
solidification, stabilization, hauling, and/or disposal of solidified stabilized and/or
unsolidified unstabilized sludge and scum . . . (emphasis added).
As is apparent from the plain language of the contract, plaintiff had no entitlement to haul
a specific amount of solidified stabilized sludge and defendant was unrestrained in its ability to
award contracts to haul raw sludge as it deemed necessary, even if the amount of solidified
stabilized sludge was reduced by the awarding of such additional contracts. The trial court
correctly dismissed this claim.
Finally, we disagree with the plaintiff’s assertions that trial court erred by rejecting
plaintiff’s claim that the defendant’s conduct in contracting with plaintiff constituted a breach of
an implied covenant of good faith and fair dealing. “Michigan does not recognize a claim for
breach of an implied covenant of good faith and fair dealing.” Belle Isle Grill Corp v City of
Detroit, 256 Mich App 463, 476; 666 NW2d 271 (2003) (citing Ulrich v Federal Land Bank of
St Paul, 192 Mich App 194, 197; 480 NW2d 910 (1991)). Accordingly, the trial court properly
dismissed this claim. Id.
Affirmed.
/s/ Kurtis T. Wilder
/s/ Richard Allen Griffin
/s/ Jessica R. Cooper
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