IN THE SUPREME COURT OF THE STATE OF FLORIDA CASE NO. Lower Tribunal Case No. 09-CA-001404 VILA & SON LANDSCAPING CORPORATION, Petitioner vs. POSEN CONSTRUCTION, INC., Respondent PETITIONER'S JURISDICTIONAL BRIEF Joseph W. Lawrence, II Florida Bar No.: 211303 Michael A. Piscitelli Florida Bar No.: 364967 Vezina, Lawrence & Piscitelli, P.A. The Museum Building 300 SW First Avenue, Suite 150 Fort Lauderdale, FL 33301 Telephone: 954-728-1270 Facsimile: 954-728-1271 Primary Email: jlawrence@vlplaw.com Secondary Email: jfrometa@vlplaw.com Attorneys for Vila & Son Landscaping Corporation
TABLEOFCONTENTS TABLE OF CONTENTS...ii TABLE OF AUTHORITIES...iii STATEMENT OF THE CASE AND FACTS...1 SUMMARY OF THE ARGUMENT...3 ARGUMENT ON JURISDICTION...3 I. THE SECOND DISTRICT'S OPINION DIRECTLY AND EXPRESSLY CONFLICTS WITH THIS COURT'S DECISION IN PAN- AM TOBACCO CORP. AND ITS PROGENY...3 II. THE SECOND DISTRICT'S OPINION CONFLICTS WITH THE PUBLIC POLICY AGAINST BID SHOPPING... 6 CONCLUSION...8 CERTIFICATE OF SERVICE... 9 CERTIFICATE OF COMPLIANCE...9 11
TABLE OF AUTHORITIES Cases EM Watkins & Co., Inc. v. Board ofregents, 414 So.2d 583 (Fla. 1" DCA 1982)...3, 6, 7, 8 Florida Dept. ofenvironmental Protection v. Contract Point Florida Parts, LLC, 986 So. 2d 1260, 1270-71 (Fla. 2008)... 3 Howard Cole & Co. v. Williams, 27 So. 2d 352 (1946)... 4 Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1541 (Fed. Cir. 1996)... 5 Miami Coca-Cola Bottling Co. v. Orange Crush Co., 291 F. 102 (D. Fla. 1923)... 4 Pan Am Tobacco Corp.... 5, 8 Pan-Am Tobacco Corp. v. Dep't. of Corrections, 471 So.2d 4, 5 (Fla. 1985)... 3, 4 Questar Builders. Inc. v. C.B. Flooring, LLC, 978 A.2d 651, 669-72 (Md. 2009).. 5 Taylor Consulting, Inc. v. United States, 90 Fed. Cl. 531, 545 (Fed. Cl. 2009)... 5 Wright & Seaton, Inc. v. Prescott, 420 So. 2d 623, 626-27 (Fla. 4th DCA 1982)... 4 Statutes Fla. Stat. 255.0515...6, 7 Other Authorities Eric Degn and Kevin R. Miller, Bid Shopping, J. CONSTR. EDUC., Spring 2003, at 47-55... 8 111
STATEMENT OF THE CASE AND FACTS1 This case arose from a subcontract ("Subcontract") to perform landscaping work between Petitioner Vila & Son Landscaping Corporation ("Vila") and Respondent Posen Construction, Inc. ("Posen") relating to the SR-9 (I-95) Project (Project No. T4187) for the Florida Department of Transportation ("FDOT") located in Palm Beach County, Florida ("Project"). Posen was the general contractor that submitted the low bid to construct the Project and was accordingly awarded the prime contract ("Prime Contract"). entered into the Subcontract on July 15, 2008. Subsequently, Vila and Posen After Vila began preparations for performance of the Subcontract, Posen asked Vila to lower the price to which the parties had already agreed. Vila refused to lower its price, and Posen obtained a lower price proposal from another potential subcontractor. Posen then terminated Vila's Subcontract, purportedly under the Subcontract "termination for convenience"provision. Vila sued Posen for breaching the Subcontract by wrongfully terminating Vila in bad faith. After a jury trial, the jury returned a verdict in favor of Vila against Posen on the breach of contract claim in the amount of $75,037.00. Following post-trial motions, the trial court issued its order granting Posen a new 1References to the Second District Court of Appeal opinion dated September 19, 2012 are referred to as "Opinion at " with the appropriate page number inserted. 1
trial. Vila appealed that order and sought to re-instate the verdict. Posen crossappealed and asserted that it was entitled to a directed verdict in its favor. On September 19, 2012, the Second District Court of Appeal reversed the trial court's order for a new trial and remanded for judgment in favor of Posen. The Second District held that Posen did not breach the contractual termination for convenience provision because Posen was entitled to terminate Vila essentially at will under the termination for convenience provision. The appellate court refused to recognize the bad faith limitations that have been placed on termination for convenience in the federal courts and in other state courts. (Opinion at 9-10). Posen timely filed its Motion for Certification as a Question of Great Public Importance on October 1, 2012. The Second District's October 24, 2012 Order denied the Motion for Certification.2 On November 19, 2012, Vila timely filed its Notice to Invoke this Court's Discretionary Review of the Opinion. 2 Although not certified as such by the Second District, the issue in this case is of great public importance. Should this decision stand, subcontractors will be left completely at the mercy of prime contractor bid shopping and contract renegotiation even after the parties have entered into a contract. The impact on small subcontracting businesses will be severe. 2
SUMMARY OF THE ARGUMENT The decision of the Second District Court of Appeal expressly and directly conflicts with decisions of other District Courts of Appeal and the Florida Supreme Court on the same questions of law. Art. V, 3 Fla. Const.; Fla. R. App. P. 9.030(a)(2)(A). Specifically, the Second District's holding that a contracting party has unlimited authority to terminate for convenience expressly conflicts with Florida decisions prohibiting illusory contracts, including Pan-Am Tobacco Corp. v. Dep't. of Corrections, 471 So.2d 4, 5 (Fla. 1985) and its progeny.3 Moreover, the Second District's decision conflicts with the Florida public policy against bid shopping as expressed in EM Watkins & Co., Inc. v. Board of Regents, 414 So.2d 583 (Fla. 1" DCA 1982). ARGUMENT ON JURISDICTION I. THE SECOND DISTRICT'S OPINION DIRECTLY AND EXPRESSLY CONFLICTS WITH THIS COURT'S DECISION IN PAN-AM TOBACCO CORP. AND ITS PROGENY The Second District Court of Appeal's decision directly and expressly conflicts with the established body of Florida law, including decisions by this Court, that prohibits illusory contracts in which one party has no obligation to perform. E.g., Pan-Am Tobacco Corp. v. Dep't. of Corrections, 471 So.2d 4, 5 See also Florida Dept. of Environmental Protection v. Contract Point Florida Parts, LLC, 986 So. 2d 1260, 1270-71 (Fla. 2008). 3
(Fla. 1985).4 The decision impermissibly gives Posen, and every prime contractor in the state of Florida, unlimited discretion as to whether or not to fulfill its obligations to subcontractors with whom it has entered binding subcontracts, so long as the prime contractor includes a "termination for convenience" provision in the subcontracts. This completely eviscerates basic contract law principles on illusory contracts. This Court defined these principles in its Pan Am Tobacco Corp. decision: It is basic hornbook law that a contract which is not mutually enforceable is an illusory contract. Howard Cole & Co. v. Williams, 27 So. 2d 352 (1946). Where one party retains to itself the option of fulfilling or declining to fulfill its obligations under the contract, there is no valid contract and neither side may be bound. Miami Coca-Cola Bottling Co. v. Orange Crush Co., 291 F. 102 (D. Fla. 1923); affirmed, 296 F.693 (5th Cir. 1924). Pan-Am Tobacco Corp., 471 So. 2d at 5. The decision at issue approves precisely the type of illusory contract that is barred by Pan-Am Tobacco Corp. Posen executed a binding subcontract with Vila, but later determined that it could obtain a better price elsewhere, and therefore terminated Posen's contract for convenience. Under the Second District's holding at issue, Posen can indeed "retain to itself the option of fulfilling or declining to 4 The Second District's decision cites Wright & Seaton, Inc. v. Prescott, 420 So. 2d 623, 626-27 (Fla. 4th DCA 1982), a case on employment at will, not termination for convenience, that held that the requirement of written notice provides consideration and avoids an illusory contract. Thus, the decision at issue improperly superimposes completely inapplicable employment law onto termination for convenience of construction contracts. 4
fulfill its obligations under the contract," contrary to the express holding of Pan Am Tobacco Corp. Despite recognizing that termination for convenience is a term of art that developed over many years, the opinion misinterprets that history so as to render contracts with such provisions illusory. To avoid the illusory contract problem, the body of law interpreting contractual termination for convenience provisions implies an obligation of good faith on the part of the party terminating for convenience. See Taylor Consulting, Inc. v. United States, 90 Fed. Cl. 531, 545 (Fed. Cl. 2009); Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1541 (Fed. Cir. 1996). While this interpretation comes from federal contracting, the general principle of avoiding illusory contracts is broader than that; if anything, private parties are allowed less discretion than the government in terminating for convenience, and must act in good faith. See Questar Builders. Inc. v. C.B. Flooring, LLC, 978 A.2d 651, 669-72 (Md. 2009). Terminating merely to get a better price is text book bad faith. See id. at 671-77; Krygoski Constr. Co., 94 F. 3d at 1541. The Second District Court's opinion allows prime contractors unlimited discretion as to whether to perform their subcontract obligations. Such a grant of unlimited discretion has far-reaching adverse consequences for the contracting 5
industry in Florida and conflicts with authority from this Court prohibiting illusory contracts. The Second District's decision should be reversed. II. THE SECOND DISTRICT'S OPINION CONFLICTS WITH THE PUBLIC POLICY AGAINST BID SHOPPING The sweeping reach of the Second District's decision conflicts with the well established public policy against "bid shopping," as expressed in E.M. Watkins & Co., Inc. v. Board of Regents, 414 So.2d 583 (Fla. 1" DCA 1982), thus undermining the entire subcontracting process in Florida and threatening the existence of many small family businesses that engage in subcontracting in Florida. Florida enacted Section 255.0515 to prohibit certain bid shopping by prime contractors to protect the public interest in fair bidding. See Fla. Stat. 255.0515.5 This principle was illustrated in the holding of Watkins, which conflicts with the instant opinion. In that case, a contractor appealed the lower court ruling that a bid was non-responsive for not listing all subcontractors as required under Section 255.0515. The First District denied the appeal based on the public policy 'While this only applies to educational facilities and public buildings, the public policy behind the statute does apply. Section 255.0515 states: "Bids for state contracts; substitution of subcontractors. - With respect to state contracts let pursuant to competitive bidding, whether under chapter 1013, relating to educational facilities, or this chapter, relating to public buildings, the contractor shall not remove or replace subcontractors listed in the bid subsequent to the lists being made public at the bid opening, except upon good cause shown." 6
preventing prime contractors from using a "phantom" price for bidding, then shopping for subcontractor pricing at or below that phantom price. See id. at 587. As stated in Watkins: "The public policy reasons behind requiring a list of subcontractors are evident, as noted by the hearing officer in his order: The unfair bidding advantage one contractor derives from the failure to list required subcontractors is generally threefold: (1) it provides the precious few minutes which may be saved by failing to provide a name for the appropriate blank on form D-1 and matching the name with the price used in the bid computation, (2) it allows the potential for speculation, by use of a phantom price and efforts to shop that item or trade until a subcontractor can be found at the speculative contract price, and (3) it permits a successful bidder to accept additional subcontractor bids after the bid opening, giving the opportunity for undercutting the low subcontractor on whom he relied in formulating his bid. These policy reasons, implicit in Section 255.0515, thus prevent competitive advantage, insure the quality of the subcontractors, insure public confidence in the bidding process, and encourage future competition." The public policy behind Watkins and Section 255.0515 applies here. The instant decision encourages prime contractors to bid shop after award, thus conflicting with Watkins and public policy. The harmful effects of bid shopping are well recognized. It is widely condemned because, while it may benefit the party that bid shops, it defeats the purpose of competitive bidding, promotes lower quality work, encourages cutting corners, increases claims and change orders, delays project completion, and 7
negatively affects the business environment. See Eric Degn and Kevin R. Miller, Bid Shopping, J. CONSTR. EDUC., Spring 2003, at 47-55. Florida's public policy is consistent with this reasoning. CONCLUSION This Court should exercise its discretion to review the decision of the Second District Court of Appeal which expressly and directly conflicts with decision of this Court in Pan-Am Tobacco Corp. v. Dep't. of Corrections, 471 So.2d 4, 5 (Fla. 1985), as well as Florida public policy against bid shopping as express in E.M. Watkins& Co., Inc. v. Board of Regents, 414 So.2d 583 (Fla. 1" DCA 1982). 8
CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished via E-Mail and U.S. mail to Mr. C. David Harper (CHarper@foley.com) and Mr. Adam R. Alaee (AAlaee@foley.com), Foley & Lardner, LLP, 100 North Tampa Street, Suite 2700, Tampa, FL 33602 on this M day of November, 2012. Respectfully submitted, Jos W. L rence, II Flo da Bar No.: 211303 Michael A. Piscitelli Florida Bar No.: 364967 Vezina, Lawrence & Piscitelli, P.A. The Museum Building 300 SW First Avenue, Suite 150 Fort Lauderdale, FL 33301 Telephone: 954-728-1270 Facsimile: 954-728-1271 Primary Email: jlawrence@vlplaw.com Secondary Email: jfrometa@vlplaw.com Attorneys for Vila & Son Landscaping Corporation CERTIFICATE OF COMPLIANCE I hereby certify that the Petitioner's Jurisdictional Brief complies with Rule 9.210(a)(2) of the Florida Rules of Appellate Procedure by using Times New Roman 14-point font. J p. Lawrence, II 9