Earlier this week, the Seventh Circuit affirmed the district court’s order granting our client’s, Annex Construction, LLC, motion for summary judgment dismissing all claims brought against it by a framing subcontractor, Skyrise Construction Group, LLC.  See Skyrise Construction Group, LLC v. Annex Construction, LLC, Case No. 19-1461 (7th Cir. April 21, 2020).  In a unanimous decision authored by Circuit Judge Rovner, the three-judge panel recognized that Wisconsin has adopted an objective view of a party’s contract formation intentions, thereby rendering summary judgment appropriate regardless of Skyrise’s undisclosed subjective beliefs.

At issue was one of Annex’s student housing unit construction projects near the University of Wisconsin-Oshkosh in the early summer of 2017.  Annex issued a request from subcontractors for the rough framing carpentry labor for the project and, after some preliminary discussions, Annex accepted Skyrise’s bid proposal and issued a letter to Skyrise voicing Annex’s intent to retain Skyrise for that work.  A short time later, Annex sent Skyrise proposed contract documents for the project for Skyrise’s review and comment.

Skyrise proceeded to sit on the proposed contract documents for over two months without providing any feedback.  During this period of time, the parties kept in touch regarding the details of the project as they developed, and in September Skyrise requested that Annex sign and return the accepted bid proposal consistent with Skyrise’s business practices.  Annex’s president complied with Skyrise’s request by signing the bid and demarking it as “Contract Exhibit A” to the proposed contract documents still under review by Skyrise.  Unbeknownst to Annex, Skyrise began blocking off its calendar and making arrangements to work on the Annex project during this time period.

Skyrise finally returned the proposed contract documents to Annex in October with proposed handwritten edits to the scope of work and payment term provisions.  By that time, Annex’s needs for the project had expanded considerably and, ultimately, Annex elected to retain a different framing contractor better positioned to complete the increased scope of the required framing work.  After Annex informed Skyrise that it would not be retained as the framing contractor for the project, Skyrise filed suit.

Skyrise’s asserted claims against Annex for breach of contract, promissory estoppel, negligent misrepresentation and statutory violations of Wisconsin and Illinois deceptive business practices acts.  Regarding its contract claim, Skyrise asserted that a meeting of minds occurred either in September when Annex signed and returned Skyrise’s accepted bid proposal or, alternatively, in October when Skyrise finally returned the proposed contract documents to Annex with its handwritten changes.  See Slip Op. at 6.

Both the district court and Seventh Circuit agreed that Skyrise’s contractual claim failed as a matter of Wisconsin law.  Importantly, the Court recognized that in Wisconsin a contract is formed when the parties manifest a mutual intent to be bound, which must be established from an objective consideration of the parties’ conduct.  Slip Op. at 8.

The Court found no objective “meeting of the minds” under either of Skyrise’s theories.  The Court held that the undisputed facts demonstrated that Annex signed the bid proposal in September only upon Skyrise’s request, while Skyrise admittedly was still reviewing the proposed contract documents, and with a clear demarcation that the bid was to be an exhibit to any contract document into which the parties ultimately may enter.  Moreover, when Skyrise finally did return the proposed contract documents to Annex in October, Skyrise had made material changes to the payment terms of that document, which thus operated as a counteroffer under settled Wisconsin law. Slip Op. at 7-11.  The Court rejected as immaterial Skyrise’s unilateral preparatory steps, noting that “secret hopes and wishes count for nothing.”  Id. at 8 (quoting Skycom Corp. v. Telstar Corp., 813 F.2d 810, 814 (7th Cir. 1987)).

The Court reached a similar conclusion with respect to Skyrise’s extracontractual claims.  Regarding Skyrise’s promissory estoppel claim, the Court again noted that Skyrise knew or should have known that Annex had made no binding promises because the “objective evidence demonstrates that both parties intended for their relationship to be governed by a detailed contract that remained under review by Skyrise for two months before Skyrise ultimately rejected that contract by marking it with material alterations.”  Slip Op. at 14.  And, regarding Skyrise’s three remaining claims of misrepresentation and statutory false business practices violations, the Court found the record devoid of any false statements made by Annex, concluding that “[t]here is some irony in Skyrise’s claim that it was falsely led to believe that it had a firm deal when Skyrise itself held onto the Proposed Contract for two months, twice assuring Annex that it was still reviewing the draft agreement, and then altering it in a material manner before returning it.”  Id. at 17.

This case is an important reminder that defendants in commercial disputes should not disregard the availability of obtaining pre-trial relief even if at first blush the factual record appears messy.  Because Wisconsin ultimately applies objective standards to contract and promissory estoppel claims, summary judgment can be appropriate when, like here, the parties’ conduct tells a clear and consistent story (notwithstanding any attempts by the claimant to muddy the water with its subjective beliefs).

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