Present: Carrico, C.J., Compton, Hassell, Keenan and Kinser,
JJ., and Stephenson and Whiting, Senior Justices
W.J. SCHAFER ASSOCIATES, INC.
v. Record No. 961945
CORDANT, INC.
OPINION BY SENIOR JUSTICE ROSCOE B. STEPHENSON, JR.
October 31, 1997
LENZAR ELECTROOPTICS, INC.
v. Record No. 961964
CORDANT, INC.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Thomas S. Kenny, Judge
These are appeals of a judgment rendered on separate jury
verdicts arising from a single trial. In Record No. 961945, the
dispositive issue is whether a so-called "Teaming Agreement"
constitutes an enforceable contract for the sale of goods. In
Record No. 961964, we decide whether promissory estoppel should
be recognized as a cause of action.
I
By an amended motion for judgment filed September 28, 1995,
Cordant, Inc. (Cordant) sought damages from Ogden Government
Services Corp. (Ogden), W.J. Schafer Associates, Inc. (Schafer),
and Lenzar ElectroOptics, Inc. (Lenzar) based upon claims arising
out of Cordant's efforts to secure a government contract to
convert certain personnel records to a computer-accessible form.
In the motion for judgment, Cordant set forth the following
claims: Count I, breach of contract by Ogden; Count II, breach
of contract by Schafer and Lenzar; Count III, promissory estoppel
against Ogden; Count IV, promissory estoppel against Schafer;
Count V, promissory estoppel against Lenzar; Count VI, fraud and
deceit by Ogden; Count VII, constructive fraud by Ogden; Count
VIII, fraud and deceit by Ogden, Schafer, and Lenzar; and Count
IX, constructive fraud by Ogden, Schafer, and Lenzar.
After about a three-week trial, the jury returned the
following three verdicts in favor of Cordant: a verdict against
Ogden for breach of contract with damages fixed at $0; a verdict
against Schafer for breach of contract with damages fixed at
$300,000; and a verdict against Lenzar for promissory estoppel
with damages fixed at $150,000. The trial court entered judgment
on the verdicts, and Schafer and Lenzar appeal. 1
II
On April 15, 1991, the United States Air Force issued a
Request for Proposal (RFP), seeking bids for its project to
convert its personnel records stored on microfiche to a system of
electronic data accessible by computer. The system was known as
"Automated Records Management System" (ARMS).
For nearly two years prior to the RFP, Cordant, a computer
and telecommunications integration systems company, prepared to
submit a bid as a prime contractor. The ARMS project required
Cordant to procure software and equipment necessary for
"scanning" or "digitizing" the microfiche.
1
The trial court had struck Cordant's evidence relating to
the fraud claims.
- 2 -
In preparing to bid on the project, Cordant solicited
pricing and product information from various companies, including
Ogden. Ogden was a software development firm with prior
experience on Air Force contracts and expertise in the type of
software necessary for the ARMS project. Ogden also had a
corporate affiliation with Schafer, another technology company
that had been developing image scanning equipment known as
"digitizers." Cordant believed that having access to Schafer's
digitizer would enhance its chances of securing the Air Force
contract.
On May 24, 1991, Ogden signed a document with Cordant
entitled "Teaming Agreement," and Cordant signed the document on
July 23, 1991. 2 The Teaming Agreement provided, in pertinent
part, that Cordant would "propose" Ogden to the Air Force as "an
exclusive Subcontractor" for the products and services set forth
in Exhibit A to the Agreement. Ogden would "supply pricing" for
the products and services listed in Exhibit A, which specifically
included software development services and the Schafer digitizer.
Cordant and Ogden each would "bear its own costs, risks and
liabilities incurred as a result of its obligations and efforts
under [the] Agreement," and neither party would have the "right
to any reimbursement, payment, or compensation of any kind from
the other party during the period prior to the Government
2
At the time of the Agreement's execution, Cordant was known
as Centel Federal Systems, Inc., and Ogden was known as
Evaluation Research Corporation.
- 3 -
contract." Cordant and Ogden also agreed that, if Cordant became
the prime contractor of the ARMS project, they would "negotiate
in good faith in a timely manner a Subcontract Agreement."
Cordant reserved the right, "in its sole discretion to withdraw
its participation from this procurement at any time prior to
award [of a contract by the Air Force] if [Cordant] determin[ed]
that such withdrawal [was] in [its] best interest." The parties
agreed that the Teaming Agreement "contain[ed] the entire
agreement between the parties and supersed[ed] any previous
understandings, commitments or agreements, oral or written."
Finally, with regard to the availability of the Schafer
digitizer, Exhibit A to the Agreement provided as follows:
[C]ompliant with the requirements specified in the RFP
[, the Schafer digitizer] will be available for
delivery on August 31, 1991. By July 31, 1991,
[Cordant] shall make a determination, through
consultations with [Ogden's] representative, on the
probability of product availability by contract award.
If sufficient and satisfactory progress has not been
made in order to make the product available by contract
award, [Cordant] reserves the right, in its sole
discretion, to pursue a replacement product . . . . In
the event that the [Schafer digitizer] is not available
to [Cordant], it is agreed by the parties that it shall
not be available to any other party participating in
the Project.
Following its execution of the Teaming Agreement, Ogden
submitted to Cordant initial pricing information, which covered
both services and products, including digitizers. Shortly
thereafter, Ogden reduced its estimated price for software
development services.
On August 9, 1991, Cordant submitted a bid to the Air Force
- 4 -
for the ARMS project. Cordant's own evidence established that,
at the time its bid was submitted, it knew that the Schafer
digitizer was not yet fully developed or commercially available.
In December 1991, Cordant submitted to the Air Force its "best
and final" offer (BAFO), listing Lenzar, a recently-acquired
wholly-owned subsidiary of Schafer to which Schafer had delegated
its obligation to provide the digitizers, as the supplier of the
digitizers. Again, at the time it submitted its "best and final"
bid, Cordant knew that the Schafer digitizer was still in
development and not in production, that there was "a risk that
one will not be available," and that it was not "commercially
available."
On January 9, 1992, the Air Force awarded Cordant the ARMS
contract for the amounts set forth in Cordant's BAFO.
Thereafter, Lenzar insisted on Cordant's negotiating a written
subcontract with it. By April 1992, however, there remained
"unresolved contracting issues," and Cordant had not yet provided
Lenzar with a draft subcontract. Nevertheless, on April 17,
1992, Cordant requested that Lenzar provide it with "adequate
written assurances" that Lenzar would perform its "obligation to
deliver [the digitizers] as committed under the teaming
agreement." In response, Lenzar reiterated its request for
negotiation of a written subcontract. Cordant, thereupon,
declared that Lenzar's response "constitute[d] an anticipatory
repudiation of [the] Agreement," and, on June 2, 1992, Cordant
- 5 -
sent Lenzar a "termination" letter. Thereafter, Cordant secured
from another company a product to replace the Schafer digitizer.
III
Schafer contends that the Teaming Agreement is not an
enforceable contract for the sale of digitizers. It is, Schafer
asserts, merely an agreement to agree in the future and,
therefore, too vague and indefinite to be enforced. Cordant
responds that the Teaming Agreement "reveals a document that
clearly sets forth in significant detail the obligations of the
parties."
The Teaming Agreement is clear and unambiguous; indeed,
neither party contends otherwise. When a written agreement is
clear and unambiguous, it is the duty of a court, not a jury, to
determine whether an enforceable contract exists. Pierce v.
Plogger, 223 Va. 116, 120, 286 S.E.2d 207, 210 (1982).
Therefore, whether the Teaming Agreement contains the requisites
of an enforceable contract is a matter of law.
In Allen v. Aetna Casualty & Surety, 222 Va. 361, 281 S.E.2d
818 (1981), an insurance company "did bargain for and obtain
plaintiff's agreement not to retain counsel to prosecute his
claim in exchange for [the company's] promise to effect full and
final settlement with him." Id. at 362, 281 S.E.2d at 819. The
insurance company subsequently breached this agreement with the
plaintiff. Id. We noted that the crucial question in Allen was
"whether the terms of the agreement . . . were too vague and
- 6 -
indefinite to enforce." Id. at 363, 281 S.E.2d at 819. In
holding that the agreement was not an enforceable contract, we
said
there must be mutual assent of the contracting parties
to terms reasonably certain under the circumstances in
order to have an enforceable contract. Here, there was
no such mutual commitment. No sum was specified in the
agreement, nor was any method or formula alleged for
determining the amount payable in settlement. A court
should not determine the terms of the settlement upon
which the parties might ultimately agree. As the
agreement provided no reasonable basis for affording a
remedy for its breach, it is too vague and indefinite
to be enforced.
Id. at 364, 281 S.E.2d at 820.
In the present case, the Teaming Agreement provided that
"[f]or all items identified in Exhibit A, [Ogden] shall supply
pricing." However, no price for the digitizers was set forth in
the Agreement, and the Agreement shows that the parties knew that
the digitizers might not be available for use if the ARMS
contract were awarded to Cordant. In that regard, the Agreement
states that, by July 31, 1991, Cordant "shall make a
determination, through consultations with [Ogden's]
representative, on the probability of [the digitizer's]
availability by contract award" and that, "[i]f sufficient and
satisfactory progress has not been made in order to make the
[digitizer] available by contract award, [Cordant] reserves the
right, in its sole discretion, to pursue a replacement product."
Clearly, therefore, the Teaming Agreement shows by its express
terms that it was not an enforceable contract for the sale of
- 7 -
digitizers. There was no mutual commitment by the parties, no
obligation on the part of Ogden to sell the digitizers or on the
part of Cordant to purchase them, no agreed purchase price for
the product, and, indeed, no assurance that the product would be
available when needed. It follows, therefore, that, if the
Teaming Agreement was not enforceable against Ogden as a contract
for the sale of goods, it also was not enforceable against
Schafer under the claim that Schafer was Ogden's delegate within
the meaning of the Uniform Commercial Code, i.e., Code § 8.2-
210(1).
IV
Next, we consider Lenzar's appeal. The jury found that
Lenzar was not liable to Cordant on its breach of contract claim.
However, the jury found against Lenzar on Cordant's claim of
promissory estoppel.
Lenzar contends on appeal, as it did at trial, that
promissory estoppel is not a cognizable cause of action in
Virginia. Cordant, citing Georgeton v. Reynolds, 161 Va. 164,
170 S.E. 741 (1933), claims we previously adopted promissory
estoppel as a cause of action. We do not agree. In Georgeton,
promissory estoppel was not asserted offensively as an
affirmative claim, but was applied defensively to establish
consideration for a unilateral contract (a release). Id. at 173-
74, 170 S.E. at 744.
In the alternative, Cordant asks us to create a new cause of
- 8 -
action for promissory estoppel, adopting the approach set forth
in Restatement (Second) of Contracts § 90(1) (1981). The
Restatement provides that "[a] promise which the promisor should
reasonably expect to induce action or forbearance on the part of
the promisee . . . and which does induce such action or
forbearance is binding if injustice can be avoided only by
enforcement of the promise."
Although we have addressed the doctrine of promissory
estoppel and even assumed, without deciding, the existence of
such a cause of action, we never have held that such a cause of
action exists or should be created. See, e.g., Tuomala v. Regent
University, 252 Va. 368, 376, 477 S.E.2d 501, 506 (1996) (noting
that this Court "[has] not applied the doctrine in this
Commonwealth"); Stone Printing and Mfg. Co. v. Dogan, 234 Va.
163, 165-67, 360 S.E.2d 210, 211-12 (1987) (assumed, without
deciding, doctrine of promissory estoppel applies; held, however,
elements not proved). Today, however, we hold that promissory
estoppel is not a cognizable cause of action in the Commonwealth,
and we decline to create such a cause of action. See Virginia
School of the Arts v. Eichelbaum, 254 Va. ___, ___, ___ S.E.2d
___, ___ (1997) (this day decided); Ward's Equipment v. New
Holland North America, 254 Va. ___, ___, ___ S.E.2d ___, ___
(1997) (this day decided).
V
In sum, we hold that no enforceable contract for the sale of
- 9 -
digitizers by Schafer to Cordant existed, and, with respect to
Lenzar, promissory estoppel is not a cognizable cause of action.
Accordingly, the judgment of the trial court will be reversed in
each appeal and final judgment will be entered in favor of
Schafer and of Lenzar.
Record No. 961945 -- Reversed and final judgment.
Record No. 961964 -- Reversed and final judgment.
- 10 -