Questar Builders, Inc. v. Cb Flooring, LLC

978 A.2d 651 (Md. Ct. App. 2009)

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Nature of the Case

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Facts

D is a general contractor hired to construct an apartment complex. D selected P to install carpeting for a total price of $ 1,120,000. The next lowest carpeting bid was $1,240,000. The contract contained clauses that allowed D to terminate the Subcontract by written notice for a breach and also without cause under a Termination for Convenience provision. After execution of the Subcontract, the interior design firm changed the carpets to be installed in the clubhouse and corridors. With the changes, D contacted the second-place bidder (CTI) about installing carpeting, and CTI submitted a new bid incorporating the changes. That bid was $1,119,000, but that bid was based on the Shaw and Bigelow carpets and the Prince Street and New Stratford carpets specified by the ID Drawings. P submitted a change order requesting an upward adjustment of $33,566 to the Subcontract price. D sent an unexecuted subcontract to CTI, pursuant to which CTI would install carpeting at Greenwich Place in exchange for $1,120,000. P then submitted a revised change order changing its requested adjustment from $33,566 to $103,371 above the original Subcontract price. In a letter dated 23 March 2006, D terminated P's subcontract. D entered a subcontract with CTI. P sued for breach of contract. D claimed that P had refused to perform, and in any event, it could terminate for convenience. P contended that, although it requested an upward price adjustment due to the interior designer's change in carpeting, it did not refuse to perform its contractual obligation. P also claimed that the termination for convenience clause was not applicable because D acted in bad faith by invoking the clause after scheming to hire CTI in its place. (The evidence in the case about business synergies between P and D as well as attendance at weekly meetings etc. was extensive). The trial judge found that P did not breach the Subcontract. The trial judge also found that P did not attempt to use the change order as leverage and did not jeopardize the timely performance of the Subcontract. The court rejected D's assertion that its subjective loss of faith in P's ability to perform did not satisfy the implied limitations there might be on the exercise of the termination for convenience clause. P got $243K in expectation damages. D appealed.