Delaware Case Law
PISANO v. DELAWARE, 05C-03-132-FSS (Del.Super. 2006) JERRY
PISANO, Plaintiff, v. DELAWARE SOLID WASTE AUTHORITY,
Defendant. C.A. No. 05C-03-132-FSS. Superior Court of
Delaware, New Castle County. Submitted: July 6, 2006.
Decided: November 30, 2006.
Upon Defendant’s Motion for Summary Judgment —
GRANTED.
R. Stokes Nolte, Esquire, Nolte & Associates, 1010 N.
Bancroft Parkway, Suite 21, Wilmington, Delaware, 19805.
Attorney for Plaintiff.
Jeremy W. Homer, Esquire, Parkowski, Guerke & Swayze, P.A.,
116 West Water Street, P.O. Box 598, Dover, Delaware,
19904. Attorney for Defendant.
MEMORANDUM OPINION and ORDER
SILVERMAN, J.
This is Defendant’s summary judgment in a breach of
contract case. Generally, Plaintiff relies on agency
principles and claims he had an unconditional contract to
buy used equipment, worth millions, from Defendant.
According to Plaintiff, Defendant breached when it sold the
equipment to someone else. Not only that, Defendant refuses
to return the purchase price, $150,000. Alternatively,
Plaintiff alleges unjust enrichment and promissory
estoppel.
I.
More specifically, Jerry Pisano alleges that in 1999, he
obtained a contract through Delaware Solid Waste
Authority’s agent, Stanley Wong of Professional Systems
Associates, Inc., to acquire the DSWA’s defunct Energy
Generating Facility, for scrap or resale. Pisano claims DSWA
sold the EGF’s multi-million dollar equipment to
him, outright, for $150,000. He paid for the equipment up
front, through a certified check he gave to Wong. DSWA,
however, later sold part of the EGF’s equipment, “t he most
valuable and indispensable part,” to another, thereby
breaching the alleged contract. Also, according to Pisano,
DSWA unjustly forfeited the $150,000 he gave to Wong.
Defendant relies on the statute of limitations and the fact
that it had no contractual relationship with Plaintiff.
DSWA agrees that there was a contract between DSWA and
Wong’s company, Professional Services Associates, Inc, and
not Pisano. Wong, therefore, was PSA’s principal, not
DSWA’s agent. The contract, as finally amended, stated that
PSA would give $150,000 to DSWA for the right to remove and
sell the EGF equipment. The money that Defendant kept came
from Wong, not Plaintiff, as a non-refundable deposit.
Moreover, Plaintiff dealt with Wong and not Defendant.
Also, Wong and Pisano were partners and joint venturers.
PSA and Pisano then failed to perform on time. They failed
to meet the contract’s preconditions, such as posting a
performance bond and letter of credit. After time
extensions and repeated requests for performance, DSWA was
entitled to cancel the contract, sell the equipment
elsewhere, and keep the deposit that PSA, not Pisano,
submitted.
Pisano answers that he bought the equipment with the money
he gave to Wong. Pisano alleges PSA and Wong, on DSWA’s
behalf, waived the preconditions and extended the
contract’s deadlines. DSWA replies that Wong clearly had no
authority to alter DSWA’s contract with PSA, much less to
give Pisano a seemingly open-ended extension.
Discovery is complete. On the record, starting with the
clearly written contract between DSWA and PSA, a reasonable
fact-finder could only conclude: Pisano was not a party to
the contract; Wong never was DSWA’s actual or apparent
agent; Defendant did not misled Plaintiff about the
contractor’s relationship with Defendant; and Pisano could
not have reasonably believed that Wong was authorized by
DSWA, directly or indirectly, to bind DSWA to an
unconditional, open-ended sales contract with Pisano.
Pisano’s beliefs were unreasonable because they were based
only on things Wong said or did, and Plaintiff’s undeniable
failure to investigate the facts is neither attributable to
Defendant nor excusable. Besides, Plaintiff’s beliefs were
flatly refuted by Pisano’s direct communication with DSWA,
and Pisano failed to clear-up the obvious inconsistencies
between what Wong and DSWA told him. Finally, Plaintiff
never satisfied important, financial preconditions to
qualify as the equipment’s buyer.
Moreover, the disputed money came to DSWA from PSA, and it
does not matter where PSA got it. Also, in effect, the
money purchased an option on the equipment, which was
potentially valuable to Pisano and PSA. Finally, after DSWA
had obviously terminated the contract, Plaintiff waited too
long to file suit. Accordingly, Defendant’s motion for
summary judgment must be granted.
II. Standard of Review
A. Issues of Fact
Summary judgment is proper if there is no genuine issue of
material fact and the moving party is entitled to judgment
as a matter of law.[fn1] The court considers the full
record, including pleadings, depositions, and answers to
interrogatories in deciding the motion.[fn2] The court must
view the facts in a light most favorable to the non-moving
party and accept as established all undisputed factual
assertions.[fn3] All rational inferences will be drawn in
favor of the non-moving party.[fn4] “If the evidence is
merely colorable, or is not significantly probative,
summary judgment may be granted.”[fn5] “The non-movant can
not create a genuine issue for trial through bare
assertions or conclusory allegations.”[fn6]
Here, the credibility of Pisano’s testimony was seemingly
refuted, in part, by other evidence. Nevertheless, the
court is taking Pisano’s testimony as true. Even so,
Pisano’s testimony does not create a material dispute of
fact making summary judgment inappropriate. Although
Pisano’s testimony is hard to believe, the court is not
discounting it for that reason. Instead, as seen below,
other facts, including Pisano’s actions, show that there is
no material dispute of facts.
B. Contract Interpretation
Contract interpretation initially presents a question of
law.[fn7] By reviewing the entire contract, the court must
determine whether the contract is ambiguous. Ambiguity only
exists when the contract’s terms are “reasonably or fairly
susceptible of different interpretations” or if the terms
may have more than one meaning.[fn8] Contract terms,
however, will not be twisted to create ambiguity if an
ordinary reading leaves no room for uncertainty.[fn9] If
the language is clear and unequivocal, the parties are
bound by its plain meaning.[fn10] As discussed below,
DSWA’s written contract with PSA is unambiguous and
supports DSWA’s position clearly.
III.
A. The Energy Generating Facility
Delaware Solid Waste Authority is a public
instrumentality[fn11] that owns and operates the Delaware
Recycling Center at Pigeon Point Landfill. At the site was
the Energy Generating Facility, built in the early 1980s
and operated until 1991, when it was shut down for
technical and economic reasons. The EGF was originally
intended to burn trash and generate electricity, but DSWA
used it as a transfer station to collect waste before
sending it out-of-state.
According to the complaint, the EGF was a large building
containing equipment, primarily consisting of an
incinerator and “multiple u nits of major mechanical
equipment,” including oilers, turbine generators,
electrostatic precipitators, cooling towers, and much more.
B. DSWA Contract 410’s Formation
In June 1996, DSWA issued a Request for Proposals for the
EGF’s “dismantlement and removal.” DSWA wanted an empty
building for recycling work. Dismantling and removing the
EGF building’s contents, including the “gigantic”
incinerator, would require an experienced, skillful and
resourceful demolition company. It also would require a
third-party to take the equipment, which even in its used
condition was potentially quite valuable.
DSWA rejected the first proposals as too costly. So, it
issued another RFP. PSA, whose president was Stanley Wong,
submitted a proposal, including $100,000 for the right to
remove the equipment. No other offer guaranteed DSWA a
definite sum. DSWA accepted PSA’s proposal in September
1998. Pisano was not involved in these dealings.
Meanwhile, before the contract was signed, Pisano, “in
partnership” with Wong, formed Nasprosa, Inc. to move the
EGF to Santo Domingo in the Dominican Republic. The name
Nasprosa combines Pisano’s company’s name, Northeastern
Associated Services Affiliates, with Wong’s company’s name,
PSA. The Nasprosa website listed Pisano as “President and
Chairman of the Board,” and Wong as “Vice President
— R & D.” Also, the website listed PSA as ”
coordinating the Construction and Operations for all
projects.”
On January 7, 1999, before any DSWA contract was let,
Pisano sent a memorandum to an associate requesting help in
finding financing for acquiring the EGF. Pisano’s memo
stated that he and Wong were “partners” and “w ould like to
own this one.” Pisano and Wong expected that the equipment
was worth far more than it would cost to dismantle and
remove it.
Nasprosa’s formation, its principals, its objectives and
even its name are significant, undisputed facts. Much of
Pisano’s complaint turns on his claim that Wong and PSA
were DSWA’s alter egos. Pisano’s relationship, however,
with Wong and Nasprosa is inconsistent with his alleged
belief that Wong was DSWA’s employee or agent.
On February 2, 1999, DSWA and PSA entered into DSWA
Contract410, “Agreement for Dismantlement and Removal of
Equipment Located at the Energy Generating Facility.” Wong
signed for PSA, the designated Contractor. Pisano and
Nasprosa were neither parties to the contract, nor are they
mentioned in it.
C. The Contract’s Terms
Contract 410 granted PSA the exclusive right to remove the
EGF’s equipment “on or before September 1, 2000,” and
further provided that PSA would sell the dismantled EGF
equipment to “a firm acceptable to DSWA.” DSWA was not
entitled to any proceeds from PSA’s sale of the EGF’s
equipment. Under the contract, DSWA received the
equipment’s removal and $100,000 from PSA, nothing more.
PSA was entitled to whatever the approved buyer would pay
to PSA. DSWA’s only interest in the EGF equipment’s
ultimate disposition was that PSA had to sell it to a
DSWA-approved buyer.
As mentioned, the EGF equipment was massive, and according
to Contract 410, dismantling and removing it was a highly
regulated undertaking. The contract specified what was to
be removed, how it was to be removed, and what was to be
left behind — from the roof down to the anchor bolts
in the floor. The contract also contained many provisions
concerning PSA’s timely and satisfactory performance,
including PSA’s providing a million dollar, performance
bond.
As mentioned above, the contract also called for PSA to
find an acceptable buyer for the dismantled and removed
equipment. The contract and the record are unclear as to
why DSWA insisted on approving the buyer. Not that it
matters here, presumably DSWA qua DSWA had to be assured
that the buyer would be able to take the EGF equipment away
and dispose of it properly.
Even though the contract provided for DSWA to approve the
buyer, the contract was concerned primarily with getting
the equipment out of the EGF building. Contract 410
contained 28 sections, covering nine pages, not counting
the signature page. It also incorporated a major equipment
list in an appendix. Of all that, only three sections,
Sections 5, 6, and 7, related to the prospective buyer of
the EGF’s equipment.
Section 5 set a deadline and addressed the approved buyer.
It gave PSA thirty days from the “commencement of the
Agreement” to sign a sales agreement with “a firm
acceptable to DSWA,” at DSWA’ s discretion. If no
acceptable buyer was found, Contract 410 could be cancelled.
The section also allowed DSWA to extend the deadline “in
[DSWA’s] best interest.”
Section 6 required PSA to obtain a DSWA-approved, bona
fide, $750,000 letter of credit from the equipment’s buyer.
The letter of credit was to “assure that all work described
in [the] Agreement will be performed and completed and in
the time frame required and that all subcontractors are
paid. . . .” Section 11 called for PSA to also provide the
$1,000,000 performance bond mentioned above.
Section 7 required PSA to pay DSWA $150,000 “[u]pon
execution of a sales agreement with a firm acceptable to
DSWA,” with $100,000 comprising DSWA’s “final net revenue,”
and $50,0 00 in escrow as retainage.
Thus, DSWA’s interest in the contract was: having the EGF’s
equipment promptly removed by PSA, having the work done
properly by PSA, and receiving $100,000 from PSA. Although
DSWA benefitted by having the buyer take the dismantled
equipment away, Contract 410 contemplated that PSA would
strike its own deal with the buyer and PSA would keep the
proceeds, whatever they turned out to be. DSWA had no real
stake in the sale. PSA’s interest in the contract was in
whatever profit PSA could garner from its sale of the
potentially valuable, dismantled and removed equipment. As
presented below, PSA and Pisano thought the equipment was
worth at least two million dollars, probably much more.
D. Pisano’s Involvement
The record shows that Pisano first met Wong, apparently
through an advertisement, either three weeks or three
months before March 1999. On March 3, 1999, Pisano gave
Wong, not DSWA, a $150,000 check, made out to himself and
endorsed: “James Pisano in full payment for the Pigeon
Point EGF. To PSA with $50,000 escrow.” Pisano
characterizes the check as “t he actual contract between
PSA and [him].” Pisano’s case turns on his adamant
insistence that although he gave his check to Wong, endorsed
to PSA, he nevertheless bought the EGF’s equipment directly
from DSWA. Pisano’s contention is refuted conclusively by
Contract 410’s terms, the record and the check, itself.
On March 4, 1999, before the first completion deadline,
Wong notified DSWA that “a sales agreement has been
executed between PSA, Inc. and J. Pisano T.A. Nasprosa
Partnership.” The letter promised PSA’s performance bond
and Nasprosa’s letter of credit would be forthcoming, and
Wong attached a PSA check for $150,000. Presumably, the
funds for PSA’s check to DSWA came from Pisano’s March 3,
1999 check. There is no evidence, though, that DSWA knew
how PSA came up with the money. Nor is there a reason why
DSWA should have cared.
Wong did not disclose his relationship with Pisano and
Nasprosa. In any event, the March 4, 1999 letter seems to
be the first time DSWA became aware of Pisano and Nasprosa.
Meanwhile, Pisano claims that he thought Wong was a DSWA
employee and PSA was part of DSWA. Pisano, however, has no
evidence showing that his belief was based on any assurance
by DSWA.
On March 6, 1999, Pisano, Wong, and two erstwhile partners
agreed to form a corporation, Electag Corp., which would
buy the EGF’s equipment from Nasprosa. Although Electag was
never actually formed, Pisano signed an agreement, as
Electag’s president and CEO, with Wong, as Nasprosa’s
president. Additionally, on May 14, 1999, an Electag
principal sent a letter to a business associate in Santo
Domingo acknowledging that they had “very limited time to
meet [their] commitment to move [their] plant.”
On July 2, 1999, Pisano sent another letter to Santo
Domingo mentioning that Nasprosa was “committed to . . .
move the plant by a certain date and that date is quickly
approaching.” And in an August 4, 1999 letter, Pisano
promised Wong $2,000,000 for the EGF, acknowledging that
PSA “has secured the rights to” the EGF. For the most part,
the EGF’s equipment would then end-up in the Dominican
Republic. PSA, Nasprosa and Electag would profit from the
final sale of the equipment abroad. At some point, at least
$2,000,000, probably much more, was supposed to change
hands, with none of it going to DSWA.
As explained above, not only was Pisano not a party to
Contract 410, he had nothing to do with the deal between
DSWA and PSA. It is undisputed that DSWA first learned of
Pisano two months after DSWA and PSA signed Contract 410.
Nevertheless, for an unknown reason, Pisano allegedly
“thought that PSA was Delaware Solid Waste,” and Wong was
DSWA’s “man.”
Viewing the evidence favorably to Pisano, it is possible
that Wong was playing both ends against the middle,
misleading DSWA and Pisano about what Wong was up to.
Closely examining the record undermines that notion. There
is reason to suspect that Pisano knew what was what. For
present purposes, however, the court assumes that thanks to
Wong and not because of anything done by DSWA, Pisano was
initially confused about Wong’s and PSA’s character.
E. The December 9, 1999 Meeting
On December 9, 1999, DSWA staff, Pisano, and Wong finally
met to discuss the equipment’s removal and the sales
agreement. Until then, DSWA had never communicated with
Pisano and vice versa. This is also when Wong, Pisano and
DSWA met face-to-face and when Pisano first met with DSWA.
The December 9, 1999 meeting is pivotal to Pisano’s agency
theory.
As mentioned in the Standard of Review,[fn12] and as
discussed in again in Section IV, Pisano claims that
everyone at the meeting congratulated him on becoming the
approved buyer of the EGF. Pisano admits, however, that
during the meeting, DSWA also reviewed Contract 410’s
requirements, financial and otherwise. Pisano further admits
that he disagreed with things said by DSWA concerning
Nasprosa’s obligations, but Pisano neither said nor did
anything in response. He continued to rely on his belief
that Wong was associated with DSWA and Wong was entitled to
waive DSWA’s written and agreed on requirements. That
belief, however, as the record shows, was inspired only by
Wong.
The following day, December 10, 1999, DSWA sent a letter,
on DSWA letterhead, to Wong as president of PSA, with a
copy to Pisano. The letter memorialized the meeting and
recapitulated Contract 410’s requirements, including its
deadline and DSWA’s insistence on receiving financial
information and the letter of credit from Nasprosa. DSWA’s
letter also called for PSA’s performance bond. After
attending the meeting and reading DSWA’s letter, Pisano can
not maintain that he still believed that he had bought the
equipment from DSWA unconditionally.
F. The Contract’s Termination And Aftermath
Presumably, Pisano spent the next eight months trying
unsuccessfully to find a real buyer for the equipment. DSWA
sent Wong several letters complaining about the lack of
progress. On August 23, 2000, Wong met with DSWA to discuss
an extension. Subsequently, DSWA and PSA amended Contract
410 by Amendment No. 1, pushing back the completion deadline
to December 31, 2001.
Amendment No. 1 required PSA to comply with all previous
contract requirements, as well as to remove one major piece
of equipment by December 31, 2000. The amendment also
provided that if the work did not go forward as required,
DSWA would keep the entire $150,000 provided by PSA. Pisano
argues that Wong’s ability to obtain an extension
demonstrated that Wong spoke for DSWA, and therefore,
explains Pisano’s belief that he was not subject to the
December 10, 1999 letter’s requirements. The fact that Wong
got an extension is consistent with but does not justify
Pisano’s conclusion.
By January 9, 2001, past the extended deadline, the
equipment’s removal still had not begun, and neither PSA’s
performance bond nor Nasprosa’s letter of credit had been
provided. The problem, of course, was that Pisano had not
resold the equipment. Pisano dismisses the extended
deadline by asserting that Wong told him not be concerned
about it.
On January 29, 2001, DSWA’s counsel notified Wong, as PSA’s
president, that Contract 410 was in default, and it gave
PSA until February 12, 2001 to cure the default in specific
ways. On February 13, 2001, Wong replied directly to DSWA,
with a copy to Pisano, implying that the deal was still
good. Again, Pisano was content to blindly rely on Wong,
despite DSWA’s seemingly inconsistent behavior.
In response to Wong’s disingenuous reply, DSWA’s counsel
sent a letter, dated February 22, 2001, terminating the
contract, barring PSA’s employees from doing any work under
the contract, and announcing DSWA’s intent to hold PSA
liable for damages. On November 24, 2002, over nine months
after the termination, eleven months after DSWA’s extended
deadline had passed, and almost four years after Pisano gave
his check to Wong, DSWA sold some of the equipment to
someone else.
Meanwhile, although DSWA did not copy Pisano on its
termination letter, Pisano admittedly knew about it.
According to Pisano’s testimony, “at a round the time” that
Wong replied to DSWA’s January 29, 2001 letter, which would
have been on or about February13, 2001, DSWA stopped Pisano
from removing the EGF’s equipment. DSWA told Pisano, as he
testified, “We didn’t have any right to be in there. Every
time we went in there they gave us a hard time.” In other
words, by mid-February 2001, Pisano knew DSWA would not let
him have the EGF’s equipment.
Pisano and Nasprosa did not react to the contract’s
February 2001 termination and their ouster until August 22,
2001. Then, Pisano sent a letter, on Nasprosa letterhead,
to DSWA. In the letter, seemingly for the first time,
Pisano referred to PSA and Wong as DSWA’s agents.
Pisano’s August 22, 2001 letter also darkly referred to
Wong and another DSWA contractor as having been “forced on
Nasprosa, Inc. as the only approved Contractors that had
Special relationship the board members of [DSWA].” It also
conveyed Nasprosa’s belief that Nasprosa was the EGF’s
owner, “by virtue of the $150,000 paid to DSWA.” The letter
recited ways that Nasprosa had to “endure [DSWA’s] meddling
and bad faith,” including DSWA’s showing a competitor “the
plant as for sale . . .,” and a vendor telling the
Dominican Republic authorities that “Nasprosa, Inc. is not
the owner of the plant. . . .” The August letter concluded
by asking DSWA to ” [p]lease be patient a short while
longer,” or Nasprosa would hire lawyers.
On January 25, 2002, Wong wrote a letter, also on Nasprosa
letterhead, to DSWA. Wong asked for “90 days to have the
exclusive on the EGF.” Won g claimed that Nasprosa had a
commitment for the EGF from “the Government of Zambia,”
funded through the European Economic Union, or
alternatively, “another party from the Dominican Republic
interested in the EGF.” Apparently, Wong also was speaking
to DSWA by telephone.
DSWA responded to Wong by letter dated February 6, 2002.
DSWA wrote that “we anticipate issuing an RFP by the end of
this year, subject to certain other activities under
consideration. . . .” DSWA expressly refused to give
Nasprosa “any exclusive arrangement.” But, DSWA closed with
assurance that,”[DSWA] will include you on our list of firms
to receive notification of the RFP. . . .”
IV.
As indicated above, DSWA’ s motion turns on whether a
reasonable juror could conclude that: Pisano had an
interest in Contract 410; whether Wong was authorized,
directly or indirectly, to bind DSWA to an unconditional
sales agreement between PSA and Nasprosa or Pisano; and
whether DSWA was entitled to cancel Contract 410 and keep
PSA’s deposit, which unbeknownst to DSWA was funded by
Pisano. Subsumed in this is Pisano’s claim that he bought
the EGF unconditionally when he gave Wong the $150,000
check.
The motion also presents Defendant’s statute of limitations
defense. Finally, DSWA’s motion addresses Pisano’s unjust
enrichment and promissory estoppel claims.
A. Pisano Was Not a Party to The Contract
As suggested above, DSWA offers alternative arguments
supporting summary judgment. It claims that regardless of
how it handled the EGF equipment’s sale, DSWA never had a
contract with Pisano. Its deal, Contract 410, was with PSA.
And although Contract 410 entitled PSA to sell the EGF to a
third party, DSWA was never in privity with Pisano or
Nasprosa. Accordingly, if anyone had a claim against DSWA
arising out of Contract 410, it would have been PSA, the
only other party to the contract. Starting with Contract
410 and considering the events through July 1999, a
reasonable jury, viewing the evidence most favorably to
Pisano, could only conclude that DSWA hired PSA to promptly
dismantle and remove the EGF’s equipment in a workmanlike
manner, to dispose of the equipment by selling it to an
acceptable buyer, and to pay DSWA $100,000.
Pisano tacitly concedes, as he must, that neither he nor
Nasprosa were parties to Contract 410. In fact, Pisano
admits that he did not know Contract 410 existed until Wong
introduced him to DSWA at the December 1999 meeting, ten
months after DSWA and PSA signed the contract. Therefore,
Pisano has no standing to sue DSWA outright for any breach
of Contract 410.
As presented, Pisano claims that “the actual contract
between PSA and [Pisano]” was his March 3, 1999 check, and
the check was his contract to buy the equipment
unconditionally. The way Pisano attempts to convert his
“contract with PSA” into an unconditional contract of sale
between him and DSWA is by claiming Wong was DSWA’s broker
and agent.
B. Wong Was Neither DSWA’s Broker Nor Its Agent
Pisano claims that DSWA held Wong out as DSWA’s broker or
agent because Contract 410 authorized Wong to sell the
EGF’s equipmen t on DSWA’s behalf. Pisano claims that since
there was no requirement in Contract 410 for PSA to
communicate any performance obligations to a prospective
buyer, DSWA mistakenly granted PSA authority to sell the
equipment unconditionally.
Assuming the facts supported the claim that DSWA held Wong
out as its broker or agent, which they do not, Pisano knew
Wong was doing business as PSA, and technically, PSA was
doing business with Nasprosa, not with Pisano. More
importantly, as explained above, Contract 410 did not
authorize PSA to sell the equipment on DSWA’s behalf. The
contract gave PSA the right to sell the equipment to an
acceptable firm on PSA’s behalf, after PSA dismantled and
removed it. In return for that, DSWA was entitled to
$100,000 from PSA. The only way to reasonably read Contract
410 is that once PSA met the contract’s terms and removed
the equipment, the equipment was PSA’s, not DSWA’s, to
sell.
As a matter of law, based on the contract’s terms, neither
Wong nor PSA was DSWA’s actual agent. Contract 410 does not
create any agency. DSWA had no agency agreement, or any
contract with Wong, Nasprosa, Pisano, Electag or anyone
else. This point is subtle but it goes to the heart of the
dispute. DSWA’s only contractual relationship was with PSA,
and PSA’s status is clearly defined by the written contract.
By the same token, no matter what Pisano thought about
Wong, and no matter how Wong misled Pisano, Wong could not
unilaterally cloak himself with authority to bind DSWA. As
discussed next, the only way Wong could be characterized as
DSWA’s agent is if DSWA did something to make it reasonably
appear to Pisano that Wong was DSWA’s agent and as such,
was authorized to bind DSWA in the way Pisano claims it was
bound.
C. Wong Did Not Have Apparent Authority
Pisano’s core argument is that Wong had apparent authority
to bind DSWA and Pisano relied on it. The argument fails at
different levels. First, although DSWA does not make the
point, DSWA is a governmental entity. Pisano’s Complaint
refers to DSWA as “a State Agency of the State of
Delaware.” The American Law Institute’s Third Restatement
of the Law of Agency provides that the doctrine of apparent
authority generally does not apply to governmental
entities.[fn13]
For sound policy reasons, some courts will not consider
apparent authority claims against governmental entities. At
most, courts apply apparent authority against governmental
entities reluctantly. Courts that consider exceptions to
the rule against applicability usually require that injured
parties must show that the rule against applicability will
cause “substantial injustice.” Usually, however, third
parties dealing with governmental entities “take the risk of
error regarding the agent’s authority to a greater degree
than do third parties dealing through agents with
non-governmental principals.”[fn14] If the court was
willing to consider whether Pisano demonstrated substantial
injustice, the record shows no unjust behavior by DSWA.
As a matter of law, based on the undisputed facts, this is
the sort of case contemplated by the Restatement’s general
rule against applying the doctrine of apparent authority to
a governmental entity. Based on a record like this one,
allowing a claimant, like Pisano, to establish apparent
authority of an actor, like Wong, on behalf of a
governmental entity, like DSWA, would set a troublesome
precedent.
Second, Pisano cannot prevail under the doctrine of
apparent authority as it typically applies to ordinary
business relations. It has long been held
(1) that the law indulges in no bare presumptions that an
agency exists; it must be proved or presumed from the
facts; (2) that the agent cannot establish his own
authority either by his representations or by assuming to
exercise it. . . .[fn15]
Moreover, Delaware follows the Restatement of Agency.[fn16]
According to the Restatement, paraphrasing slightly:
Apparent authority is the power held by an agent or other
actor to affect a principal’s legal relations with a third
party when the third party reasonably believes the actor
has authority to act on the principal’s behalf and the
belief is traceable to the principal’s
manifestations.[fn17]
To hold DSWA liable under the apparent authority doctrine,
therefore, Pisano must be able to prove not only that Wong
showed signs of authority to Pisano, the signs of authority
were linked to DSWA’s intention al or unwitting conduct. As
a matter of law, Pisano could not rely only on Wong’s
representations. At the moment Pisano gave his money to PSA
and Wong in March 1999, DSWA did not even know Pisano
existed. And, the only authority Wong had was manifested in
Contract 410.
DSWA’s congratulations at the December 9, 2001 meeting came
ten months after Pisano gave his money to Wong. The same
goes for DSWA’s relaxed enforcement of its contract
deadlines. The congratulations and the deadline
enforcement, individually and collectively, do not
establish that Wong probably could sell the EGF on DSWA’s
behalf, without conditions or deadlines. Their
insignificance pales further in light of DSWA’s oral and
written insistence on Pisano’s meeting Contract 410’s
conditions. In short, there is insufficient evidence to
support a jury’s finding that Wong’s putat ive authority
was traceable to DSWA’s manifestations.
Furthermore, as presented above, Pisano’s reliance on
Wong’s apparent authority had to have been reasonable.
Whether a belief is reasonable, of course, begs a jury’s
consideration.[fn18] But what constitutes a reasonable
belief is neither an entirely subjective nor amorphous
concept. Not every belief, no matter how sincere, is legally
reasonable. The law provides normative standards by which
the reasonableness of Pisano’s belief about Wong’s
authority must be measured.
For one thing, Pisano’s beliefs have to considered.
Pisano’s belief that Wong had unilateral authority to waive
Contract 410’s deadlines and conditions is unreasonable.
Pisano offers no reason, much less evidence, explaining why
DSWA would give Wong the carte blanche over its affairs
that Pisano attributed to Wong.
Beyond that, Pisano “believed” that Wong was DSWA’s broker.
If he were correct, that meant Wong also was partnering
with Pisano to become the buyer. In other words, Pisano
cannot claim that he thought Wong was DSWA’s broker while
knowing that Wong was self-dealing. Pisano cannot have it
both ways. At best, Pisano had to have suspected that
Wong’s relationship with DSWA was sketchy.
Another factor in deciding whether Pisano’s beliefs were
reasonable concerns his duty to act with “ordinary prudence
and reasonable diligence” in ascertaining the scope of
Wong’s authority. As a matter of law, Pisano had to make a
preliminary inquiry as to Wong’s apparent authority, and if
warranted, make further investigation.[fn19] Pisano could
not reasonably rely on Wong’s apparent agency if he ignored
facts pointing to Wong’s lack of authority.[fn20]
Pisano offers no evidence that he made any preliminary
inquiry about Wong’s supposed authority. Whatever the
reason, Pisano gave Wong the check without contacting DSWA.
In Pisano’s August 22, 2001 letter to DSWA on Nasprosa
letterhead, he implies that DSWA “forced” Wong on Nasprosa,
but Pisano has not presented evidence showing that.
In at least one important way, Pisano cannot deny that he
failed to investigate Wong’s authority when he should have.
As presented above, Pisano admits that when he finally met
DSWA for the first time, which was at the December 9, 1999
meeting, DSWA’s representative explained Contract
410’sconditions. The next day, DSWA copied Pisano on a
letter to Wong, written on DSWA’s letterhead, clearly
recapitulating the conditions, including Nasprosa’s
financial obligations and the deadline for completion. Even
after he heard what DSWA said, Pisano stated, “I didn’t
tell them anything at the meeting. I just listened.”
After the meeting, Pisano did nothing to find out what was
going on. He did not even ask DSWA to copy him on future
correspondence with Wong. Regardless of what DSWA told him
orally and in writing, Pisano remained content to rely on
whatever Wong said.
Pisano attempts to dismiss DSWA’s alarming letter and his
failing to even attempt to meet DSWA’s conditions, by
claiming: “Stanley [Wong] told me. . .that you didn’t have
to worry about that stuff.” That, coupled with the
allegation that Pisano “didn’t agree to those terms.”
Pisano’s position cannot add up in other ways. If Wong were
DSWA’s agent, as Pisano believed, why would DSWA send its
December 10, 1999 letter to PSA and Wong demanding that
“PSA provide a $1,000,000 performance bond in accordance
with our contract”? If Pisano’s views were accurate, DSWA’
s December letter was written by DSWA to its agent (Wong),
demanding that its agent provide a performance bond to
assure completion of a contract with itself. In reality,
anyone reading DSWA’s letter had to realize that DSWA and
PSA were not the same, and Wong was neither DSWA’s employee
nor its agent.
Again, Pisano had no contract or direct relationship with
DSWA. He had nothing in writing from DSWA, Wong, PSA, or
even Nasprosa. Pisano made a deal with Wong without
checking out Wong’s authority. From then on, Pisano
doggedly relied on Wong’s assurances. Thus, Pisano thought
he had bought a massive industrial facility worth millions,
including an incinerator, turbines, electrostatic
precipitators, cooling towers, almost everything in the
plant “even t he light bulbs,” according to Pisano, for
$150,000. And, he had whatever time he needed to remove the
equipment.
In summary, Pisano presents nothing that makes his initial
belief in Wong’s authority reasonable. Pisano failed to
make a satisfactory initial inquiry into Wong’s authority.
And, after he had obvious reason to question what Wong was
telling him, Pisano failed to investigate. Pisano,
therefore, cannot meet his burden of proving that his
beliefs about Wong’s authority were traceable to DSWA’s
manifestations, nor that he had a reasonable basis to
believe Wong was authorized by DSWA to act on its behalf.
C. DSWA Did Not Breach Any Contract
Since Pisano cannot prove that Wong had authority to
excuse performance or that Pisano bought the EGF from DSWA,
he cannot prove DSWA breached any agreement. Giving the
contract its plain meaning and viewing the facts in the
light most favorable to Pisano, he had no contract with
DSWA. That not only includes Contract 410, but also any
agency-based agreement with DSWA to sell the equipment to
Pisano. Therefore, there is no basis for a jury to find
that DSWA breached any contract with Pisano.
To the contrary, the record shows that DSWA properly
terminated Contract 410 after PSA and, indirectly, Pisano
failed to meet the contract’s financial preconditions.
Although PSA told DSWA on March 4, 1999 that PSA had found
Naprosa as a buyer for the equipment, the record shows that
from the start, Pisano, Wong, PSA and Nasprosa were
financially unable to qualify under Contract 410. Pisano
always intended to resell the equipment, and until they
found a buyer with actual resources, PSA and Nasprosa could
not fulfill their respective bargains. As the record
undeniably demonstrates, Pisano and Wong were unable to
find a legitimate taker in the Dominican Republic, Zambia,
or any other place. So, as Wong and Pisano searched in vain
for an actual buyer, the years passed. And the original and
extended deadlines came and went. As discussed further in
the next section, DSWA formally terminated Contract 410 and
went elsewhere.
As discussed above, Pisano also cannot establish that after
December 1999, he reasonably believed that, through Wong,
he had bought the EGF’s contents from DSWA. Based on the
undisputed evidence, no juror could find in Pisano’s favor
on any breach of contract claim. Intending to broker the
equipment’s sale, Pisano paid for the rights to the EGF’s
equipment from PSA, but he could not find a buyer. Now,
Pisano simply wants DSWA to cover his losses, even though
no contract existed between him and DSWA.
V.
A. Pisano’s Claim Comes Too Late
Pisano tacitly concedes that if he had a claim for breach
of contract based on Contract 410, his March 11, 2005
Complaint was filed more than three years after DSWA
terminated Contract 410 in February 2001. Instead, Pisano
claims that his contract was for the sale of goods under
Delaware’s Uniform Commercial Code.[fn21] Therefore, Pisano
argues the applicable statute of limitations is four
years.[fn22]
For statute of limitations purposes, the court assumes that
Pisano’s contract claim has potential merit. As discussed
above, that assumption is incorrect because Pisano bought
the “goods” from PSA, not DSWA. And, as also discussed
above, Contract 410 was primarily concerned with the goods’
removal, not their sale. Thus, Contract 410 was not a
contract for the sale of goods. Nevertheless, the court
accepts here that: the contract Pisano is suing on was the
check he gave to Wong, the “contract” was primarily for the
sale of the EGF’s equipment, and the massive equipment’s
removal was merely incidental.
But even if Pisano had a contract to buy the EGF equipment,
he missed the UCC’s four year statute of limitations too.
Pisano’s Complaint alleges that DSWA breached on February
6, 2002, when it notified Pisano that it would sell parts
of the incinerator to others. Actually, on that date, DSWA
sent Wong a letter, mentioned above, telling him about
DSWA’s efforts to find PSA’s re placement. Pisano
testified, however, that DSWA barred him from the EGF
around the time it terminated Contract 410. That was in
February 2001. Thus, Pisano’s Complaint, having been filed
in March 2005, came more than four years after Pisano knew
DSWA would not let him have the goods.
B. DSWA Was Not Unjustly Enriched
Alternatively, claiming unjust enrichment,[fn23] Pisano
wants DSWA to return the front money he gave to Wong. He
alleges in the Complaint:
On March 3, 1999, PSA attempted to broker a sale between
the Authority and Pisano for the incinerator. Pisano gave
the Authority $150,000.00 for the purchase of the
incinerator should the Authority have decided to sell it
to him.
As discussed above, the Complaint mischaracterizes PSA’s
role and Pisano’s actions. PSA was not DSWA’s broker, and
Pisano gave his money to Wong. On the record presented, it
may be that Wong misused Pisano’s money, but that was
between them.
Otherwise, Wong agreed in Amendment 1 that the money PSA
gave to DSWA (regardless of where PSA got it) would serve
as PSA’s deposit. In return for Amendment 1, DSWA allowed
PSA to continue as the Contractor under Contract 410.
C. DSWA Is Not Estopped By Any Promise It Made To Pisano
Pisano’s Complaint finally alleges promissory
estoppel[fn24] against DSWA. Specifically, Count 3 says, in
part: “The Authority promised to sell the incinerator to
Pisano.” Actually, DSWA agreed that PSA could sell the
incinerator to Nasprosa if Nasprosa met specific
conditions. Neither Nasprosa nor Pisano ever met those
conditions. To the extent Pisano spent “time, money,
resources, great effort, and pains in an attempt to re-sell
the incinerator. . .[,]” his attempt failed.
Although there is innuendo in the record, Pisano has not
presented substantial evidence from which a jury could find
that DSWA broke any promise it made to Pisano, much less
that it pulled the rug out from under him. To the contrary,
Contract 410 did not contemplate PSA’s selling the
equipment to an approved buyer who, in turn, would
“re-sell” it. The heart of Pisano’s problem was that he was
not an appropriate buyer. He was merely a middleman. When
he could not find a true taker for the EGF’s equipment,
neither he nor PSA could keep their ends of their bargains.
Again, if Pisano has evidence showing that someone led him
on, it was Wong, not DSWA. And Wong is not before the court.
VI.
For the foregoing reasons, Defendant’s Motion for Summary
Judgment is GRANTED.
IT IS SO ORDERED.
[fn1] Super. Ct. Civ. R. 56(c).
[fn2] Id.
[fn3] Merrill v. Crothall-American, Inc., 606 A.2d 96, 99
(Del. 1992).
[fn4] Id.
[fn5] Savor, Inc. v. F MR Corp., Del. Super., C.A. No.
00C-10-149, Slights, J. (Aug. 16, 2004) (Mem. Op.) (citing
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 24 9-50
(1986)).
[fn6] Board of Educ. of Caesar Rodney Sch. Dist. v. New
Castle Roofing & Water proofing, Inc., 2001 WL 1456870 (D
el. Super.).
[fn7] Lorillard Tobacco Co. v. American Legacy Foundation,
903 A.2d 728, 739 (Del. 20 06). See also O’Brien v.
Progressive Northern I ns. Co ., 785 A.2d 281, 288 (Del. 20
01). Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 74
2, 744-45 (Del. 199 7).
[fn8] Rhone-Poulenc Basic Chems. Co. v. American Motorists I
ns. Co., 616 A.2d 1192, 11 96 (Del. 1992).
[fn9] Id. at 1197.
[fn10] Emmons, 697 A.2d at 745.
[fn11] 7 Del. C. § 6403(a).
[fn12] See supra Section II.
[fn13] Restatement (Third) of Agency § 2.03 cm t. g
(2006).
[fn14] Id. See also Limestone Realty Co. v. Town & Country
F.F. & C., Inc. 256 A.2d 676, 678-679 (Del.Ch. 1969)
(citing Zeeb v. Atlas Powder Co., 87 A.2d 123 (Del. 1952)
and Arthur Jordan Piano Co. v. Lewis, 154 A. 467 (D el.
Super. Ct. 1930)).
[fn15] Arthur Jordan Piano, 154 A. at 472.
[fn16] See, e.g., Billops v. Magness Constr. Co., 391 A.2 d
196, 19 8 (Del. 1978) (citing Restatement (Second) of
Agency §§ 8, 8B, 27 (1958)); Int’l Boiler
Works, Co. v. Gen . Water works Corp., 372 A.2d 176, 177
(Del. 19 77) (citing Restatement of Agency § 13 5
(195 8)).
[fn17] Restatement (Third) of Agency § 2.03 (2 006).
See also Limestone Realty, 256 A.2d at 678-679 (citing
Zeeb, 87 A.2d 123 and Arthur Jordan Piano, 154 A. 676).
[fn18] See, e.g ., Billops, 391 A.2d at 198.
[fn19] Int’l Boiler Works, 372 A.2d at 177.
[fn20] Limestone Realty, 256 A.2d at 679.
[fn21] 6 Del. C . § 2-106.
[fn22] 6 Del. C. § 2-725(1).
[fn23] Schock v. Nash, 732 A .2d 217, 232-2 33 (D el.1999 ).
[fn24] Lord v. Souder, 748 A.2d 393, 399 (Del. 2000).