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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Handle Construction Co., Inc. v. Norcon, Inc. (10/28/2011) sp-6616

Handle Construction Co., Inc. v. Norcon, Inc. (10/28/2011) sp-6616, 264 P3d 367

        Notice: This opinion is subject to correction before publication in the PACIFIC  REPORTER. 
        Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 
        303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email 
        corrections@appellate.courts.state.ak.us. 

                 THE SUPREME COURT OF THE STATE OF ALASKA 

HANDLE CONSTRUCTION                             )       Supreme Court No. S-13885 
COMPANY, INCORPORATED,                          ) 
                                                )       Superior Court No. 3AN-09-04966 CI 
                        Appellant,              ) 
                                                )       O P I N I O N 
        v.                                      ) 
                                                )      No. 6616 - October 28, 2011 
NORCON, INCORPORATED,                           )
 
                                                )
 
                        Appellee.               )
 
                                                )
 

                Appeal from the Superior Court of the State of Alaska, Third 
                Judicial District, Anchorage, Eric A. Aarseth, Judge. 

                Appearances:       Brian    J.  Stibitz,   Reeves     Amodio      LLC, 
                Anchorage,       for  Appellant.     Michael      C.   Geraghty     and 
                Stephanie S. Aicher, DeLisio Moran Geraghty & Zobel, P.C., 
                Anchorage, for Appellee. 

                Before:    Carpeneti, Chief Justice, Fabe, Winfree, Christen, 
                and Stowers, Justices. 

                CARPENETI, Chief Justice. 

I.       INTRODUCTION 

                A construction company solicited a bid from a subcontractor to perform 

concrete   work.    The   construction   company   provided   a   plan   and   bid   schedule.     The 

subcontractor responded with a proposal, which the construction company accepted.  The 

subcontractor carried out the subcontract as it understood the terms.  After the work was 

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completed, the subcontractor discovered it had inadvertently underbid on the project. 

In   the   ensuing   lawsuit,   the   superior   court   granted   partial   summary   judgment   to   the 

construction company with respect to all damages claimed in relation to the bidding 

error.   The subcontractor appeals the partial summary judgment order, claiming breach 

of an implied warranty that the plans and specifications would be sufficient, and arguing 

that the superior court erred by applying the theory of unilateral mistake to the case. 

Because      the  construction     company     did   not  breach    the  implied    warranty     and  the 

subcontractor committed a unilateral mistake for which it bore the risk, we affirm. 

II.     FACTS AND PROCEEDINGS 

        A.      Facts 

                Norcon   Incorporated,   a   general   contractor,   was   the   prime   contractor   to 

Doyon   Utilities   for   construction   of   a   small   electrical   substation   at   Fort   Greely.  On 

August      13,  2008,    Norcon     solicited   a  bid   from    Handle    Construction      Company, 

Incorporated, to perform concrete work for the Fort Greely project.                  Norcon emailed 

Handle   the   bid   solicitation   from   Doyon,   as   well   as   drawings   (also   called   a   "plan") 

depicting   the   foundation   work.     On   August   19,   Norcon   emailed   the   bid   schedule   to 

Handle's General Manager, Ron Stoops.  The bid schedule was attached to the email as 

a pdf.  Stoops assigned the task of estimating the cost of the project to another employee, 

Jassen Michael, who had not been sent the email or the attachments. 

                The drawings showed that fifteen L2, one L4, and three L5 foundations 

should be built, each comprised of two piers that would be paired together to form a 

single foundation.      The body of Norcon's email advised Handle, "[n]ote that they have 

grouped the L2-1, L2-2, L2-3, L2-4 so that a double p[ie]r foundation is counted as one 

on the tab. Call with any questions." 

                Stoops printed the bid schedule, but not the email, and put it on Michael's 

desk for him to use in preparing Handle's bid.  In a later affidavit, Stoops said he "did not 

                                                   -2-                                             6616
 

----------------------- Page 3-----------------------

have knowledge of the project details and, therefore, didn't understand the significance 

of the [email] to which the bid schedule was attached." 

               The bid schedule was set up as a chart, showing the requested items along 

with a description and quantity for each type of item.        Adjacent to each line item were 

blank fields, in which Handle could write its estimated costs. The bid schedule requested 

a bid on fifteen L2, one L4, and three L5 foundations.         The same day that Norcon sent 

Handle the bid schedule template and drawings, Handle responded to Norcon with a 

proposal and completed bid schedule.        Norcon awarded the subcontract to Handle. 

               Work     commenced      on   September    15,  2008.    Handle    carried   out  the 

subcontract in accordance with the drawings.         Norcon accepted all of Handle's work. 

               On October 11, 2008, Handle notified Norcon for the first time that after a 

trip to the construction site by Handle's General Manager, Handle had "discovered a 

discrepancy between the . . . bid schedule and the project drawings."            It described the 

discrepancy in a letter as follows: 

               The    drawings    call  for  30  type  L2   foundations;    the  bid
 
               schedule only calls for 15.
 

               The drawings call for 2 type L4 foundations; the bid schedule
 
               only calls for 1.
 

               The drawings call for 6 type L5 foundations; the bid schedule
 
               only calls for 3. 

Handle     maintained    that  it  had  not  realized  until  October   4,  2008,  that  the  word 

"foundation" in Norcon's bid schedule form was intended by Norcon to mean a two-pier 

foundation rather than a one-pier foundation.   As a result, Handle had miscalculated the 

value of the project.   Handle requested that $123,000 "be added to our proposal in the 

form of a change order" for the additional foundations, along with costs for "tent and 

                                                -3-                                          6616
 

----------------------- Page 4-----------------------

heat" and "room and board," for a total additional cost of $139,648.1            Norcon did not pay 

the additional requested amount. 

        B.      Proceedings 

                On   February   6,   2009,   Handle   filed   a   complaint   alleging   that   "Handle's 

compensable costs for performing the work were increased due to discrepancies between 

the bid schedule and the project drawings which resulted in an error in the calculations 

on Handle's bid schedule and proposal."           Handle sought damages for the bid error and 

for additional costs allegedly caused by delays that it blamed on Norcon. 

                On February 23, 2010, Norcon filed a motion for partial summary judgment 

with   respect   to   all   damages   claimed   by   Handle   in   connection   with   the   discrepancy 

between the bid schedule and the project drawings. Superior Court Judge Eric A. Aarseth 

granted partial summary judgment for Norcon, holding that Handle had committed a 

unilateral mistake, that it bore the risk of the mistake, and that Norcon did not breach the 

implied covenant of good faith and fair dealing.            In April 2010, Handle filed a motion 

for reconsideration.      In a supplemental statement, Handle noted that any other claims 

were "incidental" to the discrepancy issue, and so "if the Order on Summary Judgment 

stands, there are no damages left in the case to be tried."             The superior court denied 

Handle's motion.        In keeping with Handle's supplemental statement, the court entered 

final judgment for Norcon on May 6, 2010, ruling that "there were no claims remaining 

for trial." 

                Handle appeals. 

        1       This figure also included a $552 deduction from a September 10, 2008 

modification to the proposal. 

                                                  -4-                                               6616 

----------------------- Page 5-----------------------

III.	   STANDARD OF REVIEW 

                We review grants of summary judgment de novo, determining whether 

issues of material fact exist and whether the moving party is entitled to judgment as a 
matter   of   law.2  "In   particular,   a   grant   of   summary   judgment   based   upon   contract 

interpretation is subject to de novo review because interpretation of contract language 
is a question of law."3     In reviewing the superior court's decision, we view the facts in 

the light most favorable to the non-moving party.4 

IV.	    DISCUSSION 

        A.	     Handle's   Implied   Warranty          Of   Adequate     Specifications   Claim      Is 
                Waived. 

                The   implied   warranty   of   adequate   specifications   is   a   construction   law 

principle,   by   which   "contractors   impliedly   warrant   the   adequacy   of   the   plans   and 
specifications which   they   supply and require subcontractors to follow."5              Under this 

principle,   the   contractor   warrants   that   the   contract   is   capable   of   performance.  In 

addition, a project owner impliedly   warrants that adhering to the contract terms will 

        2       Prentzel v. State, Dep't of Pub. Safety, 169 P.3d 573, 581 (Alaska 2007) 

(quotingIn re Estate of Maldonado, 117 P.3d 720, 722 (Alaska 2005) (internal quotation 
marks omitted)). 

        3       K&K Recycling, Inc. v. Alaska Gold Co., 80 P.3d 702, 711-12 (Alaska 

2003) (citing Am. Computer Inst. v. State, 995 P.2d 647, 651 (Alaska 2000)). 

        4       Prentzel, 169 P.3d at 581 (citing Olson v. Teck Cominco Alaska, Inc., 144 

P.3d 459, 463 (Alaska 2006)). 

        5       L.K. Comstock & Co. v. United Eng'rs & Constructors Inc., 880 F.2d 219, 

226 (9th Cir. 1989). In federal law, this principle is also known as the Spearin doctrine 
after United States v. Spearin, 248 U.S. 132 (1918).  Id. 

                                                  -5-	                                          6616
 

----------------------- Page 6-----------------------

result in a satisfactory product.6      The implied warranty applies specifically to design 

specifications   such   as   "detailed   measurements,   tolerances,   materials,   i.e.,   elaborate 
instructions   on   how    to   perform   the   contract."7  It   does   not   apply   to   performance 

specifications.8    In Alaska, as in other jurisdictions, "[i]f defective specifications cause 

the contractor to incur extra costs in performing the contract, then the contractor may 
recover those costs that result from breach of the implied warranty."9              For instance, in 

Northern Corp. v. Chugach Electric Ass'n,10           Chugach Electric Association insisted on 

contractual performance by Northern using a method which proved to be impossible - 

        6       AAB Joint Venture v. United States., 75 Fed. Cl. 414, 428-29 (Fed. Cl. 

2007).     For instance, a contract for installation of a sprinkler system resulting in a high 
leakage rate in cement joints would be grounds for finding defective specifications.  See 
id. at 430   (citing Appeals of Columbia Eng'g Corp ., ASBCA No. 32139, 89-2 BCA  
21689,   1989   WL   27594).        Another   example   might   be   a   contract   that   results   in   a 
structurally unsound building. 

        7       Mega Const. Co. v. United States, 29 Fed. Cl. 396, 418 (Fed. Cl. 1993) 

(quoting Stuyvesant Dredging Co. v. United States, 11 Cl. Ct. 853, 860, aff'd, 834 F.2d 
1576 (Fed. Cir. 1987)). 

        8       See Stuyvesant Dredging Co, 834 F.2d at 1582.             Stuyvesant explains the 

distinction as follows:     "Design specifications explicitly state how the contract is to be 
performed and permit no deviations. Performance   specifications, on the other hand, 
specify the results to be obtained, and leave it to the contractor to determine how to 
achieve those results." 

        9       State, Dep't of Natural Res. v. Transamerica Premier Ins. Co., 856 P.2d 

766, 772 (Alaska 1993) (citing Fairbanks N. Star Borough v. Kandik Constr., Inc. & 
Assocs., 795 P.2d 793, 797 (Alaska 1990), vacated in part on other grounds, 823 P.2d 
632 (Alaska 1991)). 

        10      523 P.2d 1243 (Alaska 1974). 

                                                  -6-                                           6616
 

----------------------- Page 7-----------------------

hauling rock across a frozen lake.11  We deemed Chugach to have breached the implied 

warranty that the contract could be performed.12 

                Citing to Chugach, Handle claims that Norcon's bid schedule was defective 

and    breached     an   implied    warranty     that  the   plans   and   specifications     would    be 

"sufficien[t]."     But   Handle   failed   to   place   the   plans   in   the   record,   precluding   any 

appellate review of them.         For this reason, this argument is waived.            We also reject 

Handle's   argument   for   a   second   reason:      The   legal   theory   of   implied   warranty   is 

inapposite to this case.     There is no dispute that (1) the drawings called for double pier 

foundations and (2) Handle produced the product they were meant to produce.  Handle 

has never alleged that performance was impossible or that it has incurred unexpected 

costs due specifically to structural defects inherent in Norcon's requested design.  The 

fact that Handle built the foundations in accordance with the drawings leaves no question 

that the requested design was feasible and that consequently, the plans and specifications 

were not defective. 

        B.	     The     Superior     Court     Did   Not    Err   By   Applying      The    Theory     Of 
                Unilateral Mistake. 

                Under Section 153 of the Restatement of Contracts, one party's mistake 

"as   to   a   basic   assumption   on   which   he   made   the   contract"   may   make   the   contract 

voidable, but only if that party did not bear the risk of mistake, and "(a) the effect of the 

mistake is such that enforcement of the contract would be unconscionable, or (b) the 
other party had reason to know of the mistake or his fault caused the mistake."13 

        11      Id. at 1244. 

        12      Id. at 1247. 

        13      RESTATEMENT  (SECOND) OF  CONTRACTS   153 (1981); see also Askinuk 

Corp. v. Lower Yukon Sch. Dist., 214 P.3d 259, 270 (Alaska 2009). 

                                                   -7-	                                            6616
 

----------------------- Page 8-----------------------

              As to the first part of this test, Section 154 of the Restatement dictates that 

a party bears the risk of mistake in three circumstances: 

               . . . when (a) the risk is allocated to [the mistaken party] by 
              agreement of the parties, or (b) he is aware, at the time the 
              contract is made, that he has only limited knowledge with 
              respect to the facts to which the mistake relates but treats his 
              limited knowledge as sufficient, or (c) the risk is allocated to 
              him by the court on the ground that it is reasonable in the 
              circumstances to do so.[14] 

We have adopted the Restatement and often denied relief to parties bearing the risk of 
mistake.15 

              In his order granting summary judgment, Judge Aarseth held that Handle 

committed a unilateral mistake, and he allocated the risk to Handle.  He explained that 

Handle bore the risk for this mistake "by not diligently reviewing the materials provided 

to it by Norcon and by not seeking clarifying instructions." By Handle's own admission, 

its bid preparer Jassen Michael never read the contents of the clarifying email, as Ron 

Stoops did not give it to him.  The superior court held that Stoops's "choice not to read 

the email or not to give Mr. Michael the complete document is an internal issue within 

Handle."  As a result, Handle bore the risk of mistake and the contract was not voidable. 

               Handle argues that the superior court's analysis under unilateral mistake 

theory was wrong as a matter of law.      Here, Handle appears to have two separate but 

related legal arguments: first, that unilateral mistake is completely inapplicable to this 

case, and second, that it did not bear the risk of mistake.  As an initial matter, we do not 

       14     RESTATEMENT (SECOND) OF  CONTRACTS   154 (1981). 

       15     See Kingik v. State, Dep't of Admin., Div. of Retirement & Benefits, 239 

P.3d 1243, 1250 (Alaska 2010);Dickerson v. Williams, 956 P.2d 458, 466 (Alaska 1998) 
("We have adopted [the Restatement] standards and denied relief to many parties who 
bore the risk of mistake."). 

                                             -8-                                        6616
 

----------------------- Page 9-----------------------

find that the superior court erred in applying the theory of unilateral mistake - the facts 

of the case easily fit the Restatement definition of unilateral mistake, by which one party 

(in this case, Handle) makes a mistake "as to a basic assumption on which he made the 
contract."16   Handle has presented no convincing arguments otherwise. 

                As    to  the  allocation   of  risk,  Handle     claims   that   under Chugach,   the 

contractor impliedly warrants to the subcontractor that the bid documents are free from 
defects.17  From this Handle appears to infer that the subcontractor neither bears the risk 

of   mistake,   nor   is   obliged   to   seek   clarification   of   bidding   specifications. Norcon 

responds that (1) Chugach is inapplicable to this case, as it does not address unilateral 

mistake     theory,   and   (2)  Handle     has  provided     no  relevant   legal   authority   for  the 

proposition that the subcontractor does not bear the risk of mistake. 

                We agree with Norcon.  Handle's sole legal authority - Chugach - does 

not support Handle's claim that the subcontractor does not bear the risk of mistake. 

Chugach       stands    for  the   proposition    that   when    performance       is  impossible,    the 

subcontractor should not have to pay for unexpected costs.                  This is entirely different 

from   saying   that   a   subcontractor   should   not   be   allocated   the   risk   of   its   unilateral 
mistake.18 

        16      RESTATEMENT (SECOND) OF  CONTRACTS  153 (1981). 

        17      While not specifically citing to Chugach in this section of its appellate brief, 

Handle refers back to its argument in the preceding section of its brief, that a contractor 
impliedly warrants the sufficiency of its bid documents.               This earlier section cited to 
Chugach. 

        18      See Tillmon v. Tillmon, 189 P.3d 1022, 1029 n.20 (Alaska 2008). 

                                                   -9-                                             6616
 

----------------------- Page 10-----------------------

                 A   court has "broad   discretion   in   determining   when   to   deny   relief   to   a 
mistaken contracting party under the theory that a party bore the risk of the mistake."19 

Here, we find no abuse of discretion.             We agree with the superior court that Norcon 

could "reasonabl[y] rely on the fact that Handle received the information and would 

process   that   information   as   it   deemed   best";   Norcon   bears   no   responsibility   for   the 

flagrant communication missteps between Michael and Stoops that led to the bid error. 

Our case law also dictates that "the risk of mistake should be borne by the party who has 
the   greater   interest   in   the   consequences   of   a   contract   term."20  Here,   that   party   was 

Handle.     For these reasons, it was reasonable for the superior court to allocate the risk 

to Handle, as per Section 154(c) of the Restatement. 

                 In addition to concluding that the superior court rightfully allocated the risk 

of mistake under Section 154(c) of the Restatement, we conclude that Handle bore the 

risk   of   mistake   under   Section   154(b).     Section   154(b)   provides   that   a   party   who   is 

"aware, at the time the contract is made, that he has only limited knowledge with respect 

to the facts to which the mistake relates but treats his limited knowledge as sufficient," 

rightfully bears the risk of mistake.           Here, Handle was aware that it completed the bid 

schedule using incomplete information; by Stoops's own admission he "did not have 

knowledge of the project details" and "didn't understand the significance of the [email] 

to   which   the   bid   schedule   was   attached."       It   is   undisputed   that   Handle's   General 

Manager, Ron Stoops, did not give to Handle's bid preparer, Jassen Michael, a printout 

of   the   email;   that   Michael filled   out   the   bid   schedule   without   the   printout;   and   that 

         19      Wasser & Winters Co. v. Ritchie Bros. Auctioneers (America), Inc., 185 

P.3d 73, 79 (Alaska 2008) (quoting 77 AM . JUR . 3D Proof of Facts  18, at 217 (2004)). 

         20      Kingik, 239 P.3d at 1250. 

                                                    -10-                                                  6616 

----------------------- Page 11-----------------------

Handle submitted the bid schedule without that information.                Handle treated its limited 

knowledge as sufficient, and consequently bore the risk of mistake. 

        C.      Claims Regarding Norcon's August 19, 2008 Email 

                Handle presents two arguments regarding the August 19, 2008 email that 

Norcon sent Handle and to which the drawings and bid schedule template were attached. 

The   first   is   that   the   superior   court   implicitly   and   wrongly   held   that   the   subcontract 

included the contents of the August 19, 2008 email.             Handle claims this was reversible 

error, though it offers no legal authority for this proposition.             However, the superior 

court's order does not indicate that the court incorporated the email into the subcontract. 

Rather, the superior court queried "whether the text of the email put Handle on notice 

that its assumption that one foundation equaled one pier [was incorrect]."                 Rather than 

incorporate the email into the subcontract, the superior court used the email to interpret 

the terms of the contract, and specifically the meaning of the word "foundation" as used 

in the drawings and the bid schedule.             Alaska law provides that a court may look to 
extrinsic evidence without a preliminary finding of ambiguity.21              In light of this rule, the 

superior court did not commit an error of law by considering the contents of the body of 

the email. 

                Handle then argues that the email "did not resolve the ambiguities created 

by Norcon's defective specifications," and that the superior court erred by finding that 

the text of Norcon's email put Handle on notice that one foundation equaled two piers. 

While     the  email   addressed     L2   type   foundations,    Handle     argues   that  it  gave  "no 

instruction for how a bidder should treat L4 and L5 type foundations for the purpose of 

filling   out   the   Bid  Schedule."    But   as   discussed   above,   because   Handle   failed   to 

        21      Alyeska Pipeline Serv. Co. v. O'Kelley, 645 P.2d 767, 771 n.1 (Alaska 

1982). 

                                                  -11-                                               6616 

----------------------- Page 12-----------------------

introduce   the   plans   and   specifications   into   the   record   and   does   not   dispute   that   the 

drawings called for double pier foundations, it has not established that there were any 

"ambiguities" created by alleged defects in the specifications, and we thus need not 

determine whether they were resolved by the August 19 email. 

        D.      No Material Fact Disputes Precluded Summary Judgment. 

                Handle   claims   that   Norcon   sent   its   August   19   email   to   Handle   in   an 

untimely fashion, emailing Ron Stoops the bid schedule on 7:52 a.m. of the very day that 

Handle's proposal was due, thus giving Handle an inadequate opportunity to "digest" 

and "incorporate" the email into the bid.   In addition, Handle notes that Norcon did not 

communicate directly with Handle's bid preparer, Jassen Michael.                  Handle argues that 

the email's timing and the identity of its receiver raise factual questions as to whether the 

text of the email actually put Handle on notice of Norcon's understanding of the bidding 

instructions. The superior court imputed knowledge of the email to Michael, opining that 

the lapse in communication between Stoops and Michael was internal to Handle, and that 

"[t]here was no duty on the part of Norcon to make sure that Mr. Stoops or Mr. Michael 

were doing their job."       Handle claims this imputation was "not reasonable" given the 

email's untimeliness and the fact that it was not sent directly to Michael. 

                We disagree that the email was sent so soon before Handle returned its bid 

that "Handle did not have adequate opportunity to digest the [email] and incorporate it 

into the bid"; nothing precluded Stoops from printing the email and giving it to Michael 

or otherwise informing him of its contents.   Nor do we conclude that the superior court 

erred by imputing knowledge of the August 19 email to Handle's bid preparer.                      Under 

the Restatement of Agency, "[f]or purposes of determining a principal's legal relations 

with a third party, notice of a fact that an agent knows or has reason to know is imputed 

to   the  principal   if  knowledge      of  the  fact  is  material   to  the  agent's   duties   to  the 

                                                  -12-                                             6616
 

----------------------- Page 13-----------------------

principal."22   Michael can reasonably have been expected to know the facts material to 

estimating Handle's bid, the contents of the email included. 

        E.	     Norcon Was Not Obligated To Inquire Into Handle's Bid, Which Was 
                35% Below The Next-Lowest Bidder. 

                Handle argues that even if the superior court was correct in finding that 

Handle   committed   a   unilateral   mistake,   Norcon   should   have   inquired   as   to   whether 

Handle was under a mistaken assumption when it submitted its bid because its bid was 

35% lower than that of the next-lowest bidder.           Handle argues that an offeree may not 

take an offer "too good to be true," and that the 35% difference was great enough that 

it should have placed Norcon on notice that Handle believed the terms of the contract 

were different from Norcon's requested specifications.             While there are circumstances 

when this theory is viable, we reject it here for two reasons. 

                First, Handle's argument is based on Section 153 of the Restatement of 

Contracts, which states that a contract may be voidable by a party committing a unilateral 

mistake if "the other party had reason to know of the mistake or his fault caused the 
mistake."23    But the same Restatement section makes clear that this doctrine does not 

apply if the party committing the mistake bore the risk of mistake.  As discussed above, 

Handle rightfully bore the risk of mistake under the facts of this case, given its failure to 

open the email containing specifications and forward it to its bid preparer.  Under these 

circumstances, Handle is not entitled to claim that Norcon had any duty to inquire. 

                Second,   Handle   has   made   no   showing   that,   even   if   the   defense   were 

applicable, a 35% difference in bid amounts was enough to put Norcon on a duty to 

inquire.   Handle cites only two cases in support of its argument, but neither lends any 

        22      RESTATEMENT (THIRD) OF AGENCY  5.03 (2006). 

        23      RESTATEMENT (SECOND) OF  CONTRACTS  153 (1981). 

                                                 -13-                                              6616 

----------------------- Page 14-----------------------

appreciable support.   Notably, both cases found no duty to inquire.  In Wender Presses, 
Inc. v. United States,24 the Court of Claims rejected the argument that the government 

had a duty to inquire where a bid was 125% higher than the next highest bid.  If a 125% 

difference was insufficient to create a duty to inquire, the 35% difference in this case was 
clearly not enough.      Bauer v. American International Adjustment Co.,25              also cited by 

Handle, is even less helpful to Handle's case.           In Bauer, purporting to believe that an 

offer had previously been made to a claimant, an insurance adjuster characterized it as 

"extremely generous" and "an amount which I never would have considered offering on 
this case" but stated that she would leave the offer open for 30 days.26                 (The parties 

agreed that the offer had not previously been made.)27          Then, after trying to convince the 

insurance company to increase its offer slightly, the claimant accepted the offer.28               The 

insurance   company   claimed   that,   by   seeking   to   increase   the   settlement   amount,   the 
claimant had rejected its offer and made a counteroffer.29               The lower court allowed 

rescission of the agreement that was reached when the claimant subsequently accepted 

the offer on the grounds that the claimant's attorney had a duty to inquire about the 
agent's allegedly erroneous original offer.30         The appellate court reversed, holding that 

there was no duty on the part of the claimant to inquire about the insurance agent's 

        24      343 F.2d 961 (Ct. Cl. 1965). 

        25      389 N.W.2d 765 (Minn. App. 1986). 

        26      Id. at 766. 

        27      Id. at 767. 

        28      Id. 

        29      Id. at 768. 

        30      Id. at 767. 

                                                 -14-                                            6616
 

----------------------- Page 15-----------------------

purported mistake.31      In short, Bauer has little to do with our case.32        Thus, neither of the 

cases cited by Handle leads us to conclude that the 35% difference between Handle's bid 

and the next highest bid created a duty on the part of Norcon to inquire before entering 

into the subcontract. 

V.      CONCLUSION 

                Because Handle waived its argument that the plans were defective, and 

because the superior court did not err in applying unilateral mistake and allocating the 

risk of mistake to Handle, we AFFIRM the superior court's grant of partial summary 

judgment for Norcon. 

        31      Id. at 768. 

        32      Bauer cited to Speckel v. Perkins, 364 N.W.2d 890 (Minn. App. 1985), a 

case involving a letter containing a settlement offer that was patently erroneous (in that 
the letter contained diametrically contradictory statements in successive paragraphs) and 
contained   an   offer   over   three   times   as  large  as   was   intended.   Because   the   letter 
containing the mistaken offer was "internally inconsistent," the court held that "[t]he 
letter containing the disputed settlement amount raised a presumption of error and a 
consequent duty to inquire."  364 N.W.2d at 893-94.  Thus, while Speckel is closer than 
Bauer   to   the   factual   situation   in   our   case,   it   lends   no   support   to   Handle's   position 
because there was no patent internal inconsistency in the bid and no other marker of 
unreliability. 

                                                  -15-                                               6616 
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