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Luedtke Engineering Co. v. Indiana Limestone Co.

August 10, 1984

LUEDTKE ENGINEERING CO., INC., PLAINTIFF-APPELLANT,
v.
INDIANA LIMESTONE CO., INC., DEFENDANT-APPELLEE



Appeal from the United States District Court for the Southern District of Indiana, No. NA80-165-C -- James E. Noland, Judge.

Author: Bauer

Before BAUER, WOOD, Circuit Judges, and WEIGEL, Senior District Judge.*fn*

BAUER, Circuit Judge. Plaintiff Luedtke Engineering Company brought this diversity action against Defendant Indiana Limestone Company, alleging that Indiana Limestone breached its contract to sell breakwater stone to Luedtke. The district court held in favor of Indiana Limestone, and Luedtke appeals. We affirm.

I

In December 1977, the Army Corps of Engineers (the Corps) solicited bids for repair of the breakwater in the Milwaukee harbor.*fn1 The Corps approved two sources from which bidders could purchase stone: Indiana Limestone and another quarry located in Indiana. The Corps earlier had given Indiana Limestone information about the repair project, including details of the Corps' time schedule. That schedule anticipated that work on the project would begin in March 1978 and be completed by November 1979.

The Corps also sent Indiana Limestone a list of the general contractors who planned to bid on the project; the list included Luedtke. Indiana Limestone and Luedtke had engaged in at least five other projects together. After receiving the list, Indiana Limestone sent Luedtke a letter containing a price quotation. Indiana Limestone's letter, dated February 20, 1978, contained the following proposals:

(1) Indiana Limestone would supply Luedtke with 70,000 tons of stone at $10.15 per net ton;

(2) The price would apply to shipments made during 1978 and 1979;

(3) Luedtke would be obligated to negotiate the freight rate for stone shipped in 1979 with the railroad company.

Luedtke relied on Indiana Limestone's quote to formulate its bid for the project. On April 12, 1978, the Corps awarded the contract to Luedtke. After it received the Corps contract, Luedtke located a different quarry that offered to sell breakwater stone for $5.25 per ton. Because this quarry had not been approved by the Corps, Luedtke made several attempts to obtain permission from the Corps to buy stone from this quarry. When Indiana Limestone learned that Luedtke wanted to buy from another source, an Indiana Limestone official phoned Luedtke and offered to lower his company's price to $5.50 per ton. On the same day, the Corps denied Luedtke's request to purchase stone from the unapproved quarry.

On July 1, 1978, Luedtke issued a purchase order to Indiana Limestone for 70,000 tons of stone at $5.50 per ton. The order stated that Indiana Limestone should "ship at 1500 tons/day starting 24 July 1978." At this rate, shipping would be completed by November 1978.For a variety of reasons, Indiana Limestone did not ship the stone at the specified rate; Luedtke instead received the last shipment in August 1979. Luedtke nevertheless finished the job in September 1979, seven weeks before the Corps' scheduled completion date of November 15.

Luedtke brought suit alleging that Indiana Limestone breached its contract by failing to ship the breakwater stone at the rate of 1,500 tons per day. Luedtke claimed that it incurred damages of $797,700 as a result of untimely and delayed deliveries. Indiana Limestone countered that it was unaware of Luedtke's intention to finish the project by November 1978, that it believed the shipping rate of 1,500 tons per day was merely an optimal goal, and that its delays in delivery were caused by factors beyond its control, including insufficient rail service, labor strikes, and bad weather.

The district court held in favor of Indiana Limestone. The court ruled that Indiana Limestone's February 20 quote letter was an offer to sell breakwater stone to Luedtke, and that Luedtke's purchase order was an acceptance of that offer. The court found that Luedtke's specific delivery requirement was a "material alteration" of the offer under Indiana law, and thus the parties had not agreed to a shipping rate. As a result, the court turned to the parties' course of dealing and trade usage in the industry to evaluate Indiana Limestone's performance. The court determined that Indiana Limestone delivered the stone in a reasonable time and thus did not breach the contract. Alternatively, the court held ...


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