American Sheet Metal Works, Inc. v. Con-Ark Builders, Inc.

Darrell Hickman, Justice. This is an appeal from the trial court’s directed verdict in favor of the appellee, Con-Ark Builders, and others, finding that the appellant, American Sheet Metal Works, Inc., did not have a binding contract to be a subcontractor to Con-Ark, which had the general contract to construct the medium security building at the Cummins unit of the Department of Correction. American Sheet Metal Works had sued the appellees for damages for breach of contract. We agree with the trial court that the issue was a question of law and find the court properly decided that issue. Con-Ark Builders was the general contractor bidding on the medium security building at the Cummins unit of the Department of Correction. American Sheet Metal Works made a telephone bid to several general contractors, bidding on various mechanical portions of the job. American’s bid was $643,969.00 and it was the low bid for its portion of the job. Con-Ark used American Sheet Metal’s bid as part of its overall bid and was awarded the construction project as the low bidder. Later, Con-Ark had some reservations about the ability of American Sheet Metal Works to perform the job. Of the total subcontract of $643,969.00, approximately $400,000.00 of it was plumbing. It was learned that American Sheet Metal Works, which was primarily a sheet metal, electrical, air conditioning and mechanical contractor, intended to use Southern Mechanical, a Memphis, Tennessee firm, to perform the plumbing part of the subcontract and that Southern had no license to perform construction work in Arkansas. Con-Ark also questioned whether American Sheet Metal Works could obtain a bond in the amount of the subcontract, and, Con-Ark learned that American Sheet Metal Works’ Arkansas license did not authorize American Sheet Metal for the specialty of plumbing. Con-Ark notified American Sheet Metal that it would not enter into a written contract with American Sheet Metal on this job; instead Con-Ark obtained permission from the State to substitute one of its subsidiaries, Nabco Mechanical, Inc., to perform this subcontract at the amount bid by American Sheet Metal Works. Essentially American Sheet Metal argues that the trial court was wrong in finding as a matter of law that it did not have an enforceable contract with Con-Ark Builders. What American Sheet Metal Works could not avoid at trial, nor with us, is that its Arkansas license, at the time of the negotiations, did not authorize American Sheet Metal Works to do plumbing. Later, American Sheet Metal Works did have ip license amended to reflect that it was authorized to perform plumbing work. American insisted below and insists on appeal that the missing authorization was due to a mistake. But the question has to be, could Con-Ark be forced to accept the proposal in view of the deficiency on the license and the other considerations that we have mentioned? American Sheet Metal Works, Inc. argues that Ark. Stat. Ann. § 14-613 (Repl. 1979) was circumvented by Con-Ark. Ark. Stat. Ann. § 14-613 is referred to in the construction industry as the “name your subcontractor law.” Generally it requries that a general contractor offer the first opportunity for subcontracts to Arkansas contractors qualified as mechanical, electrical, roofing and sheet metal contractors engaged in plumbing, heating, ventilating, air conditioning, electrical wiring and illuminating fixtures and other such specialties. However, the statute reads that the general contractors must “first offer an opportunity to Arkansas licensed and qualified . . . subcontractors.” [Emphasis added.] Con-Ark insisted that American Sheet Metal Works, Inc. was not licensed and qualified at the critical time and we must agree. Essentially, American Sheet Metal Works’ argument is one of equity and implies that Con-Ark Builders used bad faith. It is suggested that American Sheet Metal Works was simply used to obtain the bid and then Con-Ark deliberately awarded the subcontract to one of its subsidiaries. American Sheet Metal Works argues that it found a qualified Arkansas subcontractor to perform the plumbing work; that it proved that it could be bonded for the full amount and that later it had its license amended to include plumbing. But all these factors arose after the fact and could merely be used as arguments to persuade Con-Ark to sign a contract with them. These arguments avoid the question of law involved and that is, whether Con-Ark Builders was required to accept American Sheet Metal Works’ proposal after the State of Arkansas awarded the contract to Con-Ark. The Arkansas statute did not require Con-Ark to accept the bid and, consequently, we cannot. Affirmed. Holt, J., not participating. Hays, J., dissents.