By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC

The waiver of a contractual condition may be inferred from the conduct or acts of a party, which puts the other party off his guard, leading him to believe that such condition has been waived. In GMT Construction, Inc. v. Gulfside Supply, Inc., 2013 WL 2494715 (Fla. 3rd DCA 2013), Gulfside Supply, Inc. (“Gulfside”), a roofing supply company, supplied roofing materials to GMT Construction, Inc. (“GMT”) and Anderson Roofing.  GMT referred some of its roofing work to Anderson Roofing and Kent Spires (“Spires”). Spires was the vice-president of Anderson Roofing.  GMT gave Spires authority to purchase roofing materials from Gulfside on GMT’s account when performing roofing work for GMT. Spires also had authority to enter into contracts and purchase materials on behalf of Anderson South.

While employed by Anderson Roofing, Spires was hired by Ocean Key Resort (“Ocean Key”) to apply a roofing product to the Ocean Key facility. The contract, signed by Spires and Ocean Key, was rendered on Anderson Roofing’s letterhead, and Ocean Key’s first payment for the roofing work was deposited into Anderson South’s account.  GMT neither referred the Ocean Key’s Project to Spires or Anderson Roofing, nor was GMT involved with or had any knowledge regarding the Ocean Key Project. Rather, the referral came from Gulfside’s manager directly to Spires.  Spires purchased the necessary roofing supplies from Gulfside and paid for the supplies using Anderson Roofing’s debit card.

After the roofing product was applied to the Ocean Key facility, the manufacturer of the roofing product determined that the product had been improperly applied and demanded that the work be reapplied.  Spires lacked the funds to purchase the materials from Gulfside to reapply the materials to the Ocean Key Project. Gulfside’s manager suggested that Spires charge the materials to GMT’s account and to pay for the charges after Spires received final payment from Ocean Key.  Although GMT had no involvement in the Project, and did not authorize the use of its account for this Project, Spires charged the materials to GMT’s account and Gulfside’s manager processed the order.  Spires did not receive any further payments from Ocean Key because Spires never completed the project, and therefore failed to pay for the charges made to GMT’s account.

Subsequently, Gulfside submitted invoices to GMT for the materials Spires and Gulfside’s manager charged to GMT’s account, and Gulfside filed suit against GMT for breach of contract after GMT did not pay the invoices.  GMT filed its answer asserting affirmative defenses of waiver, estoppel and unclean hands, and a counterclaim for negligent supervision against Gulfside.

Gulfside filed a motion for summary judgment arguing that the credit agreement that GMT signed required GMT to provide Gulfside with a written revocation of Spires’ authority to purchase materials on its account, and a written notice of any disputed charges within ten days of invoice – and that GMT did neither.  GMT opposed Gulfside’s motion on the grounds that GMT had not authorized, purchased, or received the supplies; that GMT had contested the charges; and the damages sought were incorrect because payments made by Anderson Roofing for some of the Ocean Key materials had not been properly credited to GMT’s account.  The trial court granted Gulfside’s motion for summary judgment, and GMT appealed.

A summary judgment is only proper where, after review of every inference in favor of the non-movant, no genuine issues of material fact remains.  Where affirmative defenses are plead, the movant for summary judgment must conclusively refute the affirmative defenses.

GMT argued on appeal that Gulfside waived the requirement that GMT was to provide Gulfside with a written notice that it disputed the charges on GMT’s account.  In support of this argument, GMT provided deposition testimony from GMT’s officer that when he called Gulfside to contest the charges, Gulfside’s manager told him not to worry about the invoice because Spires would pay the bill.  GMT’s officer further testified that he relied on Gulfside’s manager’s reassurance, which lulled him into not taking any further action to contest the charges; and that because Gulfside’s manager had represented that he knew that Spires, and not GMT was liable for the supplies for the Ocean Key Project, Gulfside was estopped from now claiming that GMT was liable for the same charges.  Gulfside did not provide any evidence or affidavits to contradict or deny GMT’s affirmative defenses and arguments in opposition to Gulfside’s motion for summary judgment.

The appellate Court held that Gulfside failed to meet its burden to show there were no issues of material fact as to GMT’s affirmative defenses, thereby reversing the summary judgment in favor of Gulfside.  The Court explained that a waiver of a contractual condition may be inferred from the conduct or acts putting one off his guard and leading him to believe that a right has been waived.  The Court reasoned that Gulfside’s manager’s actions and representations may have constituted a waiver of the ten-day written objection requirement, thereby creating an issue of fact to be decided by the trier of fact.  The Court further explained that issues of material fact precluding summary judgment also remained due to the unrebutted testimony that GMT did not order or receive the supplies for which it was invoices, and that Gulfside’s manager knew that Spires did not have authority to charge the materials on GMT’s account.

This case demonstrates that a contractual condition may be waived by the conduct or acts of a party which puts the other party off his guard, leading him to believe that such condition has been waived. Further, a party may be estopped from maintaining a breach of contract claim if the party asserting breach made a misrepresentation of a material fact upon which the other party detrimentally relied, resulting in a change in position detrimental to the other party.

About the Author: Richard E. Guttentag is a partner with Stearns, Roberts & Guttentag, LLC, and is Board Certified in Construction Law by the Florida Bar. Mr. Guttentag exclusively in construction law including construction lien claims and defense, payment and performance bond claims and defense, bid protests, construction contract preparation and negotiation, and construction and design defect claims and defense. He can be reached for consultation at [email protected].

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