Worster however denied this, stating at trial that the proposal received from Wells-Fargo was inadequate. In his testimony Worster stated that he believed that the Wells-Fargo proposal expired on February 15, 1980. Since he had not received approval from the Investment Committee by that date he concluded that the proposal was worthless to him. Furthermore, Worster denied that the financial data provided by him to Lombardo was inadequate. In fact, according to Worster, he was able to use this same data to independently obtain long-term financing.
In their pleadings both parties have alleged that a binding contract existed between them. Each has then contended that the other violated some of the terms of that contract. As a result of these alleged contractual breaches the plaintiff demands the return of its commitment fee. The defendant, on the other hand, contends that the plaintiff's failure to perform entitles him to retain that fee.
We feel that each party errs in its characterization of this case. It is a fundamental principle of contract law that, in interpreting an agreement, the mutual intention of the parties is controlling. Walther & Cie v. United States Fidelity & Guaranty Co., 397 F. Supp. 937 (M.D.Pa.1975). Accordingly in order for an agreement to exist there must be a meeting of the minds. This mutual assent is the very essence of the contractual relationship. Therefore, without such mutual assent no enforceable agreement exists. Irma Hosiery Co. v. Holm Indemnity Co., 276 F.2d 212, 214 (3d Cir. 1960) (applying Pennsylvania law); Walter & Cie v. United States Fidelity & Guaranty Co., supra; Hahnemann Medical College & Hospital etc. v. Hubbard, 267 Pa.Super. 436, 406 A.2d 1120, 1122 (1979). "Furthermore, in order for there to be an enforceable contract, the nature and extent of its obligation must be certain; the parties themselves must agree upon the material and necessary details of the bargain. (citations omitted)". Lombardo v. Gasparini Excavating Co., 385 Pa. 388, 123 A.2d 663, 666 (1956).
In this case it is clear that the parties never agreed to the "material and necessary details of the bargain." At trial it became apparent that Worster and Lombardo honestly and unwittingly disagreed regarding virtually all of the details of their "agreement". For example, Worster, felt that he was free to seek credit elsewhere; Lombardo thought that Worster was dealing with him exclusively. Similarly Worster believed that time was of the essence in this deal; Lombardo felt no such time constraints. Worster also understood his commitment fee to be automatically refundable; Lombardo on the other hand had no such understanding regarding this good faith money. In addition Worster and Lombardo labored under mutual misunderstandings regarding the significance of the February 15 deadline; the sufficiency of the financial data supplied by Worster; and the adequacy of the Wells-Fargo proposal. Ultimately these misunderstandings compounded, one upon the other, until the entire business deal between these parties collapsed.
Given this total failure by the parties to arrive at any understanding regarding the essentials of their business deal we conclude that no binding, legally enforceable contract exists between them. Accordingly, the defendant has no right to retain the commitment fee paid to him by the plaintiff. Therefore, that fee must be returned.
One final matter remains for our consideration. In his pretrial narrative and at trial, Mr. Lombardo presented a list of expenses he had encountered in connection with his dealings with Worster. Lombardo requested that he be allowed his expenses as his damages in this action.
Both parties agree that Worster never promised to compensate Lombardo for his expenses. Therefore, Lombardo is apparently seeking recovery of these expenses on some quasi-contractual theory of liability.
We will not allow Lombardo to recover these damages in this lawsuit. In this case the defendant's claim for these damages was not made in its answer to plaintiff's complaint. Instead that claim was first articulated in the defendant's pretrial narrative. This narrative was filed almost one year after the initiation of this lawsuit. By this time discovery in this case had been closed and the matter was ready to proceed to trial.
Under the Federal Rules of Civil Procedure a set-off of the type requested by this defendant is an affirmative defense which the party should set forth in his Answer. Fed.R.Civ.P. 8(c); see also United States v. American Packing & Provision Co., 122 F.2d 445, 449 (10th Cir. 1941), (set-off is an affirmative defense pleaded under Rule 8). Similarly Pennsylvania law requires that "damages in quantum meruit for the reasonable value of services must be specially pleaded. (citations omitted)." Pulli v. Warren National Bank, 488 Pa. 194, 412 A.2d 464, 465 (1979).
In this case it is undisputed that the defendant did not timely plead this quasi-contractual, set-off defense. Because this defense was not timely pleaded, and because several elements of the defendant's bill of expenses appear to be unsupported, we will not allow any recovery on this claim.
In accordance with Rule 52(a) of the Federal Rules of Civil Procedure, the findings of fact and conclusions of law made by the court are embodied in this opinion.
An appropriate order will issue.