This case is before the Court on a Motion for Summary
Judgment by defendant, O.H. Materials Corp., (OHM), which
contends that all claims asserted by plaintiff, Project
Development Group, Inc. (PDG) are devoid of material issues of
fact and should be decided in favor of OHM as a matter of law.
In 1987, the Olin Chemical Corp. (Olin) decided to demolish
its unused chemical facility in Moundsville, West Virginia.
Environmental regulations required that the residue of
hazardous chemicals and the asbestos and other insulating
materials in the plant be removed and transported for disposal
before the demolition could be done.
OHM was one of the contractors on Olin's list of those
approved to submit bids for the decontamination and insulation
removal at the Moundsville plant. OHM submitted a joint
proposal with an insulation contractor known as Biscraft/Brand
(Brand) to Olin during the first round of bidding. Olin advised
OHM that the insulation bid submitted by Brand was high.
After the first round of bids, Olin decided to entertain lump
sum bids favoring a single contractor for both phases of the
project. OHM contends that the delay resulting from Olin's
decision to rebid afforded it the opportunity to do its own
estimates on the insulation phase of the project. Though OHM
considered bidding the entire project itself, it decided to
solicit bids from two other insulation contractors,
Ameral-Neumayer (Ameral) and PDG.
In March of 1988, OHM's representatives twice met with PDG's
Vice President, David D'Appolonia (D'Appolonia). At the first
meeting, on March 2, D'Appolonia expressed an interest in
submitting a bid to OHM, but claimed it would do so only if OHM
agreed to use PDG on an exclusive basis if OHM was awarded the
Olin contract. OHM contends that their representatives told
D'Appolonia there would be no exclusive contract, but PDG could
submit a bid as any subcontractor would.
At the second meeting on March 10, D'Appolonia met with Steve
Smith (Smith), OHM's Midwest Region Manager, and Doug Marquart
(Marquart), a Project Development Coordinator with OHM. OHM
contends that Smith and Marquart reiterated that there would be
no exclusive agreement with PDG. At that time, Smith allegedly
informed D'Appolonia that OHM had estimated the project itself,
and was considering submitting its own bid to self-perform the
insulation removal phase of the project. PDG was allegedly
informed that it could submit a bid for consideration as any
PDG contends that D'Appolonia informed Smith and Marquart
that if, after they've heard from Ameral, they were interested
in receiving PDG's proposal, OHM should contact D'Appolonia
because PDG's price and proposal would only be given under an
exclusive arrangement. On Friday,
March 11, 1988, Marquart allegedly called D'Appolonia and said
that OHM had not heard from Ameral and therefore was going to
use PDG. D'Appolonia contends that he believed that Marquart
was authorized to make the call and obtain PDG's proposal. On
that basis, D'Appolonia delivered a written bid proposal to OHM
on Saturday, March 12, 1988. PDG's proposal did not, however,
include the price. D'Appolonia had advised Marquart that he
would wait until Monday to supply such price, in case OHM heard
from Ameral at the last minute.
On Monday, March 14, 1988, D'Appolonia again spoke with
Marquart, and Marquart allegedly informed him that OHM had not
heard from Ameral. PDG alleges that D'Appolonia was then told
that PDG's bid would be in OHM's proposal. Following this
telephone conversation, D'Appolonia telecopied PDG's prices to
After OHM received and evaluated the various bid proposals,
OHM submitted its own lump sum bid on the decontamination and
asbestos removal phase of the project to Olin without any
references to any subcontractor. OHM contends that it utilized
public governmental regulations, as well as portions of PDG's
asbestos removal procedures*fn1 as part of its bid package. In
June of 1988, Olin awarded the lump-sum contract to OHM. OHM
self-performed both phases of the project utilizing its own
work force, and without the use of any subcontractor.
In August of 1988, PDG learned that OHM had secured the
contract from Olin and had begun self performing the
asbestos/insulation removal. PDG immediately contacted OHM,
demanding that it honor its agreement with PDG. OHM denied the
existence of any agreement, and PDG filed suit for breach of
During discovery of the breach of contract action, PDG
learned that OHM had copied portions of PDG's bid proposal
verbatim and had submitted it to Olin as its own work. PDG
alleges that the bid submitted by OHM as its own, was
essentially a "cut and paste" product derived from PDG's
proposal. PDG further contends that OHM copied verbatim from
PDG's written technical approach and appropriated other trade
secrets and proprietary information which PDG had shared with
OHM on a confidential basis.
PDG then brought an additional action against OHM for
copyright infringement, misappropriation of trade secrets,
conversion, and unjust enrichment. The two cases before the
Court*fn2 were consolidated, discovery was completed, and the
summary judgment motion filed pursuant to Rule 56(c) of the
Federal Rules of Civil Procedure*fn3 is ready for disposition.
In interpreting Rule 56(c), the United States Supreme Court
in Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.CT. 2548, 91
L.Ed.2d 265 (1986) has ruled that:
"The plain language . . . mandates entry summary
judgment, after adequate time for discovery and
upon motion, against a party who fails to make a
showing sufficient to establish the existence of
an element essential to that party's case, and on
which that party will bear the burden of proof at
trial. In such a situation, there can be `no
genuine issue as to any material fact,' since a
complete failure of proof concerning an essential
element of the non-moving party's case necessarily
renders all other facts immaterial."
Celotex, 477 U.S. at 322-323, 106 S.Ct. at 2552.
An issue of material fact is "genuine" only if the evidence
is such that a reasonable
jury could return a verdict for the non-moving party.
Anderson v. Liberty Lobby, Incorporated, 477 U.S. 242, 248, 106
S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The moving party bears
the initial burden of identifying for the Court those portions
of the record which it believes demonstrate the absence of a
material fact. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552. To
overcome the movant's assertion that there is no material issue
of fact, the opposing party must point to specific evidence.
Williams v. Borough of West Chester, 891 F.2d 458, 463-64 (3d
BREACH OF CONTRACT
In its Motion for Summary Judgment, OHM contends that no oral
contract was formed, PDG's bid proposal was merely an offer
which was not accepted, and that the Statute of Frauds bars
PDG's contract claim.
The essential requirements to the formation of a contract are
an offer, acceptance and a manifestation of assent, or a
"meeting of the minds." At every meeting prior to Marquart's
call to D'Appolonia on March 11, 1988, D'Appolonia was
consistent with his insistence on an exclusive arrangement with
OHM before he would submit a bid on behalf of PDG. In essence,
PDG was willing to provide a bid proposal on the insulation
removal phase of the Olin project, if OHM promised to use PDG
exclusively if OHM was awarded the general contract on the
project. This was PDG's offer.
Knowing the conditions upon which PDG would provide a bid,
OHM's representative called D'Appolonia and informed him that
OHM wanted "to use PDG" in its bid. Whether such statement by
OHM was an intent to accept PDG's offer is not for the court to
decide. Under Pennsylvania law, when the record contains
conflicting evidence regarding intent, the question of whether
parties formed a completed contract is one for the trier of
fact. Channel Home Centers, Division of Grace Retail Corp. v.
Grossman, 795 F.2d 291 (3d Cir. 1986).
It is undisputed, that a subcontractor's bid to a contractor,
is merely an offer to contract. PDG, however, is claiming the
existence of an oral contract, prior to the submission of PDG's
bid proposal. The actual contract to do the removal of the
insulation is secondary to the oral contract to become an
exclusive bidder. In essence, if there was an acceptance of
PDG's offer, it was an oral contact to enter into a contract
should the condition of Olin's acceptance of OHM's bid be met.
This being the case, OHM's argument, that the disallowance of
the introduction of parol evidence would make PDG's contract
claim fail as a matter of law, is invalid. The writings of
March 12th and March 14th are separate and distinct from the
alleged oral contract for exclusivity. The writings were part
and parcel of the actual contract for the removal of the
insulation. The oral manifestations of contract were with
relation to exclusive bidding rights. Parol evidence only
affects writings, and therefore the parol evidence rule has no
application to the evidence of an oral contract.
Though parol evidence may not be admitted to vary or alter
the forms of a written contact, it can be admissible where the
written contract is ambiguous. Viceroy Fluid Power Intern, Inc.
v. Banks Engineering Co., Inc., 680 F. Supp. 725 (W.D.Pa. 1988).
The oral evidence as to the exclusivity agreement does not vary
the terms of PDG's written bid proposal. Whether PDG's written
bid proposal can be deemed a contract, collateral or otherwise,
is a factual issue.
OHM also contends that the alleged oral exclusive contract on
the Olin project could not be fully performed within the span
of one (1) year from the making thereof, and was, therefore,
invalid under the statute of frauds.*fn4 Whether there was
a possibility that the alleged oral contract could, in fact, be
performed within one (1) year is, in and of itself, a question
of fact to be determined by the jury.*fn5
With regard to PDG's claim for damages in the form of profits
it would have realized but for OHM's breach, under Pennsylvania
law, lost income or profit damages are recoverable where they
can be proved with reasonable certainty. Delahanty v. First
Pennsylvania Bank, N.A., 318 Pa. Super. 90, 464 A.2d 1243, 1261
(1983). OHM's claim that PDG is limited to its bid preparation
costs is without merit.
For the aforesaid reasons, OHM's Motion for Summary Judgment
on PDG's breach of contract claim shall be denied.
OHM has moved for summary judgment on PDG's claim of
copyright infringement. OHM claims that PDG is not entitled to
copyright protection for its bid proposal because: (1) PDG's
work was not original; (2) the doctrine of merger of idea and
expression applies; (3) the work had been previously published;
(4) damages are incalculable; and (5) because of the doctrine
of unclean hands.
The bid proposal, of which PDG seeks copyright protection,
consists of: a transmittal letter; a proposal produced on
Olin's form; a cost schedule containing PDG's prices;
insulation and manhour quantity estimates; technical proposal;
qualification and reference information; insurance information;
PDG's standard procedure for handling of asbestos and asbestos
contaminated materials; PDG respirator program for asbestos
abatement; and PDG's price sheet. (See Appendix 23 & 24 to
OHM's Brief in Support of Summary Judgment). PDG's bid proposal
is made up of a series of facts, procedures, and methods or
It is fundamental in the law of copyright that "no author may
copyright his ideas or the facts that he narrates." Harper &
Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 556,
105 S.Ct. 2218, 2228, 85 L.Ed.2d 588 (1985). The source of
Congress' power to enact copyright laws is Article I, § 8, cl.
8, of the Constitution, which authorizes Congress to "secure
for limited times to authors . . . the exclusive right to their
respective writings."*fn6 Originality is therefore a
constitutional requirement. Because facts do not owe their
origin to an act of authorship, no one may claim originality as
to facts. Feist Publications v. Rural Telephone Service, ___
U.S. ___, 111 S.Ct. 1282, 1288, 113 L.Ed.2d 358 (1991).
A compilation of facts may possess the requisite originality,
however, if the author chooses which facts to include, in what
order to place them, and how to arrange such facts. As long as
the selection and arrangement are made independently by the
compiler and entail a minimal degree of creativity, Congress
may protect such compilations through the copyright laws.
See Feist Publications v. Rural Telephone Service, 111 S.Ct. at
By PDG's own admission, the actions of OHM constituting their
use of PDG's bid proposal are the use of PDG's: (i) estimates
as to scope of work; (ii) contract price; (iii) proposed
methodology and process; (iv) quantities; (v) safety
procedures; and (vi) technical approach. (PDG's Answers to
Interrogatories, Appendix 22, OHM's Brief in Support of Summary
Estimates of scope of work, price and quantities are all
factual. In order for PDG to be entitled to copyright
protection in the facts, it must show that there is a modicum
of originality in the selection and arrangement of such facts.
We find that PDG has not done that.
The bulk of such facts are set forth on forms which were
provided by Olin to all those wishing to bid on the project.
There is no originality, therefore, in the arrangement of such
facts. As far as the selection of such facts, everyone was
bidding the same job. By his own admission, D'Appolonia states
that it is common "in the construction industry to bid the
highest price which a contractor believes could win the job.
There is no necessary relationship between the estimated cost
and the bid price." (See Appendix 12 to PDG's Brief in
Opposition to Motion for Summary Judgment). There is also
evidence in the record that PDG had access to bid prices that
were submitted to Olin during the first round of bidding. The
quantities estimated and prices selected, by nature of the
estimate and bid process, do not possess the requisite
originality under the copyright laws.
The remaining portions of PDG's bid proposal that were
allegedly appropriated by OHM are the Standard Operating
Procedure (SOP) and the Respirator Program. The SOP was the
result of compiling and arranging asbestos industry procedures
and government regulations. The Respirator Program was likewise
developed from the regulations, but the respirator requirements
also describe how such requirements were to be administered by
PDG. (See Regan Dep. pp. 111-112, 115, Appendix 3, PDG's Brief
in Opposition to Motion for Summary Judgment).
Section 102(b) of Title 17, United States Code, provides:
In no case does copyright protection for an
original work of authorship extend to any idea,
procedure, process, system, method of operation,
concept, principle, or discovery, regardless of
the form in which it is described, explained,
illustrated, or embodied in such work.
17 U.S.C. § 102(b). Protection is extended to an expression of
an idea in a tangible form, but not to the idea itself,
regardless of the form in which it is fixed. Kern River Gas
Transmission Co. v. Coastal Corp., 899 F.2d 1458, 1463 (5th
Cir. 1990). In drawing this distinction, Congress balanced the
competing concerns of providing incentive to authors to create
and of fostering competition in such creativity. Apple
Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1253
(3rd Cir. 1983).
The doctrine of merger has grown out of the efforts of courts
to apply Section 102(b) and draw the line between an idea and
its expression. When the expression of an idea is inseparable
from the idea itself, the expression and idea merge. See Kern
River Gas Transmission Co. v. Coastal Corp., 899 F.2d at 1463.
If the particular expression and the idea are inseparable,
protecting the expression would confer a monopoly on the idea
upon the copyright owner free of the conditions and limitations
imposed by the patent law. See Herbert Rosenthal Jewelry Corp.
v. Kalpakian, 446 F.2d 738, 742 (9th Cir. 1971).
PDG's expression of its SOP and Respirator Program is one of
a limited number of possible ways, in view of the substantial
federal regulations in this area, that such procedures can be
stated. Under the doctrine of merger and the express language
of 17 U.S.C. § 102(b), such expressions by PDG are no subject
Accordingly, OHM's Motion for Summary Judgment on PDG's claim
of copyright infringement shall be granted.
PDG contends that OHM was authorized to use PDG's bid
proposal only in the event that OHM used PDG to perform the
asbestos removal portion of the Olin project, if the contract
for such project was awarded to OHM. Because OHM was awarded
the contract, but failed to employ PDG to perform the asbestos
removal, PDG alleges that OHM intentionally exercised dominion
and control over PDG's property inconsistent with PDG's
possessory rights in the bid
proposal and beyond the authorization given by PDG.
Under Pennsylvania law, conversion is the deprivation of
another's right of property in, or use or possession of, a
chattel, without the owner's consent and without lawful
justification. Shonberger v. Oswell, 365 Pa.Super 481,
530 A.2d 112 (1987). Conversion can only result from an act intended to
affect chattel, and, an intent to exercise dominion or control
over goods which is inconsistent with the owner's rights is
sufficient. Id. (Emphasis added).
The property of which PDG claims was subject to conversion by
OHM is the actual bid proposal submitted to OHM. (See PDG's
Amended Complaint). This Court is unable to find an
interference with PDG's possessory rights in the bid proposal.
The proposal was solicited and voluntarily submitted to OHM.
Though there is evidence that certain portions of PDG's bid
were also contained in, or made a part of, OHM's bid proposal
to Olin, such does not rise to a level of dominion or control
necessary for PDG to maintain an action in conversion. OHM's
Motion for Summary Judgment shall therefore be granted.
MISAPPROPRIATION OF TRADE SECRETS
PDG also contends that its bid proposal given to OHM was a
compilation of trade secrets and proprietary information, which
was misappropriated by OHM for use in its own bid. The
threshold issue in a trade secret misappropriation case is
whether a trade secret in fact exists. Reinforced Molding Corp.
v. General Electric Co., 592 F. Supp. 1083 (W.D.Pa. 1984).
The Supreme Court of Pennsylvania has defined a trade secret
as "any formula, pattern, device or compilation of information
which is used in one's business, and gives him an opportunity
to obtain an advantage over competitors who do not know or use
it." Felmlee v. Lockett, 466 Pa. 1, 9, 351 A.2d 273, 277
(1976). In order for PDG to claim such protection of trade
secrets, the secrets must be those of PDG, and not general
secrets of the trade in which PDG is engaged. If such alleged
secrets are public knowledge, or general knowledge of the
industry, they will not be construed as trade secrets.
Though there is evidence in the record that PDG's asbestos
abatement procedures were merely paraphrased versions of the
federal regulation and/or procedures readily available in the
industry, this Court will refrain from making such a finding as
a matter of law. The question of whether proprietary
information constitutes a trade secret is an issue of fact,
ordinarily resolved by the fact finder after a full
presentation of the evidence. Continental Data Systems, Inc. v.
Exxon Corp., 638 F. Supp. 432, 441 (E.D.Pa. 1986). Because it
has been held that pricing and estimating tactics and
formulations deserve trade secret protection. S.I. Handling
Systems, Inc. v. Heisley, 753 F.2d 1244, 1260 (3d Cir. 1985),
summary judgment on such issue must be denied.
Should PDG's cause of action for breach of contract be found
to be without merit, PDG alternatively seeks equitable
restitution relief in the form of a claim of unjust enrichment.
PDG contends that OHM was awarded the contract from Olin based
on the use of PDG's work product, and at the expense of PDG.
PDG seeks restitution in the form of damages and expenses
incurred, including damages in the amount of OHM's profits
unjustly derived, as well as punitive damages.
OHM claims that PDG is not entitled to equitable relief on
grounds they were acting with "unclean hands," in that PDG was
less than forthright in its dealings with OHM and in fact had
surreptitiously copied OHM's bid prices and used them as their
own. OHM further contends that PDG's bid proposal conferred
absolutely no benefit upon OHM.
OHM requests this Court to disregard PDG's unjust enrichment
claim due to a pattern of fraud and illegal conduct during
their bid negotiations with OHM. The question of whether PDG
with unclean hands is a question of fact. Based on the current
state of the record there are material issues of fact with
regard to PDG's actions that prevent an adjudication at this
stage of the litigation.
Similarly, whether there was an enrichment or benefit
conferred on OHM by PDG, and whether an injustice would exist
should the benefit be retained without compensation to PDG, are
factual issues not subject to summary judgment. Though OHM
relies upon numerous affidavits and deposition testimony to
show PDG's bid proposal conferred no benefit upon it, they are
contradicted by the deposition testimony of OHM's own Project
Manager on the Olin project. Such contradiction raises a
material issue of fact requiring the denial of OHM's request
for summary judgment.
An appropriate Order follows.
ORDER OF COURT
AND NOW, this 1st day of May, 1991, upon consideration of
defendant's Motion for Summary Judgment and plaintiff's
response thereto, it is hereby
ORDERED, that defendant's Motion for Summary Judgment is
GRANTED in part and DENIED in part as follows:
(1) Summary Judgment on plaintiff's cause of action for
breach of contract is DENIED;
(2) Summary Judgment on plaintiff's cause of action for
copyright infringement is GRANTED;
(3) Summary Judgment on plaintiff's cause of action for
conversion is GRANTED;
(4) Summary Judgment on plaintiff's cause of action for
misappropriation of trade secrets is DENIED; and
(5) Summary Judgment on plaintiff's cause of action for
unjust enrichment is DENIED.