Contractor Gets a Shot at Proving Architect Improperly Interfered with Bid Award
By Aileen Leipprandt
Previously published in AGC Michigan Legal Brief, Volume VII, Issue 1, 2011
A contractor’s claim for tortious interference in the context of a bid selection process was recently the subject of a detailed and lengthy Court of Appeals decision, Cedroni Associates, Inc. v Tomblinson, Harburn Associates, Architects & Planners, Inc., (November 2010). There, the appellate court ruled that the low bid contractor had produced enough evidence to allow the contractor to proceed to trial on its claim that the architect improperly interfered with the bid award process in refusing to recommend the low bid contractor.
In Cedroni, Davison Community Schools (DCS) invited bids on a construction project involving two elementary schools. Pursuant to its contract with DCS, the architect, Tomblinson Harburn Associates, assisted DCS with the bid selection process in typical fashion by reviewing and evaluating bid applications, investigating competing contractors and their references, and expressing opinions as to which contractor should be awarded the project. Plaintiff, Cedroni Associates, Inc., was the low bidder. However, based upon reference responses and the architect’s own experience with Cedroni, the architect recommended that the school board award the contract to the second lowest bidder. The school board accepted the architect’s recommendation.
Cedroni then sued the architect asserting that the architect tortiously interfered with Cedroni’s “prospective economic relations” by wrongfully claiming that Cedroni was unqualified to perform work on the project. The architect asked the trial court to dismiss the lawsuit because Cedroni did not have a valid expectation of entering into a business relationship with the school district given the broad discretion afforded the school district in selecting contractors and because the architect did nothing improper in expressing its opinion as to which bidder the school district should select. The trial court agreed with the architect and dismissed the case. The contractor appealed and the Court of Appeals reversed the trial court and remanded the case for trial.
The Court of Appeals first concluded that while the school board’s Fiscal Management Policy contained multiple provisions reserving to the board the right to reject bids, such discretion was not unfettered and was subject to the provision requiring an award to be made to the “lowest responsible bidder” as defined in the Fiscal Management Policy.
The appellate court next concluded that Cedroni had submitted enough evidence to suggest that Cedroni was a “responsible” contractor and that there was a reasonable probability that Cedroni would have been awarded the contract but for the wrongful conduct of the architect. To that end, Cedroni presented a detailed affidavit regarding the specifics of various projects that Cedroni had timely and successfully completed. In light of this evidence, the Court concluded that Cedroni had a valid business expectancy in the construction project.
Next, the appellate court ruled that Cedroni had submitted enough evidence to create a factual dispute as to whether the architect acted improperly in the manner in which it communicated and recommended the bidders. Cedroni showed that a great deal of friction and animosity had developed between Cedroni and the architect on past projects by the time of the bid selection on the Davison Schools project, and that this animosity unfairly colored the architect’s recommendation so that the unfavorable recommendation was motivated by malice and not legitimate business reasons. That is, the architect “sabotaged” Cedroni’s bid.
The appellate court was careful to limit its opinion, emphasizing that the architect’s exercise of professional business judgment in making recommendations as to public contracts “must be afforded some level of protection and deference.” Nonetheless, given that there was some evidence to suggest the architect’s exercise of judgment was “in reality a disguised” attempt to improperly interfere with Cedroni’s business expectancy, the appellate court concluded that Cedroni should have a chance to prove its case.
Judge Kelly authored a strong dissenting opinion, observing that given the school district’s broad discretion in bid selection, Cedroni’s only legitimate business expectancy was a fair bidding process free of fraud, not a favorable outcome.
While the Cedroni case may be considered a victory for contractors, design professionals may be dismayed at the prospect of being embroiled in litigation for recommendations it makes on bid awards.