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The bidder on a public school project has no valid business expectancy of being awarded a contract, only “wishful thinking,” and in the absence of evidence of fraud, injustice or a violation of trust, it’s tortious interference claim against the owner’s architect for recommending rejection of is low bid must fail as a matter of law.  Cedroni Associates v. Tomblinson, Harburn Associates Architects, 821 N.W. 2d 1 (Mich. 2012).  Under the common law, the court stated that “Given that a contractor that submits the lowest bid cannot bring a cause of action against the municipality when its bid is rejected, even when the municipality has adopted a charter provision that requires it to accept the ‘lowest responsible bidder,’ it is difficult to fathom how plaintiff’s submission of the lowest bid could have created a valid business expectancy in light of the highly discretionary process of awarding governmental contracts.”  Moreover, the expectations of a bidder would be the same regardless of whether the allegations of wrong are against the government or against a third party design professional.

In addition to the common-law rule, the court cited a state statute as granting the municipality statutory authority to make a highly discretionary decision to “reject any or all bids.”  In light of the combination of the common-law rule preventing a disappointed bidder from suing the public entity for rejecting its bid and the statutory provision that allowed the school district to reject any and all bids, “a bidder on a school district project should know that its submission of the lowest bid does not create a reasonable probability that the school district will award it the contract.”  The bidder’s argument was made even more untenable according to the court, because the Invitation for Bid (IFB) included a project manual expressly stating that the school district has the “right to reject any and all bids” and that “the lowest dollar cost bidder may not always receive award of the bid.”

Having established that the bidder had no valid business expectancy of receiving a contract, and that the school district’s exercise of its discretion to accept or reject bids would only be subject to control of the courts “when necessary to prevent fraud, injustice or the violation of trust,” the court considered the evidence presented by the plaintiff in this case and determined “there is no evidence that this Court’s intervention is necessary….”  For these reasons, the court determined that the trial court correctly granted the Architect’s motion for summary judgment against the plaintiff.

 

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 14, No. 11 (Dec 2012).

Copyright 2012, ConstructionRisk, LLC