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An engineer that prepared a Request for Proposals (RFP) owed no duty to a bidder on a sewer authority project as a third-party who could foreseeably be injured or suffer economic loss due to engineer’s negligent performance of a contractual duty owed by the engineer to its client, the project owner. The low bidder asserted that information and comments provided by the engineer to the Authority resulted in rejection of the bid and thereby constituted intentional interference with its right to contract. The court found the engineer couldn’t be sued for negligence because it owed the bidder no duty. John Rocchio Corp. v. Pare Engineering Corp., 201 A. 3d 316 (RI, 2019).

In rejecting the third party beneficiary claim, the court held that there was no evidence of intent for the contract between the engineer and the Owner to benefit anyone other than the owner. No action could stand for intentional inference because the record before the court lacked any indicia of intent to harm the bidder and there was no evidence that the engineer didn’t act in good faith in fulfilling his obligations to his client, the Authority.

Five companies bid on the project. The engineer reviewed the bids and prepared a memorandum to the owner providing its review and recommendations regarding the bidding process. In its memo to the Authority’s executive director, it concluded that, “it appears that [the low bidder] should be disqualified, at the discretion of the WAS, for failing to include the required EPA forms … as required by page 2 of Attachment F: Good Faith Efforts.”

The executive director subsequently met with the president of the low bidder and obtained from him the missing EPA forms. After that, the executive director asked the Authority’s Board of Directors to reject the low bid as non-responsive because the forms were omitted with the original bid and, even after being later submitted, there were “several irregularities.” The executive director also referenced several other projects that the low bidder performed on where there were performance concerns and lack of attention to detail. But the primary reason given by the executive director for recommending the rejection of the bid was “the research she had been doing with past experience on projects with the WSA.”

At the trail level of the case against the engineer, the hearing justice determined that the bidder failed to submit sufficient evidence of causation and on that basis dismissed all three counts of the complaint. It was the executive director that made the recommendation to reject the bid, and the Board that took action to reject the bid. There was insufficient evidence that the engineer caused the outcome.

On appeal, the appellate court agreed that the engineer couldn’t’ be sued but for different reasons than stated by the trial judge. The court stated:

“In situations involving public requests for bids, it may be impossible to determine how many and which general contractors will submit bids for the project. [citation omitted] (holding that the plaintiff-purchaser of property “was neither known to nor identifiable to [the] defendant contractor” and that “[t]heir individual relationships with the original owner were wholly independent of each other * * * [so t]here was no foreseeable harm to a subsequent owner”). Here, a determination that [Engineer] owed a duty to [Bidder] under the circumstances present in this case would effectively be a determination that all engineers contracted by project owners owe a duty to all general contractors that could possibly submit a bid on any given request for proposal. We believe that would be an absurd result; and, accordingly, it is our view that there is a distinct difference between situations like [case precdent] and situations like the one before us, where a third party is unidentifiable and unforeseeable at the time of the alleged negligence.”

Comment: When a design professional is fulfilling its responsibility to its client by reviewing bids, change order requests, payment applications, and the like, it is important that these professionals be immune from third party claims by the contractors that submitted such documents (in the absence of bad faith and intentional wrong), otherwise this would impair the ability of the client to receive the benefit of the professional opinions from their design firm.   A designer should be able to in good faith fulfill its contractual duties to its client without fear of recourse from a disgruntled contractor.

 

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 ConstructionRisk 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. 21, No. 2 (June 2019).

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