The Michigan Supreme Court has ruled in favor of an architect in a tortious interference case filed by a disappointed bidder. The opinion in Cedroni Assoc Inc v Tomblinson Harburn Assoc Architects & Planners Inc, ___ Mich ___, ___ NW2d ___ (2012) was issued on July 27, 2012 and it reversed a published Michigan Court of Appeals decision issued in 2010.
In Cedroni, a public shool district had entered into a contract with Tomblinson for architectural services with regard to a construction project. Tomblinson reportedly agreed to assist the school district with the bid selection process by, among other things, "evaluating the bids submitted by contractors and making a recommendation to the school district regarding which contractor should be awarded the project." Allegedly due to Tomlinson's recommendation, the school district eventually awarded the project to the second-lowest bidder rather than to Cedroni, who had submitted the lowest bid. Cedroni thereafter sued Tomblinson for tortious interference with a business expectancy.
The trial court ruled in Tomblinson's favor, holding that Cedroni did not have a valid business expectancy. However, the Court of Appeals reversed that ruling in a split decision, holding that a genuine issue of material fact existed on that issue. Cedroni Assoc Inc v Tomblinson Harburn Assoc Architects & Planners Inc, 290 Mich App 577, 802 NW2d 682 (2010).
The Michigan Supreme Court disagreed with the Court of Appeals and held that Cedroni, "had no valid business expectancy for the purposes of sustaining a claim of tortious interference with a business expectancy." It noted the highly discretionary nature of the school district's decision, and the longstanding rule in Michigan that "a disappointed low bidder on a public contract has no standing to sue in order to challenge the award of a contract to another bidder."
The Court did not find any evidence that Thomblinson had improperly influenced the school district's decision. However, in order to dispel concerns that its ruling might be interpreted to mean that architects and other private entities are now immune from liability for making false statements about low bidders or otherwise dishonestly influencing governmental entities, the Court clarified its holding by specifically stating that "we do not hold that an architect is 'immune from liability' for making false statements about a low bidder." It further explained that it was not, "immunizing from liability a private entity that 'acts with dishonesty and bad faith to interfere with the governmental entity's efforts, . . . .'" Indeed, the Court twice noted that, "we are simply holding that when the ultimate decision to enter into a business relationship is a highly discretionary decision reposed by law within a governmental entity, a disappointed low bidder does not have a valid business expectancy for the purpose of sustaining a claim of tortious interference with a business expectancy."
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In Cedroni, a public shool district had entered into a contract with Tomblinson for architectural services with regard to a construction project. Tomblinson reportedly agreed to assist the school district with the bid selection process by, among other things, "evaluating the bids submitted by contractors and making a recommendation to the school district regarding which contractor should be awarded the project." Allegedly due to Tomlinson's recommendation, the school district eventually awarded the project to the second-lowest bidder rather than to Cedroni, who had submitted the lowest bid. Cedroni thereafter sued Tomblinson for tortious interference with a business expectancy.
The trial court ruled in Tomblinson's favor, holding that Cedroni did not have a valid business expectancy. However, the Court of Appeals reversed that ruling in a split decision, holding that a genuine issue of material fact existed on that issue. Cedroni Assoc Inc v Tomblinson Harburn Assoc Architects & Planners Inc, 290 Mich App 577, 802 NW2d 682 (2010).
The Michigan Supreme Court disagreed with the Court of Appeals and held that Cedroni, "had no valid business expectancy for the purposes of sustaining a claim of tortious interference with a business expectancy." It noted the highly discretionary nature of the school district's decision, and the longstanding rule in Michigan that "a disappointed low bidder on a public contract has no standing to sue in order to challenge the award of a contract to another bidder."
The Court did not find any evidence that Thomblinson had improperly influenced the school district's decision. However, in order to dispel concerns that its ruling might be interpreted to mean that architects and other private entities are now immune from liability for making false statements about low bidders or otherwise dishonestly influencing governmental entities, the Court clarified its holding by specifically stating that "we do not hold that an architect is 'immune from liability' for making false statements about a low bidder." It further explained that it was not, "immunizing from liability a private entity that 'acts with dishonesty and bad faith to interfere with the governmental entity's efforts, . . . .'" Indeed, the Court twice noted that, "we are simply holding that when the ultimate decision to enter into a business relationship is a highly discretionary decision reposed by law within a governmental entity, a disappointed low bidder does not have a valid business expectancy for the purpose of sustaining a claim of tortious interference with a business expectancy."
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