Lead Opinion
Plaintiff appeals as of right the trial court’s order granting summary disposition in favor of defendant. This case involves a claim of tortious interference with a business expectancy arising out of, allegedly, defendant’s improper conduct, communications, and recommendations that resulted in a school district’s decision not to award plaintiff a construction project despite plaintiffs submission of the lowest bid. We hold that genuine issues of material fact existed with respect to the elements of plaintiffs cause of action. More specifically, we reject the trial court’s determination that, as a matter of law, plaintiff lacked a valid business expectancy. Plaintiff, as the lowest bidder, submitted evidence sufficient to create a factual dispute with respect to whether it was a “responsible” contractor to the extent that the trier of fact could have concluded that there existed a reasonable probability or likelihood that plaintiff would have been awarded the project absent the alleged tortious interference. Therefore, there was a genuine issue of material fact with respect to whether plaintiff had a valid business expectancy. We emphasize that the submission of the lowest bid, in and of itself, was inadequate to sustain plaintiffs suit. We reject any rule per se that would allow litigation to proceed simply on the basis of proof of the lowest bid, except, of course, if no additional criteria needed to be satisfied, which is unlikely. Absent sufficient additional evidence on relevant award criteria, there would be no valid business expectancy. We further reject the trial court’s determination that, as a
I. BACKGROUND
The Davison Community Schools (DCS) opened bidding on a construction project that entailed work at two school sites. Pursuant to a contract, defendant, an architectural firm, assisted the DCS with the bid-selection process by reviewing and evaluating bid applications, investigating competing contractors and their references, expressing opinions and views on contractor competence and workmanship, and making recommendations regarding which contractor should be awarded the project. Plaintiffs bid was the lowest submitted to the DCS by any contractor. After entertaining all the submitted bids, the DCS, as recommended by defendant, elected to award the contract on the construction project to the contractor that had submitted the second lowest bid, not plaintiff.
Plaintiff filed suit against defendant, alleging a single count of, as framed by plaintiff, tortious interference with prospective economic relations.
The trial court granted defendant’s motion for summary disposition under MCR 2.116(C)(10), ruling that the evidence failed to show that plaintiff had a reasonable or valid expectation of entering into a business relationship with the DCS and that the evidence fell short of showing that defendant did anything improper.
II. ANALYSIS
A. STANDARD OF REVIEW AND GENERAL SUMMARY-DISPOSITION PRINCIPLES
This Court reviews de novo a trial court’s decision on a motion for summary disposition. Allen v Bloomfield Hills Sch Dist,
B. VALID BUSINESS EXPECTANCY
On appeal, plaintiff first argues that the trial court erred by granting the motion for summary disposition when there was evidence sufficient to create a factual issue regarding whether plaintiff, as a qualified and responsible bidder that submitted the lowest bid, had a valid business expectancy. We agree.
1. THE CASELAW
With respect to a claim of tortious interference with a business expectancy, a plaintiff must prove (1) the existence of a valid business expectancy, (2) knowledge of the expectancy on the part of the defendant, (3) an intentional interference by the defendant inducing or causing a termination of the expectancy, and (4) resultant damage to the plaintiff. Dalley v Dykema Gossett PLLC,
In Joba Constr Co, Inc v Burns & Roe, Inc,
On appeal, the defendant claimed that the trial court had erred by denying its motion for a directed verdict, arguing “that it was entitled to a directed verdict as plaintiff failed to produce sufficient evidence to raise a question of fact as to a valid expectancy that the contracts would have been awarded to plaintiff absent defendant’s alleged interference.” Id. at 633. The defendant maintained that “the discretionary factors going into the determination of who is the lowest qualified bidder preclude[d] plaintiff from proving it had an expectation of being awarded the contracts.” Id. at 634 (emphasis added). The Joba Constr panel stated that, to support the tortiousinterference claim, the plaintiff had to prove that it was reasonably likely or probable that a specific and reasonable economic advantage or expectancy would indeed develop and occur. Id. at 634-635. The panel stated that the plaintiff was not required to demonstrate a guaranteed relationship, considering that anything defined as prospective in nature would necessarily be uncertain, and stated that while certainties need not be shown, there must he something more than innate optimism or mere hope. Id. at 635. This Court concluded that the plaintiff had submitted “sufficient evidence to create a question of fact as to whether it was the lowest qualified bidder and thus had a legitimate expectancy in obtaining the contracts . ...” Id.
In Trepel,
The Trepel panel, examining whether the hospital had a valid business expectancy in obtaining approval of the bond issue from the government, first noted that there was an absence of Michigan caselaw “relating to interference with discretionary governmental action.” Id. at 378 (emphasis added). This Court proceeded to review three federal court decisions, two of which approved of interference suits brought by parties that had submitted the most favorable bids on governmental contracts, Lewis v Bloede, 202 F 7 (CA 4, 1912), and Pedersen v United States,
In the instant case, the discretion to be exercised by the MFC appears to be somewhat greater than that attributed to the governmental bodies in Lewis and Pedersen, supra, but significantly less than that in Carr. We perceive that Carr is a gloss on the general rule. It applies to situations where too many factors are in play to be able to reasonably infer that, but for defendant’s allegedly wrongful action, plaintiff likely would have obtained the desired advantage. In this case, the MFC’s grant of approval must be preceded by the determinations required by statute. A trier of fact might be persuaded that defendant hospital could ascertain with reasonable certainty whether the items listed in the statute were satisfied so that MFC approval was a probability. If the question were whether defendant hospital’s application for a loan was denied because of [the plaintiffs] interference, defendant hospital would have made out a cause of action because a trier of fact could assess the causal effect of the [plaintiffs] actions.
However, where the MFC approval is only delayed, as alleged here, the problem becomes more difficult. The MFC is required to make findings of fact before granting approval. Obviously, that task takes a certain amount of time to accomplish. However, the procedure involved is not a notice and comment type hearing, as in Carr, designed to let interested parties express their opposition. Defendant hospital should have the opportunity to prove its allegation that approval was “scheduled” for September 11, 1979.
In Lewis, [202 F at] 20-21, and Carr, [395 A2d at] 84, reference is made to the prior history of the governmental entity in granting approval. Defendant hospital has sought to introduce evidence by way of affidavit of the MFC’s perfect record in approving bond issues already approved by the Michigan State Hospital Finance Authority. We believe such evidence if otherwise admissible could persuade a trier of fact at a contested trial. [Id. at 380-381.]
From Joba Constr, Trepel, and First Pub, and cases relied on therein, we derive the following principles to apply in determining whether there exists a valid business expectancy: (1) the presence of some level of discretion exercisable by a governmental body or decision-maker does not automatically preclude a recognition of a valid business expectancy, (2) if the discretion is expansive and not restricted by limiting criteria and factors to an extent
2. APPLICATION OF THE LAW TO THE FACTS
We begin by examining the documents governing the DCS and the bid-selection process. DOS’s fiscal management policy (FMP) indicates multiple times that the DCS Board of Education (Board) has and reserves the right to reject any or all bids. In one section of the FMp it provides that the reservation of the right to reject bids includes “the bid of any contractor who is not reasonably determined to be ‘responsible’ in conjunction with this policy.” The FMp however, also provides:
The Board. .. hereby establishes this policy to satisfy its statutory duty to competitively bid contracts for construction of a new school building, or an addition to or repair or renovation of an existing school building of the [DCS], except for repairs in emergency situations. Bids shall be awarded in compliance with applicable bidding obligations imposed by law to the “lowest responsible bidder.” [Emphasis added.]
This language, including use of the word “shall,” indicates that if a bidding contractor submits the lowest bid on a project and is deemed “responsible,” the Board is mandated to award the project to that contractor. In re Kostin Estate,
[t]he Responsible Contractor that has submitted a fully complete and responsive bid that provides the lowest net dollar cost for all labor and materials required for the complete performance of the work of the Construction Project let for bid. Such bid must satisfy the requirements of all applicable local, state, and federal laws, this Policy, any administrative rules associated with this Policy developed by the Superintendent at the Board’s direction, and bid documents used to solicit bids, and any other guidelines and specifications required for the Construction Project. Because a bidder with the net lowest dollar cost bid may not be a Responsible Contractor, the lowest dollar cost bidder may not always receive award of the bid.
This definition refers to the term “Responsible Contractor,” and the FMP also defines that term as being
[a] contractor determined by the Board to be sufficiently qualified to satisfactorily perform the ConstructionProject, in accordance with all applicable contractual and legal requirements. The Board’s determination shall be based upon: (1) an overall review of the Responsibility Criteria listed below and the contractor’s responses, or failure to respond, to same; (2) the contractor’s compliance with this Policy and all applicable local, state and federal laws; (3) the input of the District’s architect(s) [here defendant] and/or construction manager(s), if any; (4) review of the contractor’s proposed subcontractors; and (5) other relevant factors particular to the Construction Project.
The FMP then provides a definition of “Responsibility Criteria,” which sets forth a nonexclusive list of criteria that can be examined and weighed by the Board in determining whether a contractor is responsible.
In his affidavit, the superintendent of the DCS, R. Clay Perkins, averred that the DCS had the authority and right under the FMP to reject any or all bids and that the FMP specifically apprised contractors that the lowest bidder might not always be awarded a project.
The trial court was also provided with a project manual drafted by defendant that addressed the advertisement of bids and the planned construction to be undertaken at the two work sites, Hill Elementary School and Siple Elementary School. The project manual twice indicates that the DCS “reserves the right to accept or reject any or all offers.” But the manual also provides that the DCS “reserves the right to reject any or all bids where incomplete or irregular, lacking bid bond, data required by bidding documents, or where proposals exceed funds available.” (Emphasis added.) This provision suggests that there is somewhat of a limitation on the grounds pursuant to which a bid can be rejected.
Defendant’s reliance on the language in the FMP and project manual that gives the DCS the right to reject any or all bids reflects a failure to appreciate the language in the FMP that requires the DCS to award a project to the lowest responsible bidder. Indeed, defendant fails to even acknowledge the provision concerning the “lowest responsible bidder” mandate, let alone argue that it is negated by or subject to the language in the FMP and project manual on which defendant relies. Defendant’s position suggests that the DCS has complete and unfettered discretion to reject a bid, but this is inconsistent with the “lowest responsible bidder” provision that mandates an award and inconsistent with the language in the project manual that indicates that the DCS has the right to reject bids, but only for certain reasons.
We hold, as a matter of law, that the multiple provisions reserving the right to reject bids are subject to the provision requiring an award to be made to the lowest responsible bidder; otherwise, the “lowest responsible bidder” provision is rendered meaningless and nugatory. In Klapp v United Ins Group Agency, Inc,
Just as “[c]ourts must give effect to every word, phrase, and clause in a statute and avoid an interpretation that would render any part of the statute surplusage or nugatory,” courts must also give effect to every word, phrase, and clause in a contract and avoid an interpretation that would render any part of the contract surplusage or nugatory. [Citation omitted.]
We find no reason not to apply this same construction principle when interpreting the FME Further, our interpretation does not render the “right to reject” provisions surplusage or nugatory, given
We next need to address whether plaintiff submitted evidence sufficient to create a genuine issue of material fact on the question whether it had a valid business expectancy, accepting the undisputed fact that plaintiff submitted the lowest bid and taking into consideration our construction of the FME Our attention must focus on the requirement that the contractor or bidder be “responsible.” The Board certainly has some discretion in making this determination. However, we are not prepared to rule that, as a matter of law, a contractor that submitted the lowest bid on a project, thereby satisfying one of the FMP award prerequisites of the “lowest responsible bidder” clause, can never establish a valid business expectancy merely because the Board had some discretion in determining whether that contractor was responsible.
The Board’s discretion in awarding a project is not expansive or unrestricted by limiting criteria and factors to an extent that it makes it impossible to reasonably infer that plaintiffs claimed expectancy would likely have come to fruition. Rather, the FMP limits the discretion to an assessment of whether a contractor is “responsible,” and that determination is subject to the factors and criteria delineated in the definitional section of the FMP In determining whether a contractor is responsible, the ultimate question to be answered by the Board, according to the FMR is whether the contractor is “sufficiently qualified to satisfactorily perform the Construction Project, in accordance with all applicable contractual and legal requirements.” Certainly, a contractor submitting the lowest bid on a project, such as plaintiff, may be able to prove with testimony and other evidence that it was sufficiently qualified to complete the project in a satisfactory and legally and contractually compliant manner, to the extent that a trier of fact could conclude that there existed a reasonable likelihood or probability that the contractor would have been awarded the project absent tortious interference by a defendant. Supporting evidence that goes beyond innate optimism or mere hope could easily exist if a contractor truly has a stellar track record in the construction field; certainty or a guarantee of an award need not be shown.
We shall now examine the documentary evidence presented in the trial court. Defendant’s
In light of the documentary evidence indicating that plaintiff was sufficiently qualified to complete the project in a satisfactory manner, we conclude that a genuine issue of material fact existed concerning whether plaintiff was a responsible contractor to the extent that a trier of fact could conclude that there existed a reasonable likelihood or probability that plaintiff would have been awarded the project absent the alleged tortious interference by defendant. Stated otherwise, there was a genuine issue of material fáct regarding whether plaintiff had a valid business expectancy.
As indicated in our introduction, we emphasize that the submission of the lowest bid, in and of itself, was inadequate to sustain plaintiffs suit. We reject any per se rule that would allow litigation to proceed simply on the basis of proof of the lowest bid, except, of course, when no additional criteria needed to be satisfied,
We find it necessary to address some of the criticisms leveled by the dissent regarding the issue whether there could be a valid business expectancy. Initially, the dissent asserts that no cause of action exists to protect bidders on a governmental contract, citing Talbot Paving Co v Detroit,
The dissent contends that there could be no valid business expectancy because MCL 380.1267 gave the DCS unfettered discretion to reject a bid, since the statute provides no limiting criteria and because the FMP does not have the force of law. MCL 380.1267(6) provides, in part, that “[t]he board, intermediate school board, or board of directors may reject any or all bids, and if all bids are rejected, shall readvertise in the manner required by this section.” We first note that MCL 380.1267(6) does not restrict a board from imposing its own criteria and limitations on itself relative to the bidding process and the acceptance and rejection of bids. While the statutory language, standing alone, places no limits on discretion, the dissent’s position ignores the reality that the FMP governed the bidding process. Superintendent Perkins averred that the FMP guided the bidding process and that the process involved identifying the lowest responsible bidder. The FMP itself provides that projects “requiring competitive bids shall be made in accordance with current statutes, the creation of bid specifications, and adherence to the District’s bidding procedure[.]” (Emphasis added.) The FMP further provides that the requirements of the FMP “shall be incorporated into all bid documents used to solicit bids for construction projects[.]” We therefore conclude that the FMP is absolutely relevant to analyzing the issue whether plaintiff had a valid business expectancy.
Finally, we reject the dissent’s reliance on unpublished opinions. MCR 7.215(J).
C. TORTIOUS INTERFERENCE — INTENTIONAL AND IMPROPER CONDUCT
Plaintiff next argues that the trial court erred by granting the motion for summary disposition when a genuine issue of material fact existed with respect to whether defendant’s communications to the DCS that plaintiff was not qualified constituted intentional and improper conduct.
1. THE CASELAW
In regard to a claim of tortious interference with a business expectancy, a plaintiff must demonstrate that the defendant acted both intentionally and either improperly
A false accusation may provide a basis to pursue a claim of tortious interference. First Pub,
2. APPLICATION OF THE LAW TO THE FACTS
The FMP provides that the determination whether a contractor is a responsible contractor shall be based, in part, on “the input of the [DOS’s] architect,” which in this case was defendant. The contract between the DCS and defendant provides that defendant “shall assist the [DCS] in obtaining competitive bids and shall assist the [DCS] in awarding and preparing contracts for construction.” Superintendent Perkins averred that plaintiff had submitted the lowest bid, but, “[b]ased on the review by the Board Committee and the recommendations of [defendant], [the DCS] decided to award the Project to US Construction[.]” There is no dispute that, consistently with its obligation to provide assistance in the bid-selection process, defendant made a recommendation and conveyed'information to the DCS regarding plaintiff and its bid. Hoist sent a letter on behalf of defendant to the DCS in which she stated:
We have reviewed the apparent low bidder[’]s proposal, references, past experience and qualifications. At the close of the review, we recommend that you move to the second low bidder, US Construction . 1.. They have provided construction services for other projects designed by [us] & for [the DCS], and have performed the work adequately.
It can reasonably be inferred from this letter that Hoist, and thus defendant, found that plaintiff had a poor work history and consequently would not adequately perform the work on the project at issue. And Perkins’s averment indicating that the award decision was based, in part, on defendant’s recommendation provides evidence of a causal relationship between defendant’s
There was conflicting evidence presented regarding plaintiffs workmanship on various projects. In Hoist’s notes, she indicated that the contact person on a construction project involving toilet buildings at the Island Lake State Park stated that plaintiff had failed to meet the project’s schedule, failed to follow the plans and specifications, failed to provide supervision, and failed to follow up on matters. The contact person also stated that plaintiffs work was of poor quality and that he believed that “the state put [Cedroni] on their ‘may not bid’ list.” Cedroni asserted in his affidavit that the contact person on the Island Lake project was employed by defendant, which acted as the architect on the project. Cedroni further averred that plaintiff “timely and properly completed all work on the project considering the design errors of [defendant].” Cedroni additionally attested that “[t]he work was fully completed and was of good quality, as proven by [plaintiffs] receipt of full payment for the project[, and plaintiff] had on-site supervision during the entire course of the project.”
In Hoist’s notes, she indicated that she spoke with a person from Architectural Systems Group regarding a prime subcontract and that the individual stated that plaintiff was “[n]ot good to deal with.” In Cedroni’s affidavit, he averred that plaintiff “is currently working with Architectural Systems Group as part of a $170,000 contract[.]”
In Hoist’s notes, she indicated that Ken Kander, a contact person on a construction project involving the Holly Academy, stated that he would not say anything negative about plaintiff, nor would he say anything positive. Another contact person on the Holly Academy project supposedly told Hoist that he would never hire plaintiff for the DCS construction project. In Cedroni’s affidavit, he attested as follows regarding the Holly Academy project, for which defendant provided architectural services:
Ken Kander will attest that Cedroni completed quality work on the project, had appropriate levels of supervision, and addressed any concerns of the owner. The problems on this construction project were due to [defendant]. [Plaintiff] suggested an alternative ballast to the one [defendant] had specified. [Defendant] rejected [plaintiffs] proposal. [Defendant’s] specified ballasts were problematic and [plaintiffs] subcontractor has made repeated visits to the construction project to address the problems. In fact, Holly Academy has since retained a new architect rather than work any further with [defendant].[7 ]
Hoist’s notes also reflect her own thoughts regarding plaintiffs workmanship on projects that plaintiff and defendant worked on together. According to Hoist, plaintiffs work at Holly Academy lacked supervision and showed poor workmanship. She also indicated that the quality of plaintiffs work on the project was reflective of their bid “and about what I expected from Cedroni, but in addition to the low quality, his follow-up on construction issues, especially with regard to their lighting problem, is unacceptable to me.” In an e-mail from Hoist to Kander regarding the Holly Academy project, Hoist complained of plaintiffs failure to deal with a problem with lights, and she then stated, “So, here’s where the rubber may hit the road for Cedroni, [h]e was low bidder on some work we are doing for [the DCS].” Regarding a construction project involving a maintenance building in Rochester Hills, Hoist described some of plaintiffs work as the worst that she had ever seen. With respect to that project, Cedroni averred that the problems were caused by defendant.
In his letter presented to the DCS committee, Cedroni made the following observations regarding his company:
I have personally contacted all parties on this document [Hoist’s notes] and all admitted to talking to Jackie. They all reported giving good reviews and glowing reports of our performance, except for one architect. After speaking with this architect and explaining to him that his comment could be viewed as damaging, he stated he didn’t think his review was particularly bad and he would have no problem working with us in the future.
... I have found no definitive reason as to why my company should not be recommended for this project. I am offering to complete this job at nearly $50,000 less than the next lowest bidder .... We have never been removed from a project and never received a poor review from any architect/owner we’ve worked with. Even after our last project with [defendant], I was told they had no issue with our performance and we could use them as a reference for future work.
Viewing the conflicting and inconsistent evidence and the inferences arising from it in a light most favorable to plaintiff, a trier of fact could reasonably conclude that defendant acted with malice, in a wrongful manner per se, unethically, with an improper motive and absence of justification, or deceitfully with respect to the damaging information and recommendation conveyed to the DCS. If plaintiffs evidence were found to be credible by the trier of fact, it could reasonably conclude that defendant acted intentionally and improperly in an effort to interfere with plaintiffs business expectancy, i.e., being awarded the construction project by the DCS. It is quite evident in reviewing the documentary evidence that a great deal of friction and animosity had developed between plaintiff and defendant over past projects by the time the bid-selection process took place here, and a trier of fact could determine that defendant’s recommendation was motivated
As indicated in our introduction, we emphasize that the exercise of professional business judgment in making recommendations relative to governmental contracts and projects must be afforded some level of protection and deference. But we will not preclude litigation when there exists evidence suggesting that the ostensible exercise of professional business judgment is in reality a disguised or veiled attempt to intentionally and improperly interfere with the contractual or expectant business relationships of others. There is evidence here indicating that defendant, through Hoist, was being untruthful and inaccurate in its portrayal of plaintiff. The trier of fact must sort through all the conflicting evidence and assess the credibility of the parties’ claims and their witnesses.
Finally, the dissent posits that there was no evidence that Hoist provided false information to the DCS or had an improper motive and that the information supplied by Hoist simply constituted a negative opinion. The dissent asserts that the evidence merely reflected professional disagreements. We respectfully conclude that the dissent fails to view the evidence in a light most favorable to plaintiff and fails to consider reasonable inferences arising from the evidence. A reasonable inference arising from Cedroni’s affidavit is that Hoist was lying, and Cedroni’s letter indicates that glowing reviews were given to Hoist, which, if true, would directly establish that she was lying. Taking into consideration Cedroni’s affidavit and letter, along with the other documentary evidence, and viewing it in a light most favorable to plaintiff, this case entails more than professional disagreements and negative opinions.
D. DEFENDANT’S RELATIONSHIP WITH THE DCS
The dissent argues that defendant is entitled to summary disposition on the basis that defendant was not a third party to the prospective contract or relationship between plaintiff and the DCS; rather, defendant was an agent of the DCS and thus a tortiousinterference cause of action cannot be maintained. We initially note that defendant itself does not make this argument, nor did the trial court address this issue.
A plaintiff must establish that the defendant was a third party to the contract or business relationship in order to maintain a tortious-interference claim, and therefore corporate agents are not liable for tortious interference with respect to corporation contracts and relationships when acting for the benefit of the corporation and within the scope of their authority. Lawsuit Fin, LLC v Curry,
Nevertheless, assuming for the sake of argument that defendant was an agent of the DCS and not a third party relative to the relationship between plaintiff and the DCS, that would not automatically insulate defendant from liability. Instead, even an agent can be held liable for tortious interference if the agent acts not for the benefit of the corporation or entity involved in the transaction or prospective transaction, but for his or her own benefit or pursuant to a personal motive. Reed,
Reviewing the evidence in a light most favorable to plaintiff, and talcing into consideration reasonable inferences arising from the evidence, a genuine issue of material fact existed regarding whether Hoist was honestly acting for the benefit of the DCS or whether she was acting solely for her own benefit and out of motivation to harm plaintiff. As already indicated, a trier of fact, on the basis of the evidence, could reasonably conclude that defendant acted with malice, in a wrongful manner per se, unethically, with an improper motive and absence of justification, or deceitfully in regard to the damaging information and recommendation conveyed to the DCS. There was evidence of an acrimonious relationship between Hoist and Cedroni, and it could reasonably be inferred from the e-mail Hoist sent to Kander, when considered in conjunction with the other evidence, that Hoist was out to sabotage plaintiffs efforts in the bid process. If the information conveyed to the DCS was fabricated, and given the history between Hoist and Cedroni, one could conclude that Hoist was driven by a personal motive to get back at Cedroni and not by a good-faith attempt to benefit the DCS. The winning contractor was to work with defendant in completing the project, and Hoist’s recommendation benefited her in that she would not be forced to work on the project with Cedroni, of whom she had a very negative opinion. Again, issues of fact abound and summary disposition was improper. We further note that very little discovery had taken place before the summary disposition motion was granted, and further discovery could greatly sharpen the issues presented. Finally, this Court’s decision in Joba Constr would effectively have to be ignored on the issue now raised by the dissent, given that the defendant
III. CONCLUSION
In light of the documentary evidence indicating that plaintiff was sufficiently qualified to complete the project in a satisfactory manner, we conclude that a genuine issue of material fact existed concerning whether plaintiff was a responsible contractor to the extent that the trier of fact could conclude that there existed a reasonable likelihood or probability that plaintiff would have been awarded the project absent the alleged tortious interference by defendant. Thus, there was a genuine issue of material fact regarding whether plaintiff had a valid business expectancy.
Furthermore, viewing the conflicting and inconsistent evidence and the inferences arising from it in a light most favorable to plaintiff, a trier of fact could reasonably conclude that defendant acted intentionally and improperly in an effort to interfere with plaintiffs business expectancy.
Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction. Having fully prevailed on appeal, plaintiff is awarded taxable costs pursuant to MCR 7.219.
Notes
For purposes of this opinion, we shall refer to plaintiffs claim as “tortious interference with a business expectancy.”
While the Joba Constr opinion did indicate that the plaintiff was the lowest bidder on the first project, it did not reveal the nature of the evidence presented at trial with respect to the plaintiff being a “qualified” bidder.
Hoist noted that, on one project, some of plaintiffs work was the worst that she had ever seen.
Cedroni is plaintiffs president and principal representative.
The documentary evidence is not clear regarding whether Hoist’s notes themselves were shared with the DCS; however, defendant’s brief in the trial court indicated that the notes were indeed shared and that the DCS chose another contractor on the basis of the notes and the information contained therein.
Hoist’s notes and Cedroni’s affidavit and letter do raise concerns about hearsay. However, neither party argued in the trial court, nor argues on appeal, that any of the documentary evidence should be disregarded and not considered on the basis of hearsay. Indeed, both parties place some reliance on all three of the documents. Given that the parties have effectively agreed to allow consideration of the documents and their contents, we shall not engage in any hearsay analysis.
Returning to our hearsay concern, aside from again noting that neither party raises hearsay issues, we would note that Cedroni’s claims with respect to what others told him about plaintiffs workmanship would not be hearsay in the context of this issue because their statements would not be offered to prove the truth of the matter asserted. MRE 801(c). For purposes of this issue, statements that, for example, plaintiff did quality work on a project would not be used to prove that plaintiff indeed did quality work, but simply to show that the declarant made a statement contrary to one attributed to him or her in Hoist’s notes, calling into question Hoist’s truthfulness and showing improper conduct. See Merrow v Bofferding,
Dissenting Opinion
(dissenting). I respectfully dissent. The trial court correctly determined that plaintiff lacked a valid business expectancy in a potential governmental contract. In my view, plaintiff merely had a legitimate expectancy that the bidding process would be openly and fairly conducted and, thus, it had to establish fraud, injustice, or violation of trust in order to avoid summary disposition. Moreover, even assuming that the majority’s framework of analysis is correct, plaintiff nonetheless failed to show that defendant did anything improper or that its conduct was anything other than the exercise of professional business judgment. Accordingly, I would affirm the trial court’s order granting summary disposition in favor of defendant.
I. STATEMENT OF FACTS
This action arises out of the bidder selection process for a construction project undertaken by the Dawson School District that involved renovations and new construction at the Hill and Siple elementary schools (the project). In June 2003, the school district contracted with defendant to provide professional architectural and engineering services for the project. In addition to providing these services, defendant agreed to assist the school district, in the administration and implementation of the project, to provide evaluations and recommendations during all phases of the project, and to help the school district obtain competitive bids. With regard to the competitive-bidding process, it was defendant’s role to assist the school district with “bid validation or proposal evaluation and determination of the successful bid or proposal, if any.” In this capacity, defendant was responsible for advertising the project and distributing bidding documents to prospective bidders and, if requested by the school district, for assisting in interviewing, selecting, and negotiating with prospective contractors. Defendant designated Jackie Hoist to act as its designated representative to assist the district with the project.
With respect to the competitive-bidding process, the school district’s fiscal management policy (FMP) provides that bids shall be awarded consistently with applicable law. The applicable provision of law, MCL 380.1267, provides, in relevant part:
(1) Before commencing construction of a new school building, or addition to or repair or renovation of an existing school building, except repair in emergency situations, the board of a school district... shall obtain competitive bids on all the material and labor required for the complete construction of a proposed new building or addition to or repair or renovation of an existing school building.
(2) The board .. . shall advertise for the bids required under subsection (1) by placing an advertisement for bids at least once in a newspaper of general circulation in the area where the building or addition is to be constructed or where the repair or renovation of an existing building is to take place and by posting an advertisement for bids for at least 2 weeks on the department of management and budget website on a page on the website maintained for this purpose or on a website maintained by a school organization and designated by the department of management and budget for this purpose....
(6) At a public meeting identified in the advertisement for bids described in subsection (3), the board... or its designee shall open and read aloud each bid that the board.. . received at or before the time and date for bid submission specified in the advertisement for bids. The board... may reject any or all bids, and if all bids are rejected, shall readvertise in the manner required by this section. [Emphasis added.]
The FMP further provides that “[b]ids shall be awarded ... to the ‘lowest responsible bidder.’ ” The FMP indicates that the lowest responsible bidder, i.e., the responsible contractor that submits the lowest bid, is not necessarily the lowest overall bidder because that bidder might not be a responsible contractor. In determining who is a responsible contractor, the FMP directs the district’s school board to rely on a variety of factors, including responsibility criteria and the recommendation of the architect. Responsibility criteria take into account a wide variety of information relating to a particular contractor, such as projects completed during the last three years, experience with projects similar to those being bid on, and references from third persons who have hired the contractor, and, importantly, the FMP defines a responsible contractor as a contractor “determined by the Board to be sufficiently qualified to satisfactorily perform the [cjonstruction project. . . .” Further, under the FMR the board specifically reserves “the right to reject any or all bids, including the bid of any contractor who is not reasonably determined to be ‘responsible’ in conjunction with this policy.”
In July 2007, defendant prepared a project manual for the project. The manual established a method by which the school district would procure bids on the project consistent with applicable law, see MCL 380.1267. It provided a bid advertisement, which required bidders to submit a bidder-qualification form with their proposals and indicated that “offer[s] will be required to be submitted under a condition of irrevocability for a period of thirty (30) days after submission”
In October 2007, plaintiff submitted a bid on the project. In its application, plaintiff identified five public-sector educational clients that it had completed projects
On October 17, 2007, the school board opened all the contractors’ bids. Of the six bids submitted, plaintiff’s bid was the lowest. Defendant then checked plaintiff’s references, and Hoist conducted interviews. Hoist spoke to several of plaintiff’s identified contacts, including Tagle, Hartzman, Rothermel, Muzyk, and Gassen. She also spoke with Ken Kander, another person affiliated with the Holly Academy project; Jim Tomblinson and Bryan Hall, who had apparently worked with plaintiff on other projects; and two persons identified as Ron K and Aaron W. According to plaintiff, Kander and Hall were outside sources, while Tomblinson, Ron, and Aaron were affiliated with defendant. These people had differing opinions regarding plaintiff’s work, both positive and negative. Apparently, Hoist made notes of these conversations, which provided:
Contact #1 — David Gassen — Partners in Architecture
2005 or 2006 thinks $600,000 Warren Consolidated Schools Service Center Connecting Links.
Work was a tight schedule, people were in the building, He managed it well, hands on job, supervision was good, would work with them again. His firm has asked them to bid a lot of their jobs.
Contact #2 — Jim Tomblinson
2003 or 2004
State Island Lake State Park Toilet Buildings
Cedroni didn’t meet the project schedule
Did not follow plans and specs
Lack of supervision
No follow-up
Poor quality
He thinks the state put him on their “may not bid” list
Contact #3 — Bryan Hall regarding a prime subcontract — casework
Architectural Systems Group
Says Not good to deal with
Contact #4 — Tim Rothermel — ABC Paving
Detroit Public Schools Jayne Field Fieldhouse. $80,000 exterior and interior work, concrete, finishes, and emu.
Worked for them but not recently, did a good job, very dependable, do what they way [sic] they will. Schedule was fine, they ended up getting into winter conditions but it was not Cedroni’s fault.
Contact #5 — Elizabeth Musyk —■ Eares and Associates
$700,000 — City of Madison Heights Library, January 2007, grand opening was in July. Work was very good as a whole. Problems with the electrical sub who did not finish on time. Schedule lag. DTEgot them behind as too. Did as much as possible to keep (on schedule). Very reasonable on change orders.
Contact #6 — John Tagle
Irene Hughes Building Alterations, Flint — State of Michigan job $100,000
Work quality was good, redid work when necessary. Did not follow documents closely. Fairly good. Paperwork end was good. Schedule — didn’t meet deadlines but not all his fault. The fire marshal and the state agencies were involved. There were some things/issues created that didn’t have to be created. He did things his own way, then they had to scramble and re-design
Contact #7 — Les Hartzman
Holly Academy, 2006 $260,000
Laughed, said he didn’t have a problem with the guy. Would not hire him for this job.
Contact #8 — Ken Kander
2006 Holly Academy $260,000.
Declined to comment
I won’t say anything negative but I won’t say anything positive either.
Myself
Worked with him on several projects. Rochester [Hjills Maintenance addition, Rochester Hills Paths and Vault Toilets, and Holly Academy.
Some of the work at the Maintenance addition was the worst I’d seen — I told him that. Holly as [sic] lacking supervision and workmanship was poor. The quality level received is reflective of their bid and about what I expected from Cedroni, but in addition to the low quality, his follow-up on construction issues, especially with regard to their lighting problem, is unacceptable to me.
Ron K. reminded me that the Paths and vaults project was so late that the owner almost lost their grant money and had to finish up the work themselves just to close out the contract.
Aaron W. reminded me that when we did pre-award interview at Holly — I warned him that past shortcomings will not be tolerated.
Ultimately, Hoist did not recommend plaintiff to the school district, and plaintiff was made aware that it had not been recommended. In response, Richard Cedroni, plaintiff’s president, wrote a letter to “All Interested Parties” regarding the matter. In the letter, he stated:
Jackie Hoist was forthcoming enough to let me know she intended to not recommend our company as general contractors for this project. I admire her frankness, but I obviously do not agree with her evaluation.... I have personally contacted all [our references] and all admitted to talking with Jackie. They all reported giving good reviews and glowing reports of our performance, except for one architect. After speaking with this architect and explaining to him that his comment could be viewed as damaging, he stated he didn’t think his review was particularly bad and he would have no problem working with us in the future.
Quite truthfully, I was shocked to hear her intentions, as we have recently worked together to complete a classroom renovation at Holly Academy. The project was successfully completed on time, with the only difficulty coming from the state office of fire and safety.... I have spoken with [the] owner numerous times and he was very happy with our quality and performance on the project and would not hesitate to utilize our services again.
Based upon my research, I have found no definitive reason as to why my company should not be recommended for this project. I am offering to completethis job at nearly $50,000 less than the next lowest bidder.... We have never been removed from a project and never received a poor review from any architect/owner we’ve worked with. Even after our last project with [defendant], I was told they had no issue with our performance and we could use them as a reference for future work.
On October 30, 2007, a district committee held a meeting regarding the bids. Cedroni appeared at the meeting, distributed copies of his letter, and addressed the committee. Plaintiff did not allege that the statements of the respective references were not made, or that Hoist had transcribed them inaccurately; rather, plaintiff merely disagreed with the content of the opinions expressed. Ultimately, the committee approved defendant’s recommendation to award the contract to the second lowest bidder, “contingent upon review of” Cedroni’s letter, and forwarded its recommendation to the school board. After further review, and based on the recommendations of the committee and defendant, the board awarded the contract to the second lowest bidder, US Construction and Design Services, LLC. At the time, US Construction had an active contract with the school district and was performing in a satisfactory manner.
On May 20, 2008, plaintiff filed suit against defendant for tortious interference with business relations. Defendant moved for summary disposition pursuant to MCR 2.116(C)(8) and (10). After arguments, the court determined that plaintiff did not have a valid business expectancy because all the documentation indicated that the lowest overall bidder was not guaranteed to receive the contract and the board never implied that it would accept plaintiffs bid. The court also determined that there was no evidence indicating that defendant’s conduct was improper. It therefore granted defendant’s motion pursuant to MCR 2.116 (C)(10).
II. STANDARD OF REVIEW
We review de novo a trial court’s ruling on a motion for summary disposition. Gillie v Genesee Co Treasurer,
III. ANALYSIS
Plaintiff first argues that the trial court erred by granting summary disposition in favor of defendant on plaintiffs claim of tortious interference with a prospective economic advantage. I disagree. In my
As noted by the majority, the requisite elements for tortious interference with advantageous business relationships or prospective economic relations are (1) the existence of a valid business relationship or expectancy, (2) knowledge of the relationship or expectancy on the part of the interferer, (3) an intentional interference causing a breach or termination of the relationship or expectancy, and (4) resulting damage to the party whose relationship or expectancy has been disrupted. At issue here are the first and third elements.
The first element requires proof of “the existence of a valid business relationship or the expectation of such a relationship between the plaintiff and some third party . . ..” Blazer Foods, Inc v Restaurant Props, Inc,
A. PLAINTIFF FAILED TO ESTABLISH THAT DEFENDANT IS AN INDEPENDENT THIRD PARTY
Although the trial court dismissed plaintiffs claim on the basis of MCR 2.116(0(10), I would also conclude that an additional basis for dismissal exists under MCR 2.116(C)(8). “To maintain a cause of action for tortious interference, the plaintiff must establish that the defendant was a ‘third party’ to the contract rather than an agent of one of the parties acting within the scope of its authority as an agent.” Lawsuit Fin, LLC v Curry,
Defendant was not a third party to the prospective contract; rather defendant was acting as the school board’s agent. The contractual agreement between the school board and defendant directed defendant, at the school board’s request, to assist the school board in the competitive-bidding process. Thus, defendant stood in a fiduciary relationship with the school board, and it was incumbent on defendant to act in good faith and in the school board’s best interest when it assisted the
B. PLAINTIFF HAD NO VALID BUSINESS EXPECTANCY
Next, even assuming that defendant could be liable for tortious interference, I would conclude, contrary to the majority’s position, that plaintiff lacked any business expectancy, valid or otherwise. Plaintiff merely stood in the position of a “disappointed bidder” on a construction contract. Michigan law makes clear that disappointed bidders for governmental contracts have no action at law to recover lost profits, let alone any protected interest in being awarded a governmental contract. See Talbot Paving Co v Detroit,
Because the instant matter involves a claim of tortious interference with a business expectancy allegedly stemming from the school board’s competitive-bidding process, the question becomes, What degree of discretion was allowed to the school district and was it such a high degree that no business expectancy could flow from the bidding process? By statute, the competitive-bidding process here was highly discretionary in nature. The statute provides no limiting criteria, and thus it can be said the discretion granted to the school board in awarding a contract for construction is unfettered and the broadest discretionary authority possible. See MCL 380.1267. Further, the fact that plaintiff was not awarded the contract even after it had a full and fair opportunity to be heard at a public forum supports my conclusion that the award of the contract to US Construction was a highly discretionary governmental activity in which “too many factors [were] in play to be able to reasonably infer that. . . plaintiff likely would have obtained the desired advantage.” Trepel,
Implicit in this conclusion is my rejection of the majority’s contrary position that the school district’s discretion was limited. The bidding instructions clearly informed all bidders that the lowest bidder, or in fact any bidder, was not guaranteed to receive a contract. All the accompanying documentation related to the bidding process reiterated the board’s full discretion to reject any and all bids. For example, the district’s advertisement for bids provided, “Owner reserves the right to accept or reject any and all offers”; the instructions provided to bidders indicated that the board reserved the right to reject or accept any bids in its “best interest”; and, the FMP also contained language reserving the board’s discretion to “reject any or all bids.” I acknowledge, as the majority points out, that the FMP also mandates that the board select the “lowest responsible bidder.” However, the majority’s reliance on this language to conclude that the school district’s discretion was limited, thereby creating a valid business expectancy in an exercise of discretionary governmental authority using principles of contract interpretation, is puzzling. The FMP did not have the force of law, and its distribution to all competing bidders did not create an enforceable contract or even an expectancy in a business relationship. Rather, in my view, the FMP is akin to an employer’s policy manual and merely informs contractors how the school board intends to proceed in the selection process.
Turning to the instant matter, because plaintiff had no valid business expectancy, plaintiff had to show that defendant interfered
Further, I find the majority’s reliance on Joba Constr Co, Inc v Burns & Roe, Inc,
While a superficial reading of Joba Constr suggests that it is applicable to this matter, I would conclude that its value as a guide to this Court is nonexistent. The Joba Constr Court never explained the nature of the evidence presented that gave rise to a legitimate business expectancy, and the Court never described what discretion, if any, the city of Detroit had to remove a subcontractor from the project. Thus, it is unclear whether the Court meant to suggest that simply being the lowest bidder in the bidding process is sufficient to establish a legitimate business expectancy or whether because the plaintiff had contracted with the general contractor and was already performing the role of a subcontractor it had some legitimate expectancy in the continuation of the same. Further, given the foregoing, the facts of Joba Constr are clearly distinguishable from the present matter. Here, plaintiff was never awarded a contract for the project through a general contractor and then subsequently removed from the project like the plaintiff in Joba Constr. Rather, the present matter is limited to the highly discretionary bidding process before a contract is awarded that school districts use when undertaking a school-construction project. Thus, the exact issue that was before the Joba Constr Court is not now before this Court. In any case, the decision in Joba Constr is not binding on this Court. Although a published opinion generally has precedential effect under the rule of stare decisis, MCR 7.215(C)(2), a rule of law established in a published opinion issued before November 1, 1990, need not be followed, MCR 7.215(J)(1).
Where the ultimate decision to enter into a business relationship is a highly discretionary decision reposed within the structure of a governmental entity, it becomes more difficult for a plaintiff to prove that it had an expectancy of doing business with the governmental body. Here, the fact that [the second lowest bidder] was awarded the contract at a city council meeting after all interested parties were given a chance to be heard supports the view that the award of the contract was a highly discretionary governmental activity in which “too many factors [were] in play to be able to reasonably infer that. . . plaintiff would have obtained the desired advantage.” Moreover, the bidding instructions clearly informed plaintiff that the lowest bidder was not guaranteed to receive the water main improvement contract. Lastly, the fact that plaintiff submitted a nonconforming bid should have negated any expectation that it might have had regarding the possibility of receiving the contract. [Id. at 3 (citations omitted).]
Apart from the bond issue, Mago is identical to this case. Plaintiff knew from the outset that the lowest bidder was not guaranteed to be awarded the contract, that the selection of the winning bidder depended on the evaluation of numerous criteria, and that the decision was made at a public meeting at which interested parties, including plaintiff, were permitted to speak.
An additional case I find persuasive is EBI-Detroit, Inc v Detroit,
[BQowever one describes EBI’s relationship with DWSD, ■it is not the kind of relationship that can support a tortious interference claim. Michigan courts have already rejected the idea that a disappointed bidder has a valid business expectancy in a potential government contract. Timmons v. Bone, [unpublished opinion per curiam of the Court of Appeals, issued April 23, 2002 (Docket No. 228942)]2002 WL 745089 , at *2 (Mich.Ct.App. April 23, 2002). We agree, and note that holding otherwise would give any low responsive bidder an immediate business expectancy in the government contract at issue. EBI had a “unilateral hope” of winning the contract,nothing more, so its tortious interference claim cannot proceed. [Id.]
In summary, given that the school board expressly reserved the right to reject any bid under MCL 380.1267,1 conclude that while plaintiffs status as the lowest bidder created the mere possibility that it would be in contention to be awarded the contract, it did not create a reasonably likely or probable expectation that it would, in fact, be awarded the contract. Because plaintiff had no business expectancy in the highly discretionary bidding process and it only had an expectancy that its bid would be treated fairly, it was required to come forward with some evidence of fraud, injustice, or violation of trust. It failed to do so, and therefore the trial court properly granted defendant summary disposition under MCR 2.116(0(10).
C. PLAINTIFF DID NOT ESTABLISH INTENTIONAL INTERFERENCE
Even assuming that the majority’s framework of analysis is correct, i.e., that plaintiff had some valid business expectancy, I would nonetheless conclude that plaintiffs claim fails on the third element necessary to establish a claim of tortious interference. The claim requires proof that the defendant intentionally interfered with the existence of a valid business relationship or expectancy and that the interference induced or caused a breach or termination of the relationship or expectancy. BPS Clinical Laboratories v Blue Cross & Blue Shield of Mich (On Remand),
1. INTENTIONAL INTERFERENCE
Plaintiff contends that a question of fact existed regarding whether defendant provided the school board false information. I disagree. Plaintiff fails to identify any evidence in the record substantiating this claim. Plaintiffs argument seems to rely on Hoist’s notes from the reference checks, which related to projects plaintiff worked on. However, there is no evidence in the record indicating that Hoist’s notes contained false reports. Noticeably absent from the record is any affidavit or proof that Hoist’s notes were made up, slanted, or created out of whole cloth. In fact, plaintiff has never asserted that the comments recorded in Hoist’s notes were not actually made. Indeed, Cedroni’s letter to the school district made no such allegations, but simply asserted that he disagreed with the references. Plaintiff chose
Further, it is obvious from the record that plaintiff and defendant have had disagreements in the past while working together on previous projects and that their relationship was contentious at times. Considering that the parties worked together on complex, large, and costly construction projects, it is not difficult to imagine professional disagreements occurring. Plaintiffs attempt to blame defendant for the professional disagreements, however, does not create a legitimate question of fact, absent some other substantiating evidence, that defendant acted on improper motives. As noted, a plaintiff must identify specific affirmative acts that corroborate the alleged improper motive. BPS Clinical Laboratories,
2. CAUSATION
Even if defendant had acted improperly, however, plaintiff has failed to show that this allegedly improper conduct actually interfered with plaintiffs supposed business expectancy. Defendant’s recommendation was but one factor that the school district was to consider in determining which contractor to award the contract. After receiving defendant’s recommendation and Cedroni’s letter, a district committee considered the recommendation and the letter. The committee then made a recommendation to the school board, which, in turn, consistenly with the FMI] considered a number of responsibility criteria, defendant’s recommendation, and Cedroni’s letter. As noted, the responsibility criteria take into account a wide variety of information relating to a particular contractor, such as projects completed during the last three years, experience with projects similar to those being bid on, and references from third persons that have hired the contractor. Discretion was vested in the board to select the contractor that it viewed to be qualified to perform the job. The school board ultimately selected the second lowest bidder, US Construction, which at that time had an active contract with the school district and was performing well. In other words, defendant’s recommendation was only one factor
IV CONCLUSION
In my view, the trial court properly granted summary disposition for defendant. Plaintiff never established that defendant was an independent third party. Rather, in recommending that the school board reject plaintiffs bid, defendant was acting as an agent of the school board. Thus, plaintiff failed to state a claim on which relief could be granted. Reed,
I would affirm.
Apparently, the purpose of the 30-day irrevocability period was to give the district time to determine whether bidders were responsible contractors.
Elizabeth’s surname was spelled “Muzyk” in plaintiffs documents and “Musyk” in defendant’s documents.
EBI Detroit, Inc v Detroit, unpublished opinion per curiam of the Court of Appeals, issued April 30, 2009 (Docket No. 277953). Although this case is not binding, MCR 7.215(C)(1), this Court may view it as persuasive, Dyball v Lennox,
Section 1267 of the Revised School Code, MCL 380.1 et seq., establishes procedures that school districts must abide by when constructing a new school building. MCL 380.1267(6) requires bids to be read aloud at a public meeting and provides that “[t]he board, intermediate school board, or board of directors may reject any or all bids ... .”
Again, while I recognize this case is not binding precedent, MCR 7.215(C)(1), I do view it as persuasive. See Dyball,