Negligent Bid Recommendation

Originally posted on July 22, 2011 by Ryan

Sunland Constr. Co. v. Wilbur Smith, Inc.,  387 F. App’x 361 (4th Cir. 2010).

In this recent Fourth Circuit case, a construction company sued the city of Myrtle Beach for breach of contract after the City terminated its contract to install rainwater pipes. The construction company also sued the project’s design engineer. The City filed a counterclaim against the construction company and the engineer. The district court held that the design engineer was liable to the City, but dismissed the other claims. The design engineer appealed this judgment to the circuit court of appeals.

The facts of this case are simple: the engineer was to recommend a contractor for the job following a competitive bidding. The engineer recommended a contractor that bid drastically less than the other bidders. The court held that the City had a right to rely on the engineer’s recommendation, which the engineer should have foreseen. Likewise, the engineer should have foreseen that the contractor bidding substantially less than its competitors would not reasonably be able to perform under the contract.

The court determined that the engineer was liable to the City for its negligent recommendation because the engineer had a duty to make a reasonable recommendation, breached that duty by negligently recommending the dramatically low bidder, and this recommendation was a foreseeable contributing cause of the City’s injuries. Based on this finding, the court affirmed the district court’s holding.

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