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There was “no collusion, secret intent or improper motive.” While this sounds like a tweet from President Donald Trump, it is a quote from the U.S. District Court in the case of John T. Jones Construction Company v. Hoot General Construction, 543 F. Supp. 2d 982 (S.D. Iowa 2008). The case provides a different look at prospective engineer liability to a contractor; liability based on interpretation of specifications. Unlike many of the cases analyzed in this column, the Jones case is not brimming with legal theories and explanations. Rather, it is predicated on detailed facts and circumstances, which are summarized succinctly below for purposes of this article.
The case involved a public improvement project at a Des Moines, Iowa wastewater reclamation facility. As the Court explained, the project included “a lining system to protect the concrete in ‘blended sludge wetwells, a new wast-to-digester’ wetwell and septage tanks, which were to be rehabilitated to serve as ‘special waste receiving tanks.’” Jones, 543 F. Supp. 2d at 986. The dispute at issue in the lawsuit was centered around which of two competing lining systems should have been installed at the project.
Due to the “corrosive effect” of wastewater, the concrete tanks in which it is collected need to be lined appropriately. The Court noted that the most consistently successful protective methods involve attachment of an impervious polyvinyl chloride (PVC) liner to the concrete surface. In recent years, lining systems have evolved to protect rehabilitated existing concrete collection structures. As relevant in this case, “the rehabilitation and protection of an existing structure involves first repair of the corroded concrete surface . . . followed by the application of a bonding material or ‘mastic’ to the repaired concrete surface to which is affixed a PVC liner. In 2002 two companies offered PVC/mastic lining systems for rehabilitated concrete wastewater structures – Ameron International Corp. (‘Ameron’), and Linabond, Inc. (‘Linabond’).” Jones, 543 F. Supp. 2d at 988.
The Des Moines engineer, Black & Veatch (“B&V”), originally prepared specifications provided for a liner manufactured by Linabond. At the city’s request, however, the design was altered to provide for “Linabond ‘Semi-Rigid Co-Lining System’ manufactured by Linabond Inc., or equal.” The liner subcontractor, Hoot General Construction (“Hoot”), had a great deal of experience with a competing product manufactured by Ameron. An Ameron field service representative assured Hoot that Ameron’s products were equal to Linabond’s. Moreover, Hoot had never had Ameron rejected as an or-equal, and Ameron was considered equal to Linabond in the industry. Since Hoot believed that the Ameron liner was equal to the Linabond liner, Hoot submitted its bid with the Ameron liner to the general contractor, John T. Jones Construction Co. (“Jones”). After the Jones bid was accepted by Des Moines, B&V rejected Hoot’s subcontractor bid with the Ameron liner. Jones was ultimately required to install the more expensive Linabond liner.
Jones commenced a lawsuit in 2005 and together with Hoot, sued B&V for rejecting the Ameron liner as “equal” to the Linabond liner. (The lawsuit included a number of other claims and parties as well. For purposes of this article, we are limiting the discussion to Jones and Hoot’s professional negligence claim against B&V.)
In an opinion laden with detailed facts, the District Court found that Jones and Hoot made a “threshold showing” that Ameron’s lining system was generally equal to the specified Linabond co-lining system. Jones, 543 F. Supp. 2d at 1005. However, the Court noted that reasonable engineers superintending a wastewater treatment project could prefer one lining system over the other. For example, the systems differ significantly with respect to the type of mastic and how the PVC liner is affixed to the mastic. In addition, the Linabond system, unlike the Ameron system, has been tested for resistance to corrosion. The Court pointed out that “[a] reasonable engineer might prefer a mastic whose resistance to corrosion has been tested over one that has not been tested.” Jones, 543 F. Supp. 2d at 1007.
Indeed, the Court reviewed a number of potential advantages to using the Linabond system before concluding, “The relative advantages and disadvantages of the Ameron mechanically-bonded system and Linabond’s continuously chemically-bonded system are debatable, but reasonable professional engineers could differ on whether Ameron’s Arrow-lock system is the equal of the Linabond co-lining system in a given application, and vice versa.” Jones, 543 F. Supp. 2d at 1007.
Among other things, Jones and Hoot argued that B&V selected the Linabond liner based on B&V’s prior business relationship with Linabond. The Court rejected this argument:
The Court is not convinced B&V and Linabond had any relationship other than the normal relationship between a manufacturer of construction products and an engineer with a potential use for those products. The record indicates it is common for manufacturers and vendors to pitch their products to design engineers. Ameron does it . . . . Information from manufacturers and vendors is essential to engineers in making decisions about what products and materials to specify on a project . . . . That Linabond was in contact with B&V while the selection of a lining system was stalled over the or-equal issue merely reflects that Linabond, as much as Ameron, wanted the job. Jones, 543 F. Supp. 2d at 1007.
By the time the lining submittal arrived, B&V had established a working relationship with Linabond on the project. A Linabond representative had visited the site and Linabond engineers worked assisted in developing a specification and making technical recommendations. “Having recommended the Linabond system to [the city], become familiar with the system during the design process, and established a working relationship with Linabond, it is understandable B&V was favorably disposed to Linabond's co-lining system. These practical circumstances do not evince bad faith. They are likely to be present in the common situation in which a design engineer specifies a specialty product as the standard for type, function and quality desired.” Jones, 543 F. Supp. 2d at 1007-08.
In sum, the Court found that B&V's denial of the Ameron submittals was in good faith and not tainted with collusion, secret intent or improper motive. Jones, 543 F. Supp. 2d at 1008. “B&V's assessment of Ameron’s system as an or-equal was wanting in some respects, but having considered Ameron’s system, B&V honestly believed the Linabond co-lining system would best serve the interests of its client, [the city]. Right or wrong, at the end of the process B&V thought Linabond's chemically-bonded system offered greater protection for the rehabilitated tanks than [Ameron’s system].” Jones, 543 F. Supp. 2d at 1008.
The Jones case offers a number of lessons for the engineer on a project involving what may be perceived to be a sole-source procurement. First, document, in detail the reasons why a particular brand or manufacturer is specified. Everything should be considered, including, for example, prior use of and experience with the product, as well as its distinguishing features. Second, the engineer must be able to justify the reasonable bases for its decision. This could include many factors, such as prior use, product literature and meetings with company representatives. Third, there is nothing wrong with using “information from manufacturers and vendors” to assist in making a decision what products to specify for a project. If the engineer follows these general principles and considers proposed “equal” products in good faith (assuming an “or-equal” specification), then a reviewing court (such as the Jones court) would have a basis to sustain the engineer’s decision and find that the engineer did not breach a duty of care to the contractor in connection with its determination regarding a product proposed as “or-equal.”