Petition — Baltimore County v. Raymond International Builders, Inc.

oo } |. Supreme Court, U.S.

FILED

80-512 SEP 30 1980

tea RODAK, JR., CLERK

NO.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1980

BALTIMORE COUNTY, MARYLAND,

Petitioner,

Vv.

RAYMOND INTERNATIONAL BUILDERS, INC.,

and

J. E. GREINER, INC.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

COURT OF SPECIAL APPEALS OF MARYLAND

LEONARD S. JACOBSON,

HARRY S. SHAPIRO

Baltimore County,

Office of Law,

Court House

Towson, Maryland 21204

(301) 494-3 146 :

Attorneys for Petitioner

———————————S—_ ———————————————————_—_

THE PAUL M. HARROD COMPANY, BALTIMORE, MARYLAND 21234

i

To the Honorable, the Chief Justice and Associate Justices

of the Supreme Court of the United States:

Baltimore County, Maryland, the Petitioner prays that a

Writ of Certiorari be issued to review the judgment of the Court

of Special Appeals of Maryland entered in the above-entitlted

case on April 11, 1980, and the order dated July 3, 1980, of

the Court of Appeals of Maryland which denied a Petition for

Writ of Certiorari relating to said case.

QUESTIONS PRESENTED

1. Was the Court of Special Appeals correct when it

held thai, following Hollerbach v. United States, 233 U.S. 165

(1914), Baltimore County was liable to a contractor for cost

overruns on a bridge repair contract, where the contractor

allegedly relied on data provided by the county, even though

the contractor was warned the data was forty years old and

should not be relied upon?

2. Was the Court of Special Appeals correct when it

remanded the case to the trial court for damages alone, and

against the Petitioner alone, when the Respondent, J. E. Greiner,

Inc., was also an original Defendant and had prepared the

contract documents upon which the allegations of misrepre-

sentations had been made?

3. Did the failure on the part of the State Court to

apply your Petitioner’s defenses of sovereign immunity and the

statute of limitations deprive your Petitioner of its rights of due

process under the Constitution of the United States?

PARTIES

The Petitioner herein, Baltimore County, Maryland, was

a Defendant before the Trial Court, and was an Appellee before

ii

the Court of Special Appeals of Maryland. The Respondent

herein, Raymond International Builders, Inc., was the Plaintiff

before the Trial Court, and was the Appellant before the Court

of Special Appeals. The Respondent herein, J. E. Greiner,

Inc., was a Defendant before the Trial Court in the action

brought by Raymond International Builders, Inc., and was a

Cross-Defendant in the Trial Court proceedings in a Cross-

Claim filed against such party by Baltimore County, Maryland,

before the Trial Court.

TABLE OF CONTENTS

Page

ob yy es ne Pore re ey sere i

PUNE <vsa - Kean Coun ¥ scene Ukecks eee reese Rees i

Bo gS er er rere rer er er Ts |

| ESTEE UTR CURR TTL ROPER LTT 2

CONSTITUTIONAL PROVISIONS AND STATUTES....... 3

SEAR TE TIE FEE WON 66 65h S Ra ee Ned FOS SS eed 4

REASONS FOR GRANTING THE WRIT................. 7

COE oct cous ese eh ewan beeen et obeeeeGeren 14

TABLE OF CITATIONS

Cases

Accord, Alpert v. Commonwealth,

250 Fi de Fae COs BOTs ooo 6 eens Dab erens a

Accord, Dravo Corp. v. Municipality of Metropolitan

Seattle, 79 Wash. 2d 214, 494 P.2d 399

Ca OE es STs ate eid on ie eek babes dates 10

Archie and Allen Spiers, Inc. v. United States,

296 F 26 Ta? Cott OE Com, PIED oc cc cc ces oes 8

Branna Construction Corp. v. West Allegheny

Joint School Authority, 430 Pa. 214,

DES A280 DO Oe is CE hh ewes 6 dceeass 9,10

ry

iv

Page

Condun-Cunningham, Inc. v. Day, 258 N.E.2d 264

(Ct. of Common Pleas of Ohio,

Ce ME Sve ce dees escbesionses 11

Detroit and I. R. Co. v. Guthrie,

pea ey 8 eS "re eee 10

Elkan v. Sebastian Bridge District,

BO oe bg vik dk oo desde ewasees 9

Gevyn Construction Corp. v. United States,

og Re ge | | Se 1]

Hollerbach v. United States,

ae ae Pe Es weeseeceecces i,2,6,7,8,9,10,11,13

MacArthur Brothers Co. v. United States,

oe le il 6 wd wi aé'b'g 0 kb o.o 0 66 « asia 7

Robert E. McKee, Inc. v. City of Atlanta,

rr PT CEs BP oe Site cue eecn sve’ 9

Penn Central Transportation Co. v. United States,

as, CRUE I BOT ED 65.5 c's Se cee dlecde ween 11

Pitt Construction Co. v. City of Alliance,

Re ee a es BOD, bn ob ok oe hoe sc acaewee ee 10

Transbay Construction Co. v. City and County

of San Francisco,

Pe es Te Crees COE, BOOED cc ccc chs ceecccews 10

Wunderlich v. State, 56 Cal. Rptr. 473,

ff Ta gk oy) 10

Constitutiv::<! Provisions and Statutes

Annotated Code of Maryland, Article 25A, Section 1A ... 3,13

Constitution of the United States,

Fourteenth Amendment................... 2,3,12,13

INDEX TO APPENDIX

Appendix A—Opinion of the Court of

Special Appeals of Maryland.............sceee0. A. 1

NO.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1980

BALTIMORE COUNTY, MARYLAND,

Petitioner,

v.

RAYMOND INTERNATIONAL BUILDERS, INC.,

and

J. E. GREINER, INC.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

COURT OF SPECIAL APPEALS OF MARYLAND

OPINIONS BELOW

The opinion of the Court of Special Appeals of Maryland

whose judgment is herein sought to be reviewed is reported at

412 A.2d 1296. By its order dated July 3, 1980, the Court of

Appeals of Maryland denied Petitioner’s Petition for Writ of

Certiorari.

2

JURISDICTION

The jurisdiction of this Court is invoked pursuant to 28

U.S.C., Section 1257, as the Petitioner herein is alleging that its

rights and privileges under the Fourteenth Amendment to the

Constitution have been violated by the State Court decision.

Additionally, the principal issue in the case relates to the State

Court construction and application under the Supreme Court

of the United States case of Hollerbach v. United States, 233

U. S. 165 (1914), and your Petitioner is alleging that the State

Court erroneously construed and applied such 1914 case and

overlooked a more recent Supreme Court and other federal

decisions relating to the issue in Hollerbach. Under Rule 19

of the Rules of the Supreme Court, the Supreme Court may

consider the application of the decisions of the Supreme Court

in order to clarify in a uniform way such application. Addition-

ally, under Rule 20 of the Rules of the Supreme Court, the

Supreme Court may give consideration to the imperative public

importance of the matter, and the Petitioner is alleging that the

application by the State Court in the case at bar could detri-

mentally affect municipal and state contracts throughout the

United States contrary to the public interest and not in accord-

ance with the current view of the Supreme Court of the United

States.

Although the element of damages in this case was remanded

to the trial court for further consideration as to the Respond-

ent, Raymond International Builders, Inc., the case was fully

and finally determined as to the Respondent, J. E. Greiner,

Inc. Additionally, the case was fully and finally determined

as to the defenses of sovereign immunity and statute of limita-

tions raised by the Petitioner.

Therefore, it is the Petitioner’s belief that this case is in

a posture of finality for review by this Honorable Court with

reference to some or all of the issues.

3

CONSTITUTIONAL PROVISIONS AND STATUTES

Fourteenth Amendment to the Constitution of the United

States:

“All persons born or naturalized in the United States

and subject to the jurisdiction thereof, are citizens of

the United States and of the State wherein they

reside. No State shall make or enforce any law which

shall abridge the privileges or immunities of citizens

of the United States; nor shall any State deprive any

person of life, liberty, or property, without due

process of law; nor deny to any person within its

jurisdiction the equal protection of the laws.”

Article 25A, Section 1A of the Annotated Code of Maryland

“Article 25A—Chartered Counties of Maryland 1A.

(A) Unless otherwise specifically provided by the

laws of Maryland, a chartered county, and every

officer, department, agency, board, commission or

other unit of county government may not raise the

defense of sovereign immunity in the courts of this

state in an action in contract based upon a written

contract executed on behalf of the county, or its

department, agency, board commission, or unit by

an official or employee acting within the scope of

his authority... .

SECTION 7. AND BEIT FURTHER ENACTED,

That this Act shall take effect July 1, 1976.

Approved May 4, 1976.”

4

STATEMENT OF THE CASE

On July 17, 1972, the Respondent, Raymond International,

Inc. (hereinafter referred to as “Raymond”) and Petitioner,

Baltimore County, Maryland, entered into a written contract

relating to underwater repairs to the Wise Avenue Bridge in

Baltimore County. The bridge was in excess of forty years old.

The contract documents in this case were made up of

various documents which included an invitation to bid, speci-

fications, proposal, agreement, special provisions and various

documents. Section 5 of the Special Provisions states:

“Original construction data has not been verified by

actual field measurements and the conditions observed

during the underwater inspections and tests may have

changed since the date on which furnished to the con-

tractor for general information purposes only and do

not purport to represent existing field conditions. It

shall be the contractor’s sole responsibility to verify

by actual field measurements, inspections and tests

and data which may be of significance to him in tz

preparation of his bid.”

The contract document specifically states that “Special

Provisions shall govern over specifications, supplemental speci-

fications and plans.” In addition the invitation to bid states at

page 1-03 that:

“Bidders must examine the drawings and specifica-

tions carefully and must make a personal examination

of the location and nature of the proposed work.”

Sheet “X” of the contract documents states in the notes:

5

“Note 2—contractor to verify all dimensions in field.

Note 5—dimensions shown taken from as built plans

and have not been verified by actual measurement.

The contractor shall verify any and all dimensions as

may be required to complete satisfactorily all work

under this contract.”

The Proposal, which is a part of the contract, clearly states

that:

“The undersigned hereby declare that they have care-

fully examined the Form of Contract Specifications,

Special Provisions and Drawings forming a part of the

same and have their satisfaction examined the locality

of the proposed work... .”

Substantial testimony was produced at trial showing that

Raymond could have determined the underwater conditions,

prior to its submitting its bid for the repair job, through the use

of soundings, observations and underwater probes. Raymond

should have foreseen the underwater conditions which existed

because of the age of the bridge (over forty years old) and the

repeated statements in the plans and specifications that the

drawings and measurements were original construction data

and had not been verified. The contract had clear and unam-

biguous statements to the effect that the data was old, was

given for general information purposes only and did not purport

to represent existing field conditions. In addition the contract

stated that it was Raymond’s responsibility to verify any data

which might be of significance in the preparation of its bid.

The original contract price for the repair job was $213,000.

Immediately after the contract was awarded to them, Raymond

decided that it did not have enough profit in the job and

attempted to persuade the county to change the plans and

specifications in order to create more profit. After repairs

6

began, Raymond alleges that it discovered that specifications

provided by the county were inaccurate. The testimony also

revealed that in September of 1972, Raymond was fully aware

of the underwater conditions, and could have taken any legal

action it sought fit to rescind the contract, or other legal

measures that might have been designed to protect any legal

interest it might have had in this matter. However, Raymond

took no such action.

Notwithstanding the fact that Raymond took no action in

September of 1972 or soon thereafter, it later alleged that it

had to perform unforeseeable work at an increase in cost in

excess of one million dollars. Raymond did not institute any

action against Baltimore County until May 26, 1976; more, the

documents clearly stated that the bidder should not rely on the

information given in preparing its bid.

Respondent then institutec an appeal in the Court of

Special Appeals of Maryland. Relying heavily on this Court’s

holding in Hollerbach v. United States, 233 U.S. 165 (1914),

the Court of Special Appeals held that the Trial Court had erred

in holding that the Raymond was not justified in relying upon

the data provided. The Court of Special Appeals further held

that Raymond was entitled to compensation for the unforeseen

or negligently misrepresented conditions which they encountered

in the performance of the contract. However, the Court of

Special Appeals determined that the Respondent, J. E. Greiner,

Inc., the independent contractor who prepared the specifica-

tions for the bid, was not responsible in any way despite the

fact that the proceedings contained a cross-claim brought by

your Petitioner against said Greiner. The Court of Appeals

of Maryland denied, without opinion, Baltimore County’s

Petition for Writ of Certiorari.

7

REASONS FOR GRANTING THE WRIT

Certiorari should be granted in this case because there is

an urgent need for clarification and guidance from the Supreme

Court as to when municipal corporations and states will be

held liable for the accuracy of information provided to pros-

pective bidders and when exculpatory clauses will be upheld.

In Hollerbach v. United States, 233 U.S. 165 (1914), the

Court held that where the government has made a positive

representation upon which the contractor has justifiably relied,

the government will be held liable for increased costs if the

representations prove to be inaccurate. In MacArthur Brothers

Co. v. United States, 258 U.S. 6 (1922), the Court held that

where there has been no positive assertion there can be no

liability.

“To hold the government liable under such circum-

stances would make it an insurer of the uniformity of

all work, and cast upon it responsibility for all of the

conditions which a contractor might encounter, and

make the cost of its projects always an unknown

quantity.” Jd. at 13.

There is a need for the Supreme Court to provide guidance

for the gray area between Hollerbach and MacArthur. In the

sixty-six years since the Court handed down its decision in

Hollerbach, the Courts have differed widely in applying it.

There is great confusion in the federal and state courts as to

when there has been a positive assertion upon which the con-

tractor is justified in relying. Some courts have even used

Hollerbach to hold the government absolutely liable for infor-

mation provided to contractor, even where the contractor has

clearly been warned that the data may be inaccurate and should

not be relied upon. Raymond International, Inc. v. Baltimore

County is a good example of such an erroneous application of

F*

8

Hollerbach. Raymond was clearly warned that the information

provided to it was from original construction drawings, which

were more than forty years old, and that data should not be

relied upon unless the contractor verified it for itseif. The

Court of Special Appeals of Maryland held that following

Hollerbach the Court was liable when the information allegedly

proved to be inaccurate. The Court of Special Appeals of Mary-

land and other courts have effectively interpreted Hollerbach as

holding governments absolutely liable for information provided

to contractors. Clearly the Court did not intend this to be the

effect of its decisions in Hollerbach and MacArthur.

The confusion existing in the federal and state courts can

be clearly seen by examining cases where the fact situations

were similar but the court’s decisions were vastly different. In

Archie and Allen Spiers, Inc. v. United States, 296 F.2d 757

(Court of Claims, 1961), the court was faced with a situation

similar to that in Raymond International. The Navy had

requested bids on a contract to refurbish and repair its pipe-

lines on several piers. The proposal contained a clause telling

bidders to

“inspect carefully the work in place and satisfy them-

selves as to the character and amount of work to be

removed, re ewed, or replaced... .”

The contract drawings contained statements that the “contrac-

tor shall verify all dimensions and conditions at the site.” The

contractor failed to verify the data on the drawings before sub-

mitting his bid. The data was inaccurate and the contractor

brought suit for the cost overruns which resulted. The court

held that the government was not liable for the overruns. The

court recognized Hollerbach but held that it did not remove all

cautioning and exculpatory clauses from contracts. The con-

tractor was not justified in relying upon the data supplied by

the government.

9

In Elkan v. Sebastian Bridge District, 291 F. 532 (8th

Cir., 1923), the court held that the government was not liable

where representations made in construction plans were inaccur-

ate. The construction plans for a bridge contained a profile of

test borings from the bridge site. The contract contained a

clause stating that:

“data furnished to bidders. . .are to be considered as

approximate and bidders must assume the risk of

having to carry the foundations to a greater or less

depth without altering their prices.”

The contractor used the government’s data to determine how

much work was required. When the foundations had to be dug

deeper, he filed suit to recover his cost overruns. The court

held that Hollerbach did not require the government to be held

liable under these circumstances.

In Robert E. McKee, Inc. v. City of Atlanta, 414 F. Supp.

957 (N.D.Ga. 1976), the court stated that if a contract clearly

places the risk of uncertainty on one of the parties then that

party must absorb the losses from unexpected conditions. The

court found that following Hollerbach two conditions must be

met to void an exculpatory clause. It must be unrealistic to

expect the bidders to uncover error on their own and the mis-

representation must be material. According to the court, the

state is not liable when it has done little more than represent

the results of an investigation and the bidder knew or should

have known of the factual basis of these representations. The

government does not become an insurer merely by providing

information to contractors.

The federal courts are not alone in holding that Hollerbach

does not require governments to pay cost overruns when they

provide data to a contractor. In Branna Construction Corp. v.

10

West Allegheny Joint School Authority, 430 Pa. 214, 242

A.2d 244 (S.C. of Pa., 1968), the prospective bidders were

provided with test boring information. The contract stated:

“No responsibility is assumed by the owner or archi-

tect for subsurface conditions, such information is

given for guidance only. Bidders shall not rely on

data, bidders shall make their own investigation.”

The Pennsylvania Supreme Court recognized Hollerbach but

‘held that the exculpatory clause was a sufficient manifestation

of the intent of the government that the contractor should not

rely upon subsurface conditions as represented by plans and

specifications. In accord, Dravo Corp. v. Municipality of

Metropolitan Seattle, 79 Wash. 2d 214, 494 P.2d 399 (S.C. of

Wash. 1971); Wunderlich v. State, 56 Cal. Rptr. 473, 423 P.2d

545 (S.C. of Cal., 1967); Detroit and I. R. Co. v. Guthrie, 72

F.2d 126 (6th Cir., 1934).

As stated previously, the courts are not in agreement on

their interpretation and application of Hollerbach. In Pitt

Construction Co. v. City of Alliance, 12 F.2d 28 (6th Cir.,

1926), the contract contained an exculpatory clause to the

effect that the bidders are required to examine the site and

inform themselves of the magnitude of the work involved and

the conditions and difficulties which would be encountered in

performing the work. The depths of existing excavations shown

on blueprints were stated as being ‘‘about.””» The Depths were

inaccurate and the contractor brought suit for his cost overruns.

The court held that the contractor was entitled to accept and

rely upon the data provided by the city government, despite the

exculpatory clause.

In Transbay Construction Co. v. City and County of San

Francisco, 35 F. Supp. 433 (N.D. Cal., 1950), the bid invitation

for a dam construction project stated that the quantities stated

1]

in the contract were estimates only and the bidders were to

make careful, personal examinations of the proposed work.

Citing Hollerbach the court held that where the estimates

proved incorrect the contractor could recover his cost overruns.

The Court of Special Appeals of Maryland is not the only

state court which has followed this line of rasoning. In Condun-

Cunningham, Inc. v. Day, 258 N.E.2d 264 (Ct. of Common

Pleas of Ohio, Cuyahoga County, 1979) the county had made

available to the bidders soil and foundation investigation

reports. The reports stated that they were not part of the con-

struction plans and were merely a source of supplementary

information. The contract also stated that the bidder was

required to examine the site and the contractor warranted that

he had fully investigated the project and was aware of all the

characteristics of the work. The court held that where the

county makes tests results available to a bidder, the bidder is

justified in relying upon the data and the county warrants that

the information is accurate. In accord, Alpert v. Common-

wealth, 258 N.E.2d 755 (Mass., 1970); Penn Central Trans-

portation Co. v. United States, 366 F. Supp. 1161 (Del., 1973);

Gevyn Construction Corp. v. United States, 357 F. Supp.

18 (S.D.N.Y., 1972).

In the sixty-six years since Hollerbach, the size and num-

ber of government construction contracts has increased tre-

mendously, as has the involvement of the federal government

in funding construction projects. The integrity of federal,

state and municipal contracts is in jeopardy unless the Court

makes a clear and definitive statement as to when a govern-

ment will be held liable for information provided to contractors

and when exculpatory clauses will be upheld. If contractors

dealing with state and municipal governments have a free hand

in claims for overruns, the taxpayers shall have to bear the

brunt of the inevitable financial burden. If government cannot

budget expenses for capital improvement projects and make

12

contracts accordingly, the fiscal affairs of our governments will

become chaotic. Raymond International, Inc. v. Baltimore

County presents the Court with a clear opportunity to make a

definitive ruling in this confused and chaotic area.

The proceedings before the Trial Court involved five or

six weeks of testimony and the consideration of numerous

exhibits by the Trial Court. The hearing before the Court of

Special Appeals of Maryland was intended to test the validity

of various legal principles applied to the case at bar by the

Trial Court. However, as indicated by the opinion of the Court

of Special Appeals, the said Appellate Court made numerous

findings of fact without having the benefit of hearing the testi-

mony and examining the exhibits in the light of such testimony.

lt is your Petitioner’s belief that such a factual determina-

tion by said Appellate Court constitutes a violation of the

due process rights of your Petitioner under the Fourteenth

Amendment to the Constitution of the United States. The

determination of said Appellate Court further excluded factual

issues relating to proximate cause and the obligations of the

Respondent, J. E. Greiner, Inc., to your Petitioner in accordance

with contracts between said parties, which contracts were filed

as evidence in the Trial Court. At the very least, your Petitioner

believes and avers that the entire case should have been remanded

to the Trial Court for further proceedings relating to liability

and damages with the legal! direction of the said Appellate Court

relating to the legal principles to be applied by the Trial Court

to the facts and evidence presented.

The failure on the part of the Special Court of Appeals to

remand the entire case to the Trial Court constituted a final

deiermination as to the issue of liability involving your Peti-

tioner and Raymond International Builders, Inc., and involved

a determination as to all issues between your Petitioner and

J. E. Greiner, Inc., which your Petitioner believes to be an

13

erroneous conclusion in the light of the due process rights of

your Petitioner and in the light of an appropriate application

of the Supreme Court cases cited herein.

In addition to the substantial and important issues relating

to Hollerbach and the Fourteenth Amendment to the Constitu-

tion of the United States, this Honorable Court should consider

the defenses of sovereign immunity and the statute of limitations

as presented by your Petitioner in the State Court. The Peti-

tioner believes that the failure to apply such defenses by the

State Court violated the rights of due process of your Petitioner.

Until July 1, 1976, when Article 25A, Section 1A of the

Annotated Code of Maryland was changed, the county had the

benefit of the defense of sovereign immunity in contract actions

(Chapter 450 of the Laws of Maryland, 1976).

The claims of Raymond International in this proceeding

originated prior to July 1, 1976, which made sovereign immun-

ity applicable to the claims asserted against your Petitioner.

When the Court of Special Appeals of Maryland remanded the

proceeding to the Trial Court for damages, it failed to apply

the defenses of sovereign immunity which were legally raised

in the State Court.

With reference to the statute of limitations defenses, the

testimony indicated that Raymond was fully aware of under-

water conditions in September of 1972, but did not file any

action until 1976 which was long after the three-year statute

of limitations applicable had run. Petitioner believes and avers

that the failure of the State Court to apply the defense of

Statute of limitations detrimentally affected the rights of due

process of your Petitioner in the State Court proceeding.

14

CONCLUSION

Wherefore, Petitioner respectfully prays that a Writ of

Certiorari be granted.

Respectfully submitted,

LEONARD S. JACOBSON

County Solicitor

HARRY S. SHAPIRO

Chief Assistant County

Solicitor

Baltimore County Office of Law

Courthouse

Towson, Maryland 21204

Attorneys for Petitioner

A. 1

APPENDIX A

REPORTED

IN THE COURT OF SPECIAL APPEALS OF MARYLAND

No. 714

September Term, 1979

RAYMOND INTERNATIONAL, INC.

v.

BALTIMORE COUNTY, MARYLAND, et al.

Gilbert, C.J.

Thompson

Liss,

JJ.

Opinion by Liss, J.

Filed: April 11, 1980

A. 2

This appeal by appellant, Raymond International, Inc.,

arises out of a judgment rendered in a non-jury trial in the

Circuit Court for Baltimore County in which the presiding judge

ruled that Baltimore County, one of the appellees, was indebted

to the appellant in the amount of $18,431.98. At the same

time, the trial judge entered a verdict for costs in favor of the

remaining appellee, J. E. Greiner, Inc. Appellant filed the

within appeal from these judgments.

By invitation to bid in May of 1972, Baltimore County

solicited bids for underwater repairs to the bascule piers of the

Wise Avenue Bridge over Bear Creek. Bidders were supplied

with plans and specifications prepared for the County by

Greiner. The proposed repairs consisted of the removal of

deteriorated concrete from the bases of the piers and the place-

ment of aggregate concrete in lieu of the deteriorated material.

The bridge was originally built about thirty years ago. It was of

the bascule type with two main piers which encompassed the

channel of the river. The piers were of concrete resting on piles

driven into the river bottom. Their reconstruction was contem-

plated to be accomplished by driving additional piles into the

river bottom and encircling the piling with a cofferdam consist-

ing of interlocking sheet piling driven into the bottom of the

river and extending out of the water thus forming a boxlike

structure. The cofferdam is erected and sealed in order to per-

mit the water to be removed from the interior of the structure.

The sealing of the cofferdam is accomplished by placing in its

bottom a mass of concrete heavy enough to act as a plug and

sufficient to counteract the pressure of the water. The place-

ment of this mass of concrete is achieved by the “‘tremie”

method which requires a tube to be lowered into the water

through which concrete flows that settles on the bottom of

the cofferdam. Subsequent to this operation, the water in the

cofferdam is removed and work on the bridge pier may be

completed free of the water. The mass of concrete in the

bottom of the cofferdam is known as “‘tremie concrete,” and

A.3

when construction or repair of the bridge pier is completed,

the sheet piling of the cofferdam is removed and the “tremie”

is abandoned by being left in place.

Over the years after the original construction of the bridge,

Greiner conducted regular inspections of the bridge including

the piers. In 1971, Greiner reported deterioration of the bridge

piers below the waterline. This deterioration was determined

to be of a progressive nature. Based on the data gathered includ-

ing test borings and inspection by divers, Greiner came to the

conclusion that the piers needed immediate repairs. Greiner

communicated with Raymond which had some expertise in the

making of underwater repairs. Raymond’s representatives

recommended a repair procedure which contemplated a jacket-

ing of the piers with preplaced aggregate concrete. This pro-

cedure is a construction technique used in underwater work by

which stones are placed in a form with a cementitious material

(grout) pumped into the form displacing the water and forming

concrete.

At the request of the County, Greiner prepared contract

documents for the recommended repairs in order that the

County could solicit bids. The documents included specifica-

tions, drawings, informational drawings, an addenda, an invita-

tion to bid and other general provisions. Bids were solicited

from a limited group of bidders who were thought to have the

specialized abilities to perform the work. The group included

Raymond which ultimately submitted a bid substantially below

the bid of the next lowest bidder. Raymond and the County

entered into an agreement by the terms of which Raymond was

to finish the work in 100 days. Failure to do so made the

contractor liable for liquidated damages under the contract.

The County promised to obtain for Raymond a necessary right

of way. Raymond was to be paid on a unit price basis the

approximate sum of $213,000 based on the 230 cubic yard

quantity estimated by Greiner and the County to be the amount

A.4

of aggregate concrete required to complete the job. The work

to be performed consisted primarily of cleaning around Piers

Nos. 3 and 4 of the bridge, forming and pouring preplaced

aggregate concrete around the deteriorated faces of the piers,

and making repairs to the submarine cables.

After the repairs began, Raymond contends it discovered

that Greiner’s specifications were inaccurate. It produced

witnesses who stated that: (1) the material surrounding the

piers was not soft as represented, but contained large pieces of

concrete, pile butts, old timbers and steel; (2) the tremie was

irregular with variations up to 1.5 feet; (3) no tremie existed

in some areas; (4) only an average of two inches of deteriorated

concrete could be chipped away, rather than the six inches

represented in the plans and specifications which resulted in the

projected total of 230 cubic yards of concrete not being able to

be placed; and (5) the tremie was so weak in places that the

form could not be anchored. Raymond contended below and

contends here that as a result of the inaccuracy of Greiner’s

specifications it was required to perform unforeseeable increased

work. Raymond also complained particularly that instead of

the 230 cubic yards of aggregate concrete estimated to be used,

it utilized and was paid for only 114 cubic yards. Raymond

urges that its unit price as bid was computed by spreading its

fixed costs over the 230 cubic yards stated in the plans and

specifications and that the County paid for only 114 yards

which deprived Raymond of more than half of its computed

contract price. Raymond advised the County in a summary

of claim filed on January 30, 1976, that while its original

bid was $213,000, as a result of the misrepresentations included

in the plans and specifications and the unforeseeable conditions

arising out of the misrepresentations, its actual expenditure to

complete the project amounted to $1,095,804.30. This calcu-

lation is apparently not disputed. Baltimore County rejected

the claim and refused any adjustment in its contract with

Raymond.

A.5

Suit was then filed by Raymond against Greiner and the

County. The declaration was based on alleged fraud, negligent

misrepresentation, breach of warranty and breach of contract.

Raymond sought compensation for the additional costs incurred

as a result of the unforeseen conditions of the piers, the return

of liquidated damages retained by the County, and an award

for punitive damages. During the course of the bench trial

which lasted for many weeks, the trial judge granted Greiner’s

motion to dismiss at the conclusion of Raymond’s case. At the

conclusion of the entire case, the court awarded Raymond $900

representing rental payments made by the appellant for rights

of way and $17,531 being the compensation withheld by the

County which was due Raymond. The appellant, unsatisfied

with the judgment of the trial judge, thereupon filed this appeal.

The issues to be decided are:

I. Whether the trial judge erred in holding that the

plaintiff was not entitled to rely on the conditions,

quantities and representations contained in the

contract?

II. Whether the trial court erred in holding that the

plaintiff was not entitled to compensation for the

unforeseen or misrepresented conditions encountered

in the performance of the contract?

Ill. Whether Greiner’s motion to dismiss at the close of

Greiner’s case was improperly granted?

IV. Whether the County’s motion raising preliminary

objection was improperly granted on the issue of

sovereign immunity?

A. 6

V. Whether the trial judge erred in denying plaintiff's

claim for an equitable adjustment in time and com-

pensation due to a 50.1% underrun in preplaced

aggregate?

I,1I,V

One of the principal issues at trial was whether Raymond

was justified in relying on the conditions, quantities and repre-

sentations contained in the contract documents. Baltimore

County in its defense relied principally on the contract docu-

ments which were filed as exhibits in this case. These documents

included the invitation to bid, specifications, the proposal, the

agreement, special provisions and various drawings. Included in

the contract documents was the following which appeared in

Section 5 of the special provisions:

Original construction data has not been verified

by actual field measurements and the conditions

observed during the underwater inspections and tests

may have changed since the date on which they were

made. Therefore, the above described data are fur-

nished to the Contractor for general informational

purposes only and do not purport to represent exist-

ing field conditions. It shall be the Contractor’s sole

responsibility to verify by actual field measurements

inspections and tests and data which may be of sig-

nificance to him in the preparation of his bid.

The contract documents specifically stated that: “Special

provisions shall govern over specifications, supplemental speci-

fications and plans.” The County points out that the invitation

to bid at page 1-03 states: ‘Bidders must examine the drawings

and specifications carefully and must make a personal examina-

tion of the location and nature of the proposed work.”

A.7

In addition, the proposal which was made a part of the

contract documents required the bidders to agree as follows: ©

The undersigned hereby declare that they have

carefully examined the Form of Contract, Specifica-

tions, Special Provisions and Drawings forming a part

of the same and have to their satisfaction examined

the locality of the proposed work and agreed to fur-

nish all labor, tools, materials, machinery, equipment

and other means of construction called for in the

manner provided in the Contract, Specifications,

Special Provisions and Drawings thereto and require-

ments under them of the Engineer... .

Sheet “X”’ which also was made a part of the contract

documents provided:

Note 2—contractor to verify all dimensions in

field.

Note 5—dimensions shown taken from as built

plans and have not been verified by actual measure-

ment. The contractor shall verify any and all dimen-

sions as may be required to complete satisfactorily all

work under this contract.

Relying on these provisions, the County urgently contends

that the trial judge was correct when he held that there was no

“justifiable reliance” by the appellant on the conditions stated

to exist at the Wise Avenue bridge by the County’s engineer,

Greiner, and that the trial judge committed no error when he

held that: “[T] he contract documents that finally formed the

contract clearly placed the burden to the Plaintiff to make a

reasonable inspection to determine if these conditions were as

depicted as in the contract documents.”

A.8

The legal issue boils down to a question of whether Ray-

mond was required to verify independently the information

upon which it based its bid, or whether Raymond was justified

in relying on the information supplied by the County and its

engineer as to the plans and specifications for the project.

The seminal case on the subject is Hollerbach vy. United

States, 233 U.S. 165, 34 S.Ct. 553, 58 L.Ed. 898, which was

decided by the Supreme Court in 1914. That controversy

involved a contract between the appellant Hollerbach and the

United States Government for the repair of a dam. In its speci-

fications for the contract, the Government stated that the dam

was backed with broken stone and sediment. As the contractor

proceeded with the work of removing the material, it was

discovered that the backing of the dam was composed of a soft,

slushy sediment and that the required excavation of the dam

was substantially greater than that stated in the contract docu-

ments. The contract contained several exculpatory clauses

which were stated as follows:

It is understood and agreed that the quantities

given are approximate only, and that no claim shall

be made against the United States on account of any

excess or deficiency, absolute or relative, in the same.

Bidders, or their authorized agents, are expected to

examine the maps and drawings in this office, which

are open to their inspection, to visit the locality of

the work, and to make their own estimates of the

facilities and difficulties attending the execution of

the proposed contract, including local conditions,

uncertainty of weather, and all other contingencies.

It is expected that each bidder will visit the site

of this work, the office of the lockmaster, and the

A.9

office of the local engineer and ascertain the nature

of the work, the general character of the river as to

floods and low water, and obtain the information

necessary to enable him to make an intelligent

proposal. [233 U.S. at 167-68, 34 S.Ct. at 554.]

In spite of the Government’s attempt to make the contrac-

tor responsible for his own inspection,the investigation of the

site and the work to be done under the contract, the Supreme

Court held:

{T]he specifications assured them of the character of

the material, a matter concerning which the Govern-

ment might be presumed to speak with knowledge

and authority. We think this positive statement of

the specifications must be taken as true and binding

upon the Government, and that upon it rather than

upon the claimants must fall the loss resuiting from

such mistaken representations. We think it would be

going quite too far to interpret the general language

of the other paragraphs as requiring independent

investigation of facts which the specifications fur-

nished by the Government as a basis of the contract

left in no doubt. If the Government wished to leave

the matter open to the independent investigation of

the claimants it might easily have omitted the speci-

fication as to the character of the filling back of the

dam. In its positive assertion of the nature of this

much of the work it made a representation upon

which the claimants had a right to rely without an

investigation to prove its falsity. See United States

v. Stage Co., 199 U.S. 414, 424. [233 US. at 172,

34 S.Ct. at 556.]!

‘See also United States v. Spearin, 248 U.S. 132, 39 S.Ct. 59, 63

L.Ed. 166 (1918); Christie v. United States, 237 U.S. 234, 35 S.Ct. 565,

59 L.Ed. 933 (1915).

-

A. 10

Appellant also cites Robert E. McKee, Inc. v. City of

Atlanta, 414 F. Supp. 957 (N.D. Ga. 1976). In that case, the

results of test borings were gratuitously provided to bidders

along with specifications and other contract documents. The

contract contained a clause in which the owner disclaimed any

responsibility for the accuracy of the test results or for any

conclusions drawn from them. The contract specifically pro-

vided that the test boring data were not to be considered a

part of the contract. The contractor sued for misrepresenta-

tion because it discovered the level of rock was substantially

higher than had been represented by the test boring.

The District Court in McKee, supra, at 959, held that it is

clear “the government does not become an insurer merely by

providing certain information” to the contractor. That Court,

in determining whether the Government was liable for mis-

information which it furnished to the bidder, posed two ques-

tions which must be examined: (1) “whether the contractor

could have discovered the true facts through reasonable investi-

gation[?]” and: (2) what “is the materiality of [the] misrepre-

sentation itself[?]’’ Jd. at 960.

Condon-Cunningham vy. Day, 22 Ohio Misc. 71, 258

N.E.2d 264 (1969) involved a suit in which damages were

allowed to a highway contractor as a result of misleading soil

tests even though the contract provided that the test results

were not part of the contract and that the contractors were

obliged to make their own inspection. In examining the issue

whether the contractor could have discovered the true facts

for itself, the Court said: ©

What were the bidders to do? Was each bidder to run

these tremendously expensive core boring tests not

knowing whether or not he would get the contract?

Under defendant’s contention there would be practic-

ally no bidders. A bidder wouid be faced with this

A. 11

dilemma. Shall I bid on what is presented to be and

run the risk of loss if the information is not correct

or shall I run core boring tests at great expense,

amounting to thousands of dollars, which expense I

must bear on my own if I do not secure the contract?

[258 N.E.2d at 274-75.]

See also Michigan Wisconsin Pipeline Co. v. Williams-Mc Williams

Co. v. United States, 551 F.2d 945 (Sth Cir. 1977); Foster Con-

struction C. A. & Williams Bros. Co. v. United States, 435 F.2d

837 (1970); Alpert v. Commonwealth, 357 Mass. 306, 258

N.E.2d 755 (1970).

There is one case from the Court of Appeals in which a

similar controversy was addressed. That case is Linz v. Schuck,

106 Md. 220, 67 A. 286 (1907), in which a contractor was

hired to excavate a cellar under appellant’s property. Before

submitting a price, the contractor inquired about the nature of

the soil whereupon he was taken by the owner to a property

across the street from the subject property and shown a cellar

which the owner stated had been constructed without any dif-

ficulty. When the contractor began the work, however, it was

ascertained that the building stood on a three-foot crust of hard

ground under which were muddy, swamp-like conditions. It

was conceded that the contractor could have ascertained the

condition of the earth under the house by digging a test hole.

However, the contractor relied on the owner’s representations

without performing any tests. Suit for additional compensation

due to substantial and unforeseen difficulty was brought by the

contractor. In affirming a judgment for the contractor, the

Court of Appeals said:

When two parties make a contract based on supposed

facts which they afterwards ascertain to be incorrect;

and which would not have been entered into by the

one party if he had known the actual conditions

A. 12

which the contract required him to meet, not only

Courts of justice but all right thinking people must

believe that the fair course for the other party to the

contract to pursue is either to relieve the contractor

of going on with his contract or to pay him additional

compensation. [106 Md. at 230.]

We have very carefully reviewed the record extract in order

to determine whether the trial court was clearly erroneous in

its conclusions as to the law and the facts. The record extract

establishes that the specifications as prepared by Greiner on

behalf of Baltimore County were materially wrong and sub-

stantially inaccurate. The evidence disclosed no substantial

dispute that the conditions as found by Greiner and reported to

the County and to the bidders were substantially different from

those encountered by Raymond when it began to perform the

work required by the contract. Greiner and the County knew or

should have known the representations regarding the deteriora-

tion of the piers and the quantities of concrete necessary for

the repairs were inaccurate as Greiner had been engaged by the

County over a period of years to inspect the underwater por-

tions of the bascule piers. Greiner actually had thirteen con-

tracts with the County between 1968 and 1972 which required

Greiner to make underwater inspections of the bascule piers,

tremies and piles, and field supervision of the piers.

Greiner, as agent for the County, submitted to Raymond

information and plans which represented an average surface

deterioration depth of six inchesin spite of the fact that Greiner

had reports from its divers that indicated the average depth of

deterioration was only two inches. Therefore, in its bid proposal,

Greiner required a computation based on quantities and infor-

mation which Greiner knew or should have known was incorrect.

To suggest that Raymond, who had been solicited to bid on

the job by the County and Greiner, should have conducted

diving tests in order to verify the information given it in the

A. 13

plans and specifications prepared by Greiner seems to us to

place an undue burden on Raymond. Entirely apart from the

substantial cost of any such verification, it is obvious that

Greiner required a period of almost four years and innumerable

test divings to compile the information necessary to prepare the

plans, specifications and bid proposals, and that even in view of

that lengthy time frame the information it had was incorrect.

We conclude that Raymond was not reasonably able to discover

the true facts for itself and was, therefore, entitled to rely on

the representations made by the County and Greiner.

As to the materiality of the representations, there can also

be no dispute. Raymond established that its bid was conditioned

upon the erroneous representation in the contract documents

that a total of 230 cubic yards of aggregate concrete would be

required to perform the contract. The actual amount required

was approximately 114 cubic yards. The bid was based on a

unit price per square yard, and because the County paid only

for the actual amount used, the appellant was deprived of over

half its contract price. In addition, because of the incorrect

information supplied to Raymond, the contractor was required

to perform additional work in connection with the use of the

prefabricated forming system and to utilize new methods for

sealing and anchoring the form bottoms. As a direct result of

the variations from the conditions as represented in the plans

and specifications, Raymond was unable to complete the

project within the 100 days provided in the contract. As

Raymond failed to perform within the time specified, the

County withheld the sum of $37,000 notwithstanding that

performance was impossible within the 100 days required by

the contract.

Appellee Baltimore County relies on Trionfo v. Board of

Education of Harford County, 41 Md. App. 103, 395 A.2d

1207 (1979), in which Judge Thompson of this Court exhaus-

tively discussed the law of a contractor’s right to recover on a

A. 14

theory of misrepresentation. There we held, as we hold here,

that the plaintiff must establish a right to rely on the misrepre-

sentation. In Trionfo, we found no right to rely because the

test boring data furnished to contract bidders were supplied

only in exchange for a written release from the bidders

designed to absolve the board from any responsibility for the

accuracy or completeness of the information and to protect

the board from assessments for additional work performed

pursuant to assumptions made based on the supplied data.

No such release provision exists in this contract. We, there-

fore, find Trionfo inapplicable to the present case. We con-

clude that the trial court erred in holding that the appellant

was not entitled to rely on the conditions, quantities and

representations contained in the contract. We further hold

that the trial court erred in its finding that the appellant was

not entitled to compensation for the unforeseen or negligently

misrepresented conditions encountered in the performance of

the contract.

We perceive an additional error in the trial court’s rulings.

The contract documents expressly incorporated the specifica-

tions of the State of Maryland with the contract between

Raymond and the County. Section 10.09-3 of those specifi-

cations expressly provides for an equitable adjustment for

major discrepancies in quantities as follows:

Whenever a final quantity for any Major Con-

tract Item shows that either the Proposal Quantity

of said item, or the quantity specified therefor in

any Supplemental Agreement has been actually over-

run or underrun by more than 25 percent; the Con-

tractor and Commission shall then be allowed an

equitable adjustment in time and/or compensation

as though said overrun or underrun had been antici-

pated by the Engineer and ordered, under the pro-

visions of Section 10.04-3.

A. 15

The term “major contract item” is defined in the State

specifications as follows:

Major Contract Items shall be the original Contract

item of greatest cost, computed from the original

Contract price and estimated quantity, or lump sum

price and such other original Contract items next in

sequence of lower cost, computed in like manner,

necessary to show a total cost at original prices and

quantities of not less than 60 per cent of the original

Contract cost and all other Contract items shall be

considered as minor items.

The record extract, we think, clearly establishes that the

major contract items in this contract were the preplaced aggre-

gate contract amount of $115,000 and the removal of the

fender systems amounting to $34,000 and totaling more than

60 percent of the original contract price. The evidence is undis-

puted that the quantity of preplaced concrete used amounted

to a 50 percent underrun of the prescribed quantities set forth

in the contract. Under these circumstances, Raymond was

entitled to an equitable adjustment in time or compensation.

The trial court initially came to the same conclusion, but

inexplicably without reliance on either the law or the facts

changed that opinion and concluded that Baltimore County

was entitled to a favorable verdict on the issues of the failure

to renegotiate and on the issue of an equitable adjustment. The

lower court said:

The other three issues were the failure to renegotiate

an equitable adjustment. At one point in the trial,

I think I indicated to counsel, that I was really some-

what impressed that this is an issue that the plaintiff

has a right to a particular equitable adjustment. I

was very impressed by the testimony of Mr. Morris

A. 16

on this issue. He dwelled at length, but after review-

ing the contract documents and listening to argu-

ments of counsel, I’ve come to the conclusion that

the defendant is correct that this is just not called

for under the contract documents, and I could not,

without breaking the rules of the law, allow that

amount and I find that I would have to find for the

defendant, Baltimore County, on those issues failing

to renegotiate, and on the equitable adjustment.

We find nothing in the record extract on the basis of the facts

or the law which supports that conclusion.

III

We find no error in the trial court’s granting of Greiner's

motion to dismiss Raymond’s suit against Greiner on the

grounds of misrepresentation at the conclusion of Raymond’s

case. Raymond contends that Greiner waived its right to file

such a motion to dismiss because it offered testimony before

the conclusion of the plaintiff’s case and that this amounted

to a clear violation of Maryland Rule 535. We do not agree.

The record discloses that Greiner’s counsel read into the record

a short portion of the deposition of one of Greiner’s executives,

the major portion of which had been put into the record by

Raymond’s counsel. The clearly expressed purpose of the

reading of the short excerpt of the deposition was for clarifica-

tion of the witnesses’ testimony. We do not find that this

amounted to such a violation of either the letter or the spirit

of Rule 535 as to make Greiner’s motion to dismiss a “nuga-

city.” See Smith v. State Roads Comm., 240 Md. 525, 214

A.2d 792 (1965).

It would serve no useful purpose to again restate the five

prerequisites of proof required to sustain an action for mis-

representation or deceit. It is sufficient to state that the appel-

lant failed to produce evidence from which could be found or

A. 17

inferred that Greiner intended to defraud by reason of the

allegedly incorrect information it furnished to Raymond.

Even assuming that Greiner was negligent in preparing the

information it furnished to the bidders, that would not be

sufficient to satisfy the plaintiff’s burden as a misrepresentation

induced by negligence or ignorance will not sustain an action

for fraud. Peurifoy v. Congressional Motors, Inc., 254 Md. 501,

255 A.2d 332 (1969). There was no testimony establishing

clear and convincing evidence that Greiner’s representations in

this case were made for the specific purpose of defrauding the

plaintiff. This is particularly so when we note that at the time

the information was supplied to the prospective bidders no one

had any knowledge as to who the successful bidder would be.

It is not contended in appeal that the trial court was otherwise

in error with respect to Greiner’s motion.

IV

The trial court was correct in its ruling on the County’s

motion raising preliminary objection on the ground of sovereign

immunity as to the first and second counts of Raymond’s

declaration which were founded on the torts of fraud and negli-

gent misrepresentation. See Jekofsky v, State Roads Comm.,

264 Md. 471, 287 A.2d 40 (1972); Godwin v. County Commis-

sioners of St. Mary’s County, 256 Md. 326, 260 A.2d 295

(1970),

JUDGMENT REVERSED AS TO BALTI-

MORE COUNTY; REMANDED FOR NEW

TRIAL AS TO DAMAGES ONLY. JUDG-

MENT AFFIRMED AS TO GREINER.

COSTS TO BE PAID BY BALTIMORE

COUNTY.