Baltimore County v. John K. Ruff, Inc.

• Decision Date: 18 July 1977
• Docket Number: No. 164,164
• Citation: 375 A.2d 237,281 Md. 62
• Parties: , 2 A.L.R.4th 985 BALTIMORE COUNTY, Maryland, et al. v. JOHN K. RUFF, INC., et al.
• Court: Maryland Court of Appeals

Page 62

281 Md. 62

375 A.2d 237, 2 A.L.R.4th 985

BALTIMORE COUNTY, Maryland, et al. v. JOHN K. RUFF, INC., et al.

No. 164.

Court of Appeals of Maryland.

July 18, 1977.

Philip V. Tamburello, Asst. County Sol., and Harry S. Shapiro, Chief Asst. County Sol., Towson (J. Carroll Holzer, County Sol., Towson, on the brief) for appellants.

Richard W. Emory, Baltimore (Benson, Everett, Legg & Venable, Baetjer & Howard, Baltimore, on the brief), for appellees.

Argued before SINGLEY, SMITH, DIGGES, LEVINE, ELDRIDGE and ORTH, JJ.

ELDRIDGE, Judge.

In the Circuit Court for Baltimore County the chancellor (DeWaters, J.) ordered the rescission of a bid of the plaintiff contractor to construct a building for the defendants. The basis for the order was that the contractor had made a "simple mathematical mistake in calculating the bid," and that, therefore, under the principles set forth in Baltimore v. DeLuca-Davis Co., 210 Md. 518, 124 A.2d 557 (1955), a court of equity should decree rescission. The defendants took an appeal to the Court of Special Appeals, and we granted a writ of certiorari prior to any decision by the Court of Special Appeals. The defendants' only substantial contention is that this is not an appropriate case for rescission based on a unilateral mistake, under the principles of Baltimore v. DeLuca-Davis Co., supra, because the contractor's mistake was not of such "grave consequences" that it would be "unconscionable" to enforce the bid as offered.

The defendants, Baltimore County, Maryland, and the Board of Trustees of the Community Colleges of Baltimore County, advertised for sealed bids for the construction of a humanities classroom building for the Catonsville Community College. Bids were to be submitted by 2:00 p. m., February 6, 1975. The bid on behalf of the plaintiff contractor, John K. Ruff, Inc., was prepared by two of its employees, Mr. Hopkins and Mr. Robbins. It was not until 1:40 p. m. on February 6 that the contractor had received the last of the estimates from its subcontractors. Upon receiving the remaining subcontractor's estimate, Mr. Hopkins totaled Ruff's bid, but he neglected to include in the total a figure of $253,371.00 for labor costs. The contractor's final figure was then given, by telephone, to Mrs. Yeakle, secretary of John K. Ruff, Inc., who was at the Catonsville Community College. Mrs. Yeakle inserted the final figure in Ruff's bid proposal and submitted the proposal by 2:00 p. m. At approximately 2:30 p. m. Ruff was advised that its bid of $3,033,080.00 was the lowest bid.

By 3:30 p. m. on the same day, Ruff had discovered the $253,371.00 mistake and notified the project's architect. A short time later, Mr. Ennis, an engineer for Baltimore County, called Ruff and was also informed of the mistake. Mr. Ennis arranged a meeting for 10:00 a. m. the next morning, February 7, which was attended by representatives of Baltimore County, the Board of Trustees of the Community Colleges and Ruff. At the meeting Ruff explained how the mistake came about. As a result of that meeting, a letter was sent by Ruff to the defendants, giving formal written notice of the error along with a request to withdraw the bid and bid bond. The defendants did not grant Ruff's request, and, on February 19, 1975, Ruff was sent the contract for the humanities building. However, Ruff refused to sign the contract. The defendants then demanded that the Seaboard Surety Company perform under its bid bond, but the surety declined on the ground that Ruff did not breach its bid by refusing to sign the contract in light of the "patent, honest and obvious clerical mistake." By letter dated March 12, 1977, the defendants informed Ruff and Seaboard Surety that they were going to award the contract to the second low bidder and would hold Ruff and Seaboard Surety "responsible for the consequential damages."

Thereafter, Ruff initiated the instant action by filing a bill of complaint seeking the rescission of the bid and the return of the bid bond. The defendants filed a counterclaim against Ruff and, pursuant to Maryland Rule 314 c, a cross-claim against Seaboard Surety, alleging that they had awarded the contract to the second lowest bidder and demanding, pursuant to the liquidated damages provision of the bid proposal, the amount of $151,650.00 which represented 5% of the bid submitted by Ruff. After a full evidentiary hearing, the circuit court ordered the rescission of the bid and return of the bid bond and dismissed with prejudice the counterclaim and cross-claim.

In Baltimore v. DeLuca-Davis Co., supra, a contractor had made a clerical error in its bid for the construction of storm water conduits along a city highway. If there had been no error, the contractor's bid would have been $2,385,944.25. However, the clerical error amounted to $589,880.00, making the contractor's actual bid $1,796,064.25. The contractor became aware of its mistake as soon as it was announced as the lowest bidder, and it informed the city of the mistake within five days. The facts also show that if the contractor had been held to the bid, it would have incurred a loss of over $400,000.00 while its net worth was only $82,000.00. In addition, there was a city ordinance making such bids irrevocable. This Court, after an extensive review of the authorities, held that despite the ordinance a...