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Summary Judgment must be granted to Architect against Contractor’s suit that claimed Architect tortuously interfered with its contract by recommending that the project owner terminate the contractor for default.  The architect based its recommendation on what it observed as well as on Owner’s construction manager conclusions and those of an independent consultant brought in by the Owner as a third party neutral to evaluate the project.  The CM expressed concerns about “lack of progress,” “general disregard of accepted construction means and methods,” and “willful violations of the law as the approved project plans and specifications.”  The project neutral issued a report concluding that the contractor failed to perform in accordance with the terms of the contract and failed to provide a schedule that satisfied “even the most rudimentary requirements of the contract documents” and neglected to give adequate attention to certain issues and failed to maintain an adequate workforce, among other problems.   The court found that in light of the documented concerns and critical analysis of the contractor’s work, the contractor could not even establish that “but for” the architect’s conduct, it would not have been declared in default by the Town.  In addition, as explained in the balance of this article, the court concluded that the Architect acted within the scope of its contract, and the contractor didn’t prove the Architect acted with malice.  For these reasons the court reversed the trial court and held that summary judgment should have been granted to dismiss the contractor’s complaint. Schmidt & Schmidt v. Town of Charlton, 103 A.D.3d 1011 (2013).

This case has an interesting history.  On an earlier motion to dismiss the contractor’s suit, the trial court granted the motion.  This was reversed by the appellate court, holding that the contractor’s allegations, liberally construed, were sufficient to survive the motion to dismiss for failure to state a claim.  After the architect conducted discovery and came back to the court with a motion for summary judgment, the court found the contractor failed to “come forward with sufficient admissible proof to raise a genuine question of fact” to be decided at trial.  Thus, the appellate court held that the trial court should have granted summary judgment.

As explained by the court, the tort of tortious interference “is not satisfied by conduct that is merely negligent or incidental to some other, lawful, purpose.” Rather, “the plaintiff must establish that the defendant’s procurement of the alleged breach as solely malicious.”  Here, the architect was acting as agent of the owner within the scope of its contract for professional services.  Quoting from court precedent, the court explained, “where, as here, an agent [Architect] is alleged to have induced its principal [Project Owner] to breach a contract, the agent cannot be found liable unless it does not act in good faith and commits independent torts or predatory acts directed at another for personal pecuniary gain.”

In this case, the court found that the contractor failed to have admissible proof of any of these necessary elements needed to prove tortious interference.

 

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 15, No. 6 (June 2013).

Copyright 2013, ConstructionRisk, LLC