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Kent Holland
ConstructionRisk, LLC

Where homeowners retained an inspection firm to investigate the cause of their leaky roof, the inspector issued a report stating that the roof had been installed years earlier over fiberboard roof insulation that was soaking wet, thereby causing the later leakage. When the homeowners then sued the contractor for construction defects, the contractor brought a third party defamation action against the inspector, asserting that the statement about the roof being installed over wet insulation was false and defamatory. Summary judgment was granted for the inspector by the trial judge, and this was appealed by the contractor. On appeal, the court found that the statement by the inspector could indeed be actionable as defamation, but that a conditional privilege existed to publish the statement to the homeowner to serve the purposes of the contract between the homeowner and inspector. There are several lessons to be learned from this decision as explained herein. Downey v. Chutehall Construction, 86 Mass.App.Ct. 660, 19 N.E. 3d 470 (2014).

Contractor Defamation Suit

The trial court judge found that the inspector’s report constituted a statement of “opinion” and “not fact,” it was not negligently made, and it was in any event protected by a conditional privilege.   The appellate court did not agree that the statement was an opinion rather than made as a statement of fact, but it concluded that the statement was protected by privilege that was not abused and that summary judgment in favor of the inspector was properly granted.

In order to recover on a defamation claim, the contractor would have had to establish that (1) a defamatory statement was “published”, (2) the statement was a false statement of fact as opposed to opinion, (3) the inspector was at fault for making the statement and abused any privilege that may have otherwise attached, and (4) the contractor suffered damages as a result.

Here, the inspector stated that the homeowner’s roof had been installed over wet insulation. “This appears to be an assertion of fact that, at least in theory, could be verified as true or false.” The court concluded this was stated as more than merely an opinion and as such summary judgment could not be based on the argument that the inspector had merely voiced an “opinion.” The court that published statement was not introduced merely as an expression of opinion. For example, the court pointed out that the statement was not “cautiously prefaced as representing ‘the opinion of ….” “Nor was the statement expressly qualified or limited as being based on the results of particular observations.”

In addition, the intended audience for the statement (i.e., the homeowner) “could, we conclude, reasonably be expected to understand [inspector]s] statement as one of determined fact and not just a qualified opinion., despite their understanding that [inspector] did not personally observe the installation.” “We conclude that the unqualified assertion here, which might have been proven true or false, could reasonably be construed as a defamatory statement of fact. Summary judgment should not have been granted on the ground that it was an unambiguous opinion. We therefore turned to the questions of fault and privilege.”

The court next looked at the question of whether there was a conditional privilege and if so whether it had been abused. “Under Massachusetts law, a publication will be deemed conditionally privileged if the publisher of the statement and the recipient have a common interest in the subject and the statement is ‘reasonably calculated to further protect that interest.’”

Here, the court found that the inspector’s statement involved a common business interest between the inspector and the homeowner. Specifically, it involved the evaluation of the likely source of the roof leak so that repairs could be made. The statement furthered this common business interest as it affected the homeowners’ decision on how they would proceed in addressing the roof leakage. Additionally, the statement was made in the inspector’s professional capacity and only after the homeowners specifically requested the inspector to explain the source of the leak. “The exchange between [Inspector] and the homeowner is assuredly of the type contemplated by the privilege, and to claim otherwise would rob the privilege of its intended purpose.” For these reasons, the summary judgment for the inspector was affirmed.

Risk Management Comment

The analysis by the court in this case shows the importance of being careful when expressing an opinion to make it clear that it is a professional opinion and not a statement of fact. As court stated, professionals can be expected to be cautious in explaining to their client that what is being offered is a professional opinion and carefully explaining the basis for that opinion. For insurance purposes, a professional opinion that turns out to be erroneous due to negligence of the professional may be an insured loss. On the other hand, defamatory factual statements could subject the professional to an uninsured loss.

 

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. 17, No. 5 (August 2015).

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