ARCHITECT LIABILITY TO CONTRACTORS FOR ERRORS IN THE PLANS AND SPECIFICATIONS AND OTHERWISE
This is fairly complicated stuff: thus, a fair amount of material - perhaps, more than a contractor would like to read - of a legal nature. Also, the case references which follow deal, in many instances, with court decisions on the legal theories involved, not actual decisions on the facts of the particular cases. Many of these decisions deal with summary evaluation before trial by a court as to whether or not under any set of factual circumstances a plaintiff’s claim could stand for trial. The usual vehicles for doing pre-trial are by motions to dismiss and, more usually, by motions for summary judgment. A motion for summary judgment is a presentation to a court before trial that the party seeking the motion - the ‘moving party’ - represents to the court that he/she/it is entitled to a judgment as a matter of law and that there are no genuine issues of material fact. Basically, this is a test of legal theories: does the opposing or resisting party have enough to go to trial. This is a ‘trial by affidavit’, not a trial with live witnesses. As such, many of these decisions are not final decisions on those cases: only indications that the plaintiff has - or has not - enough to go to trial.
Theoretically, there are at least five possible theories for a subcontractor or a general contractor to consider with regard to pursuing an architect to recover costs caused by the architect’s act or omission or conduct.
The first theory is contract. Traditionally, in Massachusetts, only parties to a contract could sue one another because of breach of contract. This is the idea of ‘contractual privity’ meaning that only a party having privity with the other - a direct relationship - can sue because of a claimed breach. When subcontractors and general contractors directly engage an architect - for example, for design-build purposes - then this is a good potential theory of liability. Typically, however, subcontractors and general contractors (hereinafter jointly or severally as contractors) don’t engage architects. Rather, contractors bid on projects advertised by owners, which were designed pursuant to contracts between owners and architects. To such contracts, contractors are - at best - third parties.
Massachusetts common (case-made) law very clearly held until 1979 that third party beneficiaries - persons who are not contract parties but who get some benefit from the contract - can not sue to enforce the contracts. For a great period of time, it was held that third party beneficiaries to contracts - even contracts made for their benefit - were not entitled to bring an action in contract to secure the benefit of the contract. The case holding so was a nineteenth century case known by the name of Mellen vs. Whipple, 67 Mass . 317 (1854). Some limited cracks have appeared in this doctrine, differentiating between “donee third party beneficiaries” (some one who is going to get money under a will and doesn’t extend value) and “creditor beneficiaries” (some one providing value to at least one party of the contract.)
As applies to contractors’ suing architects, some decisions a few years ago argued that contractors might be able to sue architects on the theory that the contractor is an ‘intended beneficiary’ of the Owner-Architect relationship. This theory can be negated by there simply being a clause in the Owner-Architect contract stating that there are no intended beneficiaries to the contract. Therefore, when considering a claim as an ‘intended beneficiary’, it is helpful, even necessary, to somehow obtain a copy of the Owner-Architect contract. The writer is aware of the fact that the design community and its lawyers were familiar with this decision and began inserting such clauses in the Owner-Architect contracts (hereinafter designer contracts). An additional problem suggests itself that with regard to designer contracts that are going out to bid, no specific contractor is contemplated as being the intended beneficiary of that contract. The general contract - and the lower tier subcontracts - are going to go to a bidder who has the lowest bid or who can do the job the fastest. The point is that the identity of the specific contractor who is going to build the job is not known or within contemplation during the performance of the design contract’s work.
Contract issues were discussed a couple of years back in the Superior Court case of Assoliana v.Casagronde. Contractors had filed a third party complaint against an architect on a project the contractors had built and had asserted a breach of implied warranty claim against the architect (which is a contractual theory). This was dismissed by the Court because “an architect does not imply nor guarantee that his work is fit for an intended purpose’. The breach of contract claim was likewise dismissed as the contractors were not parties to the contract between the architect and the homeowner. Because the contractor did not did not plead (allege) negligent misrepresentation with sufficient specificity, the claim was also dismissed although the contractors were given leave to amend the complaint and file the misrepresentation count at a later date.
The court said with regard to the implied warranty claim that while it is true that an architect has a contractual duty to exercise the ‘skill and judgment which can be reasonably expected from similarly situated professionals’, it is also true that ‘an architect does not imply or guarantee that its work is fit for an intended purpose’. Because there was no implied warranty that the plans would be suitable for a specific result, the motion to dismiss that count was granted.
Count two of the third party complaint alleged breach of contract by the architect. The contract at issue, however, runs between the plaintiff and the architect. The contractors alleged that they were entitled to recover under this contract because they were intended beneficiaries of the contract between the home owner and the architect. The language that the contractors attempted to rely on in the contract between the homeowner and the architect is as follows: “I would like to set up a meeting between you, your builder and myself. At that meeting, I would like to determine what your builder would need in terms of drawings . . .and assistance.”
The court found that this contractual language was not sufficient to support an inference that the contractors were intended beneficiaries of the contract. Moreover, the court state that other courts have held that a contractor is not the intended beneficiary of an agreement between a homeowner and an architect, even in situations where the architect had far more extensive duties than the architect did in the instant case. Accordingly, the count for breach of contract was dismissed.
In 1982, the Supreme Judicial Court discussed exactly what standards architects had to be judged against with regard to their work. This discussion was in the case of Klein v. Catalano, 386 Mass. 701, 718-719, 437 N.E. 2d 514 (1982).
The Court stated that:
“(a)n architect’s efficiency in preparing plans and specifications is tested by the rule of ordinary and reasonable skill usually exercised by one of that profession. . . (I)n the absence of a special agreement he does not imply or guarantee a perfect plan or satisfactory result.”
In justifying this rule, the Court pointed out that “(a)rchitects, doctors, engineers, attorneys, and others deal in somewhat inexact sciences and are continually called upon to exercise their skilled judgment in order to anticipate and provide for random factors which are incapable of precise measurement.”
In distinguishing architects from mass producers of consumer goods, the Court said:
“an architect has but a single chance to create a design for a client which will produce a defect-free structure. Accordingly, we do not think it just that architects should be forced to bear the same burden of liability . . . as that which has been imposed on manufacturers generally. We believe that, unlike a manufacturer, an architect does not impliedly guarantee that his work is fit for its intended purpose. Rather, he impliedly promises to exercise that standard of reasonable care required of members of his profession.”
The second theory is negligence. The tort (cause of action) of negligence requires essentially four elements: duty, breach of duty (doing something wrong), proximate cause and damage.
Massachusetts has not held out much hope for negligence cases for damages against architects. This is because of the so-called ‘economic loss doctrine’. The economic loss doctrine says that a party suffering only an economic loss - i.e. a loss of money - can not sue in negligence because the cause of action requires there to either be personal injury or property damage. And, increased costs to the contractor are not ‘property damage’ when they can be reduced to a certain sum of money.
Definitions abound of the ‘economic loss doctrine’ in the case law. In the superior court case of Commonwealth of Massachusetts v. TLT Construction Corp. , 1999 WL 429860 (Mass. Super.), the summary judgment Judge said the following with regard to the economic loss doctrine:
“The economic loss doctrine bars a plaintiff from recovering losses resulting from business interruption when the damage to plaintiff is solely monetary and there is no accompanying physical harm to the plaintiff’s person or property. See FMR Corp. v. Boston Edison Co., 415 Mass. 393,395, 613 N.E.2d 902(1993); Stop & Shop Cos. v. Fisher, 387 Mass. 889,893-894, 444 N.Ed. 2d 368 (1983). A plaintiff is, however, entitled to recover losses resulting from business interruption when that interruption is a foreseeable result of physical harm to the plaintiff’s person or property caused by the negligence of the defendant. See Newlin v. New England Tele. Co., 316 Mass. 234, 237-238, 54 N.E.2d 929 (1944); Priortiy Finishing Corp. v. LAL Constsr. Co., 40 Mass. App. Ct 719, 720-721, 667 N.Ed.2d 290 (1996).”
The third theory is negligent misrepresentation. This is more promising. That is the plans and specifications are ‘negligent misrepresentations’ to the contractor.
One of the leading and earliest Massachusetts cases for ‘negligent misrepresentation’ is that of Craig v. Everett M. Brooks Co., 351 Mass. 497 (1967). The plaintiff was a general contractor and the defendant was a civil engineering firm. The defendant engineer entered into a contract with the owner whereby the defendant would provide various services including staking of roads so that the contractor could build roads. Here, a key fact was that at the time the stakes were placed, the defendant knew that the plaintiff was the contractor. Plaintiff alleged that the defendant knew or should have known that its measurements and specifications as pertained to lines, grades and related matters were inaccurate and knew that plaintiff would rely on their accuracy.
The trial court through out the first claim for deceit, which was sustained by the appellate court, because there was an absence of evidence of intentional or reckless misrepresentation. The issue became then whether negligent misrepresentation claims could survive.
Some of the factors the court wrestled with in coming to the decision were as follows:
did the defendant know who the contractor would be (it did) when it performed its work; the purpose of the staking was so that the plaintiff contractor could build the roads - thus a direct correlation between the work claimed to be negligent and the damage; and, that the work that the plaintiff would perform would of necessity be in accordance with the grades and stakes which the defendant would set out. Thus, to hold the defendant liable, “There would not be ‘liability in an indeterminate amount for an indeterminate time to an indeterminate class. (Case cited). The defendant’s knowledge of the plaintiff’s identity and of the precise purpose of placing the stakes eliminates any objection based upon unlimited liability.” (Page 500)
The court allowed the claim for negligent misrepresentation to stand and reversed the trial court’s dismissal of the claim. As stated on page 501 of the decision:
“In the case at bar where the defendant was under contract with the owner to perform professional services, where the plaintiff was under another contract with the owner which contemplated reliance on those services, where the identity of the only possible plaintiff and the extent of his reliance were known to the defendant, and where damages are not remote, it is reasonable to reach an analogous result. We are reluctant to perpetuate a distinction which would be logically indefensible. Accordingly, we hold that it was error to direct a verdict for the defendant on Count 2.”
A lengthy discussion of this doctrine - and the exception for negligent misrepresentation - is found in the case of Stone/Congress v. Town of Andover, a superior court decision, 1997 WL 11737 (Mass. Super.) In this decision, the Judge recognized the viability of a negligent misrepresentation claim, even though the identity of the specific contractor was unknown when the plans and specifications were drafted. As stated by the Judge considering summary judgment claims:
“The court agrees with Stone/Congress that the economic loss doctrine does not preclude Stone/Congress from recovering against ERF&A for negligent misrepresentation. The economic loss doctrine prevents recovery in negligence for purely economic losses absent physical injury to person or property. See Stop & Shop Cos. V. Fisher, 387 Mass. 889, 893 (1983). The rationale of the doctrine is that a negligent party should not be liable to every person, no matter how unforeseeable, who may have somehow been affected by the negligence. For example, in Stop & Shop the plaintiff was a store which lost business when the defendant’s negligence damaged a bridge that led into the neighborhood where the plaintiff’s business was located, preventing a substantial number of regular customers from patronizing the plaintiff’s business during the time the bridge was closed for repairs. The Supreme Judicial Court held that the business could not recover for its purely economic losses. See Top & Shop, 387 Mass. at 893-94. The court does not believe that the economic loss doctrine was meant to preclude recovery where, as here, the architect knew that a contractor would be relying on its representations, as contained in the plans, to calculate its bid. Although ERF&SA did not know the specific identity of the party to be so affected, in the usual chronology of drafting, bidding and contracting, an architect does reasonably foresee that a general contractor will base its bid upon the architect’s plans and upon any deficiencies in these plans. In the circumstances of this case, the contractor is not a remote plaintiff, and the policy underlying the economic loss doctrine is not offended by holding ERF&A accountable to Stone/Congress which - as anticipated by ERF&A - relied on ERF&A’s plans. The ruling on this point may seem at quick glance to diverge from several other Superior Court decisions cited by ERF&A. The court, however, questions the reliability of those decisions as guidance in the present case. In one of those cases, Tasco Construction, Inc. v. Town of Winchenden, No. 91-0308-C, slip op. (Middlesex Super. Ct. Feb. 11, 1994), the court expressly rested its decision on a fact which is not present here: that the contractor had agreed to makes its bid “in sole reliance upon its own investigations regarding the amounts of material and labor . . . required.” See Tasco, slip op. at 6-7. Although the Tasco court implied that it could be dispositive that the defendant engineer did not know of the plaintiff’s identity as the contractor at the time it provided the engineering plans, the court expressly avoided resting its decision on this fact.
Two other decisions relied on by ERF&A stated that Massachusetts courts “have rejected the idea that architectural plans can ever constitute representations for purposes of a negligent misrepresentation claim.” Morse Company, Inc. v. First Healthcare Corp., No. 93-455, slip op.at 4 (Norfolk Super. Ct.) citing Craig v. Everett M. Brooks Co., 351 Mass. 497, 499-500 (1967). See also Anastasi Brothers Corp. v. The Massachusetts Convention Center Authority, Nos. 89-0867B, 89-0198-C, 89-6480-E, 89-6481-A, 89-7721, 90-0809-C, slip op. at 5 (Nov. 1, 1993) (“nor can (defendant’s) duties as architect . . . including preparation of plans and specifications, constitute representations for purposes of a negligent misrepresentation claim”) citing Craig, 351 Mass. at 501. The court questions the correctness of this assertion made in reliance on the Craig decision, and observes that the Craig court in fact expressly stated that the making of plans “(is) a form of representation.” Craig, 351 Mass. at 499. The confusion on this point apparently arises because the Craig court held that the plaintiff had not made out its negligent misrepresentation claim as it pertained to the defendant’s engineering plans, but only as it pertained to the defendant’s surveying services. Nowhere does the Craig court exclude as a matter of law the preparation of architectural plans and specification as a basis for a negligent misrepresentation claim. The precise holding and reasoning of Craig are that construction plans can embody actionable negligent misrepresentation but that the plaintiff had failed to introduce sufficient evidence of that cause of action in the particular circumstances of the case. See id. a t 499-500.
The court’s view comports with the Restatement (Second) of Torts, s. 552(1) (1977):
“One who, in the course of his business, profession or employment . . supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.” See Lawton v. Dracounis, 14 Mass. App. Ct. 165, 171 (1982). Massachusetts common law has not carved out of this generic principal a special exception for architectural plans. Furthermore, the District Court for the District of Massachusetts recently held that an exception to the economic loss doctrine permits negligent misrepresentation claims for economic recovery where the plaintiff reasonably and foreseeably relied on the defendant’ s promise to someone other than the plaintiff. The Vitetta Group. v. Town of Plymouth, C.A. 88-0882, 89-0061, slip op. at 1 (D. Mass. March 21, 1996). The Vitetta court denied summary judgment for the defendant on a claim that the plaintiff suffered economic damages in reliance on the defendant’s contract with the Town of Plymouth to perform “Professional services”.” (Emphasis added)
Yet, one superior court case refused to extend the making of plans as being the subject of negligent misrepresentation, as referenced in the above decision. In the case of Anastasi Brothers Corporation v. The Massachusetts Convention Center Authority, 1993 WL 818553 (Mass Super), on page two of the decision, the Superior Court in considering summary judgment by an architect against a contractor stated that:
“When economic loss is the only damage claimed, as here, recovery is not allowed in negligence. Bay State- Spray & Provincetown Steamship, Inc. v. Caterpillar Tractor Co., 404 Mass. 103, 107 (1989). An exception to this rule is found only in claims grounded in negligent misrepresentation where pecuniary loss is an essential element. See Lawton v. Draconsis, 14 Mass.App.Ct. 164, 171 (1982), rev. denied, 387 Mass. 1103 (1982). ABC does not allege negligent misrepresentation in its complaint. Nor can KMW's duties as architect and contract administrator, including preparation of plans and specifications, constitute representations for purposes of a negligent misrepresentation claim. Cf. Craig v. Everett M. Brooks Co., 351 Mass. 497, 501 (1967) (placing of stakes by surveyor constitutes representation). See generally Raffel v. Perley, 14 Mass.App.Ct. 242, 246, n. 9 (1982) (contrasting role of architect or other design professional with that of surveyor).” (Emphasis added)
(Ed: The Raffel case largely concerned a discussion as to whether or not a survey of lots was an ‘improvement to real estate’, so as to trigger a certain statutory provision as to limit the number of years within which an action could be brought against the surveyor.)
The Appeals Court recently stated what the elements of negligent misrepresentation are in the Commonwealth in the case of Nota Construction Corporation v. Keyes Associates, Inc., 45 Mass App. Ct. 14, 19-20, 694, N.E. 2d 401, 405 (1998):
“In order to recover for negligent misrepresentation a plaintiff must prove that the defendant (1) in the course of his business, (2) supplies false information for the guidance of others (3) in their business transactions, (4) causing and resulting in pecuniary loss to those others (5) by their justifiable reliance upon the information, and (6) with failure to exercise reasonable care or competence in obtaining or communicating the information. Fox v. F & J Gattozzi Corp., 41 Mass.App.Ct. 581, 587-588, 672 N.E.2d 547 (1996). See Restatement (Second) of Torts S 552 (1977).”
The idea behind this, then, is that the designer supplied false information for the guidance of others, which information demonstrated a failure to exercise reasonable care. At the present time, various appellate cases have not dismissed contractor claims based on this tort. Typically, the issue would come to the appellate court after a trial court granted the architect summary judgment. (This means that, short of a trial, the architect filed a motion with the court and the court allowed it deciding that there was no genuine issue of material fact and the moving party was entitled to judgment as a matter of law.) Typically, on the appellate cases considering this theory, the appellate court said that the dismissal was wrong and that the contractor should have a right to try his case.
In the Nota case, a subcontractor sued a design firm for deceit, negligence misrepresentation and C.93A (unfair and deceptive trade practices). There were various claimed negligent misrepresentations, including as to the amount of ledge at the job and the fact that while the architect knew there was ledge in the parking lot, this was not disclosed to the bidders. As stated by the Court:
“The damages recoverable for a negligent misrepresentation are those necessary to compensate the plaintiff for the pecuniary loss to him of which the misrepresentation is a legal cause. Notwithstanding the presence of disputed facts, Keyes argues Nota's claim is barred because the economic loss doctrine, Bay State-Spray & Provincetown S.S., Inc. v. Caterpillar Tractor Co., 404 Mass. 103, 107, 533 N.E.2d 1350 (1989), prohibits Nota's recovery for its purely pecuniary losses. This argument is without merit. An exception to the doctrine permits recovery for economic losses resulting from negligent misrepresentation. See Craig v. Everett M. Brooks Co., 351 Mass. 497, 499-501, 222 N.E.2d 752 (1967).” (Emphasis added)
The Nota Court commented on what damages would be recoverable in negligent misrepresentation and said, referencing another authority (Restatement (Second) of Torts S 552B (1977) that they could include:
" (1) The damages recoverable for a negligent misrepresentation are those necessary to compensate the plaintiff for the pecuniary loss to him of which the misrepresentation is a legal cause, including (a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and (b) pecuniary loss suffered otherwise as a consequence of the plaintiff's reliance upon the misrepresentation. "(2) the damages recoverable for a negligent misrepresentation do not include the benefit of the plaintiff's contract with the defendant."”
(Ed: ‘Benefit of the bargain’ usually refers to an anticipated profit. Therefore, presumably the reference in the last sentence of the above-quoted case is that the plaintiff could not recover for any lost profit it had anticipated obtaining from the performance of the contract in question.)
The fourth theory is violation of the state Consumer Protection Act (C.93A, s. 11) for ‘unfair and deceptive trade practices.’ This is Massachusetts Consumer Protection Act, which applies to both claims by consumers against businesses (section nine thereof) and claims by businesses against businesses (section eleven thereof.) Under these types of claims, a successful party can recover double or triple actual single damages (the actual damages) and receive an award of an attorney’s fee.
In these types of cases, one has to allege (and prove) that the defendant committed ‘an unfair and deceptive trade practice’.
If the concept of ‘beauty’ is incapable of a simple definition - other than beauty is in the eye of the beholder - what is an ‘unfair and deceptive trade practice’ has eluded a simple definition. The definition that many appellate courts have used to define this concept may not be terribly helpful in any particular situation: “Conduct which causes one inured to the rough and tumble of commerce to raise an eyeball.” What this seems to mean is that merely rough dealing or only moderately sharp practice probably are not enough.
Here is a portion of a judge’s decision in a superior court case discussing what constitutes an ‘unfair and deceptive trade practice’:
“An act or practice is deceptive which has the capacity to deceive. An act or practice is deceptive if it could reasonably cause a person to act differently from the way he would act if he knew the truth about the matter. Purity Supreme v. Attorney Gen., 380 Mass. 762, 777 (1980) quoting Lowell Gas Co. v. Attorney General, 377 Mass. 37, 51 (1979). It includes any communication made with the intent to deceive another person, but intent to deceive is not always necessary. Swanson v. Bankers Life Co., 389 Mass. 345, 349 (1983) (no intent to deceive need be shown). A negligent or careless misrepresentation of fact, the truth of which is reasonably capable of ascertainment is also a deceptive act or practice. Glickman v. Brown, 21 Mass. App. Ct. 229,235 (1985). An act or practice is “unfair” it was immoral, unethical, oppressive, unscrupulous or otherwise unconscionable. PMP Assocs., Inc. v. Globe Newspaper Co., 366 Mass. 593, 596 (1975), citing Federal Trade Comm’n v. Sperry Huchinson Co., 405 U.S. 233, 244 (1972), citing 20 Fed Reg. 8325, 8395 (1964). An act that might be unfair in a business transaction with an unsophisticated consumer might not be unfair when it takes place in a transaction between two sophisticated businessmen. Anthony’s Pier Four, Inc. v. HBC Assocs., 411 Mass.451,475, quoting Spence v. Boston Edison Co., 390 Mass. 601, 616 (1983). Neither negligent acts, standing alone, nor breach of contract constitute proof of an unfair or deceptive act or practice. Swanson v. Bankers Life Co., supra, at 349 (“not every negligent act is unfair or deceptive . . .”); Whitinsville Plaza, Inc. v. Kotseas, 378 Mass. 85, 100 (1979) (breach of contract alone does not amount to unfair act or practice). The plaintiff must prove that the negligence or breach was motivated by some “pernicious purpose”, was unfair or could reasonably cause a person to act differently from the way he would act if he knew the truth about the matter. Purity Supreme, Inc. v Attorney Gen., supra at 777, Framingham Auto Sales v. Workers’ Credit, 41 Mass. App. Ct. 416,418 (1996). Lastly, the plaintiff must prove that the unfair or deceptive act or practice of the defendant caused damage. Martha’s Vineyard Auto Village, Inc. v. Newman, 30 Mass. App. Ct. 363, 368-369 (1991), rev. denied. 409 Mass. 1105 (1991).” (Emphasis added)
The conduct has to be very egregious, very outrageous, very unfair. While Massachusetts is clearly a pro-consumer state (which includes business claims, for these purposes) and while there are many reported decisions giving triple damage relief, any particular plaintiff contemplating this type of case should be warned that these types of judgments are reasonably rare and certainly not to be expected in the ordinary course. Again, the conduct of the defendant has to be off the norm of negligent, off the norm of unfair and outrageous. If the conduct complained of goes beyond mere negligence, mere unfairness by quantum leaps, then one may have a viable claim. A lot may depend on the quantity and depth of the evidence.
The Nota case, cited above, also discussed on Page 21 of the decision C. 93A claims:
“Claim pursuant to G.L. c. 93A, SS 2(a) and 11. Where we hold that at least two of the representations made by Keyes in the plans and specifications set forth potentially viable claims for deceit and negligent misrepresentation, Nota's c. 93A claim based on those representations remains viable. McEvoy Travel Bureau, Inc. v. Norton Co., 408 Mass. 704, 714, 563 N.E.2d 188 (1990). Glickman v. Brown, 21 Mass.App.Ct. 229, 234- 235, 486 N.E.2d 737 (1985).”
Here are two interesting ‘nuggets’ of knowledge with regard to cases by contractors against architects as recently gleaned from the Appeals Court case of TLT Construction Corp. vs. A. Anthony Tapp & Associates, Inc.
Initially, this contractor had claims against an architect with regard to a town library renovation project with regard to the defendant architect’s conduct both before and during construction. The architect was properly awarded summary judgment as to those claims due to the res judicata effect of a prior arbitration proceeding involving the contractor and the town.
(The doctrine of ‘res judicata’ basically means that once a matter has been tried to a conclusion, it may not be tried again.)
However, this didn’t end the case! The contractor also filed claims against the architect for an evaluation which the architect submitted to the Massachusetts Division of Capital Planning and Operations upon completion of the project, which contained - according to the contractor -intentional and willful falsehoods, misrepresentations and defamatory statements about the contractor. The contractor asserted that these statements constituted intentional and negligent misrepresentations, fraud, deceit and defamation - all of which are separate torts (civil wrongs).
As to these claims, the architect also sought summary judgment. At summary judgment court, this motion was granted. The Appeals Court reversed that particular decision and remanded the case to the Superior Court for further proceedings. As to the contractor’s Chapter 93A claims against the architect, these were remanded to the Superior Court for further proceedings.
There are probably at least two things to be learned from the case. Initially, if a contractor wishes to make claims against an architect which are similar to claims sounding in a requested equitable adjustment sought against your contracting party, failure to litigate those claims - or to protect the future litigation of those claims, in some way - in litigation against the owner might bar subsequent assertion of those claims against the architect. This would seem to be fair inasmuch as the architect is supposed to be the owner’s representative and if an arbitrator determines that the owner is not liable for the equitable adjustment sought, it would seem that the architect itself should not also be liable for the equitable adjustment sought.
At the same time, not too much should be read into this decision inasmuch as the thrust of the Appeals Court inquiry is whether or not it was proper to grant summary judgment against the contractor and in favor of the architect. This is a far different thing than pronouncing under what circumstances the architect would be liable to the contractor for an apparently negative project evaluation.
The fifth theory is a claim for ‘interference with advantageous contractual relationships’.
There are four essential elements to this ‘tort’ (a tort is a ‘civil wrong’). These are that the Defendant committed: (1) intentional and willful acts; which were (2) calculated to cause damage to the plaintiff in its lawful business; and, this was (3) done with an unlawful purpose to cause such damage and loss, without right or justification on the part of the defendant; and , as a result of the same, the (4) plaintiff incurred actual damages. Put another way, the plaintiff must prove that it has a business relationship or contemplated contract of some economic benefit to it; and, that the defendant had knowledge of such relationship; and, that the defendant intentionally and maliciously interfered with that relationship, thereby causing the plaintiff harm..
The writer points out that he has not seen this approach tried too many times, at least as referenced in the appellate cases. This may be due to the fact that ‘malicious interference’ looks an awful lot like an ‘unfair and deceptive trade practice’ so that plaintiffs having these facts forego the interference claim - which would only be for single damages and would not generally support a recovery for attorneys’ fees - for a C. 93A claim, which might be for double or triple damages and would include an attorney’s fee award.
It is the writer’s sense that the architect bar in Massachusetts vigorously defends these types of cases. This can and might mean that a case brought by a contractor will be facing a motion to dismiss or, more likely, a motion for summary judgment at some point in time. (A motion to dismiss means that the complaint fails to state a legal claim, even if the facts alleged can be proved. A motion for summary judgment is usually a motion filed late in the case where the moving party claims that there are no genuine issues of material fact and the moving party is entitled to summary judgment as a matter of law.) Practically speaking, the likelihood of such a test of a contractor’s claim suggests that there will be some legal work for the contractor’s attorney resisting such a motion, more so than might be anticipated in other types of claims.
The point is that it probably never should be anticipated that a designer is simply going to pay when he/she/it is sued. A great deal of care will be necessary in framing any particular claim to make sure that both there is a viable cause of action - the type of claim - and the facts (and witnesses and, hopefully, documents) are there to support it.
There are some indications that some designers are making themselves less attractive to these kinds of claims by not having professional liability insurance, the thinking being that contractors are more likely to proceed against an insurance company and less likely to proceed against a designer who has no insurance and no ostensible ability to pay a judgment. Also, it may be that the deductible on the designer’ s errors and omissions policy is so large that the architect’s insurance may not even kick in for smaller claims.
All the foregoing having been said, the writer has been involved in several cases where an architect made a financial contribution to conclude claims between the general contractor and the owner. In one such case, where an architect took more than three months in approving submittals, pushing the general contractor into winter conditions, an architect contributed to the payment of the general contractor’s claim for temporary heat as asserted against the owner in litigation. This same architect, in another contract for the construction of a school addition, contributed ten thousand dollars to the resolution of claims between a general and the public owner.
Also, it seems from reviewing the cases that the key idea for a contractor’s claim is to survive either (or both) the motion to dismiss and summary judgment motions. The superior court is the court of general jurisdiction in Massachusetts, entertaining claims of twenty-five thousand dollars and more. Recently, the Chief Justice of the Superior Court said in testimony before a committee of the House of Representatives in Massachusetts that only one percent of all superior court cases actually goes through a complete trial. (Earlier statistics from about ten years ago was that this figure was between four and eight percent.)
Once a party has survived a motion for summary judgment, there is no generally available way of having the case dismissed prior to trial, unless the contractor fails to provide, for example, discovery (i.e. does not answer written questions - interrogatories). The court system as a whole for civil cases encourages - sometimes rather vigorously - settlement at all stages of litigation, particularly at the stages just before trial. Since a great many cases somehow do get settled, it would appear realistic that there is some chance of pretrial settlement of contractor claims which can survive summary judgment.
A final note. Much of the law on this - and other subjects - comes from ‘inferior’ courts, ‘inferior’ meaning that they are not the higher appellate courts, such as the Appeals Court or the Supreme Judicial Court, which two courts typically - and on a more prestigious scale - interpret and establish Massachusetts statutory and common law. Superior courts (along with their junior partner, the state district court) are where the actual day to day conflict resolution takes place.
Superior court decisions are not as easily available as Appeals Court and Supreme Judicial Court decisions, which means that the bar - possibly, the judiciary? - are not as aware of these decisions, which can mean that other decisions on similar facts are made without knowledge of other potentially relevant - even, controlling - decisions. Also, the higher courts have several judges looking at problems for a longer period of time than the typical superior court judge, who has to resolve disputes by himself/herself more quickly and more likely without the benefit of much, if any, legal research done by a clerk.
This is a long-winded way of saying that there may not be complete consistency between various superior court decisions on the same subject. (This is also true concerning decisions of the Appellate Division of the District Courts.) Typically, when the matter becomes more important - either to an appellate court or to a particular litigant - a more conclusive and melding decision will come from the Appeals Court and Supreme Judicial Court to resolve lower court inconsistencies.
(This paper and presentation is intended for educational purposes and should not be considered as specific legal advice for specific situations facing you. This subject matter is complicated and cannot be presented with any ultimate degree of accuracy and finality in a one-half day session to non-lawyers. For teaching purposes, some cases and trends have been generalized; indeed, architect/engineer liability to contractors is in itself an emerging and developing trend. The fact that some cases have been recited does not mean that there are not other cases which have held differently. Really, the purpose of this article is not to provide an exceptionally accurate ‘snapshot’ of Massachusetts law at present. Rather, the purpose of the seminar has been to identify what the issues are in these types of claims and what the key concepts are in working one’s way through them.)
(Copyright, Jonathan Sauer, 2002)