Architect's Good Faith Avoids Tortious Interference Claim

Facts of the Case

Rory and Sharon Shapiro (the "Owners") decided to engage in a multimillion-dollar renovation of their home. The Owners engaged Cutting Edge Homes, Inc. (the "Contractor"), to perform the work. The Owners also engaged Alan J. Mayer (the "Architect") to provide architectural services, including a review of the Contractor's performance and invoicing.

The review of the Contractor's invoices began in late 2018. After a review of the first invoice, the Architect concluded that the Contractor was overbilling the Owners by roughly $250,000. However, the Architect had not reviewed the Owners' contract with the Contractor to understand the billing arrangement. The court suggested the Architect's conclusions on overbilling may have resulted from a lack of clarity on the proper billing protocols.

As the Architect reviewed other invoices, he reached the conclusion there was significant overbilling. The Architect reported these conclusions to the Owners, who communicated the overbilling concerns to the Contractor. Despite these concerns, the Owners continued to pay the invoiced amounts.

The Architect also regularly addressed the overbilling concerns to the Contractor during the project. Eventually, the Owners terminated the Contractor for several reasons, and the first reason listed was the Contractor's practice of "routinely overbilling."

After the termination, the Contractor sued the Architect for intentional interference with its contractual relation with the Owners. After discovery was completed, the Architect moved for summary judgment. The trial court granted the Architect's motion for summary judgment, and the Contractor appealed.

The Ruling

The Massachusetts Court of Appeals started its analysis by reciting the elements of a tortious interference with a contractual relation claim. To succeed, the Contractor must meet the following four elements.

1. The existence of a contract or prospective business relation;
2. The tortious defendant knowingly induced the nonparty to breach;
3. The interference was improper in motive or means; and
4. The party making the claim was harmed by the interference.

The court found there was no issue that the Contractor and Owners had a contract, that the Architect knew of that contract, that the Architect acted intentionally in giving his advice regarding the Contractor's performance, and that the Owners terminated their relationship with the Contractor. These findings meant the determinative question was whether the Architect's actions could be found to be "improper in motive or means," which is element three of the above list.

The court was guided by how the Restatement (Second) of the Law of Torts deals with the alleged tort of tortious interference. The court considered whether it was dealing with a situation where the Architect gave "honest advice based on reasonable grounds" and had exercised "reasonable diligence in ascertaining facts." These questions, the court went on, are important to determine whether the Architect acted in good or bad faith. No more than "good faith" is required to conclude the alleged interference was not improper.

The court concluded that when someone is engaged to advise, as was the Architect, and that person is alleged to have tortiously interfered by providing that advice, then it is not enough to show that the actor was negligent or even grossly negligent in making the representations alleged to have caused the interference. What is required is at least a showing of dishonesty, which the Restatement (Second) of the Law of Torts equates with a "lack of good faith."

The Massachusetts Court of Appeals agreed with the trial court that evidence was lacking to show the Architect's improper motive or means. The court went on to say that to show an improper motive then there must be a showing of an intent to cause harm to a claimant, which is the Contractor in this case. However, the improper motive can also include an ulterior motive (i.e., wishing to do injury or evidence of retaliation or ill will).

The court recognized that the Architect did not heed the payment provisions of the agreement between the Owners and the Contractor. This factor gave rise to criticisms of the Contractor by the Architect, as well as fueled the ongoing disagreement between the Architect and the Contractor over amounts invoiced.

Evidence showed the Architect made mistakes "from time to time" in his review and calculations. However, the court concluded none of these rose to the level of deceit or intentional misrepresentation nor did they show dishonesty.

The Architect's communications with the Owners were for no other reason than to fulfill his professional obligations. Those communications did not rise to tortious interference.

Conclusion

This Architect was fortunate the court concluded he was shielded from liability, but some simple steps may have avoided the suit completely.

Had the architect reviewed and understood all of the contract documents, there likely would not have been a lawsuit. When the contract terms are followed, and the process is transparent to all, there is a significant reduction in the risk of litigation.

This process should be coupled with clear billing and review protocols, which would help communication among all parties, avoid misunderstandings, and likely avoid lawsuits.