Design professionals (particularly architects) are given a lot of responsibility on work projects. Sometimes, design professionals’ control over work projects can even supersede that of the property owner. This extra responsibility means that design professionals are open up to more liability and sometimes owe a duty to more than just the owner.
In Novermber 2011, Barr Incorporated was hired as a general contractor by Northbrook Village II, Inc. Around the same time, Northbrook entered into an American Institute of Architects (AIA) Contract with Studio One, Inc. for design and contract administration. This AIA contract identified Studio One as the “Initial Decision Maker” to review certain claims that might arise under Barr’s contract. Barr’s contract also stipulated that Northbrook could not fire the general contractor “for cause” unless Studio One certified the termination.
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Barr began work on the project in December 2011. Before Barr’s contract was executed, Northbrook and Studio One learned of an issue with the paving and water delivery system designs. Northbrook and Studio One failed to prepare timely alternative designs and obtain all requisite approvals. Due to the fault of Northbrook and Studio One, the project was delayed about a week, entitling Barr to an extension of time and an increase in payment. Studio One was not entitled to such relief unless Barr was terminated by Northbrook.
Barr asserted that in early 2013, Northbrook and Studio One “colluded to fabricate ground for terminating [Barr] from the Project.” This was allegedly due to financial issues that Northbrook experienced throughout the existence of the work project. On June 3, 2013, Northbrook terminated its contract with Barr. The termination notice included a certification by Studio One. This led to Barr filing suit against Studio One for tortious interference with contractual relations, tortious interference with advantageous relations, and unfair and deceptive trade practices. Studio One filed a motion to dismiss.
The Court Decision
In Barr, Inc. v. Studio One, Inc., Civil Case No. 15-40056-MGM (Nov. 18, 2014), the Massachusetts District Court denied Studio One’s motion to dismiss. Studio One’s argument was that Barr failed to allege that Studio One acted with actual malice. The Court held that a showing of malice is not required in order to prove these two intentional interference torts. The simple requirement was that an “improper motive” existed. Therefore, the allegations that Studio One colluded with Northbrook to terminate Barr’s contract in order to receive relief for the work delay was enough to prove an improper motive may have existed. The Court Stated
By alleging that Defendant’s certification was knowingly false and was motivated by the prospect of additional compensation in the event of Plaintiff’s termination, Plaintiff has alleged that Defendant’s actions were improper in motive or means.
Further, the Court found that all other elements necessary to prove these tortious interference torts were satisfied. The motion to dismiss was denied.
What does this mean?
First, it should be noted that this is still an ongoing case, but the defeat of the motion to dismiss likely suggests the Court will side with Barr. That being said, this case highlights the higher standard architects and other design professionals are and can be held to. Therefore, design professionals must act objectively and in good faith when performing under AIA contracts. Especially when the contracts heighten their duties to the level that this particular contract did. Design professionals must take care in the way they act on work projects and understand that they may owe duties to more than just the owner they are contracted with.