J & J CONST. CO. v. BRICKLAYERS AND ALLIED CRAFTSMEN, LOCAL 1

• Decision Date: 10 July 2001
• Docket Number: Docket No. 215090.
• Citation: 245 Mich. App. 722,631 N.W.2d 42
• Court: Court of Appeal of Michigan — District of US
• Parties: J & J CONSTRUCTION COMPANY, Plaintiff-Appellee, v. BRICKLAYERS AND ALLIED CRAFTSMEN, LOCAL 1 and Mark King, Defendants-Appellants.

631 N.W.2d 42

245 Mich. App. 722

J & J CONSTRUCTION COMPANY, Plaintiff-Appellee, v. BRICKLAYERS AND ALLIED CRAFTSMEN, LOCAL 1 and Mark King, Defendants-Appellants.

Docket No. 215090.

Court of Appeals of Michigan.

Submitted December 11, 2000, at Detroit.

Decided May 11, 2001, at 9:10 a.m.

Released for Publication July 10, 2001.

Brady Hathaway, P.C. (by Daniel J. Bretz and David A. Hardesty), Detroit, for the plaintiff.

Sachs, Waldman, O'Hare, Helveston, Bogas & McIntosh, P.C. (by Mary Ellen Gurewitz, Detroit, and Marshall J. Widick), Southfield, for the defendants.

Before McDONALD, P.J., and NEFF and FITZGERALD, JJ.

FITZGERALD, J.

Defendants, Bricklayers and Allied Craftsman, Local 1 (the union), and Mark King, one of its representatives, appeal as of right a judgment in favor of plaintiff, J & J Construction Company, after a bench trial involving claims of defamation and interference with a business expectancy. Plaintiff was awarded $57,888 in damages, $104,286.95 in costs and attorney fees, and $26,044.51 in interest. We reverse in part and remand.

FACTS

The material facts are not in dispute. In 1995, the city of Wayne solicited bids for the construction of the Wayne Aquatic Center and plaintiff submitted the lowest bid for the masonry contract. Defendant King, acting as business agent for the union, appeared before the city council and expressed doubts concerning whether plaintiff performed quality work or paid the prevailing wage, leading the council to award the contract to another bidder.

The Wayne city attorney testified that, as a matter of municipal law, the city was obligated to award contracts to the lowest qualified bidder meeting specifications unless the city council determined that the public interest would be better served by accepting a higher bid. At the city council meeting in May 1995, defendant King spoke on the subject of plaintiff and indicated that plaintiff did not pay the prevailing wage and had poor workmanship. King also showed some photographs supposedly depicting plaintiff's work. The council voted to table the contract and voted the following month to reject plaintiff's bid because of concerns about faulty workmanship and failure to pay prevailing wage and benefits.

Defendant King testified that he was as knowledgeable in the bricklaying trade as the average bricklayer. In March 1995, he took photographs of plaintiff's work at Novi High School for the purpose of showing shortcomings in craftsmanship. These photographs were shown to the Wayne city council. In the pictures, he was trying to show an inconsistency in the sizes of the joints in the locker room wall, which King regarded as indicative of poor workmanship. Another photograph taken at Novi High School was described as showing work that was "really terrible," "a cardinal sin" in bricklaying. King offered further technical descriptions of supposed deficiencies that he detected in that job.

King testified that, at the city council meeting, he stated that plaintiff lacked the ability to do to the job for which plaintiff was bidding, and also that plaintiff might be unable to complete the work in a timely manner. King additionally testified that he commented that plaintiff "is a nonunion contractor and this is a union town."

Concerning the basis for his suggestion that plaintiff might not be able to complete the job on time, King described jobs where plaintiff was obliged to engage subcontractors in order to meet a deadline. King conceded that he knew of no job that plaintiff had not finished on time.

King agreed that prevailing wages and benefits were set by the state of Michigan and that, when he suggested to the city council that plaintiff did not comply with the prevailing wage act, the only related documentation he had in his possession was certified payrolls from plaintiff stating that plaintiff had in fact complied as concerned the Novi job. King stated that he had not checked with the state, or with any official involved in the Novi job, to verify the matter. However, King testified that he spoke with two of plaintiff's bricklayers, who said that plaintiff did not pay benefits, but that upon talking to one of them a second time he did learn that insurance coverage began after sixty days on the job. King conceded that the sixty-day waiting period for insurance was shorter than the six hundred working hours for which a union contractor had to wait. He also conceded that, despite the certified payrolls indicating that plaintiff pays benefits and statements from the bricklayers that they were going to get benefits, he still informed the city council that plaintiff does not comply with the prevailing wage law. On cross-examination, King testified that he knew from experience that contractors' certified payroll statements did not always accurately reflect the actual practices. King explained that "pensions, holiday pay, stuff along that line" contributed to the prevailing wage calculation, and that he did not believe that health insurance coverage combined with $23 an hour added up to the prevailing wage in this instance.

George Hamlin testified that, during 1994-95, he was senior superintendent for Barton Mallow, a company of construction managers, and that he had served as senior superintendent for the Novi High School job. Hamlin confirmed that plaintiff was the masonry contractor for the job. Hamlin stated that he had inspected an earlier job by plaintiff and found it to be "satisfactory." Hamlin rated plaintiff's masonry work as "about a hundred percent better than the existing school's workmanship." Hamlin added that there had been no problem with plaintiff meeting completion deadlines. Hamlin explained that plaintiff had been obliged to integrate new work with existing masonry in several places, and that in no instance had plaintiff done faulty work, but in some instances where irregularities were present plaintiff had done the job as directed by Hamlin.

George Ehlert identified himself as president and principal engineer for Ehlert, Bryant Consulting Engineers of Southfield. Ehlert testified that his review of the plans for Novi High School indicated that the masonry work specified by the architect and the owner was "standard masonry," "no higher than average quality standards." Ehlert further opined upon review of plaintiff's work on that job that plaintiff's results fit "well within the tolerances" specified.

Plaintiff charged defendants with defamation and tortious interference with a business relationship or expectancy. The trial court concluded that plaintiff had failed to prove that King's statements concerning plaintiff and prevailing wages were false. However, the court found that King's statements concerning plaintiff's quality of work and ability to do the job on time were false, and negligently so. The court further concluded that King was acting on behalf of the defendant union, and so the latter shared in the responsibility for any damages. The court thus held both defendants liable for defamation and tortious interference with business expectancy. With regard to damages, the court found that plaintiff's business reputation had not been hurt and that damages were limited to the lost profit from the rejected bid, plus interest, costs, and attorney fees.

I

Defendants argue that the trial court erred in finding them liable for tortious interference with a business expectancy as the result of defendants' use of misleading statements to persuade a governmental entity not to award a contract to plaintiff. They contend that they were engaged in political advocacy that was immune from suit under the Noerr-Pennington doctrine.

The two seminal cases that engendered the name of the doctrine at issue are Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961), and United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965).

Noerr concerned competition between trucking and railroad concerns and attempts by each interest to engage in publicity campaigns designed to foster adoption and enforcement of laws harmful to the other, as well as to degrade the public image of the other's enterprise, and to impair relationships between the rival and existing customers. Noerr, supra at 128-129, 132-133, 81 S.Ct. 523. Each accused the other of violating antitrust law. Id. The United States Supreme Court ruled that "no violation of the [Sherman] Act can be predicated upon mere attempts to influence the passage or enforcement of laws." Id. at 135, 81 S.Ct. 523. The Court added, "the whole concept of representation depends upon the ability of the people to make their wishes known to their representatives." Id. at 137, 81 S.Ct. 523. The Court also touched on the First Amendment issue: "The right of petition is one of the freedoms protected by the Bill of Rights, and we cannot, of course, lightly impute to Congress an intent to invade these freedoms." Id. at 138, 81 S.Ct. 523. In this regard, deception of the public and of public officials, "reprehensible as it is, can be of no consequence so far as the Sherman Act is concerned." Id. at 145, 81 S.Ct. 523. The Court thus "restored what appears to be the true nature of the case— a `no-holds-barred fight' between two industries both of which are seeking control of a profitable source of income." Id. at 144, 81 S.Ct. 523.

Pennington involved a mine workers' union and large mining interests that had conspired to put smaller mining concerns out of business, including by way of lobbying the government to establish an unusually high minimum wage for employees of contractors selling coal to the Tennessee Valley Authority that the smaller competitors could not afford. Pennington, supra at 660, 85 S.Ct. 1585. The United States Supreme Court explained that "Noerr shields from the Sherman Act a concerted effort to influence public officials regardless of intent or...