Chaves v. Johnson

• Decision Date: 06 September 1985
• Docket Number: No. 821206,821206
• Citation: 335 S.E.2d 97,230 Va. 112
• Parties: Juan O. CHAVES v. H.C. JOHNSON, Jr. Record
• Court: Virginia Supreme Court

Page 97

335 S.E.2d 97

230 Va. 112

Juan O. CHAVES v. H.C. JOHNSON, Jr.

Record No. 821206.

Supreme Court of Virginia.

Sept. 6, 1985.

H. Glenn Goodpasture, Fredericksburg (Claude Rackley, Jr., Fredericksburg, on brief), for appellant.

Leland L. Baker, Jr., Fredericksburg, for appellee.

Present: All the Justices.

RUSSELL, Justice.

This is an action for damages based upon theories of defamation and tortious interference with contract rights. The jury awarded damages to the plaintiff on both theories. The trial court set the verdict aside and entered judgment for the defendant. We granted the plaintiff an appeal.

Juan O. Chaves is a licensed architect practicing in the Fredericksburg area. In September 1978, after soliciting bids from architects, the City of Fredericksburg awarded him a contract for architectural services. The contract provided that Chaves would make a study of the City's governmental space needs, would review the availability of existing properties to meet those needs, and would render complete architectural services with respect to additional construction work desired by the City. His fee was to be $3500 for the space study and 10% of construction costs for new construction. The contract was not specific as to the new construction desired, but at the time of its execution the City contemplated the renovation and conversion of an existing Post Office Building on Princess Anne Street into a new City Hall. Chaves was directed to develop a schematic design and a cost estimate for the project.

Chaves' cost estimate, submitted in April 1979, was for $723,720, plus his fee of $72,372, plus an allowance of $100,000 for furniture. The City Council members had contemplated spending less than $275,000 on the project. Chaves informed the City Council, "This is what you tell me you need. It's going to cost way in excess of what you want. Please tell me what to do." The Public Works Committee decided the cost of renovating the Post Office was too high and asked Chaves to investigate alternatives. He did a study of a potential new City Hall to be built on Caroline Street. Chaves submitted a plan for that project in June 1979.

H.C. Johnson, Jr., was another licensed architect practicing in the Fredericksburg area. He had submitted a competing bid for the City's Architectural Services Contract, quoting a lower fee, and was annoyed when the award was made to Chaves. Johnson testified:

It was important to me to let City Council know that I felt it was a reflection on me, and a reflection on my professional ability, and a reflection on my professional standing in the community, that it became public knowledge that they had by-passed me, they have not considered my proposal, they have hired somebody who does not have the experience that I have had; and at the same time, pay him fifty percent more. Now, that's got to tell somebody something.

On July 23, 1979, while the City Council was at an impasse concerning the cost of a new City Hall, Johnson wrote the following letter to the City Council:

July 23, 1979

Fredericksburg City Council

Fredericksburg, Virginia

Re: Proposed City Hall

Architectural Project

Members of Council:

Concerning the proposed City Hall Architectural Project. Over a prolonged period of time since Council selected an Architect for the above project it has come to my attention that members of Council did not review, or did not have, all relevant information when making the decision.

If having been aware of the facts it seems unreasonable to me that Council would retain an Architect who has had no prior experience in this type of project and agree to pay an Architectural fee that is over 50% more than what could be considered a reasonable fee.

I have been told by members of Council that they have never seen the proposal that I submitted, in response to Mr. Funk's request, and were not aware that I was really interested in the project.

I have also been told that a member of Council told other members of Council that I was too busy to work on the project. This is absolutely not true. Had I been too busy I would not have submitted a proposal or told Mr. Funk, or stated in my proposal, that I was extremely interested in the project.

In view of the fact that I am a registered Architect, a permanent resident of the area, have maintained an office in the City for thirteen years and have paid many thousands of dollars to the City Treasurer in the form of Business License Tax, and have had as much experience as any Architect in the State with respect to this type of project, have submitted a reasonable fee schedule and have expressed a sincere desire to be considered for the project, it seems a considerable reflection on my professional reputation, as well as questionable judgement on Council's part, to retain an Architect of no past experience and agree to pay him an unjustifiably high fee.

Because of my failure to request a proper interview, which I had assumed would be an appropriate formality, at the time of the original architectural selection concerning the Post Office I do not necessarily feel that I am entitled to further consideration concerning that particular project, even though I feel that Council did not give my proposal fair and impartial consideration.

However, if it is Council's intention to consider a new City Hall at any location other than the Post Office I would at this time request that my original proposal be reviewed and reconsidered and a new architectural contract be awarded based on the requirements of the new project and the merits of those submitting proposals.

Further, if it is Council's intention to accept and review unsolicited architectural concepts for a new City Hall I would also appreciate some consideration with respect to such a presenation.

If you have not seen my original propsal I have enclosed a copy for your review. Of considerable importance, I feel, is the fact that I stated I was extremely interested in the project, that my fee in the $700,000.00 to $800,000.00 range would have 6.5% of the construction cost, and that a study and determination of space needs was a part of my basic fee. If you also review the other proposals submitted and the contract that was eventually entered into by the City it is clear that all facts were not considered when a decision was reached. It seems to me that on a project of this type the public interest is being poorly served if members of Council do not review all information that is readily available to them when making a decision involving hundreds of thousand (possibly millions) of dollars, and as a result select the person or firm who is readily available, is best qualified, and proposes to do the work for the most reasonable fee.

I ask only that all relevant facts and information receive fair and impartial consideration.

Sincerely,

H. C. Johnson, Jr.

Architect

Johnson hand delivered a copy of this letter to each council member, accompanied by a copy of his fee schedule and a list of his professional qualifications.

A week following the receipt of Johnson's letter, the Public Works Committee, consisting of five councilmen, held a closed executive session and thereafter, in a public meeting, voted to recommend that City Council terminate Chaves' contract. The seconder of the motion stated that he was voting to terminate the contract because "it had been pointed out to him" that Chaves' fees were "excessive" and his experience "not sufficient." Two weeks later, at a formal meeting, the City Council voted to accept the committee's recommendation and terminate Chaves' contract. No reason was stated for the Council's action.

After Chaves' termination, the City Council solicited new bids for architectural services. Johnson's bid was accepted, although lower bids were received.

Chaves filed a motion for judgment against Johnson in two counts. The first claimed $59,597 in actual damages and $30,000 in consequential damages on a theory of tortious interference with his contract rights. The second count claimed the same amount of actual damages and $30,000 in "consequential and punitive damages" on a theory of defamation. By a consent order, the claim for actual damages was increased to $107,145 under both counts.

At trial, eight of the eleven City Council members testified. Each denied that he had been influenced by Johnson's letter in deciding to vote to terminate Chaves' contract. Several councilmen cited specific areas of dissatisfaction with Chaves' schematic design. One councilman testified that he had decided as early as April 1979 that Chaves should be replaced and had discussed the matter with other councilmen. He also admitted that he had gone to Johnson's office a few days before Johnson wrote the letter of July 23, and had discussed the matter with Johnson, who had a copy of Chaves' design on his desk.

Both counts were submitted to the jury, which returned a verdict awarding Chaves $70,000 actual damages, $15,000 damages for humiliation and harm to his professional reputation, and $15,000 punitive damages. Under the instructions, the actual damages could have been awarded under either or both counts, but the two $15,000 awards could have been awarded only under the defamation count.

The trial court sustained Johnson's motion to set aside the verdict on the tortious interference count on the primary ground that there was no evidence to support the jury's finding that Johnson's letter was the proximate cause of Chaves' discharge. The court relied on the testimony of the eight councilmen that they had been motivated by other factors. The court set the verdict aside on the defamation count on the grounds that Johnson's statements were mere statements of opinion and were, furthermore, uttered under a qualified privilege. Chaves contends on appeal that both rulings were erroneous.

We agree with the trial court's ruling that the statements in Johnson's letter were, as a matter of law, mere statements...