Lull v. Wick Const. Co., 4030
| Decision Date | 25 July 1980 |
| Docket Number | No. 4030,4030 |
| Citation | 614 P.2d 321 |
| Parties | John H. LULL and Herbert Millay, d/b/a The Crowning Touch, Appellants, v. WICK CONSTRUCTION COMPANY, Appellee. |
| Court | Alaska Supreme Court |
Peter M. Page, Juneau, for appellants.
Michael M. Holmes, Faulkner, Banfield, Doogan & Holmes, Juneau, for appellee.
Before RABINOWITZ, C. J., and CONNOR, BOOCHEVER, BURKE and MATTHEWS, JJ.
This appeal arises from complex litigation involving the construction of the Juneau Courthouse. In July 1973, John Lull and Herbert Millay, d/b/a The Crowning Touch, a plastering and drywall firm, entered into an agreement with Wick Construction Company ("Wick"), the general contractor for the courthouse project, to do fireproofing, plastering, lathing, and related work on the courthouse. The Crowning Touch began fireproofing in May, 1974, but soon had a dispute with Wick concerning the amount of material required. The state building inspector required thicker fireproofing than Wick had anticipated, and The Crowning Touch had based its bid for the job on the quantity estimated by Wick. When The Crowning Touch had sprayed the 77,000 feet of fireproofing specified in the agreement, it ceased spraying, even though some of the building had not been fireproofed. The fireproofing work had also fallen behind schedule because, according to The Crowning Touch, Wick had failed to provide suitable work areas and conditions as provided by contract.
On July 3, 1974, Walt Lamb, the Wick project manager, wrote The Crowning Touch to inform it that Wick was taking over the subcontract, due to The Crowning Touch's nonperformance. Copies of this letter were sent to the B.M. Behrends Bank, the source of The Crowning Touch's financial support for the project and the assignee of its subcontract with Wick, and to Dawson and Co., The Crowning Touch's bonding company. Oral communications between agents of Wick, the bank and the bonding company concerning The Crowning Touch's performance also took place. Following negotiations, Wick revoked the letter, conditioned on The Crowning Touch's immediate recommencement and timely completion of the work. On August 24, however, Wick apparently did take over the job.
Subsequent to these communications, further advances to The Crowning Touch by the B.M. Behrends Bank were denied. The Crowning Touch's agreement with the bank specified that Wick would forward the proceeds due The Crowning Touch directly to the bank. At some point after work began, Wick erroneously sent a large check directly to The Crowning Touch, rather than to the bank. The Crowning Touch apparently diverted these funds to another job on which it was working. According to one officer of the bank, this diversion was a major reason for cutting off The Crowning Touch's line of credit.
During the same period of time, The Crowning Touch's bonding company, Dawson and Co., decided to deny further bonding to The Crowning Touch for other projects. Lull testified that Dawson appeared willing to further bond them as soon as Wick released them from the courthouse fireproofing project. Both William Baker, manager of Dawson's Juneau office, and Mike Miller, a Dawson employee, observed that it became more difficult for anyone to get bonding from any company in the summer of 1974 because of a general tightening of the bonding market. Miller expressed his belief that no communication from Wick caused the denial of further bonding to The Crowning Touch.
The Crowning Touch sued Wick, alleging breach of Wick's subcontract with The Crowning Touch, defamation and tortious interference with contract. The complaint sought punitive as well as compensatory damages. Prior to trial, Wick moved for summary judgment as to The Crowning Touch's defamation claims and for dismissal of its other tort claims and its claim for punitive damages. The superior court, treating the motion to dismiss as a motion for summary judgment, granted Wick's motions based on the contents of numerous depositions taken by both sides. The matter then proceeded to trial on The Crowning Touch's contract claims, with The Crowning Touch prevailing.
After the trial, The Crowning Touch moved for relief from judgment and a new trial on the grounds that the superior court had not had a key deposition before it when it considered Wick's motions for summary judgment, because of the oversight of a court reporting service. The superior court ordered that the deposition be incorporated into the record, but denied The Crowning Touch's requested relief. The Crowning Touch now appeals the summary judgment granted to Wick on the tort and punitive damages claims.
We affirm the superior court's grant of summary judgment to Wick. In reaching our decision, we have examined the depositions and exhibits that were before the superior court at the time of the summary judgment motions, 1 and have concluded that Wick, as movant, did meet its burden under Alaska Civil Rule 56(c) of establishing the absence of any disputed issue of material fact. 2
The Crowning Touch alleged defamation by Wick on the basis of the letter and oral statements communicated by agents of Wick to The Crowning Touch's financing bank and its bonding insurer, indicating dissatisfaction with the performance of The Crowning Touch under its contract. 3 The superior court granted summary judgment to Wick on this claim based on a conclusion that no one at the bank or bonding company viewed Wick's information as "anything out of the ordinary," and that the statements were privileged because of Wick's business relationship with the bank and bonding company.
The superior court's ruling that Wick's communications to the bank and bonding company fell within the scope of privilege based on a joint business interest and, thus, were protected from defamatory suit was correct in our opinion. Section 596 of the Restatement (Second) of Torts (1977) provides:
An occasion makes a publication conditionally privileged if the circumstances lead any one of several persons having a common interest in a particular subject matter correctly or reasonably to believe that there is information that another sharing the common interest is entitled to know.
Here, Wick could reasonably have believed that the bank was entitled to know that Wick considered The Crowning Touch to be in default of its contract, since the bank's loan to The Crowning Touch was secured by an assignment of the contract payments which Wick owed The Crowning Touch for performance of the subcontract. Likewise, since the performance bond insuring The Crowning Touch's performance under the subcontract ran in Wick's favor, Wick could reasonably have thought the bonding company should be informed of Wick's dissatisfaction with The Crowning Touch's performance. Courts in other jurisdictions have consistently found a privilege in comparable business relationships. 4
The privilege is conditional. It is well established that such a privilege is no defense if the defamatory communication is published with express or implied malice if the perpetrator knows it to be false or acts in reckless disregard of the truth or falsity of the matter. Restatement (Second) of Torts § 600 (1977). 5
However, the evidence before the superior court in this case reveals no indication that the communications from Wick to the bank and bonding company were made with malice. The various recipients of these communications testified that they did not consider the communications themselves to be defamatory in character, but rather to be limited to comments that the work was behind schedule and complaints about the quality of the work. The letter, copies of which Wick sent to the bank and bonding company, did not go beyond stating that Wick was taking over the contract because of nonperformance by The Crowning Touch, and listing the particular instances of nonperformance of which Wick accused The Crowning Touch. 6 The comments by employees of Wick, which The Crowning Touch offered as evidence of malicious intent, occurred in circumstances unrelated to the communications to the bank and bonding company or to any other actions by Wick. 7 The evidence reveals no knowledge by Wick's agents at the time the statements to the bank and bonding company were made that they knew the statements were false; nor does the evidence indicate that the statements were made in disregard of their veracity. Even drawing all reasonable inferences in favor of The Crowning Touch, the evidence does not establish any triable issue of fact regarding malice on the part of Wick in tendering communications to the bank and bonding company which concerned their common business interests. Therefore, summary judgment on this issue was appropriate. 8
The Crowning Touch also argues that punitive damages should be awarded for malicious conduct by Wick in breaching its contract with The Crowning Touch. 9 This court has indicated in past dicta that punitive damages may not lie in contract actions, 10 but has noted that some states permit punitive damages when the breach is "malicious or grossly reckless" or when the conduct associated with the breach also constitutes an independent tort. 11 Not one of the breaches of contract alleged by The Crowning Touch is tortious in character, however. 12 Nor has The Crowning Touch tied any evidence of malicious intent by Wick to its conduct in breaching its contract with The Crowning Touch. The random comments of Wick's representatives cited by The Crowning Touch as evidence of Wick's malice are not sufficient in our opinion to raise a genuine question of fact regarding Wick's general intent in refusing to carry out its contract according to the interpretation favored by The Crowning Touch and eventually held valid in court. 13 Thus, in our opinion, The Crowning Touch in this case would not avoid summary judgment on the question of punitive damages even in jurisdictions where punitive damages are allowed for...
To continue reading
Request your trial
-
Dominguez v. Babcock
...a qualified privilege to publications concerning employees made to third persons with common interests. See, e.g., Lull v. Wick Construction Co., 614 P.2d 321 (Alaska 1980) (qualified privilege granted to communications from contractor concerning subcontractor made to bank and bonding compa......
-
City of Angoon v. Hodel
...2374, 72 L.Ed.2d 765 (1982).8 The Alaska Supreme Court has mentioned the doctrine but declined to address it. See Lull v. Wick Constr. Co., 614 P.2d 321, 325 n. 9 (Alaska 1980). ...
-
Cox v. Nasche
...P.2d 619, 623-24 (Alaska 1986); Urethane Specialities, Inc. v. City of Valdez, 620 P.2d 683, 689-90 (Alaska 1980); Lull v. Wick Constr. Co., 614 P.2d 321, 324 (Alaska 1980). The Alaska Supreme Court has also followed the Restatement in adopting an absolute privilege to defamation actions in......
-
Greenfield v. Ollikala
...claimant reasonably believed that it was necessary to convey the defamatory matter to the bonding company. See, e.g., Lull v. Wick Const. Co., 614 P.2d 321 (Alaska 1980). However, the fact that the defamatory matter was contained in a letter making a claim on a bond does not, in and of itse......