Myers v. Pickering Firm, Inc.
| Decision Date | 22 May 1997 |
| Docket Number | No. 02A01-9605-CV-00124,02A01-9605-CV-00124 |
| Citation | 959 S.W.2d 152 |
| Parties | Joseph F. MYERS, and Carl D. Klimek d/b/a MK Associates, Plaintiffs-Appellants, v. PICKERING FIRM, INCORPORATED, Defendant-Appellee. |
| Court | Tennessee Court of Appeals |
Richard M. Carter and Scott T. Beall Martin, Tate, Morrow & Marston, P.C., Memphis, for Plaintiffs-Appellants.
Jerry O. Potter and William B. Walk, Jr., The Hardison Law Firm, P.C., for Defendant-Appellee.
This appeal involves a suit for libel and for procurement of breach of contract.
The first amended complaint filed in the circuit court by the plaintiffs, Joseph F. Myers and Carl D. Klimek d/b/a M K Associates (MK), against the defendant, Pickering Firm, Incorporated (Pickering), alleges, in substance, that in July 1985 MK had a contract with Lutheran Social Services of Memphis, Inc. (LSSM) 1 to perform architectural services in connection with the design and construction of a five-story residential home for the elderly that was part of Lutheran Village and was referred to in the complaint as Project A. Subsequently, in July 1988, MK entered into another contract with LSSM to perform architectural services in connection with the design and construction of twenty-five townhouse units, which were also to be a part of Lutheran Village and were described in the complaint as Project B. In May of 1989, LSSM contracted with Fogelman/Byrnes and Doggett (FB & D) 2 as contractors for the construction of both projects. During the course of construction, MK noted defects in the work performed by the contractor that were not timely cured. As a result of FB & D's failure to complete the work, MK refused to certify draw requests submitted by FB & D and recommended that LSSM have the work corrected by another contractor. The complaint alleges that Project A never reached a stage of completion at which it could be certified as substantially complete as described in the contract and that Project B never reached the level of completion for a final inspection.
MK avers in its complaint that, in February 1991, FB & D filed suit in the Chancery Court of Shelby County against LSSM, MK, and Myers and Klimek, individually, as a result of MK's refusal to certify draw requests. MK's complaint further avers that after the FB & D suit was filed, and on or about March 22, 1991, LSSM entered into a contract with Pickering for Pickering to perform independent on-site documentary review of both projects and to report its findings as to the quality and completeness of the construction documents and the status of the construction projects. MK's complaint also alleges that Pickering issued a report to LSSM dated April 15, 1991 that contained many false and defamatory statements about MK's work as the architect on the two projects, and notwithstanding notification that the report was false and erroneous, Pickering failed and refused to correct the statements therein. The complaint further alleges that in late April or early May 1991, Pickering contracted with LSSM for Pickering to be in effect the project architect on the two projects. The complaint alleges that Pickering acted willfully, intentionally, maliciously, and recklessly when it published and republished the report without correction and that Pickering maliciously procured the breach of MK's two contracts with LSSM. The complaint seeks both compensatory and punitive damages for the libel and also seeks recovery both under the common law and by virtue of T.C.A. § 47-50-109 (1995) for the procurement of the breach of the contracts.
Pickering's answer denies the material allegations of the complaint and joins issue thereon and affirmatively avers that its report was privileged because the firm was hired as an expert in anticipation of the chancery court litigation and the report was issued in furtherance of that proceeding. Pickering denies that there was publication of the report and further denies that there was a breach of any contracts between LSSM and MK or that Pickering was in any way responsible for inducing any breach of such contracts.
Prior to trial, the trial court granted a partial summary judgment to Pickering and ruled that the April 15 report was absolutely privileged in its publication to LSSM, members of the LSSM board, representatives of Lutheran Church Extension Fund, Inc. (LSSM's lender), Jim Carson (special master in the chancery court), FB & D, and United States Fidelity & Guaranty Company (the bonding company). The court did not grant summary judgment as to the publication to Omega Contractors, Inc. (Omega), the replacement contractor, Omega's subcontractors, Thompson-White Associates (Thompson-White), the marketing agent for LSSM, and T-W Concepts, Inc., the construction manager.
After a five-week jury trial, the case was submitted to the jury as to the issues of the alleged libel by publication of the report to Omega, Thompson-White, and T-W Concepts and as to the issue of whether Pickering procured or induced the breach of MK's contracts with LSSM. In the libel action, the jury returned a verdict for MK in the amount of $600,000.00 in compensatory damages and $100,000.00 in punitive damages. In the procurement or inducement of breach of contract actions, the jury awarded MK $750,000.00 as compensatory damages, and under T.C.A. § 47-50-109, the damages were trebled.
As a result of post-trial motions, Pickering was granted a judgment notwithstanding the verdict on the actions for procurement of breach of contract.
Both MK and Pickering have appealed. MK presents the following issues for review:
1. Whether the trial court erred when it granted Pickering's Motion for Judgment Notwithstanding the Verdict on the claim of tortious interference with contract that went beyond Pickering's use of false statements in Pickering's April 15, 1991 Inspection Report of Findings.
2. Whether the trial court on summary judgment and on judgment notwithstanding the verdict erred in expanding Tennessee's "witness privilege" to immunize the non-litigation use of the unsigned, unsealed, unsworn Report that was published by Pickering only in its corporate capacity, which contained false and malicious statements designed to induce LSSM to breach its contracts with MK and was thereafter used in the construction process.
3. Whether the trial court erred in its February 9, 1995 Order On Pending Motions when it found that MK had no existing binding contracts with which Pickering intentionally interfered.
Pickering presents the following additional issues for our review:
1. Whether the trial court erred in not granting Pickering's Motion for Directed Verdict on the libel claims that were not excluded by the previous ruling on Pickering's Motion for Summary Judgment.
2. Whether the trial court committed error in not ruling that the verdict was contrary to the weight of the evidence in regard to the damages that were awarded.
3. Whether the court erred in not defining the correct burden of proof to the jury in regard to the statutory procurement of breach of contract claim of MK.
On July 2, 1985, LSSM, a Tennessee not-for-profit corporation, entered into a written contract with MK for architectural services in connection with the design and construction of a five story, residential home for the elderly (Project A) that was to be part of the Lutheran Village Project. On July 27, 1988, LSSM entered into a second written contract with MK for architectural services in connection with the design and construction of twenty-five townhouse units for the elderly (Project B). Both of MK's contracts with LSSM were standard American Institute of Architects architectural services contracts. On May 15, 1989, LSSM chose FB & D as the general contractor on both projects. Construction of Projects A and B began in August of 1989. In August or September of 1990, LSSM contracted with Thompson-White to market and sell the units in both projects. Problems arose during the construction, and in January 1991, MK refused to certify a draw request submitted by FB & D. LSSM contacted Omega as a neutral party to evaluate the projects and to determine the quality of the construction.
On February 18, 1991, FB & D filed suit in the chancery court against LSSM, MK, and Myers and Klimek individually. Because the chancery court lawsuit is relevant to the issues raised in this appeal, we will examine the pleadings in that case. 3 In its complaint, FB & D alleges, inter alia, that LSSM breached its contract with FB & D by not paying for all the work performed and that MK interfered with the contract between FB & D and LSSM by inducing LSSM's breach. The complaint also alleges that MK was guilty of negligent supervision with respect to the construction process:
The Defendants, MK Associates, Carl D. Klimek, individually, and Joseph Myers, individually, breached their duty to Plaintiff by failing to use ordinary care in the preparation of the plans and specifications, supervision, inspection, administration, coordination and in the performance of their contractual duties. Said breaches by Defendants include, without limitation: not allowing Plaintiff to perform work under the contract as it had scheduled, causing Plaintiff to perform an abnormal amount of work on the project; repeated failures to give proper and timely directions to Plaintiff; failure to design the Project in accordance with applicable codes, laws and regulations; failure to provide adequate and timely job site supervision; failure to properly evaluate the work accomplished by Plaintiff; failure to certify payment requests; failure to specifically identify problems perceived in the work and issue punch lists in a timely and specific manner so that corrections could be accomplished economically.
On March 22, 1991, LSSM entered into a contract with...
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