Oral Waiver Insufficient to Defeat Contractor’s Liability for Building Code Violation

The Massachusetts Appeals Court, in Downey, et al. v. Chutehall Construction Co., Ltd., 88 Mass. App. Ct. 795 (January 6, 2016), recently held that an oral waiver of compliance with the building code by a homeowner does not preclude the contractor’s liability for the violation, particularly where a violation carries potential public safety concerns.

In this matter, the contractor was hired to replace a roof and roof deck. The parties disputed whether the homeowners (1) represented to the contractor that there was only one layer of roofing at the time of the work; (2) refused to permit the contractor to do test cuts in the roof to determine the number of existing layers; and (3) specifically instructed the contractor to install a new rubber membrane over the existing roof. After installation of the roof was completed, the homeowners discovered four layers of roofing materials and evidence of leaking when installing HVAC equipment. A new contractor was hired to strip the roofing materials, put on a new roof, and reinstall the deck. A jury found that the contractor violated the building code, but awarded no damages, finding that the violation was a result of the homeowners’ directions.

After the case was appealed, the Appeals Court reasoned that permitting a waiver by a homeowner of his or her right to compel a contractor to comply with the contractor’s obligations under the building code would encourage contractors, and perhaps consumers, to waive provisions of the building code on an ad hoc basis, in the hope of saving money in the short-term, but endangering future homeowners, first responders and the public in general. Thus, even if the homeowners orally waived the building code requirement, the Appeals Court held that the contractor was still liable for the violation, entered judgment in favor of the homeowners, and remanded the matter to determine damages.

This decision makes it clear that a home improvement contractor must perform its work in strict accordance with the relevant building code, even if a homeowner requests certain code requirements be ignored in an attempt to save money. Contractors should use this result as an example when confronted with a request from a homeowner to deviate from the building code. This case also highlights the importance of proper documentation of the scope of work in a written contract. While this decision concerned an oral waiver, a different result may have occurred if the contractor documented in a written contract that the existing roof only had one layer of material which the new roof would be applied over. However, a written contract in which the homeowner acknowledges a request for the contractor to deviate from the building code may still leave the contractor liable due to public safety concerns.

Contractor’s Lawsuit Against Architect for Tortious Interference Allowed to Proceed

A U.S. District Court Judge for the District of Massachusetts has allowed a lawsuit to proceed brought by a contractor against an architect, alleging the architect falsely certified grounds for termination to the project owner. In a November 18, 2015 written decision in the matter of Barr, Inc. v. Studio One, Inc., C.A. No. 3:15-40056, the Court denied the architect’s motion to dismiss the contractor’s claims against it sounding in tortious interference with contractual relations and tortious interference with advantageous relations. The Court determined that in both instances, the contractor must demonstrate that the architect acted with an “improper motive or means.” The lawsuit alleged that the architect certified to the project owner that the contractor breached its contract with the project owner by “repeatedly refusing or failing to supply enough properly skilled workers or other materials.” Per the terms of the contract with the contractor and owner, this was a specific ground for termination. In the lawsuit, the contractor alleged the architect knew this was not true, and project correspondence and meeting minutes established the project delays were not the fault of the contractor. The contractor also asserted that the architect caused the owner to terminate the contractor for the architect’s own financial gain and to secure benefits with respect to compensation for post-termination services that would otherwise not have been available.

In seeking to dismiss the lawsuit, the architect argued that the contractor did not allege it acted with “actual malice,” which is more stringent than the “improper motive” which was alleged. In rejecting this argument, the Court held that intentional interference torts – such as tortious interference with contractual relations and tortious interference with advantageous relations – do not require a showing of actual malice. The contractor’s allegations in the Complaint, including that that the architect knowingly certified false reasons to induce the owner to terminate its contract with the contractor, met the elements of the intentional interference torts alleged and were sufficient to survive a motion to dismiss.

Under the standard AIA contract used here, the owner could not terminate the contractor for cause without the architect’s certification of the grounds for termination. The Court’s ruling confirms that the contractor’s Complaint sufficiently alleged that the architect was not carrying out its contractual duties objectively and in good faith. Despite being hired by the owner, the architect still has a contractual duty to interpret and decide matters concerning performance under the contract in good faith, and without partiality to either the owner or the contractor, which the contractor alleged it failed to do.