Where Breach of Contract and Tortious Interference Collide

Christopher G. Hill | Construction Law Musings

Claims for breach of contract are numerous in the construction law world.  Without these claims we construction attorneys would have a hard time keeping the doors open. A 2021 case examined a different sort of claim that could arise (though, “spoiler alert” did not in this case) during the course of a construction project.  That type of claim is one for tortious interference with business expectancy.

In Clark Nexsen, Inc. et. al v. Rebkee, the U. S. District Court for the Eastern District of Virginia gave a great explanation of the law of this type of claim in analyzing the following basic facts:

In 2018, Clark Nexsen, Inc. (“Clark”) and MEB General Contractors, Inc. (“MEB”) responded to Henrico County’s (“Henrico”) Request for Proposals (“RFP”) for the design and construction of a sport and convocation center (the “Project”). Henrico initially shortlisted Clark and MEB as a “design-build” team for the Project, but later restarted the search, issuing a second RFP. Clark and MEB submitted a second “design-build” proposal, but Henrico selected Rebkee Co. (“Rebkee”) for certain development aspects of the Project. MEB also submitted proposals to Rebkee, and Rebkee selected MEB as the design-builder for the Project. MEB, at Rebkee’s request, solicited proposals from three design firms and ultimately selected Clark as its design partner. From December 2019 to May 2020, Clark and MEB served as the design-build team to assist Rebkee in developing the Project. In connection therewith, Clark developed proprietary designs, technical drawings, and, with MEB, several cost estimates. In February 2020, MEB submitted a $294,334.50 Pay Application to Rebkee for engineering, design, and Project development work. Rebkee never paid MEB. Henrico paid MEB $50,000.00 as partial payment for MEB’s and Clark’s work. MEB then learned that Rebkee was using Clark’s drawings to solicit design and construction proposals from other companies. On July 23, 2020, Rebkee told MEB that Henrico directed it to cancel the design-build arrangement with MEB and Clark and pursue a different planning method. MEB and Clark sued and Rebkee for, among other claims, tortious interference with a business expectancy. Rebkee moved to dismiss the tortious interference claim.

After a good examination of the law and elements of a tortious interference claim (that I commend to your reading), the Court looked at the particular facts of the claim by MEB and Clark. Along with disagreeing with the plaintiffs that their relationship with the County of Henrico was one that supported an objective business expectancy, the Court further stated as follows in denying the claim by the Plaintiffs.

[a]lthough MEB and Clark Nexsen allege that Henrico encouraged Rebkee to work with them on the Project, they do not allege that Henrico selected them for the Project. Instead, they say that MEB submitted proposals to Rebkee, and Rebkee selected them for the Project. In tortious interference claims, “[t]here must be a ‘triangle’-a plaintiff, an identifiable third party who wished to deal with the plaintiff, and the defendant who interfered with the plaintiff and the third party.” Here, the facts in the Complaint seem to indicate a linear relationship: MEB and Clark Nexsen reported to Rebkee, and Rebkee reported to Henrico. (citations omitted)

In short, the Court stated what may seem obvious, namely that a party cannot interfere with its own business expectancy.  A third “leg” is necessary that was not present here.  Without it, all that remains is the seemingly everpresent breach of contract action.

There is much more to read in the opinion so I encourage you to read it in depth.  I further encourage you, as I often do, to discuss any potential construction clams with an experienced Virginia construction lawyer before deciding what legal path to take.

If one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance dispute – please call Advise & Consult, Inc. at 888.684.8305.

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