July 20, 2015

If You Can't Say Anything Nice: Criticizing Contractors Can Be Costly

Construction projects can turn acrimonious — and bad feelings often survive dispute resolution. But think twice before voicing thoughts or opinions about a fellow project participant. A false statement about another’s business practices or conduct can create liability for defamation. Modern technologies and social media make it easy to instantly insult a contractor or a construction project — and in front of many more people.

The Extreme Construction Defamation Case

A recent Connecticut case, SBD Kitchens, LLC v. Jefferson,[1] underscores the risks of speaking, writing or blogging uncharitably about a contractor or a project gone wrong. In this case, property owners, in the angry aftermath of a construction project, established a website for the sole purpose of criticizing the contractor.

The owners took drastic steps, using IT professionals to establish a website and ensure that anyone searching for the contractor would find their site with its critical comments. Regrettably for the owners, the website included statements that an arbitrator subsequently found were not only defamatory, but also to have been made with malice, and therefore awarded both compensatory and punitive damages. In addition to the website subtitle, “SBD Kitchens SCAM,” the Connecticut court listed a few examples of statements that were actionable:

  • “I feel that [SBD] made misrepresentations as to their form of compensation and that much of their work was inferior.”
  • “[SBD] with their deceptive pricing was motivated to have us select lesser quality items so they could achieve a greater markup.”
  • The section of the website entitled “Inferior Workmanship and Knowledge” was also defamatory to the extent that it contained factually inaccurate statements regarding relatively minor considerations.

The owners argued that punitive damages could not be awarded, but the Connecticut appellate court disagreed. The court agreed that the owners had published statements about the contractor either with knowledge of their falsity or with reckless disregard for their truth. Under the law of Connecticut (and many other states, too), that amounts to defamation per se, establishing actual malice and permitting an award of punitive damages.  

Defamation claims are an increasing consideration in construction and real estate disputes, so the issues here should be taken seriously by owners, contractors and designers engaged in construction projects. See Downey v. Chutehall Construction Co., 19 N.E.2d 470 (Mass. App. 2014) (contractor sued another contractor on project for defamation); Keller v. Henepin County, 2014 Westlaw 3497738 (Minn. App. 2014) (public officials’ comments about property owner were potentially defamatory in dispute centering on construction of public library).

Lessons From SBD Kitchens

The admittedly extreme example of SBD Kitchens offers lessons for parties to construction projects:

  1. While construction disputes (especially homeowner disputes) can be emotional, emotion is not an excuse for publishing false or inaccurate statements about another party. In the aftermath of a contentious dispute, it is often best to say nothing. If you feel compelled to comment on another party, be sure the comment is completely accurate.
  2. For many owners, the stakes of saying something inaccurate about a contractor can be quite high, given that a false statement about a contractor’s business can be fatal to the contractor if not rebutted. One party’s statement in the heat of the moment can be another’s bet-the-company litigation.
  3. Do not make a bad situation worse by prolonging the agony — as the owners in SBD Kitchens did. Sometimes, it is better — and cheaper — to let things go. 

Conferring with legal counsel before saying anything controversial is a good idea. A lawyer can help you understand what you can safely communicate about another party. Moreover, relying on the advice of legal counsel about the content and accuracy of a statement can sometimes serve as a defense to a defamation claim if there is a reason to make a public comment. Faegre Baker Daniels’ attorneys counsel clients in these matters every day. For additional reading, see Brunner and O’Connor on Construction Law, §§ 2:168, 7:145.

 

[1] 157 Conn.App. 731, __ A.2d __, 2015 Westlaw 350690 (Conn. App. 2015).

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