E-Alert Case Updates
Rule 12(b)(6) Motion to Dismiss Denied as to Claim of Tortious Interference with a Contractual Relationship Where Defendant Was Not a Contracting Party, But Maintained Economic Relationship with Contracting Parties
D.C. Mason Builders, Inc. v. Bancroft Construction Co., et al.
In D.C. Mason Builders, Inc. v. Bancroft Construction Co., et al., No. ELH-15-00046, (U.S. District Court for the District of Maryland, June 30, 2015), the U.S. District Court for the District of Maryland considered whether a claim brought by a sub-subcontractor, D.C. Mason Builders, Inc. (“DCMB”), against a general contractor, Bancroft Construction Co. (“Bancroft”), could survive a Rule 12(b)(6) motion to dismiss. The District Court held denied in part and granted in part DCMB’s motion to dismiss.
In January 2014, Bancroft entered into a contract with the Queen Anne’s County Board of Education to serve as the general contractor for a construction project at Stevensville Middle School. Bancroft then entered into a subcontract with JLN Construction Services, LLC (“JLN”) for masonry work. JLN subsequently hired DCMB as a sub-subcontractor in April 2014. Six (6) months later, in October 2014, JLN “suspended” DCMB for work on the project, which it later disclosed was done at the direction of Bancroft.
DCMB filed a complaint against Bancroft, JLN, and Bancroft’s insurer, which had issued a Payment Bond to assure payment of subcontractors and materialmen who performed work on the project. Bancroft filed a Rule 12(b)(6) motion to dismiss Counts III and IV, which alleged, respectively that Bancroft tortiously interfered with DCMB’s contractual relationship with JLN and that Bancroft conspired with others to discriminate against DCMB and to interfere with its subcontract with JLN on account of the race of DCMB’s owner.
In evaluating the Rule 12(b)(6) motion to dismiss, the court was bound to consider only the Complaint itself and any documents expressly incorporated therein. The court, having subject matter jurisdiction based on diversity, applied Maryland law to the facts of the case.
Bancroft argued that Count III, DCMB’s tortious interference claim, failed as a matter of law because Bancroft was a party to the economic relationship underlying the subcontract at issue. DCMB argued that Bancroft’s economic relationship with the subcontract was irrelevant, because Maryland courts have never held that being a party to an underlying economic relationship, rather than a party to the contract, forecloses liability for tortious interference with contractual relations.
Agreeing with DCMB, the court recognized that the tort of tortious interference with contractual relations has two general manifestations. The first manifestation is inducing breach of an existing contract, and the second, more broad, manifestation constitutes malicious or wrongful interference with economic relationships in the absence of a breach of contract. In other words, under Maryland law, one may claim tortious interference with a contract or, in the absence of a contract or breach of contract, one may claim tortious interference with business or economic relations. Where a plaintiff alleges tortious interference with contract and the defendant is a party to the underlying economic relationship but not to the contract at issue, the tort creates a claim for liability based on the defendant’s inducement of a third party’s breach because the injured party could not bring a breach of contract claim against the defendant. In situations like these, a defendant’s liability depends on its intent and the nature of the acts that induced the breach. Liability does not depend on the economic relationship between the parties, per se.
Bancroft’s argument to dismiss Count III was effectively an affirmative defense that its actions in interfering with the subcontract were justified; it was not an argument that DCMB had failed to state a claim. A motion asserting failure to state a claim cannot resolve the applicability of defenses unless a particular defense can be resolved on the basis of the factual allegations in the complaint. The court found that the facts necessary to resolve Bancroft’s defense were not apparent on the face of the Complaint. Similarly, the court found that the facts necessary to prove the merits of Bancroft’s defense were not present in the DCMB Subcontract with JLN, which was submitted as an exhibit to the Complaint. Because the DCMB Subcontract itself did not clearly give Bancroft an unconditional right to interfere, the court held that DCMB was entitled to an opportunity to develop the factual record. Accordingly, the court denied Bancroft’s Rule 12(b)(6) motion to dismiss as to Count III.
As to Count IV, the court granted Bancroft’s motion to dismiss. The court found that DCMB had not plausibly alleged that Bancroft conspired to induce breach of the contract between DCMB and JLN. Nothing in the Amended Complaint plausibly demonstrated that Bancroft conspired with JLN to induce breach of the Subcontract. Furthermore, the Amended Complaint failed to suggest that Bancroft conspired with any other entity or person with regard to its interference in the Subcontract between DCMB and JLN.
Maryland Defense Counsel, Inc.
1218 Broadway Rd.
Lutherville, MD 21093
|©2008 Maryland Defense Counsel, Inc. All Rights Reserved.|