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09/29/2017

Editor’s Notes

 Questioning and criticism of the hourly billings of professional service providers is not unusual. But one engineering firm fought back, suing a municipal project owner for defamation. An Indiana court was called upon to draw the line between protected criticism and slander.


A municipal official publicly accused the engineer of overstaffing construction monitoring services and charging the city for design services necessitated by the engineer’s prior errors and omissions. The official said the city had not received value for its money.


The court ruled that the municipality had not defamed the engineer. None of the allegations necessarily suggested intentional wrongdoing or criminality. The alleged overbilling could have resulted from negligence or mismanagement.


The other case in this issue involved a surety’s obligation to participate in arbitration of a claim against a performance bond. The bond had incorporated a construction contract containing an arbitration clause. The surety had agreed to be liable “for the performance” of that contract.

 

However, the highest court of Maryland ruled that agreement applied only to the performance of the construction work, not all the legal terms and conditions. The surety was not bound by the arbitration clause. Claims against the performance bond had to be litigated in a court of competent jurisdiction.

 

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