Last week, I discussed a case (here) that involved a federal district court (trial court) denying a motion to dismiss on a negligent supervision claim.
In this same case, the plaintiff, a subcontractor/fabricator, also sued the defendants–parent company of a prime contractor and two entities the prime contractor hired to inspect the subcontractor’s fabricated units–for tortious interference of the subcontractor’s contract with the prime contractor. The defendants moved to dismiss this tortious interference claim which gave rise to another interesting discussion by the trial court relating to the burden to plead and prove tortious interference claims. This discussion is worthy to remember the next time you not only want to plead a tortious interference claim, but want to be in a position to put on evidence to prove the claim at trial.
“Under Florida law, the elements of a tortious-interference-with-contract claim are: ‘(1) the existence of a contract, (2) the defendant’s knowledge of the contract, (3) the defendant’s intentional procurement of the contract’s breach, (4) absence of any justification or privilege, and (5) damages resulting from the breach.’” Bautech USA, Inc. v. Resolve Equipment, 2023 WL 4186395 (S.D.Fla. 2023) (citation omitted).
With respect to the fourth element underlined above, “absence of any justification or privilege,” the tortious interference must be UNJUSTIFIED meaning the third party “must be a third party, a stranger to the business relationship.” Id. (citation omitted). “[A] defendant is not a stranger to a business relationship, and thus cannot be held liable for tortious interference, when it has a supervisory interest in how the relationship is conducted or a potential financial interest in how a contract is performed.” Id. (citation omitted).
Notwithstanding, this does NOT mean there is an absolute privilege to interfere with a contract even if you are not a stranger to the business relationship. Bautech, supra (citation omitted).
In those circumstances in which there is a qualified privilege to interfere with a business relationship, the privilege carries with it the obligation to employ means that are not improper. In the case of officers or employees of a contracting party, the privilege is ‘destroyed where an employee acts solely with ulterior purposes, without an honest belief that his actions would benefit the employer, and the employee’s conduct concerning the contract or business relationship is not in the employer’s best interest.’ Put another way: the ‘privilege to interfere with a third party’s conduct does not include the purposeful causing of a breach of contract.”
Id. (internal citations omitted).
This exception is referred to as the “improper means exception.” Id.
However this “improper means exception” does not apply to an agent of the party to the contract. Id. (citation omitted).
Here, the defendants were not strangers to the subcontractor’s contract with the prime contractor as they were involved in the supervision of the subcontract or, regarding the parent entity of the prime contractor, had a financial interest. But this does not mean the tortious interference claims fails because the plaintiff alleged (and would need to prove withe evidence) the defendants acted with improper means to satisfy the improper means exception, and the plaintiff did not allege that any of the defendants were agents of the prime contractor. Based on the improper means exception, the trial court found the plaintiff did assert a viable tortious interference claim against the defendants…to be decided at a later date.
Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.