Tag Archives: tortious interference

IMPROPER MEANS EXCEPTION AND TORTIOUS INTERFERENCE CLAIMS

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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.

UNRAVEL THE FACTS BEFORE ASSERTING FDUTPA AND TORTIOUS INTERFERENCE CLAIMS

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CMR Construction and Roofing, LLC v. UCMS, LLC, 2022 WL 3012298 (11th Cir.  2022) is an interesting opinion where a contractor asserted a Florida’s Deceptive and Unfair Trade Practices Act (known by its acronym “FDUTPA”) claim and tortious interference claims (with a contract and with an advantageous business relationship) against another contractor, i.e., a competitor, that were dismissed from the get-go. It is an opinion worthy of interest based on the claims asserted against a competitor.  Throwing around FDUTPA and tortious interference may sound good from an intimidation standpoint, but pleading and then proving these claims are a lot different than loosely throwing around these claims.  Before filing a lawsuit for FDUTPA and tortious interference, spend time unraveling the facts and the chronology. Do not rely on conclusory allegations simply to check the box regarding required elements to plead while ignoring the actual facts that support the allegations. These are fact-based claims and it is imperative the facts are fully known from on the onset so that they can be strategically pled and pursued.

In this matter, a contractor, the plaintiff, was hired by a condominium association around April 2018 to repair damage caused by a hurricane which included roofing work. The association was going to have its insurer pay its contractor. In May 2020, the association hired a new contractor to perform the same work (the “new contractor”).  The association then directed the plaintiff to cease work since it hired the new contractor.

The plaintiff filed a lawsuit against the new contractor asserting claims for tortious interference and FDUTPA.  The allegations for these claims were as follows:

In support of [plaintiff’s] FDUTPA claim, [plaintiff] alleged that [new contractor] “wrongfully and unjustifiably interfere[d] with and procure[d] the breach” of [plaintiff’s] contractual and business relationships with the Association. In so doing, [plaintiff] relied on similar allegations to the ones supporting its claims for tortious interference—i.e., that [the new contractor] negotiated and contracted with the Association to perform work that [plaintiff] had a pre-existing contract to perform. [Plaintiff] further alleged that [the new contractor’s] conduct harmed [plaintiff] because [plaintiff] expended money and resources to perform its contractual obligations. As remedies for its FDUTPA claim, [plaintiff] sought both monetary damages and injunctive relief. [Plaintiff] also asserted a separate “cause of action” for temporary and permanent injunctions to prohibit [the new contractor] from performing any of the work that [plaintiff] was contracted to perform.

***

In support of [plaintiff’s] tortious interference claims, [plaintiff] alleged that [the new contractor] submitted a bid, as part of “a competitive bidding process,” to perform the same construction work [plaintiff] had a preexisting contract to perform. But, according to [plaintiff], [the new contractor] knew of [plaintiff’s contractual and business relationships with the Association. And, despite that knowledge, [the new contractor] negotiated and contracted with the Association to perform, and submitted building applications for, the same construction repair work that [plaintiff] had a pre-existing contract to perform. [Plaintiff] further alleged that [the new contractor] “did not have [a] justification or privilege in procuring” the Association to breach its contract with [plaintiff]. But [plaintiff] did not allege facts in support of [the new contractor’s] alleged knowledge or lack of justification.

CMR Construction and Roofing, supra.

 The trial court dismissed the plaintiff’s complaint leading to an appeal to the Eleventh Circuit Court of Appeals.

FDUTPA Claim

There were two components to the plaintiffs FDUTPA claim: injunctive relief and monetary damages. The Eleventh Circuit affirmed the trial court’s dismissal of the plaintiff’s FDUTPA claim.

“To state a claim for injunctive relief under FDUTPA, a plaintiff must allege: (1) “a deceptive [or unfair] act or practice in trade”; and (2) “that [p]laintiff is a person ‘aggrieved’ by the deceptive act or practice. And to state a claim for damages under FDUTPA, a plaintiff must allege: “(1) a deceptive act or unfair practice; (2) causation; and (3) actual damages.” CMR Construction and Roofing, supra (citations omitted).

To satisfy the first element for injunctive relief OR damage regarding a deceptive or unfair practice, “the plaintiff must allege that the relevant act or practice was harmful to a consumer.” CMR Construction and Roofing, supra.

Here, the new contractor–the competitor–was NOT a consumer.  The new contractor was a service provider “that sought to provide, and provided, construction services to the Association.” CMR Construction and Roofing, supra.  Also, the plaintiff alleged harm or damage to itself (also a provider of construction services) and not to any consumer of its construction services.

Tortious Interference Claims

The Eleventh Circuit also affirmed the trial court’s dismissal of the plaintiff’s tortious interference claims.  A main reason was that the plaintiff’s claims agianst the new contractor were conclusory allegations with no supporting facts. The plaintiff’s facts merely supported a competitive bidding process by a condominium association but did not support that the new contractor intentionally and unjustifiably interfered with plaintiff’s relationship or contract. This was fatal to the plaintiff’s tortious interference claims:

To establish a claim for tortious interference with a business relationship under Florida law, the plaintiff must establish the following elements: “(1) the existence of a business relationship[;] (2) knowledge of the relationship on the part of the defendant; (3) an intentional and unjustified interference with the relationship by the defendant; and (4) damage to the plaintiff as a result of the breach of the relationship.’ ”  And the elements of a cause of action for tortious interference with a contractual relationship under Florida law are: “(1) [t]he existence of a contract, (2) [t]he defendant’s knowledge of the contract, (3) [t]he defendant’s intentional procurement of the contract’s breach, (4) [a]bsence of any justification or privilege, [and] (5) [d]amages resulting from the breach.”

CMR Construction and Roofing, supra (internal citations omitted).

***

To support either claim, [plaintiff] was required to allege that [the new contractor] had knowledge of, and intentionally and unjustifiably interfered with, [plaintiff’s] relationship (either contractual or business) with the Association. As to the element of intentional and unjustifiable interference, if “a defendant interferes with a contract [or business relationship] in order to safeguard a preexisting economic interest of his own, the defendant’s right to protect his own established economic interest outweighs the plaintiff’s right to be free of interference, and his actions are usually recognized as privileged and nonactionable.”  But the defendant cannot do so by improper means.  “In other words, the privilege [to interfere] does not encompass the purposeful causing of a breach of contract” or business relationship. 

CMR Construction and Roofing, supra (internal citations omitted).

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.