"The Greek sculpture is all melted away, as if it had been statues of ice; here and there a solitary figure or fragment remaining, as we see flecks and scraps of snow left in cold dells and mountain clefts, in June and July. For the genius that created it creates now somewhat else."
- Ralph Waldo Emerson, "Circles" (1841)
In Arnon Ltd v. Beierwaltes, -- 257 A.D.3d -- , -- N.Y.S.2d --, 2015 N.Y. Slip Op. 01156, 2015 WL 520742, at *1 (1st Dept., Feb. 10, 2015), plaintiff commenced a lawsuit against defendants, alleging breach of contract for terminating a sale under which defendants had agreed to sell it an antique Greek sculpture.
Defendants responded that plaintiff was the one who breached the agreement, and asserted counterclaims for, among other things, (1) fraudulent inducement and (2) tortious interference with prospective economic relations.
The court issued a temporary restraining order preventing defendants from transferring the sculpture to a new buyer. The parties then stipulated that the sculpture would be held at a storage facility pending the outcome of this action. Plaintiff then moved to dismiss defendants' counterclaims pursuant to CPLR § 3211(a)(7) for failure to state a claim.
The trial court, in Arnon LTD v. Beierwaltes, 2013 WL 5859555 (New York County, October 24, 2013)(Hon. Marcy S. Friedman, J.S.), granted the plaintiff's motion and dismissed defendants' fraudulent inducement counterclaim as duplicative of their breach of contract counterclaim, finding that the alleged misrepresentation made by plaintiff that it had the capability and intent to immediately pay for the sculpture amounted only to an "insincere promise of future performance" of the contract. First Bank of Ams. v. Motor Car Funding, 257 A.D.2d 287, 292 (1st Dept. 1999).
The trial court also dismissed the counterclaim for tortious interference with prospective economic relations. Such a claim requires a showing that the "interference" was accomplished by "wrongful means" or with "malicious intent." Carvel Corp. v. Noonan, 3 N.Y.3d 182, 191 (2004). "Wrongful means" includes "physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure" Id. at 191. Where the interfering conduct is a civil suit, it must be shown that the suit was "frivolous." Pagliaccio v. Holborn Corp., 289 A.D.2d 85 (1st Dept 2001).
Here, accepting defendants' allegations as true and affording them every favorable inference, the First Department held that defendants set forth sufficient facts to support their claim that plaintiff's action against them was frivolous. However, in order for conduct to constitute "tortious interference" with business relations, the First Department held that conduct directed that it must not be solely directed at the plaintiff itself, but at the party with which the plaintiff has or seeks to have a relationship." Carvel, 3 N.Y.3d at 192. As the lawsuit was not directed at the defendants' customers to induce them to terminate business relations with defendants, but was rather directed at defendants to prevent them from carrying out their obligations to sell the sculpture to the new buyer, the First Department rejected defendants' argument that their business relationships with each other have been damaged by plaintiff's suit, and therefore unanimously affirmed the rulings of the trial court.
Mr. Szymczak is a Partner at Jaeckle, Fleischmann & Mugel, LLP in Buffalo, New York. He also serves as Chair of the NYSBA Business Torts and Employment Litigation Committee (TICL Section) and as Co-Chair of the ABA Tortious Interference Sub-Committee (Business Torts Committee).