« July 2011 | Main | September 2011 »

August 2011 Archives

August 13, 2011

"Through the Ullmannglass": Third Department Says Tortious Interference with Contract Claim Can be Predicate for Tortious Interference with Prospective Contractual Relations Claim

The Hatter opened his eyes very wide on hearing this; but all he said was, "Why is a raven like a writing-desk?" "Come, we shall have some fun now!" thought Alice. "I'm glad they've begun asking riddles. -- I believe I can guess that," she added aloud. "Do you mean that you think you can find out the answer to it?" said the March Hare. "Exactly so," said Alice. Then you should say what you mean," the March Hare went on. "I do," Alice hastily replied; "at least--at least I mean what I say--that's the same thing, you know." "Not the same thing a bit!" said the Hatter. "You might just as well say that 'I see what I eat' is the same thing as 'I eat what I see'!" "You might just as well say," added the March Hare, "that 'I like what I get' is the same thing as 'I get what I like'!" "You might just as well say," added the Dormouse, who seemed to be talking in his sleep, "that 'I breathe when I sleep' is the same thing as 'I sleep when I breathe'!"
Alice's Adventures in Wonderland, Chapter 7


Why is "tortious interference with contract" like "tortious interference with prospective contractual relations"?, asked the Defendants in Ullmannglass v. Oneida, Ltd., __ N.Y.S.2d__, 2011 WL 2899201 (July 21, 2011 3d Dep't 2011)(2011 N.Y. Slip Op. 06001. Asserting the first is sufficient to sustain the second, says the Third Department.

Tortious interference with prospective contractual relations is a special kind of tort. As it involves an inchoate, unformed contractual relationship, a claim for interference with prospective contractual relations is very speculative in nature. As such, courts have been extremely reluctant to expand this tort without a strong showing of culpable conduct such as physical violence, fraud or misrepresentation, or malicious prosecution. See PJI 3:56 and PJI 3:57. In addition, Courts are reluctant to permit such a claim unless a duty exists separate from the contractual relationship. See, Clark-Fitzpatrick, Inc. v Long Island R.R. Co., 70 NY2d 382, 389, 521 N.Y.S.2d 653 (1987) (The "legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be dependent upon the contract").

In Ullmannglass, the Third Department, mainly considered two issues in a case involving claims for tortious interference with a contract and tortious interference with prospective contractual relations. The plaintiffs, a German company and its President, alleged that the defendants interfered with the company's contract with a third party causing economic damages. The defendants moved to dismiss the complaint first claiming that the alleged interference was verbal and, therefore, was really a claim for defamation, which has a one year statute of limitations.

The Court held that, in determining whether the one year statute of limitations for defamation applied (as opposed to the three year statute of limitations for tortious interference), "it is the essence of the action and not its mere name that controls". Because the gravamen of plaintiffs' claim was economic injury rather than damage to reputation, the three year statute of limitation applied and plaintiffs' claim was not time barred.

Next, the defendants claimed that plaintiffs failed to properly plead either tortious interference claim. Addressing first the elements of a claim for tortious interference with a contract (i.e. (i) that a valid contract existed; (ii) which a third party knew about; (iii) that the third party intentionally and improperly procured a breach of the contract; (iv) causing damages to the plaintiff), the Court held that the requisite elements were alleged and that defendants' motion to dismiss that claim was properly denied.

With respect to plaintiffs' claim for tortious interference with prospective contractual relations, defendants claimed that plaintiffs failed to establish the "wrongful means" element of that claim. Specifically, in order to establish "wrongful means", a plaintiff must establish malice on the part of the defendant. In the alternative, a plaintiff must show that the "wrongful means" underlying the claim amount to a crime or an independent tort.

The Court noted that the underlying contract had an automatic renewal provision and held that, while plaintiffs' allegations of malice were insufficient, plaintiffs' claim for tortious interference with contractual relations was a sufficient predicate for the "wrongful means" element. Apparently, the plaintiffs' tortious interference with contract claim fit into the "independent tort" category of the "wrongful means" element required to state a claim for tortious interference with prospective contractual relations:

Turning next to plaintiffs' claim of tortious interference with prospective contractual relations, we find that plaintiffs' complaint sufficiently sets forth "wrongful means" employed by defendants, and Supreme Court correctly permitted that cause of action to proceed. Generally, the "wrongful means" that make such interference actionable "must amount to a crime or an independent tort" (Carvel Corp. v. Noonan, 3 N.Y.3d 182, 190 [2004]; see NBT Ban-corp v. Fleet/Norstar Fin. Group,NBT Bancorp v. Fleet/Norstar Fin. Group, 87 N.Y.2d 614, 624 [1996]; Guard-Life Corp. v. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 191 [1980]; Lerwick v. Kelsey, 24 A.D.3d 918, 919 [2005]; lv denied 6 N.Y.3d 710 [2006] ). Absent such a showing, an exception to the general rule must apply, such as where a defendant's conduct was motivated solely by malice (Carvel Corp. v. Noonan, 3 N.Y.3d at 190, 785 N.Y.S.2d 359, 818 N.E.2d 1100; Lerwick v. Kelsey, 24 A.D.3d at 919, 806 N.Y.S.2d 732). We agree with defendants that, standing alone, plaintiffs' conclusory allegations of malicious motives on defendants' part would be insufficient to avoid dismissal of this cause of action (see John R. Loftus, Inc. v. White, 150 A.D.2d 857, 860 [1989]; see also M.J. & K. Co. v. Matthew Bender & Co., 220 A.D.2d 488, 490 [1995] ). However, bearing in mind the favorable light by which we assess plaintiffs' complaint, we find their cause of action for tortious interference with contractual relations to be a sufficient independent cause of action providing the predicate wrongful conduct for their tortious interference with prospective contractual relations claim. Importantly, plaintiffs have alleged that the contract with which defendants interfered was an annual "ever green"--and thus automatically renewed--contract and, as such, defendants' tortious interference with that contract may have directly resulted in harm to its prospective contractual and business relations with Inn Crystal. Accordingly, Supreme Court properly denied that portion of defendants' motion as sought to dismiss plaintiffs' second cause of action for failure to state a cause of action.

Ullmannglass, supra, 2011 WL 2899201 at *2.


Sean C. McPhee, Esq. and
Heath J. Szymczak, Esq.

August 26, 2011

When You Can and Can't Fire Employees For Social Media Misbehavior

Article Link

NLRB Report.pdf

About August 2011

This page contains all entries posted to Business Torts and Employment Litigation Blog in August 2011. They are listed from oldest to newest.

July 2011 is the previous archive.

September 2011 is the next archive.

Many more can be found on the main index page or by looking through the archives.