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Current Developments in the Commercial Divisions of the
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Posted: June 17, 2017

Claim Fails Heightened Tortious Interference Pleading Standard for Corporate Officers

On June 5, 2017, Justice Oing of the New York County Commercial Division issued a decision in TC Tradeco, LLC v. Karmaloop Europe, AG, 2017 NY Slip Op. 31217(U), holding that a claim failed to meet the heightened pleading standard applied to a claim of tortious interference with a corporation’s contract made against a corporate officer, explaining:

A claim for tortious interference with contract requires the following allegations: the existence of an enforceable contract, defendant’s knowledge of the contract, defendant’s intentional procurement of the breach of that contract, a breach of that contract, and resultant damages to plaintiff. Further, there is an enhanced pleading standard when a claim seeks to hold a corporate officer liable for inducing a breach of contract between a corporation and a third party. There must be more than just a plausible claim for inducing a breach of contract against the officer. Thus, to plead liability for tortious interference with contract against a corporate officer, the complaint must allege that the individual officer’s acts were either outside the scope of his or her employment, or, if within the scope of employment, that the officer personally profited from these acts in contravention of the corporation’s interests. Moreover, a pleading must allege that the acts complained of, whether or not beyond the scope of the defendant’s corporate authority, were performed with malice and were calculated to impair the plaintiff’s business for the personal profit of the defendant.

Here, plaintiff has failed to plead sufficient facts to show that Davies acted for personal profit, independent of any benefit bestowed on CRS Capstone as a corporate entity. In its second proposed amended complaint, plaintiff merely alleges that both defendant Capstone Partners and/or Defendant CRS agreed in [the PPA] that it shall not pre-approve or authorize Karmaloop to make any payment to any person or entity if Karmaloop is not then current on any and all sums then owed. Such an allegation, standing alone, is insufficient to subject defendant Davies to a tortious interference claim. Plaintiff’s allegation that Davies personally profited from his procurement of the breach of the [PPA] does not eliminate the above-noted pleading deficiency. Without more, the proposed pleading is palpably insufficient.

(Internal quotations and citations omitted) (emphasis added).

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