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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: February 18, 2016

Corporate Officer Not Liable for Inducing Corporation to Breach Contract Unless Officer Acts Exclusively In His Own Interest

On February 8, 2016, Justice Singh of the New York County Commercial Division issued a decision in Public Sector Pension Investment Board v. Saba Capital Management, L.P., 2016 NY Slip Op. 30215(U), holding that a corporate officer could not be liable in tort for inducing the company to breach a contract unless the officer acted exclusively in his own interest, rather than for the interest of the corporation. Justice Singh explained:

Ordinarily a corporate officer acting in good faith is immune from liability for the acts of its corporation. However, under a heightened pleading standard, a corporate official may be found personally liable for his or her acts if their actions constitute independent tortious conduct. Plaintiffs must claim the individual either acted beyond the scope of his employment or, if not, was motivated by personal gain. The parties agree that defendant Weinstein was acting within the scope of his employment.

Conversely, the parties disagree on whether Weinstein’s acts must elicit any personal gain or whether the personal gain must be separate and apart from the corporation. . . . [R]ecent case law has clarified that the pleadings must allege that the individual corporate officer must have been acting for his or her own personal interests rather than for the corporate interest.

(Citations omitted). The court held that the complaint did not state a tortious interference claim against the officer because the personal benefit he allegedly received from the company’s breach of contract “was also bestowed upon the corporation,” and “[f]rom a policy perspective, corporate officers and directors should not be dis-incentivized from furthering the interest of their corporation when they tangentially might receive a benefit as well.”

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