Commercial Division Blog

Posted: October 14, 2016 / Categories Commercial, Tortious Interference

Tortious Interference Claims Dismissed; No Wrongful or Unjustified Conduct

On September 30, 2016, Justice Bransten of the New York County Commercial Division issued a decision in International Nut Alliance, LLC v. Bank Leumi USA, 2016 NY Slip Op. 31848(U), dismissing tortious interference claims because the conduct alleged was not tortious, explaining:

To adequately plead a cause of action for the tort of inducing the breach of an existing contract or tortious interference with existing contractual relations, Plaintiffs must allege that the Bank knew that Plaintiffs had a contract with a third party, that the Bank intentionally induced the third party to breach the contract or otherwise rendered performance impossible, and that the breach caused injury to Plaintiffs. . . . [F]or the interference to be deemed tortious, the Bank must have acted without justification and its action must not have been incidental to a lawful purpose. Where a defendant procures the breach of a contract in the exercise of an equal or superior right, it is acting with just cause or excuse and has justification for what would perhaps otherwise be an actionable wrong.

The Complaint alleges that INA's customers owe it enough money tq repay the loans. Instead of cooperating in the collection of those receivables, [the plaintiffs allege that] Bank Leumi's actions (sending out letters to vendors, summarily dismissing each collection proposal, bleeding out cash from the company) have made it virtually impossible, however, to complete such task.

. . .

The security agreement between INA and the Bank provides that INA assigns the security to the Bank, that the security includes accounts and payment intangibles, and that the Bank may demand payment from account debtors. Under N.Y. U.C.C. § 9-607(a)(3), a secured party may enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor to make payment or otherwise render performance to the debtor, and with respect to any property that secures the obligations of the account debtor or other person obligated on the collateral. INA's customers are the account debtors, the accounts receivables ate the collateral, INA is the debtor, and the Bank is the secured party. The UCC and the security agreement show that the Bank had the right to attempt to enforce INA's obligations with respect to the accounts that the customers owed INA. Such conduct is deemed commercially reasonable.

(Internal quotations and citations omitted) (emphasis added). The court reached a similar conclusion with respect to the plaintiffs' claim for tortious interference with a prospective business relationship, explaining:

Where the alleged interference is with prospective, as opposed to existing, contractual rights, the plaintiff must show improper or wrongful conduct by the defendant. Tortious interference with prospective economic relations requires an allegation that the plaintiff would have entered into an economic relationship with a third party but for the defendant's wrongful conduct, or that defendant interfered for the sole purpose of harming the plaintiff. Wrongful conduct means physical violence, fraud, misrepresentation, civil suits, criminal prosecutions and some degree of economic pressure, not mere persuasion. Where such a claim fails to allege that defendant's conduct was motivated solely by malice or to inflict injury by unlawful means rather than by self-interest or other economic considerations, it must be dismissed.

While Plaintiffs assert that the Bank's interference prevented INA from obtaining more business, they fail to allege wrongful conduct.

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