Commercial Division Blog
Claim for Tortious Interference With Business Relations Fails Because Defendant Acted In Self Interest
On July 28, 2021, the Second Department issued a decision in Stuart's LLC v. Edelman, 2021 N.Y. Slip Op. 04569, holding that the trial court erred in holding the defendant liable for tortious interference with business relations when the evidence at trial showed that the defendant's conduct was motivated by self interest, explaining:
"To prevail on a claim for tortious interference with business relations, a party must prove: (1) that it had a business relationship with a third party; (2) that the defendant knew of that relationship and intentionally interfered with it; (3) that the defendant acted solely out of malice or used improper or illegal means that amounted to a crime or independent tort; and(4) that the defendant's interference caused injury to the relationship with the third party" (106N. Broadway, LLC v Lawrence, 189 AD3d at 741; see 684 E. 222nd Realty Co., LLC v Sheehan, 185 AD3d 879, 879-880). "While a cause of action for interference with prospective contract or business relationship is closely akin to one for tortious interference with contract, the former requires proof of more culpable conduct on the part of defendant" (106 N. Broadway, LLC v Lawrence, 189 AD3d at 740; see Carvel Corp. v Noonan, 3 NY3d 182,189-190). "This standard is met where the interference with prospective business relations was accomplished by wrongful means or where the offending party acted for the sole purpose of harming the other party" (Law Offs. of Ira H. Leibowitz v Landmark Ventures, Inc., 131AD3d 583, 585; see 106 N. Broadway, LLC v Lawrence, 189 AD3d at 733). "Wrongful means" has been defined to include "physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure" (Carvel Corp. v Noonan,3 NY3d at 191 [internal quotation marks omitted]). "[A]s a general rule, the defendant's conduct must amount to a crime or an independent tort. Conduct that is not criminal or tortious will generally be 'lawful' and thus insufficiently 'culpable' to create liability for interference with prospective contracts or other nonbinding economic relations" (id. at 190; see Law Offs. of Ira H. Leibowitz v Landmark Ventures, Inc., 131 AD3d at 586). In addition, conduct which is motivated by economic self-interest cannot be characterized as solely malicious (see Law Offs. of Ira H. Leibowitz v Landmark Ventures, Inc., 131 AD3d at 586).
The Supreme Court's determination that Hong tortiously interfered with Stuart's business relations with Aeropostale was not warranted by the facts. The court made no specific findings of fact or credibility determinations concerning this cause of action and Hong individually, and the trial record reflects a lack of incriminating evidence that Hong used "wrongful means" to interfere with Stuart's business relationship with Aeropostale. Furthermore, to the extent that the court tacitly concluded that Hong's conduct harmed Stuart's business relationship with Aeropostale, any such conduct would presumably have been motivated by Hong's economic self-interest, and cannot be characterized as solely malicious (see Tri-Star Light. Corp. v Goldstein, 151 AD3d 1102, [*3] 1107; Law Offs. of Ira H. Leibowitz v Landmark Ventures, Inc., 131 AD3d at 586; Devash LLC v German Am. Capital Corp., 104 AD3d 71, 79; Out of Box Promotions, LLC v Koschitzki, 55 AD3d 575, 577; RSA Distribs. v. Contract Furniture Sales, 248 AD2d 370, 371). Accordingly, the court should have dismissed the twelfth cause of action, which alleged tortious interference with business relations, insofar as asserted by Stuart's against Hong.
The elements of a claim for tortious interference with prospective business relations are more onerous than those of a claim for tortious interference with an existing contract. One of the requirements of the former claim is that the alleged interference must be have been solely malicious, which necessarily excludes conduct taken for the defendant's self interest.
The attorneys at Schlam Stone & Dolan LLP frequently litigate claims for tortious interference with prospective relations. Contact the Commercial Division Blog Committee at email@example.com if you or a client have questions concerning whether another party's actions meet the elements of a claim for tortious interference with prospective relations.