Defendant Liable for Tortious Interference With Contract When It Caused Plaintiff to Breach Its Own Contract With Nonparty

On October 7, 2024, Justice Melissa A. Crane of the New York County Commercial Division issued a decision in EXRP 14 Holdings LLC v. LS-14 Ave LLC, Index No. 652698/2022, holding that a defendant may be liable for tortious interference with contract when the defendant causes the plaintiff to breach its own contract with a nonparty, explaining:

To support its tortious interference cause of action, plaintiff claims that: (1) defendant knew that plaintiff had a tenant and a lease for the unit once it was completed, (2) that defendant purposefully delayed the work on the unit so that the lease could not commence, and (3) defendant tried to cut plaintiff out of the lease deal and negotiate its own lease with the tenant.

The record supports plaintiffs tortious interference claim. On December 19, 2022, the tenant wrote plaintiff that as the "Commencement Date" of the lease had not occurred, tenant was electing to terminate the lease per the termination provision (NYSCEF 204). Defendant argues that the tenant's termination of the lease was not a breach, as a party has an absolute right to terminate a contract pursuant to an unconditional termination clause (Scheer v Elam Sand & Gravel Corp., 177 AD3d 1290, 1291 [4th Dept 2019]; Big Apple Car v City of New York, 204 AD2d 109, 111 [151 Dept 1994]).

However, Plaintiff correctly points out that a breach by a third party is not necessary. Causing plaintiff to breach its own contract by preventing its performance constitutes tortious interference with a contract (Italverde Trading, Inc. v Four Bills of Lading, 485 F Supp 2d 187, 203 [EDNY 2007] [relying on Restatement [Second] of Torts § 766A Intentional Interference with Another's Performance of His Own Contract]; S & S Hotel Ventures Ltd. Partnership v 777 SH Corp., l 08 AD2d 351, 354 [1 st Dept 1985] [tortious interference claim stated although party to contract with plaintiff did not breach contract, but plaintiff did]; Morris v Blume, 55 NYS2d 196, 199 [Sup Ct, NY County], affd 269 AD 832 [1 st Dept 1945]). Here, the record supports that defendant, by unreasonably and purposely delaying renovations, caused PLAINTIFF to breach its contract with tenant. The record supports that defendant prevented plaintiff from delivering the premises on time per its contract with tenant.

As this case shows, a defendant may be liable for tortious interference with contract not only when it causes a nonparty to breach a contract with the plaintiff, but when it causes the plaintiff to breach a contract with the nonparty. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning claims for tortious interference.