First Department Enforces Nonrecourse Provision To Bar Interference Claim Based On Conduct Serving Legitimate Economic Self-Interest

Posted: September 16, 2026 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Tortious Interference, Breach of Contract, Contract Interpretation

First Department Enforces Nonrecourse Provision To Bar Interference Claim Based On Conduct Serving Legitimate Economic Self-Interest

On September 3, 2026, in Jefferies LLC v. Mountain State Energy Holdings LLC, Index No. 650599/25, the Appellate Division, First Department dismissed a tortious interference claim against a nonparty to the underlying agreement, based on the agreement’s nonrecourse provision.

Plaintiff’s confidentiality agreement barred nonparties from any liability “arising under” or “related” to it. Plaintiff nonetheless sued Trilogy, a nonparty, for tortious interference, arguing the nonrecourse clause could not apply because Trilogy’s conduct was “intentional.” The Court disagreed, explaining that intentional conduct taken to advance a legitimate economic interest does not defeat a nonrecourse clause:

New York courts “routinely enforce [] liability-limitation provisions, especially when negotiated by sophisticated parties” (Electron Trading, LLC v Morgan Stanley & Co. LLC, 157 AD3d 579, 580 [1st Dept 2018]). . . . “The type of intentional wrongdoing that could render a limitation in [a contract] unenforceable is that which is unrelated to any legitimate economic self-interest” (Devash LLC v German Am. Capital Corp., 104 AD3d 71, 77 [1st Dept 2013], lv denied 21 NY3d 863 [2013] [internal quotation marks omitted]). Thus, where the conduct in question was undertaken “to advance a legitimate economic self-interest,” a party is entitled to “rely on the contractual limitation provision,” notwithstanding the intentional nature of its actions (see Electron Trading, 157 AD3d at 581 [internal quotation marks omitted]).

The Court found that Trilogy’s alleged resistance to a new member’s entry to maintain control of the company reflected legitimate economic self-interest, not bad faith.

The attorneys at Schlam Stone & Dolan LLP frequently litigate the enforceability of contractual liability-limitation provisions. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.

To read more, see Schlam Stone & Dolan’s related Commercial Division Blog posts on a decision holding that a party may intentionally breach a contract to advance a legitimate economic self-interest and still rely on a contractual limitation-of-liability provision, and a decision holding that an agent who acts in good faith and within the scope of its authority to protect its own financial stake cannot be held liable for inducing its principal’s breach of contract.