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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: December 18, 2019

No Cause of Action for Loss of Prospective Economic Advantage

On October 31, 2019, Justice Grays of the Queens County Commercial Division issued a decision in Patsiouras v. Koklanos, 2019 NY Slip Op. 33567(U), holding that there was no cause of action for loss of prospective economic advantage, explaining:

The branch of the motion to dismiss the Third counterclaim is granted. The elements of a claim for tortious interference with a prospective contract or business relationship are: (1) defendants’ knowledge of plaintiffs’ business opportunity with another party; (2) defendant’s intentional interference with that opportunity; (3) defendant’s use of wrongful means or sole purpose of inflicting harm; (4) a showing that the contract or prospective business relationship would have been entered into but for defendant’s interference and (5) resulting damages. To assert a claim for tortious interference with business relationship, a plaintiff is required to show that the defendant used wrongful means. Wrongful means include physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure; they do not, however, include persuasion alone although it is knowingly directed at interference with the contract. Plaintiff is also required to specifically allege that defendant had knowledge of the prospective contract or business relationship, and
defendant’s interference must be specified in the allegations set forth in the complaint, as must the defendants’ knowledge and the interference. Conclusory allegations without factual support are insufficient to state a cause of action for tortious interference with a business relationship.

Here, the Third counterclaim fails to adequately state a cause of action for tortious interference with business relationship. Defendant failed to allege that plaintiffs conduct intentionally induced a breach of a specific contract or business relationship between defendant and a third-party, or that plaintiff otherwise rendered performance of a contract impossible. Furthermore, where, as here, the alleged harm is injury to defendant’s reputation, the cause of action is one for defamation, not tortious interference with prospective contract or business relationship.

The branch of the motion to dismiss the Fourth counterclaim is granted. There is no cause of action for loss of prospective economic advantage. If defendant was attempting to assert a counterclaim sounding in wrongful/tortious interference with prospective economic advantage, it is well settled that in order to establish this tort, the party asserting the claim must demonstrate that the alleged interference used unlawful or improper means, or that the interference by lawful means constituted the infliction of harm done without excuse or justification. Defendant failed to adequately plead this counterclaim.

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

In New York, there are circumstances where someone can be held liable for causing someone else to break their contract with you (tortious interference with contract), and they can even be held liable for causing someone not to enter into a contract with you in the first place (tortious interference with prospective economic advantage). Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client think someone has interfered with your rights relating to a contract.

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