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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: October 24, 2020

Tortious Interference Claim Fails Without Allegations of Wrongful Means

On October 13, 2020, Justice Borrok of the New York County Commercial Division issued a decision in Slice Bus. Mktg., Inc. v. Kipp, 2020 NY Slip Op. 33361(U), holding that a tortious interference claim failed without allegations of wrongful means, explaining:

The elements of interference with contract are the existence of a valid contract, defendant’s knowledge thereof, defendant’s intentional procuring of the breach and damages. The related tort of interference with business relations applies to those situations where a third party would have entered into or extended a contractual relationship with plaintiff but for the intentional and wrongful acts of the defendant. In order to state a claim for tortious interference with contractual relations, a plaintiff must show that defendants intentionally and through improper means induced the breach of a contract between the plaintiff and a third party.

To state a cause of action for tortious interference with prospective economic advantage, a complaint must allege conduct by the defendant that interfered with the plaintiffs economic prospects and (1) was either undertaken for the sole purpose of harming the plaintiff, or (2) that such conduct was wrongful or improper independent of the interference allegedly caused thereby. This tort also requires a plaintiff to demonstrate more culpable conduct by a defendant, including conduct that amounts to a crime, independent tort, or wrongful means.

Whereas inducing a breach of a binding agreement and interfering with non-binding economic relations are both recognized as torts, the degree of protection available to a plaintiff for a competitor’s tortious interference with contract is defined by the nature of the plaintiffs enforceable legal rights. Thus, where there is an existing, enforceable contract and a defendant’s deliberate interference results in a breach of that contract, a plaintiff may recover damages for tortious interference with contractual relations even if the defendant was engaged in lawful behavior. Where there has been no breach of an existing contract, but only interference with prospective contract rights, however, plaintiff must show more culpable conduct on the part of the defendant.

Thus, where a complaint is based on interference with a nonbinding relationship, a plaintiff must show that the defendant’s conduct was not lawful but more culpable, i.e., a defendant’s conduct must amount to an independent tort. In contrast, noncriminal or independently tortious conduct will generally be lawful and thus insufficiently culpable to create liability for interference with prospective contracts or other nonbinding economic relations.

Here, the complaint does not allege knowing and intentional interference by Retriever with any existing merchant contract, so no tort for that can lie. Rather, as concerns Slice’s claim with respect to existing business relations, the complaint only alleges that the defendants (jointly, without specification) intentionally interfered with, and continue to intentionally interfere with and disrupt Plaintiffs business relationships with its customers by attempting to convert Plaintiffs customers to their own through the use of Plaintiffs illegally obtained confidential and proprietary information.

Whether this is denominated as a claim for interference with business relations or economic advantage, and the complaint and motion papers do not appear to distinguish the two, the claims fail as against Retriever because nothing in the complaint sets out that Retriever acted with knowledge of any contracts solely to harm Slice and the conduct alleged (contracting with merchant customers) was certainly not wrongful or improper independent of the interference allegedly caused thereby.

(Internal quotations and citations omitted).

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 business relations). 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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