Utah Tortious interference with economic relations
Elements of Tortious interference with economic relations:
- Defendant intentionally interfered with potential economic relations
- for an improper purpose (predominant purpose was to injure the plaintiff—can be outweighed by legitimate long-range interest in further one’s own economic condition) or by improper means (violence, threats or other intimidation, deceit or misrepresentation, disparaging falsehood)
- causing injury to plaintiff
To succeed on a claim for intentional interference with economic relations, a plaintiff must demonstrate that: (1) the defendant intentionally interfered with the plaintiff's existing or potential economic relations; (2) for an improper purpose or by improper means; (3) causing injury to the plaintiff.
To establish the first alternative, improper purpose, it is not enough to show that the defendant was motivated by ill will toward the plaintiff. See id. Rather, the plaintiff must show that the defendant's “predominant purpose was to injure the plaintiff.” Id. To establish the second alternative, improper means, a plaintiff must show “that the defendant's means of interference were contrary to statutory, regulatory, or common law or violated an established standard of a trade or profession.” Pratt v. Prodata, Inc., 885 P.2d 786, 787 (Utah 1994) (internal quotations omitted).
The tort of intentional interference with prospective economic relations reaches beyond protection of an interest in an existing contract and protects a party's interest in prospective relationships of economic advantage not yet reduced to a formal contract (and perhaps not expected to be). Buckaloo v. Johnson, 14 Cal.3d 815, 537 P.2d 865, 868-69, 122 Cal.Rptr. 745, 748-49 (1975); Restatement, supra, § 766B comment c; W. Prosser, supra, § 130. Although previously faced with arguments or circumstances presenting the issue, e.g., Searle v. Johnson, Utah, 646 P.2d 682, 683 (1982); Soter v. Wasatch Development Corp., 21 Utah 2d 224, 443 P.2d 663 (1968), we have never expressly resolved the question of whether Utah recognizes this tort. We now resolve that question, in the affirmative.
We recognize a common-law cause of action for intentional interference with prospective economic relations, and adopt the Oregon definition of this tort. Under this definition, in order to recover damages, the plaintiff must prove (1) that the defendant intentionally interfered with the plaintiff's existing or potential economic relations, (2) for an improper purpose or by improper means, (3) causing injury to the plaintiff. Privilege is an affirmative defense, Searle v. Johnson, Utah, 646 P.2d 682 (1982), which does not become an issue unless “the acts charged would be tortious on the part of an unprivileged defendant.” Top Service Body Shop, Inc., 283 Or. at 210, 582 P.2d at 1371.
The alternative of improper purpose will be satisfied where it can be shown that the actor's predominant purpose was to injure the plaintiff. *308 St. Louis-San Francisco Railway Co. v. Wade, 607 F.2d 126, 133 (5th Cir.1979); Alyeska Pipeline Service Co. v. Aurora Air Service, Inc., Alaska, 604 P.2d 1090 (1979); Dunshee v. Standard Oil Co., 152 Iowa 618, 132 N.W. 371 (1911); Tuttle v. Buck, 107 Minn. 145, 119 N.W. 946 (1909); Wesley v. Native Lumber Co., 97 Miss. 814, 53 So. 346 (1910); Huston v. Trans-Mark Services, Inc., 45 Or.App. 801, 609 P.2d 848 (1980); Prosser, § 129, quoted supra.
The alternative requirement of improper means is satisfied where the means used to interfere with a party's economic relations are contrary to law, such as violations of statutes, regulations, or recognized common-law rules. Such acts are illegal or tortious in themselves and hence are clearly “improper” means of interference, Searle v. Johnson, Utah, 646 P.2d 682 (1982) (secondary boycott); Gammon v. Federated Milk Producers Association, Inc., 14 Utah 2d at 295-96, 383 P.2d at 405-06 (1963) (price fixing), unless those means consist of constitutionally protected activity, like the exercise of First Amendment rights. NAACP v. Claiborne Hardware Co., 458 U.S. 886, 102 S.Ct. 3409, 73 L.Ed.2d 1215 (1982). “Commonly included among improper means are violence, threats or other intimidation, deceit or misrepresentation, bribery, unfounded litigation, defamation, or disparaging falsehood.” Top Service Body Shop, Inc., 582 P.2d at 1371 & n. 11. Means may also be improper or wrongful because they violate “an established standard of a trade or profession.” Id. at 1371.
A deliberate breach of contract, even where employed to secure economic advantage, is not, by itself, an “improper means.” Because the law remedies breaches of contract with damages calculated to give the aggrieved party the benefit of the bargain, there is no need for an additional remedy in tort (unless the defendant's conduct would constitute a tort independent of the contract).10
Neither a deliberate breach of contract nor an immediate purpose to inflict injury which does not predominate over a legitimate economic end will, by itself, satisfy this element of the tort. However, they may do so in combination. This is so because contract damages provide an insufficient remedy for a breach prompted by an immediate purpose to injure, and that purpose does not enjoy the same legal immunity in the context of contract relations as it does in the competitive marketplace. As a result, a breach of contract committed for the immediate purpose of injurying the other contracting party is an improper means that will satisfy this element of the cause of action for intentional interference with economic relations.
see also St. Benedict's, 811 P.2d at 201 (“An immediate intent to injure a competitor may be motivated and outweighed by a legitimate long-range interest in furthering one's own economic condition.”)
A party is subject to liability for an intentional interference with present contractual relations if he intentionally and improperly causes one of the parties not to perform the contract. Restatement (Second) of Torts § 766 (1979). There is no allegation in the complaint that any existing sublease between the development company and its tenants was breached or that the performance under any of those subleases was in any way impaired by defendants' actions. With regard to the existing contracts, therefore, the development company has not satisfied the first prong of the Leigh Furniture test. It has not shown an intentional interference on the part of the hospital or Boyer. Without more, no claim for interference with present contractual relations can lie.17 We next look at the development company's claim that defendants intentionally interfered with its prospective economic relations. The complaint alleges that defendants solicited the development company's sublessees for tenancies in the proposed building and, as a result, those sublessees did not renew their existing leases. The allegation of solicitation, being an intentional interference with prospective contractual relations, satisfies the first element of the Leigh Furniture test. The second prong of that test requires a showing that the hospital's and Boyer's intentional interference with the renewal of the subleases was for an improper purpose or accomplished by the use of improper means.
Improper purpose is established by a showing that the actor's predominant purpose was to injure the plaintiff. Leigh Furniture, 657 P.2d at 307. An immediate intent to injure a competitor may be motivated and outweighed by a legitimate long-range interest in furthering one's own economic condition. Id. In the instant case, the agreements establish the economic interest of the hospital in having professional office space to serve its admitting physicians. Similarly, Boyer, a commercial enterprise and stranger to any contract between the hospital and the development company, has a legitimate interest in competing for the future business of the development company's tenants. In its complaint, the development company alleges on information and belief that Boyer and the hospital “in planning and proceeding with the proposed development of an additional professional building on the Defendant Hospital's property ... acted knowingly, willfully and in concert with the intent and purpose of depriving Plaintiff of its rights to the continued contractual relations with tenants.” There is no allegation that defendants' desire to harm the development company predominated over their legitimate economic motivations. The damages alleged by the development company, a loss of tenants, is an “inevitable byproduct of competition.” Id. The development company has not, therefore, established that defendants acted with an improper purpose in this case.
Improper means is an alternative to improper purpose under the second prong of the Leigh Furniture test. Improper means are present “where the means used to interfere with a party's economic relations are contrary to law, such as violations of statutes, regulations, or recognized common-law rules.” Id. at 308. Improper means include “violence, threats or other intimidation, deceit or misrepresentation, bribery, unfounded litigation, defamation, or disparaging falsehood.” Id. (quoting Top Service Body Shop, Inc. v. Allstate Ins. Co., 283 Or. 201, 210 n. 11, 582 P.2d 1365, 1371 n. 11 (1978)). “Means may also be improper or wrongful because they violate ‘an established standard of a trade or profession.’ ” Id. Here, there are no facts alleged in the complaint showing any improper means used by defendants to solicit the tenants of the development company's professional buildings. The development company has, as a result, failed to satisfy the second prong of the Leigh Furniture test. For this reason, the third cause of action falls short of stating a claim for tortious interference with economic relations and was properly dismissed as to both defendants.
The alternative, “improper purpose,” is satisfied when the plaintiff proves that the defendant's ill will predominated over all legitimate economic motivations. Id. at 307. According to Leigh, a finding of improper purpose is entirely consistent with a finding that the defendant's means were proper. Id.
As our decision in Leigh makes clear, this court has rejected the various Restatement formulations of the tort of intentional interference with economic relations. Leigh, 657 P.2d at 304. Under Leigh, “the alternative of improper purpose (or motive, intent, or objective) will support a cause of action for intentional interference with prospective economic relations even where the defendant's means were proper.” Id. at 307 (emphasis added). Because we explicitly rejected the Restatement versions of the tort in Leigh and because liability may attach under Leigh even where a defendant's means were proper, we reject defendants' call to adopt truthfulness as an absolute defense to the tort of intentional interference with prospective economic relations.4
A claim for intentional interference with prospective economic relations is established “when interference resulting in injury to another is wrongful by some measure beyond the fact of the interference itself.” Top Serv. Body Shop, Inc. v. Allstate Ins. Co., 283 Or. 201, 582 P.2d 1365, 1371 (1978) (en banc).
To succeed, a plaintiff must prove(1) that the defendant intentionally interfered with the plaintiff's existing or potential economic relations, (2) for an improper purpose or by improper means, (3) causing injury to the plaintiff. Privilege *1044 is an affirmative defense, which does not become an issue unless “the acts charged would be tortious on the part of an unprivileged defendant.”Leigh Furniture and Carpet Co. v. Isom, 657 P.2d 293, 304 (Utah 1982) (quoting Top Serv., 582 P.2d at 1371 (citation omitted)); accord Sampson v. Richins, 770 P.2d 998, 1003 (Utah App.), cert. denied, 776 P.2d 916 (Utah 1989). “Even a recognized privilege may be overcome when the means used by defendant are not justified by the reason for recognizing the privilege.” Top Serv., 582 P.2d at 1371; see also William L. Prosser, Handbook of the Law of Torts, § 129, at 943 (4th ed. 1971) (discussing factors to be considered in determining whether a defendant's conduct is privileged); accord Restatement (Second) of Torts, § 767 cmt. c (1977). Thus, privilege is not an absolute defense.
The tort of interference with economic relations is an intentional tort. However, even if the defendant does not act for the purpose of interfering or does not desire it but knows that the interference is substantially certain to occur as a result of defendant's action and is a necessary consequence thereof, the interference is intentional.
We address Mumford's claim of intentional interference with economic relations under the “improper means” requirement because Mumford has not demonstrated or claimed that the alleged interference by ITT was maliciously motivated “ ‘in the sense of spite and a desire to do harm ... for its own sake....’ ” Leigh Furniture and Carpet Co. v. Isom, 657 P.2d 293, 307 (Utah 1982 (quoting William L. Prosser, Handbook of the Law of Torts § 129 at 943 (4th ed. 1971)). This is consistent with the Utah Supreme Court's pronouncement in Leigh Furniture that “[p]roblems inherent in proving motivation or purpose make it prudent for commercial conduct to be regulated for the most part by the improper means alternative, which typically requires only a showing of particular conduct.” Id.
The Restatement (Second) of Torts § 774A at 55 (1979), provides that one who is ultimately deemed liable to another for interference with economic relations is liable for “the pecuniary loss of the benefits of the contract or the prospective relation; [or] consequential losses for which the interference is a legal cause....” Thus, Judge Croft's findings must identify actual *1007 pecuniary losses suffered by Richtron as a result of Sampson's conduct.
We note that in the context of a damage award, a trial court's findings of fact must provide a sufficient basis for this court to determine whether there is a rational legal basis as well as a sufficient factual basis for the award of damages. See, e.g., Bastian v. King, 661 P.2d 953, 957 (Utah 1983). However,[a]lthough an award of damages based only on speculation cannot be upheld, it is generally recognized that some degree of uncertainty in the evidence of damages will not suffice to relieve a defendant from recompensing a wronged plaintiff. As long as there is some rational basis for a damage award, it is the wrongdoer who must assume the risk of some uncertainty. Where there is evidence of the fact of damage, a defendant may not escape liability because the amount of damage cannot be proved with precision.
Further, “[o]nce a defendant has been shown to have caused a loss, ... the reasonable level of certainty required to establish the amount of a loss is generally lower than that required to establish the fact or cause of a loss.” Cook Assocs., Inc. v. Warnick, 664 P.2d 1161, 1166 (Utah 1983) (citations omitted) (emphasis in the original). Accord Sawyers v. FMA Leasing Co., 722 P.2d 773, 774 (Utah 1986); Terry v. Panek, 631 P.2d 896, 898 (Utah 1981). “The amount of damages may be based upon approximations, if the fact of damage is established, and the approximations are based upon reasonable assumptions or projections.” Atkin Wright & Miles v. Mountain States Tel. & Tel. Co., 709 P.2d 330, 336 (Utah 1985).