Articles Tagged with tortious interference

Virginia does recognize a legal cause of action for improper interference with an anticipated business contract. The tort is known as “tortious interference with business expectancy,” “tortious interference with future economic benefit,” “tortious interference with prospective economic advantage,” or some variant of that phrase. It’s what you sue for when your business is about to close on a big deal but then the whole thing is called off as the result of some form of meddling by a third party. You’re not suing for breach of contract at this point because there is no contract. Instead, you’re suing for the loss of an anticipated future economic benefit. For the claim to be valid, however, there must be reason to believe that you would have closed on the deal were in not for the defendant’s unlawful conduct. There is no claim for interference with a contract you merely hoped to enter into, or for interference with a mere possibility of some economic benefit.

Tortious interference with business expectancy requires proof of the following elements: (1) the existence of a business relationship or expectancy, with a probability (not just possibility) of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship or expectancy; (3) a reasonable certainty that absent defendant’s intentional misconduct, plaintiff would have continued in the relationship or realized the expectancy; and (4) damages to the plaintiff.

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Not long ago, Serco, Inc., won summary judgment on various claims asserted against it by L-3 Communications Corp. and L-3 Applied Technologies, Inc., including claims for statutory business conspiracy, common law conspiracy, and tortious interference with business expectancy. On appeal to the Fourth Circuit, however, the court found that the district court erred in granting summary judgment on the conspiracy claims and sent the case back to the Eastern District of Virginia for further proceedings.

The dispute centered around rights to a lucrative government contract. In 2004, the Air Force awarded a prime contract to Serco that called for testing and upgrading services to protect certain Air Force sites from “high altitude electromagnetic pulse” (“HEMP“) events. The Air Force would periodically issue work orders for various projects, and if Serco could not complete the work itself, it could issue a request for proposals (“RFP”) to invite subcontractors to bid on the work.

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Perhaps a colleague at work is trying to get you fired. Or maybe you did already get fired, and your former boss is contacting prospective employers to make sure you don’t get hired. Either way, you’re not going to be very happy about it, and you may start to look into your legal options. When one person interferes with the employment status of another person, and does or says something with the intention of getting that person fired, and succeeds in that endeavor, the legal claim most often applicable is that of tortious interference with contract. A recent federal case, however, illustrates that successful claims require more than just an intent to disrupt another person’s employment; they require a showing that “improper methods” were used in the course of that disruption.

Because employment contracts are generally terminable at the will of either party (employees can quit, and employers can fire the employee, without being in breach of contract), tortious interference with employment relationships will not be actionable absent additional wrongdoing in the form of so-called improper methods. There is no hard-and-fast definition of “improper methods,” but Virginia cases have held that improper methods include:

  • Actions that are illegal or independently tortious
  • Violations of an established standard of a trade
  • Fraud or deceit
  • Unethical conduct
  • Sharp dealing
  • Overreaching
  • Actions that fall far outside the accepted practice of the “rough and tumble” world of free market competition

(See Duggin v. Adams, 234 Va. 221, 228 (1987); Lewis-Gale Med. Ctr., LLC v. Alldredge, 282 Va. 141, 153 (2011)).

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Legal claims are made up of elements. To sue somebody and win, you need to allege and eventually prove each element that makes up the legal theory on which you’re suing. And oftentimes, those elements have distinct legal meanings that differ from their dictionary definitions. Failure to pay close attention to the requirements of each separate element can result in dismissal of the case before it even gets started. Last month, a Virginia court summarily dismissed an IT consulting company’s claims for tortious interference for failing to allege the facts necessary to support such claims.

The case–Forsythe Global, LLC v. QStride, Inc.–was decided under Michigan law. Michigan, like Virginia, recognizes separate torts for tortious interference with contract, and tortious interference with prospective business relationships or expectancies. Under both the law of Michigan and the law of Virginia, tortious interference requires more than mere “involvement in the activities and concerns of other people when your involvement is not wanted.” (See Merriam-Webster’s definition of interference). There’s no law that requires people to mind their own business. To prevail in court, the interference must approach a specific threshold–meddling in other people’s affairs won’t satisfy the claim if the interference does not reach this level.

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Everybody knows you can get in trouble for breaching a contract. But did you know that you can also get sued for inducing someone else to breach a contract that you’re not even a party to? Virginia, like many states, recognizes a cause of action for “tortious interference with contract.” The tort requires proof of four elements: (1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted. (See Chaves v. Johnson, 230 Va. 112, 120 (1985)).

Basically, this means that if your business partner breaches a contract with you and the cause of the breach is the meddlings of a third person, your legal remedy may involve not only a breach-of-contract action against the business partner, but a tortious-interference claim against the meddler. This is a recognition of the value the law places on contract rights. Interfere with them at your peril.

Still, there won’t always be a culprit. Sometimes, contracting parties are simply unable to meet their obligations and have no choice but to breach. Other times, a third person might have induced the breach, but for reasons that the law regards as understandable and reasonable (and therefore privileged). Breaching a contract on the advice of counsel, for example, is unlikely to result in a tortious interference claim against the lawyer. And once a contract has been breached without the involvement of any third parties, no tortious interference claim will lie against anyone who wanders into the situation after-the-fact.

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