Tortious Interference with Anticipated Future Contract

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.

Let’s take a look at the opinion issued earlier this month in CSX Transportation, Inc. v. Norfolk Southern Railway Company, a case from the Norfolk Division of the Eastern District of Virginia. The facts of the case are complicated but here’s the general gist of the allegations. CSX and Norfolk Southern are railroad companies operating in the eastern United States and Canada. Back in 1896 (that’s right: 1896), they joined some other railroads in forming a “terminal switching railroad” called Belt Line. Belt Line’s purpose was to connect its owners’ railroads to various marine terminals, such as the Norfolk International Terminals (“NIT”), one of the largest marine terminals in Virginia and on the entire East Coast.

As the result of mergers and acquisitions over the years, CSX eventually became a minority shareholder of Belt Line, with Norfolk Southern owning the rest. The tortious interference claim was based on CSX’s contention that Norfolk Southern was abusing its majority-shareholder status by causing Belt Line to charge unreasonably high rates for its switch services, effectively blocking CSX from access to NIT. This amounted to tortious railway-tracks-3455169_960_720-300x200interference with business expectancy, CSX claimed, because CSX had lost “opportunities for contracts with shipping partners.”

The court held that CSX was basically complaining about the loss of possible business relationships in the future, rather than a true business expectancy. CSX had not identified in its complaint any actual third party with which it expected to transact business. CSX had pointed out that the Virginia Port Authority had concluded that having an additional railroad with access to NIT “would allow more volume to be moved at competitive prices,” presumably by companies such as CSX, but the court found this insufficient to meet the “objective probability” standard that the law requires for claims of tortious interference with prospective economic advantage:

CSX has not alleged that it would realize the economic benefit by demonstrating, for instance, that its shipping partners also use NIT and would engage CSX if CSX were able to access NIT. Therefore, the Court finds that Plaintiff has failed to allege a plausible claim that it has suffered tortious interference with a business expectancy.

The court dismissed the claim, but as is customary in federal court, granted CSX leave to file an amended complaint.

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