27.5 The Arizona Legal Tests

• Jurisdiction: Arizona

27.5 The Arizona Legal Tests. Arizona case law has blurred the distinction between the discrete rules set forth in the three Restatement sections above, thus causing confusion for many practitioners. Therefore, it is necessary to examine the development of the legal tests applied by Arizona courts.

The first Arizona courts modeled the legal test for tortious interference after Restatement (First) of Torts.³³ This test included interference with both contractual relations and business expectancies as an actionable tort.³⁴ The courts stated the test by either quoting Restatement (First) of Torts § 766³⁵ or setting forth the elements as follows:

1. The existence of a contract;

2. The defendant’s knowledge thereof;

3. A breach of contract induced by the defendant;

4. The absence of privilege or justification; and

5. Damages.³⁶

The test in its form above included only contracts and failed to recognize business expectancy interest. This changed in 1970 when the case of Pre-Fit Door , Inc. v. Dor-Ways, Inc. ³⁷ recognized a cause of action for interference with both existing contracts and expectancy interests. In 1977, Ulan v. Venda-A-Coin, Inc., ³⁸ expressly stated that “[t]he tort [of inducing breach of contract] has been expanded in Arizona to cover not only interference with valid contractual relations but also with business expectancies.”

In 1981, the Arizona Supreme Court in Antwerp Diamond Exh. of A.M., Inc. v. Better Business Bureau of Maricopa County, Inc., ³⁹ adopted a four prong test that included the term “business expectancy.” The elements of the five prong test to state a prima facie tort of tortious interference were:

1) The existence of valid contractual relationship or business expectancy ;⁴⁰

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.

Although case law as early as 1970 recognized the tort as including the interference with a business expectancy interest,⁴¹ this was the first time an Arizona court expressly included the term in the list of elements.

The current legal test to establish a prima facie case of tortious interference came in 1985 in the Seminole case Wagenseller v. Scottsdale Memorial Hospital .⁴² The Arizona Supreme Court adopted the Restatement (Second) of Torts § 766 believing it was the...