5.2 Intentional Interference with Existing Contracts Not Terminable at Will

• Library: Virginia Business Torts (Virginia CLE) (2019 Ed.)

5.2 INTENTIONAL INTERFERENCE WITH EXISTING CONTRACTS NOT TERMINABLE AT WILL

5.201 In General. The Virginia Supreme Court has noted that "[t]he tort [of interference with contract] is succinctly described in [the] Restatement (Second) [of] Torts § 766 (1977):" ⁶

Intentional Interference with Performance of Contract by Third Party. One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract.

The elements required for a prima facie showing of the tort are:

		1.	The existence of a valid contractual relationship or business expectancy;
2.	Knowledge of the relationship or expectancy on the part of the interferer;
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. 7

"[T]he interferer's knowledge of the business relationship and his intent to disturb it are requisite elements; malice is not." ⁸

Chaves v. Johnson ⁹ is the seminal case in Virginia recognizing the tort of interference with an existing contract. In this case, Chaves won a contract

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to perform architectural services for the city of Fredericksburg in connection with a proposed city hall. Johnson, a competing architect, wrote a letter to the city council describing Chaves as inexperienced and claiming that he was charging city council excessive fees in connection with the project. Johnson offered his services if the council wished to reconsider its award of the contract to Chaves and provided with his letter his fee schedule and list of qualifications. Three weeks later, the council terminated Chaves's contract, which was terminable only for cause. The city then solicited new bids, and Johnson was awarded the contract. ¹⁰

Chaves sued, seeking damages from Johnson for his interference with Chaves's contract, and won a jury award of $70,000, which the trial court set aside. In reversing the trial court, the Virginia Supreme Court noted its statement in Worrie v. Boze that "the right to performance of a contract and the right to reap profits there from are property rights which are entitled to protection in the courts." ¹¹ It recognized the tort and discussed and dismissed a number of affirmative defenses, such as justification or privilege. ¹² Rejecting the notion that malice must be proven, the court found that there was sufficient evidence of proximate cause and intent to support the jury's verdict. ¹³

5.202 Analysis of Elements of Claim.

A. Existence of Valid Contractual Relationship. The tort's premise is that the party to an existing contract has a property right in the performance of and anticipated benefits from the business relationship. ¹⁴ Consequently, the contract or business relationship that forms the basis for the claim must be valid. For example, there is no liability if a defendant interferes with a contract that is unenforceable as against public policy. ¹⁵

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Likewise, if the plaintiff's contract rights are contingent on an event that will not occur, the claim will fail. ¹⁶

B. Pleading Specific Contract or Expectancy. It has been held, at least by Virginia's federal courts, that it is fatal to a tortious interference claim for a plaintiff's initial pleadings to fail to identify a specific, existing contract or expectancy that is the subject of interference. ¹⁷ Claims based on generalized allegations and "bare assertions devoid of further factual enhancements" will be dismissed. ¹⁸

C. Knowledge of Relationship or Expectancy on Part of Defendant. The defendant must have known of the contract or expectancy at the time of the interference. ¹⁹

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D. Intentional Interference Inducing or Causing Breach or Termination of Relationship or Expectancy. The intent requirement may be satisfied when the defendant (i) acts for the primary purpose of interfering with the performance of the contract or (ii) knows that interference is certain or substantially certain to result from these actions. ²⁰ A plaintiff must show that the defendant induced a nonparty to...