B. Interference with Economic Relationships

• Library: The South Carolina Law of Torts (SCBar) (2023 Ed.)

B. Interference with Economic Relationships

1. Interference with Contract and Prospective Contractual Relations

Where A and B have a contract and B merely breaches the contract, A may usually sue B only for breach of contract. No tort is involved,³²⁰ unless, for example, a duty of "due care"³²¹ or of "good faith" dealing³²² is breached. However, if C had persuaded B to breach the contract, A may have a tort cause of action against C for interference with an existing contractual relationship. "[A]n action for tortious interference protects the property rights of the parties to a contract against the unlawful interference by third parties. . . . Therefore, it does not protect a party to a contract from actions of the other party."³²³

The elements of this tort are set forth in DeBerry v. McCain³²⁴as follows: "(1) the contract; (2) the wrongdoer's knowledge thereof; (3) his or her intentional procurement of its breach; (4) the absence of justification; and (5) damages resulting therefrom."³²⁵

The tort protection for contractual relations also includes potential contracts. The elements of the tort of intentional interference with prospective contractual relations are set forth in Crandall Corp. v. Navistar International Transport Corp.³²⁶as follows: "(1) the defendant intentionally interfered with the plaintiff's potential contractual relations; (2) for an improper purpose or by improper methods; (3) causing injury to the plaintiff."³²⁷

South Carolina courts have not yet addressed the viability of a cause of action for intentional interference with inheritance, but at least one federal district court has permitted a group of plaintiff-beneficiaries to pursue this tort, predicting that, if faced with an appropriate fact pattern, the South Carolina Supreme Court would adopt this tort.³²⁸

a. Contract

In a suit for interference with an existing contractual relationship, the contract that is breached must be valid and enforceable.³²⁹ Therefore, if there is no such contract or if such contract was not breached, then there is no cause of action.³³⁰ However, a contract terminable at will can satisfy this requirement.³³¹ In a suit for interference with prospective contractual relations, the plaintiff must show a reasonable likelihood that the relationship would have developed.³³²

b. Causation

Interference with contract or with prospective contractual relations must cause injury to be actionable.³³³ Thus, where an existing contract is involved, the interference by the defendant must proximately cause the breach;³³⁴ where there is no breach or where the breach would have occurred anyway, then there is no cause of action.³³⁵ Where interference with prospective relations is involved, plaintiff must show that there is a reasonable likelihood that the contractual relationship would have been entered into if there had been no interference.³³⁶

The causal requirement is satisfied where two actors, acting independently of one another, combine to cause the breach. For example, in Crowe v. Domestic Loans, Inc.,³³⁷plaintiff was held to state a cause of action where two of plaintiff's creditors, acting independently of one another, telephoned plaintiff's employer so often concerning loans owed by plaintiff that plaintiff was discharged.

Some jurisdictions have granted recovery not only for injury resulting from a third-party's breach but also for injury resulting from interference with plaintiff's performance of plaintiff's own contractual obligations as well.³³⁸ However, the South Carolina Court of Appeals rejected this approach in favor of a narrower reading of the tort of interference with contractual relations.³³⁹

Recovery has also been granted by some courts for action that significantly reduces the value of one's contractual rights.³⁴⁰ If South Carolina courts continue to interpret the tort narrowly, this type of recovery does not seem likely in South Carolina.

c. Nature of Interference

The defendant must know of the contract, intend to interfere with its performance,³⁴¹ and lack justification for the interference.³⁴² The last requirement—lack of justification—has been the source of considerable debate and litigation, and there are no clear guides for determining whether an interference is proper.³⁴³ However, merely exercising a legal right,³⁴⁴ engaging in legitimate competition,³⁴⁵ or acting for some other legitimate business purpose³⁴⁶ is not improper.

In adopting the tort of interference with prospective contractual relations, the South Carolina Supreme Court stated:

If a defendant acts for more than one purpose, this improper purpose must predominate in order to create liability. As an alternative to establishing an improper purpose, the plaintiff may prove the defendant's method of interference was improper under the circumstances.³⁴⁷

d. Injury/Remedies

Damages are an element of the tort of interference with contract.³⁴⁸ The plaintiff may recover not only for economic loss,³⁴⁹ but also for mental distress in an appropriate case.³⁵⁰ In addition, injunctive relief³⁵¹ and punitive damages³⁵² may be available in certain cases.

2. Slander of Title

Wrongfully recording an unfounded claim against the property of another generally is actionable as slander of title.³⁵³ The elements of a claim for slander of title include: (1) the publication (2) with malice (3) of a false statement (4) that is derogatory to plaintiff's title and (5) causes special damages (6) as a result of diminished value of the property in the eyes of third parties.³⁵⁴

A publication is derogatory to the plaintiff's title if the publication disparages or diminishes the quality, condition, or value of the property.³⁵⁵ Special damages recoverable in a slander of title action are the pecuniary losses that result directly and immediately from the effect of third-persons' conduct, including impairment of vendibility or value caused by disparagement, as well as the expense of measures reasonably necessary to counteract the publication, including litigation.³⁵⁶

In Solley v. Navy Federal Credit Union, the South Carolina Court of Appeals recited the following authority for recovery of special damages:

Special damages in this context can take at least two forms. For instance, if a slanderous statement forces a party to sell land at a reduced price, the reduction in value is a realized loss that can form the basis of a damages award. Alternatively, a landowner may take legal action to remedy the effects of the slanderous statement. To the extent that this legal action is reasonably necessary to remove clouds form the party's title, the party may recover those attorneys' fees.³⁵⁷

An injured party can pursue punitive damages in the appropriate case for slander of title.³⁵⁸

C. Civil Conspiracy

Although a civil conspiracy can involve a range of improper acts,³⁵⁹ most civil conspiracy cases involve economic injuries.³⁶⁰ Therefore, civil conspiracy is addressed in this chapter. A civil conspiracy involving economic harm may also involve a statutory claim.³⁶¹

Civil conspiracy should be distinguished from criminal conspiracy. The elements of the tort and the difference between the two types of conspiracies are summarized as follows in Lee v. Chesterfield General Hospital, Inc.:³⁶²

A criminal conspiracy consists of "a combination between two or more persons for the purpose of accomplishing a criminal or unlawful object or an object neither criminal nor unlawful by criminal or unlawful means." State v. Hightower, 221 S.C. 91, 96, 69 S.E.2d 363, 365 (1952), quoting State v. Davis, 88 S.C. 229, 70 S.E. 811 (1911). To establish a criminal conspiracy it is not necessary to prove an overt act. The gist of the crime is the unlawful combination. The crime is then complete, even though nothing further is done. State v. Ferguson, 221 S.C. 300, 70 S.E.2d 355 (1952) . . . .; Todd v. South Carolina Farm Bureau Mutual Ins. Co., 276 S.C. 284, 278 S.E.2d 607 (1981).

In Paradis v. Charleston County Sch. Dist., 433 S.C. 562, 861 S.E.2d 774 (2021), the South Carolina Supreme Court clarified the history and elements of a claim for civil conspiracy. Following Paradis, the element of "special damages" is not required to state a claim for civil conspiracy and the only elements a plaintiff must establish are: (1) the combination or agreement of two or more persons, (2) to commit an unlawful act or a lawful act by unlawful means, (3) together with the commission of an overt act in furtherance of the agreement, and (4) damages.³⁶³

The gravamen of the tort is the damage resulting to the plaintiff from an overt act done pursuant to the combination, not the agreement or combination per se.³⁶⁴A civil conspiracy may be furthered by an unlawful act. See, e.g., Charles v. Texas Co. (Charles II), supra (slander, adulterating gasoline, etc.). However, an unlawful act is not a necessary element of the tort. An action for conspiracy may lie even though no unlawful means are used and no independently unlawful acts are committed.

The civil conspiracy action is premised on the notion that where two or more persons combine for the purpose of harming someone, this combination involves greater risk of harm than the same conduct by an individual.³⁶⁵ Consequently, as indicated in the above quotation, conduct pursuant to a conspiracy can be tortious even though the same conduct by an individual would not be, while a failure to show a combination means there is no claim.³⁶⁶

Where the conspirator's conduct is not unlawful or tortious in itself, then plaintiff must show that it was otherwise improper or unjustified.³⁶⁷ This requirement can be satisfied by showing that "the primary purpose or object of the combination is to injure the plaintiff"³⁶⁸ —for example, using lawful means solely to injure plaintiffs by "preventing the opening of their restaurant."³⁶⁹ However, a mere breach of contract is not a civil conspiracy.³⁷⁰ Unfortunately, many cases will involve mixed motives and it will be necessary to...