Chapter 1-2 Tortious Interference with Prospective Business Relationship

• Jurisdiction: United States

1-2 Tortious Interference with Prospective Business Relationship

1-2:1 Overview

Tortious Interference with a Prospective Business Relationship is closely related to the cause of action for Tortious Interference with an Existing Contract. The biggest difference is the requirement that the defendant's conduct must be independently tortious to sustain a cause of action for Tortious Interference with a Prospective Business Relationship.

1-2:1.1 Related Causes of Action

Tortious Interference with Existing Contract, Breach of Contract, Breach of Covenant not to Compete, Business Disparagement

MUST READ CASE

Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711 (Tex. 2001)

1-2:2 Elements

(1) A reasonable probability that the plaintiff would have entered into a business relationship with a third party.³⁵

• Although it is not necessary to prove that a contract would have certainly been made but for the interference, the transaction must have been reasonably probable, considering all of the facts and circumstances.³⁶
• To establish a claim for tortious interference, a plaintiff must prove that more than mere negotiations occurred.³⁷
• An existing business relationship may properly fall within this category of prospective business relationship.³⁸

(2) The defendant either acted with a conscious desire to prevent the relationship from occurring or knew the interference was certain or substantially certain to occur as a result of the conduct.³⁹

• Interference which is the incidental result of conduct undertaken for another purpose but with knowledge that interference would likely occur does not make it improper.⁴⁰

(3) The defendant's conduct was independently tortious or unlawful.⁴¹

• "Independently tortious" does not mean the plaintiff must be able to prove all elements of an independent tort, but only that the defendant's conduct would be actionable under a recognized tort.⁴²
• Conduct that is merely "sharp" or perceived as "unfair competition" is not actionable as the basis for tortious interference with prospective business relations.⁴³

(4) The interference proximately caused the plaintiff's injury.⁴⁴

• Conduct that results in delaying but not preventing the execution of a contract does not constitute tortious interference with a prospective business relationship.⁴⁵
• At a minimum, the tortious conduct must constitute a cause in fact which prevented the prospective business relationship from coming to fruition, i.e. whether the act or omission was a substantial factor in causing the injury "without which the harm would not have occurred."⁴⁶

(5) The plaintiff suffered actual damage or loss as a result.⁴⁷

1-2:3 Damages and Remedies

1-2:3.1 Actual Damages

Restatement (Second) of Torts § 774A provides:

One who is liable to another for interference with a contract or prospective contractual relation is liable for damages for
(a) the pecuniary loss of the benefits of the contract or the prospective relation;
(b) consequential losses for which the interference is a legal cause; and
(c) emotional distress or actual harm to reputation, if they are reasonably to be expected to result from the interference.⁴⁸

1-2:3.1a Pecuniary Loss

The measure of actual damages in tortious interference cases is the same as for breach of contract—to put the plaintiff back in the same economic position he would have occupied had the contract been performed.⁴⁹ See Chapter 11.

1-2:3.1b Mental Anguish

mental anguish damages are recoverable.⁵⁰

1-2:3.1c Injury to Reputation

Damages are potentially recoverable for actual harm to reputation resulting from the tortious interference.⁵¹

1-2:3.1d Lost Profits and Loss of Value of a Business

Lost profits are recoverable when they are reasonably calculable.⁵²

A plaintiff may recover both lost profits and the loss of potential profits, thus allowing recovery for the loss of the future growth of the plaintiff's business.⁵³

When a plaintiff cannot show lost profits with a reasonable degree of certainty, a plaintiff may still be entitled to recover lost profits based upon the amount of profits the defendant realized on the contract.⁵⁴

Where the result of interference is to put the plaintiff out of business, damages are the difference between the value of the plaintiff's business in the absence of the interference and the amount realized by liquidation.⁵⁵ See Chapter 11, Sections 11-4, 11-6 and 11-7.

1-2:3.2 Exemplary Damages

Exemplary damages are available in an action for tortious interference with prospective business relations.⁵⁶ The Texas Supreme Court has recognized that "[e]xemplary damages are...