Chapter 11 CIVIL CONSPIRACY
| Jurisdiction | North Carolina |
11 CIVIL CONSPIRACY
A. Definition
North Carolina Courts have frequently said that "[a] conspiracy is an agreement between two or more persons to commit an unlawful act or to do a lawful act in an unlawful manner."1 The civil action is one for damages resulting from wrongful or unlawful acts committed by one or more conspirators pursuant to the formed conspiracy.2
There is actually no such thing as a civil action for conspiracy.3 The North Carolina Supreme Court has said that the combination or conspiracy charged only associates the defendants together and "perhaps liberalizes" the rules of evidence so that, under the proper circumstances, the acts of one may be admissible against all.4 The action exists for wrongful acts committed by persons pursuant to the conspiracy.5 There must be an underlying claim for unlawful conduct before the plaintiff may state a claim for civil conspiracy by also alleging an agreement of two or more parties to carry out the conduct and injury resulting from that agreement.6 A claim for conspiracy may be maintained as a counterclaim.7
Direct evidence of a conspiracy agreement often does not exist,8 but an action for civil conspiracy may be established by circumstantial evidence.9 For the matter to be submitted to a jury, however, sufficient evidence of an agreement must exist creating more than simply suspicion or conjecture.10
Jones v. City of Greensboro11 raises a pleading consideration. The plaintiff:
[used] the same alleged acts committed by defendants to support her conspiracy claim as . . . to support . . . claims for assault, false arrest, false imprisonment, libel, malicious prosecution, and abuse of process. Plaintiff [could not, said the court] use the same alleged acts to form both the basis of a claim for conspiracy to commit certain torts and the basis of claims for those torts.12
Subsequently, in another case, the defendants relied on Jones and the court said that, in Jones:
[We] held that in a summary judgment context the plaintiff could not use the same facts to form both the basis of a claim for conspiracy to commit certain torts and the basis for claims based on the underlying torts. We distinguish Jones, however, because there a divided panel upheld the trial court's decision to dismiss plaintiff's action for conspiracy on defendant's motion for summary judgment, not on a motion to dismiss for failure to state a claim . . . . As a general rule, a plaintiff may plead "alternative theories of recovery based on the same conduct or transaction and then make an election of remedies."13
B. Elements
The elements of a civil conspiracy are:
(1) An agreement between two or more individuals,
(2) To do an unlawful act or to do a lawful act in an unlawful way,14
(3) Resulting in injury to the plaintiff.15
Note that there is a type of conspiracy recognized in North Carolina known as "facilitation of fraud,"16 the elements of which are essentially the same as for conspiracy, in general.17
C. Elements Defined
1. An Agreement Between Two or More Individuals
More than one individual18 or corporation19 is required to form a conspiracy.20 A corporation's officers, employees or agents are mere extensions of the corporation, and an agreement between such personnel or between such personnel and the corporation they serve is, therefore, not a conspiracy.21 If one of two defendants has committed no wrong, there can be no conspiracy since two or more confederates are necessary to constitute a conspiracy and, with one defendant eliminated, the remaining defendant has no one with whom to conspire.22 However, the fact that one conspirator was the instigator and dominant actor is immaterial to the question of the guilt of other conspirator.23
The plaintiff must show some agreement.24 In the early case of Brannock v. Bouldin,25 the North Carolina Supreme Court held that silence in the face of wrongdoing by another would not make a conspirator of the party remaining mute. The court said:
If defendants were merely passive witnesses of the deceits of [the other defendant], they were his deceits and none of theirs. There must be some union of views, or confederation, between two or more, to constitute a conspiracy. Unless by some deed or word they became parties to the plot to cheat the plaintiff, the defendants could not have influenced his acts nor contributed to his losses; and, therefore, they are not liable to his action.26
2. An Unlawful Act or a Lawful Act Done in an Unlawful Way
"The term illegal in [the definition of civil conspiracy] is not limited to the unlawful; it includes immoral acts."27 The claimant must present evidence of an "overt act"28 committed by at least one conspirator29 in furtherance of the "common objective," because the action is for damages caused by acts pursuant to the agreement, not for the agreement itself.30 If the underlying claim is properly dismissed, the allegation that defendants conspired to act unlawfully must likewise fail.31 "Because no separate and distinct civil conspiracy tort exists, liability attaches only if one of the conspirators is liable for an underlying tort."32
An allegation that the defendants were "negligent in conspiring to do certain things" does not state a cause of action on the theory of conspiracy.33 An agreement to do a lawful act cannot be a conspiracy regardless of the motives of the parties.34 For example, in McNeill v. Hall,35 it was alleged that the defendants — business competitors of the plaintiffs — told suppliers that they would not continue to purchase those supplies if the suppliers continued to sell to the plaintiffs. The suppliers ceased selling to the plaintiffs who were, therefore, forced from business. The North Carolina Supreme Court said the "determination of the defendants to decline to buy from the salesmen if they continued to sell to the plaintiffs was not an unlawful act. It was simply the exercise of the right they had to buy from or to refrain from buying from whomsoever they pleased."36 Thus, absent intimidation and coercion, the defendants had a right to prevent competitors from procuring articles to be sold in competition with the sale of the same articles by them in a given territory. The case was decided in 1941, and a different result would likely be obtained today.37
In Combs & Associates v. Kennedy,38 the plaintiff had a contract with one of the defendants to sell its products. The plaintiff acknowledged that the defendant could lawfully terminate that exclusive representation agreement on proper notice, but contended the manner in which the defendants went about the termination was unlawful. One of the other defendants was an employee of the plaintiff who was forming a corporation to engage in the same sales business as his employer. The plaintiff employer argued that the defendants agreed among themselves to replace the plaintiff with the defendant employee's company months in advance of the notice of contract termination. The plaintiff evidently viewed this as a tortious interference with contract, and indeed also brought that claim in the same suit. The court, however, found no tortious interference with contract and said the fact that the defendants may have agreed that the employee's company — yet to be formed — would eventually replace plaintiff did not by itself demonstrate the defendants acted unlawfully. In fact, concluded the court, the effort to secure an alternative representative before exercising the termination clause, appeared to be sound business practice. On the other hand, where it was alleged that a seller, wanting to back out of its contract for sale of property with the plaintiffs, entered into an agreement with the plaintiff's lender to refuse the loan and prevent the plaintiffs from performing under the contract for sale, and the lender did in fact prevent the plaintiffs from performing, the defendants — seller and lender — would be liable for their acts pursuant to the alleged conspiracy.39
Among the wrongful acts that have been the subject of actions for conspiracy are: fraud,40 invasion of privacy,41 libel and slander,42 conversion,43 trespass,44 violations of federal and state due process and equal protection45 or freedom of speech,46 malicious prosecution and intentional infliction of emotional distress,47 breach of contract,48 abduction of a minor child,49 State Securities Act and Unfair and Deceptive Trade Statute violations,50 and obstructing public justice.51 Apparently, however, there can be no claim under ERISA for conspiring with a plan fiduciary.52
3. Injury to Plaintiff
The third element is injury resulting from the act alleged in the second element, thus implying proximate cause.53 The plaintiff, to be successful, must show injury.54
D. Defenses
There is not a specific statute of limitation applicable to civil conspiracy; the limitation governing the underlying wrongful act is applicable.55 Among the other defenses available in a conspiracy action are sovereign immunity,56 lack of standing,57 res judicata,58 and cooperation of the claimant in the conspiracy.59 The intra-corporate immunity doctrine apparently may be employed as a defense to a conspiracy action.60 A claim for civil conspiracy was not necessarily barred because it arose in connection with a lease that might be void for violating the Statute of Frauds.61
An individual defendant in a conspiracy action may allege a counterclaim solely in his or her favor if the liability of that defendant, in respect to the plaintiff's claim, is several, or joint and several.62
E. Remedies
The usual remedy is damages and the liability of conspirators is joint and several.63 In Pedwell v. First Union National Bank,64 the court said that if a jury found the defendants conspired to prevent the plaintiffs from performing their part of a contract, there would be an "unfair . . . act . . . affecting commerce" under the "unfair trade practices" statute.65 The significance of the statement is that other statutes under...
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