Chapter 22 - § 22.3 • ELEMENTS DEFINED

• Jurisdiction: Colorado

§ 22.3 • ELEMENTS DEFINED

§ 22.3.1—Existence of a Valid Contract

"To succeed on a claim for intentional interference with existing contractual relations, of course, one must plead and prove a valid contract with a third party."¹¹ In addition to the parties to the contract, a third party beneficiary of the contract at issue may assert a claim for tortious interference with contract.¹² However, a party to an existing or prospective contract cannot be liable for interfering with his or her own contract.¹³ The contract at issue in a tortious interference claim may be implied,¹⁴ and does not have to be in writing.¹⁵ Some courts have found that contracts terminable at will are entitled to protection from interference since, until terminated, an at-will contract is valid and subsisting, and strangers have no right to improperly interfere with it.¹⁶ However, other courts have found a contract terminable at will does not carry a sufficient expectation to support a claim.¹⁷

A cause of action may also exist even if the contract is voidable or unenforceable between the parties.¹⁸ For example, although the breaching party to the contract may have a defense against an action on the contract that would permit the party to void it and escape liability — such as the statute of frauds, formal defects, lack of mutuality, infancy, unconscionable provisions, conditions precedent to the obligation, or even uncertainty of particular terms — until the party does void it, the contract is a valid and subsisting relation with which a third party may not interfere.¹⁹ However, where a contract is void, rather than voidable, there is no liability for inducing a breach.²⁰

Of course, when the claim is for tortious interference with a prospective contract or business relationship, the plaintiff cannot and need not allege the existence of a contract.²¹ However, substituted in place of this element is the requirement that the plaintiff allege a particular and specific potential contract or business relationship with a particular and specific person or company. Vague allegations that the claimant lost non-specific potential contracts or business relationships will not suffice.²²

§ 22.3.2—Defendant's Knowledge of Contract

A defendant can be held liable even if he or she did not have actual knowledge of the contract so long as he or she had knowledge of facts that should have led him or her to inquire as to the existence of a contract.²³ Whether a defendant knew or should have known of an existing contract is a question of fact.²⁴ For example, in Bithell v. Western Care Corp.,²⁵ the manager of a nursing home facility sued a Colorado Department of Health employee for interfering with his employment contract with Western Care Corporation, the owner of the nursing home. The manager's employment agreement was terminated after a Department of Health employee allegedly told a stockholder of Western Care that the manager was "out of control" and that the nursing home would lose its license if it did not remove him from his position. The Department of Health employee argued that there was insufficient evidence to show that he had knowledge of any contract. However, the appellate court said there was some evidence to support the allegation because the license application submitted to the Department of Health employee was signed by the manager as "administrator" of the nursing home. Therefore, the court decided that there was at least a question of fact as to whether the Department of Health employee should have inquired about the existence of an employment contract between the manager and the corporation.²⁶

§ 22.3.3—Intentional Interference

A claim for intentional interference with a contract cannot succeed without interference with the performance of a contract.²⁷ Colorado's pattern jury instruction defines interference as intentional conduct that causes another to terminate or not perform a contract, or that makes another's performance of a contract impossible or more difficult.²⁸ Thus, a defendant does not have to make the other's performance completely impossible to be liable; rather, "impacts short of total breach or impossibility" may be sufficient.²⁹ For example, in Slater Numismatics, LLC v. Driving Force, LLC,³⁰ a competitor hired away nearly all of the key employees who were qualified to grade coins, knowing that without those employees it would be extremely difficult for the plaintiff business to honor its existing agreement to grade coins a third party was selling. Even though the defendant did not make performance of the contract completely impossible, the Colorado Court of Appeals ruled there were genuine issues of material fact about whether there was interference with contract that precluded summary judgment. As such, a defendant may be liable where:

1) The defendant causes a third party to fail in some significant aspect of performance which the third party owes to the plaintiff, such as by depriving the third party in significant part of the means of performance; and
2) The defendant's conduct was wrongful; and
3) The defendant acted either for the primary purpose of interfering with the performance of the plaintiff's contract, or knowing that the interference was certain or substantially certain to occur as a result of the defendant's action.³¹

Conduct is intentional if the person undertakes the conduct for the purpose, even in part, of interfering with the contract. In addition, conduct is intentional if the person acts knowing that it is likely to result in interference.³² Malice and ill will are not needed to establish intentional conduct, but the finder of fact may consider the presence or absence of them in determining whether the conduct is intentional.³³

Similarly, under the related tort of intentional interference with prospective contractual relations, the plaintiff must plead and prove that the defendant intentionally interfered with particular third parties with which the plaintiff had...