Chapter 36: Intentional Interference with Business Relationship

The Case: Trau-Med of America, Inc. v. Allstate Ins. Co., 71 S.W.3d 691 (Tenn. 2002).

The Basic Facts: Plaintiff brought suit against Defendant insurance company for tortious interference with a business relationship, conspiring to destroy Plaintiff's business reputation and a number of other claims after Defendant allegedly, inter alia, made libelous statements and created "defamatory documents for the purpose of ruining its reputation in the legal community." 71 S.W.3d 691, 695-697 (Tenn. 2002).

The Bottom Line:

• "[W]e now determine whether the complaint in this case states a cognizable cause of action for tortious interference with business relationships." 71 S.W.3d at 698.
• "[W]e expressly adopt the tort of intentional interference with business relationships, thereby overruling that portion of our decision in Nelson. We also hold that liability should be imposed on the interfering party provided that the plaintiff can demonstrate the following: (1) an existing business relationship with specific third parties or a prospective relationship with an identifiable class of third persons; ^FN4 (2) the defendant's knowledge of that relationship and not a mere awareness of the plaintiff's business dealings with others in general; (3) the defendant's intent to cause the breach or termination of the business relationship; (4) the defendant's improper motive or improper means,^FN5 see, e.g., Top Serv. Body Shop, 582 P.2d at 1371; and finally, (5) damages resulting from the tortious interference.

  FN4 We adopt the discussion in § 766B comment c of the [RESTATEMENT (SECOND) OF TORTS], which provides:

  The relations protected against intentional interference by the rule stated in this Section include any prospective contractual relations, except those leading to contracts to marry, if the potential contract would be of pecuniary value to the plaintiff. Included are interferences with the prospect of obtaining employment or employees, the opportunity of selling or buying land or chattels or services, and any other relations leading to potentially profitable contracts. Interference with the exercise by a third party of an option to renew or extend a contract with the plaintiff is also included. Also included is interference with a continuing business or other customary relationship not amounting to a formal contract.

  Id at 701. (emphasis added).
  
  FN5 It is clear that a determination of whether a defendant acted 'improperly' or possessed an 'improper' motive is dependent on the particular facts and circumstances of a given case, and as a result, a precise, all-encompassing definition of the term 'improper' is neither possible nor helpful. However, with regard to improper motive, we require that the plaintiff demonstrate that the defendant's predominant purpose was to injure the plaintiff. See Leigh Furniture & Carpet Co., 657 P.2d at 307-08.
  
  Moreover, in the attempt to provide further guidance, we cite the following methods as some examples of improper interference: those means that are illegal or independently tortious, such as violations of statutes, regulations, or recognized common-law rules, see id. at 308; violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation or deceit, defamation, duress, undue influence, misuse of inside or confidential information, or breach of a fiduciary relationship, see Duggin, 360 S.E.2d at 836 (citing Top Serv. Body Shop, Inc., 582 P.2d at 1371 n.11); and those methods that violate an established standard of a trade or profession, or otherwise involve unethical conduct, such as sharp dealing, overreaching, or unfair competition, see id. at 837."

  Id . at 701.

Other Sources of Note: Freeman Management Corp. v. Shurgard Storage Centers, LLC , 461 F.Supp.2d 629, 640 (M.D. Tenn. 2006) (noting the difference between the tort of intentional interference with prospective contract or existing business relations and inducement of breach of contract is "the type of motive or means required.").

Recent Cases: 

Foster Business Park, LLC v. Winfree , No. M2006-2340-COA-R3-CV, 2009 WL 113242 (Tenn. Ct. App. Jan. 15, 2009) (upholding summary judgment on intentional interference with business relationship claim); Watson's Carpet and Floor Covering, Inc. v. McCormick, No. M2004-02750-COA-R3CV, 2007 WL 134132 (Tenn. Ct. App. Jan. 18, 2007) (reversing judgment against supplier for intentional interference with prospective business relationships finding element of improper motive not met by evidence of refusal to deal, which is privileged).