Summary
The Supreme Court of Connecticut held that a claim for tortious interference with business relations cannot be maintained when the allegedly improper underlying litigation ended in a good-faith negotiated settlement. The court also held that privity is not required for an intentional-interference claim, but the plaintiff must plead and prove improper motive or improper means, and the settlement precluded the claim under the policies governing vexatious litigation.
Topics
Practice areas
Questions Presented
- Whether Connecticut law requires privity between the plaintiff and defendant to maintain an action for intentional interference with business relations.
- Whether a claim for intentional interference with business relations may be based on allegedly maliciously initiated prior legal proceedings when those proceedings terminated in a good-faith negotiated settlement.
- Whether the complaint adequately pleaded improper motive or improper means sufficient to state a claim for tortious interference with business relations.
Holdings
- Privity between the plaintiff and defendant is not required to maintain an action for intentional interference with business relations.
- Neither an intentional-interference action nor a vexatious-litigation action may be maintained when the underlying lawsuit whose propriety is challenged terminated in a good-faith negotiated settlement.
- A plaintiff must plead and prove at least some improper motive or improper means; the existence of a business relationship, interference, and resulting loss alone is insufficient.
Key quotations
“In an action for intentional interference with business relations we think the better reasoned approach requires the plaintiff to plead and prove at least some improper motive or improper means.” (191 Conn. at 262)
“While we have not previously considered the relationship between the tort of intentional interference with business relations and the tort of vexatious litigation, we now hold that neither tort action can be maintained when the underlying lawsuit whose propriety is at issue terminated in a good faith negotiated settlement.” (191 Conn. at 264)
Factual background
S. Prestley Blake was chairman of the board and a major stockholder of Friendly Ice Cream Corporation. After Friendly merged with Hershey Corporation under a stock purchase agreement negotiated by Blake, David Levy demanded a broker's commission, which Blake refused to pay. Levy sued Friendly in federal court for the commission, and that litigation ended in a negotiated settlement under which Friendly paid Levy $60,000; Blake was never a party to that action.
Procedural history
The plaintiff sued the defendant for damages based on alleged tortious interference with business relations, both individually and as assignee for Curtis Blake. The trial court granted the defendant's motion to strike, reasoning in part that the complaint lacked an allegation of privity and did not allege conduct within the definition of wrongful interference. The Supreme Court of Connecticut rejected the privity rationale but affirmed because the complaint could not support a tortious-interference claim based on prior litigation that ended in a negotiated settlement.