Interference with Prospective Economic Advantage in New York

What Is Interference with Prospective Economic Advantage?

How to Structure the Motion

A claim for tortious interference with prospective business advantage must allege that:

the plaintiff had business relations with a third party;
the defendant interfered with those business relations;
the defendant acted with the sole purpose of harming the plaintiff or by using unlawful means; and
there was resulting injury to the business relationship.

(Thome v. Alexander Louisa (2009) 70 A.D.3d 88, 108 citing Carvel Corp. v Noonan, infra, 3 NY3d 182, 189-190; NBT Bancorp v Fleet/Norstar Fin. Group, infra, 87 NY2d 614.)

Further, a plaintiff must demonstrate that the defendant's interference with its prospective business relations was accomplished by "wrongful means" or that defendant acted for the sole purpose of harming the plaintiff. (Snyder v. Sony Music (1999) 252 A.D.2d 294, 299-300 citing Glen Cove Assocs. v. North Shore Univ. Hosp. (1997) 240 A.D.2d 701, 702.) “Wrongful means” includes physical violence, fraud, misrepresentation, civil suits, criminal prosecutions and some degree of economic pressure, but more than simple persuasion is required. (Guard-Life Corp. v. Parker Hardware Mfg. Corp., infra, at 191.)

Wrongful Means Defined

The term “[w]rongful means" has been defined by the Court of Appeals as conduct amounting “to a crime or an independent tort.” (Carvel Corp. v. Noonan (2004) 3 N.Y.3d 182, 190.) This definition was a refinement to the Court's previous description of the standard, which required “more culpable conduct on the part of the defendant” for the interference when there is no breach of an existing contract. (NBT Bancorp Inc. v. Fleet/Norstar Financial Group, Inc. (1996) 87 N.Y.2d 614, 621.)

The Carvel Court also defined "‘more culpable’ conduct" as including the "wrongful means" described earlier by the Court in Guard–Life Corp. v. Parker Hardware Mfg. Corp. ([(1980) 50 N.Y.2d 183, 191.]) The Carvel Court wrote, "[c]ontinuing to draw on the Restatement, [the court] added in Guard–Life: Wrongful means include physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure; they do not, however, include persuasion alone although it is knowingly directed at interference with the contract. (Id., at 191 citing Restatement (Second) of Torts] § 768, Comment e; § 767, Comment c.)

Importantly, “a plaintiff must plead that the defendant directly interfered with a third party and that the defendant either employed wrongful means or acted for the sole purpose of inflicting intentional harm on plaintiff.” (Posner v. Lewis (2012) 18 N.Y.3d 566, 570 n 2; see also Carvel Corp., supra, 3 N.Y.3d 182, 189–191; NBT Bancorp, supra, 87 N.Y.2d at 621.)

Additionally, to maintain an action for intentional interference with prospective economic advantage there “must be some certainty that the plaintiff would have gotten the contract but for” the defendant's interference. (Mandelblatt v. Devon Stores (1987) 132 A.D.2d 162, 169 citing Union Car Adv. Co. v Collier, 263 N.Y. 386, 401; see also, Williams Co. v. Tuttle Co. (1958) 6 A.D.2d 302, 306-308.)

Timeline

Tortious interference claim [has a[] the three-year statute of limitations. (Thome v. Alexander Louisa (2009) 70 A.D.3d 88, 108 citing CPLR 214; see also Buller v Giorno (2006) 28 A.D.3d 258, 258-259). The time on that claim begins to run when the defendant performs the action (or inaction) that constitutes the alleged interference. It does not commence anew each time the plaintiff is unable to enter into a contract, unless the defendant takes some further step. (Thome, id.)

The Court’s Decision

Here are a few examples of how courts have ruled:

The distinction thus made between the possible liability of a competitor for interference with performance of an existing contract and the more demanding requirements to establish liability for interference with prospective contractual relations reflects a recognition of the difference in the two situations in the relationship of the parties and in the substance and quality of their resulting interests; greater protection is accorded an interest in an existing contract (as to which respect for individual contract rights outweighs the public benefit to be derived from unfettered competition) than to the less substantive, more speculative interest in a prospective relationship (as to which liability will be imposed only on proof of more culpable conduct on the part of the interferer). (Guard-Life Corp. v. S. Parker Hardware Manufacturing Corp. (1980) 50 N.Y.2d 183, 191.)

In Snyder, after the lower court denied summary judgment on the defendant's tortious interference with prospective economic advantage claim, the appellate court reversed the lower court's decision because the defendant had submitted evidence “providing legitimate, nontortious reasons” for the defendant's actions and because the plaintiff had not raised a triable issue of fact. (Snyder v. Sony Music (1999) 252 A.D.2d 294, 301.)

In NBT Bancorp, Inc. v. Fleet/Norstar Financial Group, Inc. the court affirmed the dismissal of a tortious interference claim, where the plaintiff and defendant were competing over the acquisition of a corporation, because plaintiff had produced insufficient evidence that defendant used “wrongful means.” (Id. at 624-25)

Motion to dismiss was proper where “[p]laintiff has not alleged any facts suggesting that defendants violated the law or undertook actions with the sole purpose of harming him; [and where], by plaintiff's own theory of the case, defendants acted with the intent of benefitting themselves. (Thome v. Alexander Louisa (2009) 70 A.D.3d 88, 108 [plaintiff had also failed to allege any facts suggesting that defendants' actions were criminal or independently tortious.])

Documents for Interference with Prospective Economic Advantage in New York

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Magdalena Trzuskot (aka "Maggie Trzuskot") v. Carl Johann Johnson (personally, and as Interim CEO of Bitt.com and Chief of Staff of Tzero.com), Patrick Byrne (as CEO of Overstock.com), Gabriel Abed (As Board Member of Bitt.com), Bitt.Com, Tzero.Com document preview

DECISION + ORDER ON MOTION - INCLUDES REFERENCE (Motion #010)

22 pages

INDEX NO. 101474/2019 NYSCEF DOC. NO. 333 RECEIVED NYSCEF: 04/19/2024 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. SHLOMO S. HAGLER PART 7 …

Case Name Magdalena Trzuskot (aka "Maggie Trzuskot") v. Carl Johann Johnson (persona…