Title: DANIEL L. PRICE, JR., D/B/A MOUNTAIN STATES ADJUSTMENT v. LARRY D. SORRELL AND HAZEL HATCHER

State: wyoming

Issuer: Wyoming Supreme Court

Document:

DANIEL L. PRICE, JR., D/B/A MOUNTAIN STATES ADJUSTMENT v. LARRY D. SORRELL AND HAZEL HATCHER1989 WY 232784 P.2d 614Case Number: 89-12Decided: 12/28/1989Supreme Court of Wyoming
DANIEL L. PRICE, JR., 
D/B/A MOUNTAIN STATES ADJUSTMENT, APPELLANT (PLAINTIFF),

v.

LARRY D. SORRELL AND 
HAZEL HATCHER, APPELLEES (DEFENDANTS).

Appeal from the District 
Court, FremontCounty, John T. Dixon, 
J.

Patrick M. 
Hunter, Casper, 
for appellant.

Larry Sorrell, 
pro se.

Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY 
and GOLDEN, JJ.

CARDINE, Chief 
Justice.

[¶1.]     Appellant, Daniel L. 
Price, Jr., d/b/a Mountain States Adjustment (Price), a collection agency, sued 
Attorney Larry D. Sorrell, appellee, to recover damages for intentional 
interference with performance of its contract with RivertonMemorialHospital. This appeal is from summary 
judgment in favor of Sorrell.

[¶2.]     We 
affirm.

[¶3.]     The issues, as stated 
by appellant, are:

"I. Did the district 
court err in finding that a breach of contract was necessary for appellant to 
prevail in an action pursuant to Section 766A of the Restatement (Second) of 
Torts?

"II. Did the district 
court err in requiring that without breach of contract in an action pursuant to 
Section 766A, appellant must show the imposition of substantial expense or 
burden upon one of the parties to the contract?"

In response, 
Sorrell asserts that under governing Wyoming law a breach or termination of the 
contractual relationship is a necessary element of the tort of intentional 
interference with contract.

[¶4.]     Appellant was engaged 
by Riverton Memorial Hospital (RMH) to collect delinquent accounts from debtors. 
Appellee Sorrell, an attorney at law, was employed by a debtor to represent her. 
Sorrell wrote a letter to RMH questioning the reputation of Price and his 
company, questioning RMH's wisdom in having engaged Price's services, denying 
that his client owed the debt, and inviting a lawsuit if that was RMH's wish. 
Price alleged these facts in his complaint and asserted that, pursuant to § 766A 
of the Restatement, Second, Torts (1979), he was entitled to collect damages 
from Sorrell. Price alleged that Sorrell's letter led to a threatened loss of 
his contractual relationship with RMH and that his actual damages to repair that 
relationship with RMH was $117. Price sought some $25,000 in damages for the 
injury to that contractual relationship and requested exemplary or punitive 
damages.

[¶5.]     Sorrell filed a motion 
for summary judgment supported by admissions and answers to interrogatories 
which established that Price's contract with RMH had not been breached; that 
Price had expended, as a result of Sorrell's letter, approximately $117 to 
produce recorded telephone conversations of cases involving collections on 
behalf of RMH; and to make telephone, as well as personal, contact with RMH 
employees in an effort to answer the questions raised by RMH concerning Price's 
contract. The district court determined that:

"1. An action for 
tortious interference with a contract will not lie unless there has been an 
actual breach, failure to perform or termination of the contract allegedly 
interfered with;

"2. If an action for 
tortious interference with a contract does lie without an actual breach, 
termination or failure to perform an obligation under a contract, it only lies 
when the tortious interference is such that a substantial expense or burden is 
imposed upon one of the parties to the contract, and no such substantial expense 
or burden was imposed upon the Plaintiff in this case."

[¶6.]     The only issue we find 
necessary to address is whether this court will adopt the Restatement, Second, 
Torts § 766A (1979). We do not perceive ourselves as whimsical nor do we believe 
that an orderly and predictable development of the common law of torts requires 
adopting the totality of the Restatement, Second, Torts (1979). We choose, under 
the circumstances presented by this case, for good and valid reasons hereafter 
stated, to decline to adopt § 766A even though we have previously embraced §§ 
766 and 766B. Section 766A provides:

"§ 766A. Intentional 
Interference with Another's Performance of His Own 
Contract

"One who intentionally 
and improperly interferes with the performance of a contract (except a contract 
to marry) between another and a third person, by preventing the other from 
performing the contract or causing his performance to be more expensive or 
burdensome, is subject to liability to the other for the pecuniary loss 
resulting to him."

[¶7.]     This court has adopted 
the Restatement, Second, Torts § 766 (1979), defining the tort of intentional 
interference with a contract. Wartensleben v. Willey, 415 P.2d 613, 614 
(Wyo. 1966); First Wyoming Bank, Casper v. Mudge, 748 P.2d 713, 715 (Wyo. 1988). In Mudge, we 
iterated that the elements of intentional interference with contract are: (1) 
the existence of the contract; (2) the defendant's knowledge; (3) intentional 
and improper interference inducing or causing a breach; and (4) resulting 
damages. In Martin v. Wing, 667 P.2d 1159, 1161-1163 (Wyo. 1983), we also 
adopted the Restatement, Second, Torts § 766B (1979), which 
provides:

"One who intentionally 
and improperly interferes with another's prospective contractual relation 
(except a contract to marry) is subject to liability to the other for the 
pecuniary harm resulting from loss of the benefits of the relation, whether the 
interference consists of

"(a) inducing or 
otherwise causing a third person not to enter into or continue the prospective 
relation or

"(b) preventing the other 
from acquiring or continuing the prospective relation."

Appellant has 
called our attention to the fact that the Federal District Court for the 
District of Wyoming has predicted that Wyoming would recognize a cause of action 
under the Restatement, Second, Torts § 766A (1979), since we have already 
embraced §§ 766 and 766B as noted above. Colorado Interstate Gas v. Natural Gas Pipeline Co. of 
America, 661 F. Supp. 1448, 1469 
(D.Wyo. 1987). While we were persuaded that §§ 766 and 766B offered legal 
theories that enhanced Wyoming jurisprudence, we are not so persuaded 
with regard to § 766A.

[¶8.]     Section 766 requires 
improper interference with a contract that induced or caused a third party not to perform, or 
a breach of the contract, for which plaintiff may recover. Section 766B requires 
for recovery that a prospective contractual relation was lost because of the 
interference. Under § 766A, however, a plaintiff may recover by showing only 
that plaintiff's performance of the subject contract was made more expensive or 
burdensome by the interference.

[¶9.]     The difference between 
§§ 766 and 766A is substantial and significant. Where § 766 requires 
non-performance which includes a breach of the contract for liability to attach, 
§ 766A requires, not a breach or non-performance, but only that performance 
became more expensive and burdensome. We are convinced that such an element of 
proof is too speculative and subject to abuse to provide a meaningful basis for 
a cause of action. The breach or non-performance of a contract, or the loss of a 
prospective contractual relation, is a reasonably bright line that reduces the 
potential for abuse of the causes of action defined by §§ 766 and 766B. See 
Champion Well Service, Inc. v. NL Industries, 769 P.2d 382, 385 (Wyo. 1989). It is our 
view that existing causes of action, including §§ 766 and 766B, as well as 
defamation, libel and slander, provide adequate protection against the claims 
sought to be addressed in this particular case.

[¶10.]  The district court correctly held that an 
action for tortious interference with a contract requires "an actual breach, 
failure to perform or termination of the contract."

THOMAS, J., files a specially 
concurring opinion in which GOLDEN, J., joins.

URBIGKIT, J., files a specially 
concurring opinion.

THOMAS, Justice, specially 
concurring, with whom GOLDEN, Justice, joins.

[¶11.]  While I agree with affirming the summary 
judgment entered by the trial court in this case, I am satisfied that my 
colleagues on the court do not incorporate in their views an apt analysis of the 
case in the light of the Restatement (Second) of Torts § 766A (1979). Instead, 
the court rejects § 766A as an appropriate rule of law for Wyoming despite the fact 
that this court already has embraced §§ 766 and 766B of the Restatement (Second) 
of Torts (1979). This renunciation seems whimsical and capricious. This is 
especially true if one recognizes that this is not a § 766A case at all, and 
that what the court has done is promulgate an advisory opinion contrary to a 
well established principle. State Board of Equalization v. Jackson Hole Ski 
Corp., 745 P.2d 58 (Wyo. 1987); Brad Ragan Tire Co. v. Gearhart Industries, 744 P.2d 1125 (Wyo. 1987); Graham v. Wyoming Peace Officer Standards and Training 
Com'n., 737 P.2d 1060 (Wyo. 1987); Reno Livestock Corp. v. Sun Oil Co. 
(Delaware), 638 P.2d 147 (Wyo. 1981); Wallace v. Casper Adjustment Service, 500 P.2d 72 (Wyo. 1972). Cf., Tobin v. Pursel, 539 P.2d 361 (Wyo. 1975); Cranston v. 
Thomson, 530 P.2d 726 (Wyo. 1975); West v. 
Willey, 453 P.2d 883 (Wyo. 1969).

[¶12.]  On the other hand we are permitted, we 
even have said required, to affirm the judgment of the trial court on any proper 
ground appearing in the record. Reeves v. Boatman, 769 P.2d 917 (Wyo. 1989); Deroche v. R.L. Manning Co., 737 P.2d 332 
(Wyo. 1987); Independent Producers Marketing 
Corp. v. Cobb, 721 P.2d 1106 (Wyo. 1986); Kane 
v. Kane, 706 P.2d 676 (Wyo. 1985); Willard Given & Associates, 
P.C. v. First Wyoming Bank-East Cheyenne, 706 P.2d 247 (Wyo. 1985); Wheatland Cold Storage and Meat Processing, 
Inc. v. Wilkins, 705 P.2d 316 (Wyo. 1985); 
Litzenberger v. Merge, 698 P.2d 1152 (Wyo. 1985). We should affirm in this case, not 
by concluding that § 766A of the Restatement (Second) of Torts is not the law in 
Wyoming, but 
by recognizing that it has no application to the undisputed facts before the 
trial court.

[¶13.]  The interrelationship between the two 
pertinent provisions perhaps can be best appreciated by setting them forth in 
full. Section 766 states:

"§ 766. Intentional 
Interference with Performance of Contract by Third Person

"One who intentionally 
and improperly interferes with the performance of a contract (except a contract 
to marry) between another and a third person by inducing or otherwise causing 
the third person not to perform the contract, is subject to liability to the 
other for the pecuniary loss resulting to the other from the failure of the 
third person to perform the contract."

Section 766A 
states:

"§ 766A. Intentional 
Interference with Another's Performance of His Own 
Contract

"One who intentionally 
and improperly interferes with the performance of a contract (except a contract 
to marry) between another and a third person, by preventing the other from 
performing the contract or causing his performance to be more expensive or 
burdensome, is subject to liability to the other for the pecuniary loss 
resulting to him."

[¶14.]  The substantial difference between these 
two sections is the identification of the party to the contract towards whom the 
acts that constitute the intentional and improper interference are 
directed.

"* * * The tort of 
interference with existing or prospective contractual relations includes 
interference with an existing contract either by causing a third party not to 
perform his contract with the plaintiff (as in § 766) or by preventing the 
plaintiff from performing his own contract or making that performance more 
expensive or burdensome (as in § 766A); it also includes interference with 
prospective contractual relationships (as in § 766B)." Restatement (Second) of 
Torts § 767, Comment a. (1979).

[¶15.]  Certainly, this is not a case in which 
the court is confronted with the adoption of a new legal theory. Instead, the 
only concern is whether the court should flesh out in a consistent manner a 
legal theory that already has been adopted. I believe that we have an obligation 
to the trial bench and to the bar to develop the common law of torts in 
Wyoming in an 
orderly and predictable fashion. The trial bench and the bar would have had 
every reason to assume that, given the history of our adoption of §§ 766 and 
766B, the court would adopt § 766A. See Colorado Interstate Gas Co. v. Natural 
Gas Pipeline Co. of America, 661 F. Supp. 1448 (D.Wyo. 1987), aff'd in part, 
rev'd in part 885 F.2d 683 (10th Cir. 1989).

[¶16.]  In this case, we need not make any 
decision to espouse or not to espouse § 766A because the facts do not justify 
invoking it. The offending letter was written to Price's client, the hospital. 
Had there ensued a termination of the contractual relationship, a claim could 
have been asserted under § 766 of the Restatement (Second) of Torts. That did 
not happen, however, and the letter could not possibly have made Price's 
performance of those duties he had assumed under the contract more expensive or 
burdensome. He was totally free to carry on the performance of his contractual 
obligations exactly as he had done before. While Price's effort to convert his 
case to one which might fit under § 766A is creative, it also is 
specious.

[¶17.]  In eschewing the concept articulated in § 
766A, the majority assumes that this is a separate and novel theory. That is not 
so. Instead, this section of the Restatement (Second) of Torts simply describes 
an alternative manner for committing the tort of wrongful interference with a 
contract, the legal theory that we adopted in Wartensleben v. Willey, 415 P.2d 613 (Wyo. 1966), and have consistently applied in First Wyoming Bank, Casper v. 
Mudge, 748 P.2d 713 (Wyo. 1988); Texas West Oil and Gas Corp. v. Fitzgerald, 726 P.2d 1056 (Wyo. 1986); Toltec Watershed Imp. Dist. v. Johnston, 717 P.2d 808 
(Wyo. 1986); Dehnert v. Arrow Sprinklers, Inc., 705 P.2d 846 (Wyo. 1985); Martin 
v. Wing, 667 P.2d 1159 (Wyo. 1983); Basin Elec. Power Co-op. - Missouri Basin 
Power Project v. Howton, 603 P.2d 402 (Wyo. 1979); and Kvenild v. Taylor, 594 P.2d 972 (Wyo. 1979). If, as we have said, we permit recovery for the tort of 
wrongful interference with a contract, or potential contract, when the wrongful 
acts are directed toward the other party to the contract, or potential contract, 
no logical reason can be advanced for refusing recovery when the wrongful acts 
are directed toward the party who thereby is prevented from performing his 
duties under the contract or whose performance is rendered more onerous by the 
wrongful acts of the tortfeasor. The wronged party well may experience problems 
of proof with respect to the factor of causation and the amount of damage, but 
those problems are no different from similar problems that arise in a myriad of 
circumstances.

[¶18.]  No meaningful distinction can be rested 
on the requirement of a breach of the contract because that requirement 
obviously is not an element of proof when the tort of wrongful interference with 
a potential contract is addressed under Restatement (Second) of Torts § 766B. 
Furthermore, it is conceptually possible that the degree of interference against 
the party to the contract would so inhibit his performance as to result in a 
breach of the contract. Surely, one who had a contract to haul logs out of the 
forest, but was forced to travel an extra fifty miles each trip because a 
landowner wrongfully closed a road would not be denied a remedy simply because 
no breach of the contract to haul logs was caused. The right to recover for 
wrongful interference with the log hauler's contract should be 
recognized.

[¶19.]  My view is that, if this court should 
eschew the adoption of § 766A of the Restatement (Second) of Torts in a proper 
case, then it would be consistent to overrule that line of cases in which we 
have adopted §§ 766 and 766B. The failure to do so would simply lend further 
uncertainty to the state of the law of torts in Wyoming.

[¶20.]  I note a concern with the economic 
implications and the consequences to free enterprise that might flow from 
adopting § 766A of the Restatement (Second) of Torts. These objections relate to 
the right to compete in business. Usually it is a mistake to read the 
Restatements of the Law selectively without considering related sections. In § 
768 of the Restatement (Second) of Torts, the economic concerns are addressed by 
the drafters, and I am satisfied with their treatment. It is apparent that the 
dire consequences here predicted have not prevented the appropriate application 
of these principles in other jurisdictions where they have been adopted in a 
consistent fashion. Certainly, the economic implications cannot be any more 
adverse than any other of the creative tort theories now in vogue in the common 
law of torts in America. 

URBIGKIT, Justice, specially 
concurring.

[¶21.]  I concur in the holding of the majority 
to affirm the decision of the trial court and also to reject the expansion of 
intentional interference as a class of tort from the demonstrable to the 
arguable. I write further to define the philosophy for care before expansion of 
this tort and to recognize the lessons which should be accordingly learned from 
the Texas West cases: Texas West Oil and Gas Corp. v. Fitzgerald, 726 P.2d 1056 
(Wyo. 1986) (Texas West I) and Texas West Oil and Gas Corp. v. First Interstate 
Bank of Casper, 743 P.2d 857 (Wyo. 1987), aff'd 749 P.2d 278 (Wyo. 1988) (Texas West 
II). In Texas West I, two members of this court found tortious conduct when a 
guarantor interfered with a contract between a borrower and equipment 
purchasers, two members of this court found no actionable tort, and the fifth 
member of this court found interference with a prospective contract "for 
intentional interference with a contractual expectancy." TexasWest II, 743 P.2d  
at 867 (Thomas, J. dissenting).

[¶22.]  In Texas West II, a majority of this 
court found the lender when sued by the borrower had not committed any tortious 
offense in loan collection activities by recoursing the obligation to the 
guarantor. One dissenting member of this court again found an arguable tort, not 
only against the lender, but against a director of the contracting party for 
wrongful interference with an expectancy (to contract). The second dissenting 
member of this court had a procedural objection to the decision of the trial 
court achieved by order sustaining a motion to dismiss.

[¶23.]  The first lesson from the Texas West 
cases is the membership of this court did not even agree as to the nature of the 
basic tort for which recovery should or should not be available. A 
multiplication of problems for both bench and bar should be expected if not even 
a breach or denial of contract is required for institution of this character of 
tort litigation.

[¶24.]  A further lesson in commercial activities 
springs from the nature of competition which is indigenous to free enterprise. 
Competition inflicts burdens on competitors. The pursuit of conflicting economic 
interests is the essence of free enterprise. Extending protection from 
competition, under the guise of actionable tort, works to our economic 
disadvantage because such protection is antithetical to our economic 
requirements for vibrancy and expansion. Consequently, I find continued 
justification for a conservative perspective before expanding any theories of 
intentional interference torts. Much of what any active person does can be said 
to adversely affect someone else, whether rightfully or wrongfully. The legal 
issue presented here is direct and pervasive. Prior to Texas West I, Wyoming had adopted 
intentional interference with a performance of a contract which included the 
following elements:

"(1) the existence of a 
valid contractual relationship;

"(2) knowledge of the 
contractual relationship on the part of the interferor;

"(3) intentional and 
improper interference inducing or 
otherwise causing a breach or termination of the relationship; 
and

"(4) resultant damage to 
the party whose relationship has been disrupted." * * * Dehnert v. Arrow 
Sprinklers, Inc., supra, 705 P.2d [846] at 850 [(Wyo. 1985)].

Texas West I, 
726 P.2d  at 1073 (Urbigkit, J., concurring in part and dissenting in part) 
(emphasis in original).1

[¶25.]  By the concurrence in Texas West I as 
following Martin v. Wing, 667 P.2d 1159 (Wyo. 1983), this court had also adopted the 
Restatement (Second) of Torts § 766B (1979) proviso of inducing and causing the 
non-entry into a contract or preventing achievement of the relationship as the 
interference with the expectancy claim. Elements of that cause of action are 
identical with Restatement (Second) of Torts, supra, § 766, the conventional 
interference tort, except the claim relates to denial of another contract and 
not causing the breach of an existing contract.

[¶26.]  This present case advances appellant's 
request to expand the scope of liability to include damage recovery from 
increase in burden of performance of an existing contract - activity which does 
not cause a contract to be breached or result in a failure to enter into a 
contract. Any adverse activity can "cause an increased cost in performance." I 
could find that tort in almost every kind of head-to-head competition. There is 
a place in tort litigation for damage recovery when someone improperly causes a 
contract between two other actors to be broken or the performance denied. Cf. 
Texaco, Inc. v. Pennzoil Co., 626 F. Supp. 250 (S.D.N.Y.), aff'd and modified 
784 F.2d 1133 (2d Cir. 1986), rev'd 481 U.S. 1, 107 S. Ct. 1519, 95 L. Ed. 2d 1 
(1987); Texaco, Inc. v. Pennzoil Co., 748 S.W.2d 631 (Tex. App. 1988); Texaco, 
Inc. v. Pennzoil Co., 729 S.W.2d 768 (Tex. App. 1987), cert. denied 485 U.S. 994, 108 S. Ct. 1305, 99 L. Ed. 2d 686 (1988); and Note, The Ultimate Expansion of 
the Younger Doctrine: Pennzoil Co. v. Texaco, Inc., 41 S.W.L.J. 1055 (1987). I 
see no justification in expanding tort liability to include an increase in the 
costs of performance since that liability can potentially reach the ends of free 
enterprise.

[¶27.]  Collection agencies, as was appellant's 
Mountain States Adjustment, are subject to the slings and arrows of angered 
debtor response. In absence of the actions that cause a loss of business, the 
performance of collection agencies should be adequately adjusted to business 
responsibilities without implementation of tort litigation against debtors or 
their attorneys.2

[¶28.]  The generic nature of the differences 
between Wyoming's previously adopted intentional 
interference theories and the addition urged by appellant is apparent in this 
appeal and constitutes the difference between the easily determinable and 
specific to be compared with the non-specific and conjectural. The tort subject 
of Restatement (Second) of Torts, supra, § 766 results from a breach of a 
third-party contract and Restatement (Second) of Torts, supra, § 766B from 
denial of achieving the contract; so that the case consequently starts with a 
broken contract or a denied contract. Conversely, Restatement (Second) of Torts, 
supra, § 766A addresses the intangible or conjectural increased burden for 
performance within a contract which is neither breached nor denied. As a 
predicate for litigation, it is "relatively" simple to initially demonstrate 
that a contract was breached or never made. Conversely, any claim of increased 
burden in performance directly attracts consideration of the functionality 
factors of economics and competition's competitive conflict. The abrasive edge 
of economic competition is not so neatly confined to propriety and impropriety. 
See Restatement (Second) of Torts, supra, § 767. Making someone liable for 
making another's contract "more expensive or burdensome" is too imprecise to 
presently justify the addition of Restatement (Second) of Torts, supra, § 766A 
into the litigation arsenal of economic activities.

[¶29.]  Consequently, in accord with the lessons 
of the Texas West cases, I concur with the court's 
decision.

FOOTNOTES

1 California and some other 
jurisdictions have included a clarifying fifth factor of proximate cause: "`"(5) 
resulting in damage to the plaintiff. * * *." Abrams & Fox, Inc. v. Briney 
(1974), 39 Cal. App. 3d 604, 608, 114 Cal. Rptr. 328, 331.' International Wood 
Processors v. Power Dry, Inc., 593 F. Supp. 710, 729 (D.S.C. 1984), aff'd 792 F.2d 416 (4th Cir. 1986)." Texas West I, 726 P.2d  at 1073. This "but for" 
threshold causative requirement was recently applied in Technology For Energy 
Corp. v. Scandpower, A/S, 880 F.2d 875 (6th Cir. 1989).

2 There is another section 
of the Restatement (Second) of Torts, supra, § 766C which clarifies the tort 
cannot be negligently induced since consisting only of intentional conduct.