The Honorable Paul A. Magnuson, Chief Judge, United States Distr ict Court for 1 the District of Minnesota, sitting by designation.



## United States Court of Appeals FOR THE EIGHTH CIRCUIT

_____________ No. 98-1156

_____________ Roy L. McGreevy; Daktronics * Aust/NZ, Ltd.; International Sign * Displays Co., * * Appellants, * Appeal from the United States * District Court for the
v. * District of South Dakota. * Daktronics, Inc., * * Appellee. *

_____________ Submitted: June 12, 1998 Filed: September 18, 1998

_____________ Before BOWMAN, Chief Judge, LOKEN, Circ uit Judge, and MAGNUSON, District 1 Judge.

_____________ BOWMAN, Chief Judge. Roy McGre evy, a citizen of New Zealand, sued Daktronics, Inc., a corporat e citizen o f South Dakota, in this diversity action for breach of contract, intentiona l infl ictionof emotional distress, and tortious interference with business relationships

.The Honorable Lawrence L. Piersol, United States District Judge for th e District 2 of South Dakota.
-2- Th e District Court granted summary judgment for Daktronics on McGreevy' s 2 intentional infliction of emotional distress claim, a ruling from which McGreevy does not ap peal. The District Court granted judgment as a matter of law (JAML) fo r Daktronics at the closeof McGreevy's evidence on his tortious interference claim and de niedhis motion to submit a claim for punitive damages to the jury. The Distric t Cour t submitted McGreevy's breach of contract claim to the jury, which awarde d McGree vymoney for certain royalties and commissions owed by Daktronics, bu t concludedthat Daktronics had not otherwise breached any contract with McGreevy. McGreevy appeals from the grant of JAML on his tortious interference claim and from the denial of his motion to submit a claim for punitive damages to the jury. We affirm.

I.
In 1987, McGreevy assigned his patent rights for the GlowCube pixel (a product used in commercial signage) to Daktroni cs, in return for which Daktronics granted "an excl usive marketing right, not to exceed nine (9) years, for products sold in Ne w Zealand and Australia." Contract be tween McGreevy and Daktronics (Sept. 1, 1987). "Produ ct" was defined under the agreement as "the GlowCube display elements an d associated electronic circuitry." Id.

In 1989, M cGreevy and Daktronics entered into a "PLAN FOR THREE (3 ) YEAR CONTRACT," a separately negotiated sales agreement as contemplated by the 198 7 contract, with a duration from September 1, 1989, through August 31, 1992, " with rights of renewal for further three (3) year periods." Contract between McGreevy and Daktron ics (Aug. 24, 1989). McGreevy testified that he believed this contrac t veste d renewal rights exclusively with him, whereas Daktronics interpreted thi s contract to convey renewal rights to both parties. This three-year ag reement also called-3-

for McGreevy to receive a five percent commission on t hose sales in New Zealand and Aust ralia whether or not Daktronics was involved. See id. McGreevy thereafte r start ed a business in New Zealand to market Daktronics products utilizing th e GlowCube pixel. McGreevy attempted to recruit dealers and sub-dealers to market and sell Daktronics products in New Zealand and Australia, but was disappointed with hi s lack of success. See, e.g. , Facsimile from McGreevy to Daktronics (Aug. 26 , 1992); Facsimile from McGreevy to Daktronics (Oct. 12, 1992).

In March 1993, Krone (Australia) Technique Party Ltd (Krone) approache d Daktronics about joining forces to provide sc oreboards for new athletic facilities being constructed in Sydney, Australia, in anticipation of the city's bid for the year 200 0 Olympics. McGreevy had neglected to inform Daktronics of the possibilities thi s project pr esented for placement of Daktronics products. By the time Daktronic s learned of this business opportunity, t he entity in charge of the Sydney 2000 Olympics project h ad established and released a list of preferred bidders--a list from whic h McGreevy a

nd his distributors were excluded. Moreover, the specifications released fo r the project designated the product of a Daktronics competitor. After bein g approachedby Krone, Daktronics sent an engineer to Australia in an attempt to ge t Daktronics produc ts specified for the project. McGreevy, learning of the attempts by Daktronics and Krone to b id on the project, agreed in a letter dated April 15, 1993, to
ac cept a five percent commission if Daktronics was successful in getting its products used i n the Sydney 2000 Olympics project. See Facsimile from McGreevy t o Daktronics (Apr. 15, 1993) ("We are of course disappointed that we are not Tendering with Da ktronics Inc both from a credibility and financial point of view. We wil l therefore have to accept the 5% commission if the pro ject is successful."). Daktronics, working with Krone, ultimately was successful in selling its product to th e Sydney 2000 Olympics project. McGreevy confirmed in writing on two subsequent occasions hi s agreement to accept a five percent commission on this sale.-4-

On Apr il 22, 1993, McGreevy entered into a contract with GlowTronic s Advertising, Ltd. (a company not yet formed when the contract was signed), assigning to GlowTronics the marketing rights acquired under his contract s with Daktronics. See Agreement between McGreevy and David Ale xander Curlett (Apr. 22, 1993). Also in April 1993, McGreevy was negotiating with Signopsys New Zealand, Ltd., for a similar assignment of marketing rights.

In Aug ust 1993, McGreevy provided Daktronics with a copy of his April 22 , 1993, cont ract with GlowTronics. McGreevy requested a "letter of comfort" fro m Daktronics, designed to a ssure GlowTronics that McGreevy held the marketing rights he previously had assigned to GlowTronics. See Letter from McGreevy to Daktronics (Dec. 1, 1993 ). Daktronics eventually provided the letter of comfort on December 8, 1993 , although GlowTronics and McGreevy continued to perform under thei r agreement in the interim.
In May 1994, McGreevy entered into negotiations with Signopsys to sell all or a portion of his business. After borrowing $50,000.00 from Bruce Tho mson, the owner of Signo psys, McGreevy embarked on an extended vacation without informin g Daktronics or Sign opsys of his plans or the date of his anticipated return. During this pe riod, Signopsys approached Daktronics about conducting business directly

. Daktronics declined this offer and attempted, unsuccessfully, to contact McGreevy

. Upon his return to New Zealand, McGreevy entered into an agreement with Signopsys on July 29, 1994, wherein he sold his Daktronics marketing rights and the benefits of the GlowTronics contract in exchange for $95,000.00 and a stream of income fro m future sales. See Purchase Agreement ¶¶ 1, 2 (July 29, 1994).

On Augus t 19, 1994, McGreevy and Signopsys informed Daktronics tha t Signopsys had "taken over the benefits of [McGreevy's] marketing rights" and "th e benefits of the marketing agreement . . . between [McGreevy] and GLOWTRONIC-5-

ADVERTISING LTD." Letter from Signopsys and McGreevy to Daktroni cs (Aug. 19, 1994).
McGreevy filed his initial complaint on October 15, 1996, stating only breach of contract claims against Daktronics for failing to ho nor his exclusive marketing rights in New Zealand and Australia, but later amended the complaint to include claims for to rtious interference with business relationships, intentional infliction of emotiona l distress, and punitive damages.

II.
McGreevy first argues that the District Court erred in granting D aktronics JAML
on his torti ous interference claim. Rule 50(a)(1) of the Federal Rules of Civi l Procedure allows the district court to enter JAML when "a party has been fully heard on an i ssue and there is no legally sufficient evidentiary basis for a reasonable jury to find f or that party." McGreevy maintains that he provided sufficient evidence fro m which the jury could have conclu ded that Daktronics engaged in improper actions that amounted to tortious interference with his business relationships. We review a district court's decision to grant JAML de no vo, applying the same standards as those used by the distr ict court. See Fought v. Hayes Wheels Int'l, Inc. , 101 F.3d 1275, 1277 (8th Cir. 1996). We affirm where, viewing the evidence in the light most favorable to the nonmoving party and granting that party the benefit of all reasonable inferences, "the evidence is such that, without weighing the credibility of the witnesses , there can be but
one reasonab le conclusion as to the verdict." Sip-Top, Inc. v. Ekco Group, Inc. , 8 6 F.3d 827, 8 30 (8th Cir. 1996) (quoting Caudill v. Farmland Indus., Inc. , 919 F.2d 83, 86 (8th Ci r. 1990)). While we must give McGreevy the benefit of all reasonabl e inferen ces, he is not entitled to the benefit of unreasonable inferences or those i n conflict with the uncontested facts. See id. "A reasonable inference is one 'which may be drawn from the evidence without resort to speculation.' When the record contains no proof beyond speculation to support the verdict, judgment as a matter of law isThe parties agree that the substantive law of South Dakota governs th e 3 contested issues.
-6- appropriate." Id. (quoting Hauser v. Equifax, Inc. , 602 F.2d 811, 814 (8th Cir. 1979)) (citation omitted).

A nu mber of McGreevy's arguments amount to contentions that Daktronic s interfered with McGreevy's own agreement with Daktronics. We note from the outset that, under South Dakota law, "'[o]ne contractin g party does not have a cause of action 3 against the other for conspiring to breach their [own] contract or for wrongfull y interfering with its own contract.'" Landstrom v. Shaver , 561 N.W .2d 1, 17 (S.D. 1997) (quotin g DP Serv., Inc. v. AM Int'l , 508 F. Supp. 162, 168 (N.D. Ill. 1981)) (firs t alteration made by this Court, second alteration made by Court in Landstrom ). On the contrar y, "when a contracting party does not act in good faith under the contract, th e other party h as a remedy under the contract for breach thereof but no independent tort
cause of action exists for the same claim." Fisher Sand & Gravel Co. v. State by and through S.D. Dep't of Transp. , 558 N.W.2d 864, 868 (S.D. 1997).

In order to prevail, therefore, McGreevy must prove the following essentia l elements of a tortious interference with business relationships claim:
1. the existence of a valid business relationship or expectancy; 2. knowledge by the interferer of the relationship or expectancy; 3. an intentional and unjustified act of interference on the part of the interferer; 4. proof that the interference caused the harm sustained; and, 5. damage to the party whose relationship or expectancy was disrupted.

Landstrom , 561 N.W.2d at 16 (quoting Tibke v. McDougall , 479 N.W.2d 898, 90 8 (S.D. 1992)). The Distri ct Court, in granting JAML on the tortious interference claim, found that McGreevy's evide nce failed to establish an intentional and unjustified act of-7-

interfe rence by Daktronics or to establish that damages occurred as a result of th e allegedinterference by Daktronics. We agree with the District Court that, even afte r vie wing McGreevy's evidence in the most favorable light, McGreevy has failed t o establish the necessary elements to prevail on a tortious interference claim. Whil e McGreevy c omplains that certain actions taken by Daktronics over the course of their relationship amount to tortious interference, we reject McG reevy's contentions and limit our discussion to address only his strongest arguments.
McGreevy most strenuously contends that Daktronics interfered with hi s business rela tionships by bidding, in conjunction with Krone, on the Sidney 2000 Olympic s project. Taking into account each essential el ement of a tortious interference claim, we conclude that McGreevy has failed to establish that any activity engaged in b y Daktronic s constitutes tortious interference. To satisfy the first element of a tortiou s inte rference claim, there must be "a 'reasonable probability' that [McGreevy] woul d have en tered into a contractual relationship with a third party but for [Daktronics's ] action s." Id. McGreevy has failed to show a "reasonable probability" that, but fo r Daktroni cs's alleged interference, he would have secured a contractual commitmen t
conce rning the Sidney 2000 Olympics project. Neither McGreevy nor any of hi s distri butors were among the ten entities approved to bid on the project. In fact, unti l Daktr onics and Krone became involved, the specifications released for the projec t desig natedthe product of a Daktronics competitor. From this evidence, McGreev y cannot demonstrate that there was a reasonable probability that he would hav e succeeded in entering into a contractual agreement concerning the Sydney 200 0 Olympics project.

Nor can Daktronics be charged with knowledge of a business relationship o r expe ctancy between McGreevy and the Sydney 2000 Olympics project--the secon d essential element of a tortious interference c laim--that did not exist. Because there was
no reaso nable probability that any such expectancy or relationship would come t o fruition, by definit

ion, the relationship or expectancy did not exist under South Dakota-8-

law. Dak tronics cannot be charged with knowledge of something that is nonexistent

. Daktronics knew only that the bidding process on the proj ect was underway, that the list of approved bidders did not include McGreevy or any of his distributors, and tha t Daktr onics products were not specified. This knowledge is insufficient to satisfy th e second element of a tortious interference claim.
Finally McGreevy has failed to satisfy the fourth and fifth elements of a tortious interfe rence claim--that the interference caused the harm sustained and that damage s ensued. McGreevy offered no evidence that, as a result of Daktronics's involvement in the Sydney 2000 Olympics project, he suffered an injury that resulted in damages. In fact, the evidence showed that McGreevy acquiesced in the Daktro nics/Krone bid on the Sydn ey 2000 Olympics project, accepting in writing on three separate occasions (an d eventually receiving) a five percent commi ssion on the sale in lieu of direct involvement in the transaction.
McGreevy next argues that Daktronics interfered with his business relationship with GlowTronics, to whom he assigned a port ion of his marketing rights in April 1993, by failing to provide in a tim ely manner a "letter of comfort" assuring GlowTronics that McG reevy indeed held the exclusive marketing rights to Daktronics products that h e pur portedto possess. The letter of comfort was requested in August 1993 an d eventually provi ded by Daktronics in December 1993. Despite the delay in complying with McGreevy's request, t he evidence, including a letter written by McGreevy himself on another matter, indicates that GlowTronics had been performing sa tisfactorily without the letter of comfort. See Facsimile from McGreevy to Signopsys (Aug. 18, 1995 ) ("GlowTronics have had every concern etc dealt with expediently whenever it arose."). F u rthermore, Daktronics notes that the delay in providing the requested letter was due to McGreevy's attempt to sell marketing rights to GlowTronics through October 2002, wh en McGreevy possessed these rights only through August 1996. The evidenc e present ed by McGreevy falls short of permitting a factfinder reasonably to infer a n intentional and unjustified act of interference by Daktronics and the necessaryMcGreevy eventually terminated his agreement with GlowTronics. Prior to this 4 termina tion, GlowTronics wrote to Daktronics that the "squabbling between Ro y McGeevy [ sic] and Bruce Thompson [sic] [of Signopsys] has been frustrating an d confusing with each party making different claims, leaving us the meat between th e sandwich." Letter from GlowTronics to Daktronics (Oct. 25, 1994). It is apparen t from this evidence that Daktronics was not responsible for the termination of th e agreement between McGreevy and GlowTronics.
-9- harmsuf fered and damages sustained as a consequence of Daktronics's imprope r actions. 4
Lastly, McGreevy contends that Daktronics tortiously interfered with his business relatio nships with Signopsys. In June and July of 1994, during negotiations betwee n Sign opsys and McGreevy for the sale of certain marketing rights, Signopsys initiate d contact with Daktronics by sending two letters urging Daktronics to conduct busines s dire ctly with Signopsys, noting Signopsys's difficulty in reaching an agreement wit h McGr eevy. In response, Daktronics hesitated, writing to Signopsys of its attempts t o reach McGreevy (who was on an extended and unforeseen leav e of absence) in an effort to resolve the situation. Nothing in these two com munications amounts to an intentional and unjustified

act of interference by Daktronics. In fact, despite being approached by Sig nopsys and offered an opportunity to deal directly, Daktronics declined to interfere with McGreevy's reasonable expectation of doing business with Signopsys.
McGreevy eventually negotiated and entered into an agreement with Signopsys in July 1994, selling certain marketing rights for $95,000.00 and a stream o f income from future sales. In August 1994, not knowing that an agreement between McGreevy and Signopsys had been reached, Daktronics sent two letters to McGreevy concerning the validity of their second sales agreement and the assignability of the marketing right s involved in that agreement. McGreevy contends that these two letters interfered with his dealings with Signopsys. McGreevy cannot, however, establish that these, or any-10-

other, communications by Daktronics caused him to suffer damages. The letters from Daktronics were not sent until August 1994, after McGreevy had completed th e negotia tions and purchase agreement with Signopsys. The August 1994 letters fro m Daktronics did not affect this transaction.
We agree with the District Court that McGreevy failed to establish a submissible case that Daktronics tortiously interfered with his business prospects. Consequently, we affirmthe District Court's grant of JAML on McGreevy's tortious interference with business relationships claim.

III.

Becaus e McGreevy has failed to establish that Daktronics tortiously interfere d with his business relationships, he is not entitled to recover punitive damages unde r South Dakot a law. In general, claims for punitive damages are prohibited, unles s expressly authorized by statute. Se e S.D. Codified Laws § 21-1-4 (Michie 1987); Dahl

v. Si ttner , 474 N.W.2d 897, 900 (S.D. 1991). Recovery of punitive damages is no t permissible in breach of contract actions. See id. § 21-3 -2 ("In any action for the breach of an obligation not arising from contr act, . . . the jury, in addition to the actual damage, maygive damages for the sake of example, and by way of punishing the defendant " where certain conduct is shown); see also Thu v. American Family Ins. C o. , 292 N.W.2d 109, 110 (S.D. 1980). Because we have concluded that McGreevy failed to establish the essential elements of

the tortious interference claim on which he bases his claim for punitiv e damages, he was not entitled to present the issue of punitive damages to th e jury. The District C ourt did not err in refusing to allow McGreevy to submit this claim to the jury.

IV.
We affirm the judgment of the District Court.-11-

A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.