Opinion ID: 765542
Heading Depth: 2
Heading Rank: 3

Heading: Conspiracy to Tortiously Interfere with Contract

Text: 32 The district court also dismissed Count III of the complaint. This Count alleges that Pecoraro (Zemco's former shareholder who left and formed his own business) conspired with Navistar to tortiously interfere with the contract between Zemco and Navistar. It alleges that Pecoraro's firm, PMI, unlawfully conspired with Navistar to end Zemco's right to supply Navistar with all of its required machined parts. 33 For there to be a conspiracy in this case, there must be an underlying claim against PMI for tortious interference with the Zemco contract. Under Indiana law, a plaintiff must prove the following elements for such a claim: (i) existence of a valid and enforceable contract; (ii) defendant's knowledge of the existence of the contract; (iii) defendant's intentional inducement of breach of the contract; (iv) the absence of justification; and (v) damages resulting from defendant's wrongful inducement of the breach. Winkler v. V.G. Reed & Sons, Inc., 638 N.E.2d 1228, 1235 (Ind. 1994). 34 The parties dispute whether the interference was justified by the terms of a contract between Pecoraro (former part-owner of Zemco) and Zemco allowing Pecoraro to compete with Navistar. More specifically, Section 2.07 of the Agreement states: 35 Permission of Seller to Compete. . . . [T]he Seller shall, notwithstanding his continued employment with Zemco, or his position as an officer or director . . . , be entitled to actively seek new employment for himself or investment opportunities for himself, including but not limited to, the establishment of a business entity which may compete with Zemco . . . . Seller shall be entitled to discuss potential business relationships between Seller or Seller's business . . . and present, past and prospective customers of Zemco. These potential business relationships may include, but are not limited to, the manufacture and sale by Seller or Seller's Business of any and all parts currently made (or proposed to be made) by Zemco. 36 The district court held that this broad competition agreement justified Pecoraro's actions. The competition agreement clearly contemplates that Pecoraro will seek to take Zemco's current customers. 37 However, an agreement to compete does not necessarily excuse tortious interference with an existing contract. The fact that one is a competitor for the business of a third person does not prevent his causing a breach of an existing contract with the other from being an improper interference if the contract is not terminable at will. Restatement (Second) of Torts sec. 768(b) at 168 (1997). Indiana courts have generally utilized this Restatement in tortious interference claims. See Harvest Life Ins. Co. v. Getche, 701 N.E.2d 871, 877 (Ind. Ct. App. 1998). The Indiana Supreme Court, expressing concern that tort remedies not displace traditional contract remedies, has clarified sec. 768 by noting that inducement to breach a contract is not always sufficient for a tortious interference claim. [T]he overriding question is whether the defendants' conduct has been fair and reasonable under the circumstances. Winkler, 638 N.E.2d at 1235. Tortious interference claims may be premised, noted the court, on an allegation of misrepresentations, applied unfair economic pressure, threatened litigation, or willful or spiteful intent to injure. See id. at 1235-36. 38 Zemco has alleged insufficient facts indicating that Pecoraro engaged, or conspired to engage, in conduct that could serve as a premise for such a claim. Zemco does allege that Navistar made misrepresentations to Zemco regarding its continuing purchases from Zemco. However, no agent of PMI is specifically alleged to have engaged or participated in these misrepresentations. Zemco also alleges that Pecoraro's son inadequately prepared for an audit of Zemco. Zemco does not explain, however, how this audit affected the parties' contractual obligations. When Zemco complained about its lack of preparation for the audit, Navistar agreed to delay it. Zemco, therefore, has failed to produce sufficient evidence and explanation from which it could reasonably be determined that PMI engaged in the kind of unfair and unreasonable conduct required for a tortious interference claim. See, e.g., Harvest Life, 701 N.E.2d at 877 (noting that, in that case, competition along with a customer's own free choice as to which . . . company with which he or she chooses to do business supports the trial court's granting of summary judgment on this issue). We therefore affirm the judgment of the district court with respect to Count III.