Opinion ID: 752950
Heading Depth: 3
Heading Rank: 1

Heading: Hannex's Prospective Business Relationship

Text: 54 Defendants GMI, Gallen and Brockway, against whom Hannex's second cause of action is directed, argue that because Hannex was not to be a party to the proposed 1988 distribution agreement, Hannex cannot claim that they tortiously interfered with Hannex's contractual and prospective relations with S & S Japan. We disagree. 55 First, we agree with Hannex that this claim was properly before the district court. The pretrial order defined the issues to be tried as including S & S Japan's failure to assign the 1985 Agreement and Yamaguchi's failure to sign the 1988 distribution agreement, due to the GMI Defendants' interference. While Hannex's claim that the GMI Defendants interfered with Hannex's existing contractual rights fails, in light of the JCAA's decision that Hannex had no contractual rights, this ruling does not preclude Hannex's claim based on its prospective business relations with S & S Japan. 56 To state a claim for tortious interference with prospective business relations, a valid contract is not necessary. See NBT Bancorp Inc. v. Fleet/Norstar Fin. Group, Inc., 87 N.Y.2d 614, 621, 664 N.E.2d 492, 496, 641 N.Y.S.2d 581, 585 (1996); Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 190-91, 406 N.E.2d 445, 448-49, 428 N.Y.S.2d 628, 632-33 (1980). Further, it is not necessary for Hannex to prove that it would have been a party to any future contract with S & S Japan. Rather, it is well-settled that a plaintiff can recover if that plaintiff can prove that the defendant tortiously interfered with a continuing business or other customary relationship not amounting to a formal contract. Restatement (Second) of Torts § 766B cmt. c (1979); see also PPX Enters., Inc. v. Audiofidelity Enters., Inc., 818 F.2d 266, 270 (2d Cir.1987). According to the Restatement, to which the New York Court of Appeals has generally looked in defining the scope of the cause of action, see Guard-Life, 50 N.Y.2d at 190-92, 406 N.E.2d at 448-49, 428 N.Y.S.2d at 632-33, [i]t is not necessary that the prospective relation be expected to be reduced to a formal, binding contract. Restatement (Second) of Torts § 766B cmt. c. Accordingly, the tort encompasses the kind of conduct alleged here, including interferences with ... the opportunity of selling or buying ... chattels or services, and any other relations leading to potentially profitable contracts. Id. 57 Here, although Hannex did not have a contract with S & S Japan, Hannex controlled the distribution of S & S Japan's products in the United States through Hannex's other contractual relationships. Further, although Hannex did not have a formal contract with S & S Japan, Jack Hannes testified that S & S Japan dealt with Hannex as a co-distributor in the United States. In many countries, Yamaguchi dealt with distributors without written contracts. Regardless of whether or not Hannex would have been a party to any future contract, Hannex lost a valuable business relationship when S & S Japan signed the exclusive distribution agreement with GMI. 58 Moreover, a jury could conclude that Hannex would have directly benefited under the proposed distribution agreement. Although Yamaguchi at first misunderstood who was to be a party to the distribution agreement, once he knew that New S & S USA, Hannex's subsidiary, was to be a party--rather than Salvo's former company, S & S USA--Yamaguchi instructed Jack Hannes to obtain a release from Salvo. According to Martin Hannes, New S & S USA was incorporated as the wholly owned subsidiary of Hannex to allow Hannex to continue using the S & S USA name in distributing S & S Japan's products in the United States. Martin Hannes explained the nature of this relationship to Yamaguchi, and Hannex would have directly benefited under the contract, through New S & S USA. Accordingly, the second cause of action cannot be dismissed simply because Hannex was not named in the proposed agreement.