Opinion ID: 2525419
Heading Depth: 4
Heading Rank: 1

Heading: Allstate had a direct financial interest in the contractual relationship between Dr. Waldroup and Lindman.

Text: The superior court found as a matter of law that Allstate [had] a direct financial interest in the contract between Dr. Waldroup and Ms. Lindman, as to medical care related to the subject automobile accident. Dr. Waldroup argues on appeal that Allstate did not have a direct financial interest in the contractual relationship between himself and Lindman, because Allstate's interference did not expose it to both potential gain and loss. In Bendix Corp. v. Adams , we considered whether a parent corporation was privileged to interfere with a contractual relationship of its subsidiary. [9] We held that where a direct interest in a contract is involved, there is reason to be more liberal in granting the privilege to interfere with an existing contract. [10] We explained: There appears to be a significant distinction... between the interests of a person in his [or her] competitor's contracts and those contracts in which he [or she] has some direct financial interest. One who interferes with a competitor's contracts ordinarily has little to lose and much to gain by successfully causing a breach of contract. Encouraging contractual stability may require imposing legal liability to stop such behavior when it steps beyond limits acceptable to society. But in a case where a person has some direct financial stake in a contract, it appears logical that a person's own economic self-interest would discourage causing a breach of contract because there would be some personal loss. For example, it seems that a stockholder in a closely held corporation would not ordinarily want to interfere in the corporation's contracts because the corporation would become liable for breach of contract, jeopardizing the value of the stockholder's own investment.[ [11] ] Citing Bendix, Dr. Waldroup contends that to find that a defendant has a direct financial interest in the contractual relationship of a plaintiff alleging interference with contractual relations, the defendant must be exposed to both potential gain and loss as a result of its interference. Because Allstate could gain by interfering in the Lindman-Waldroup contract [but] could not lose anything Allstate was not already obligated to provide to Lindman, Dr. Waldroup argues that Allstate did not have a direct financial interest in the contractual relationship between Lindman and Dr. Waldroup. We disagree. We do not read Bendix to hold that a finding of a direct financial interest in a contractual relationship requires that an interfering defendant must be exposed to both potential gain and loss as a result of its interference. [12] Rather, exposure to both gain and loss is a factor that courts consider in determining whether a defendant has a direct financial interest in a contractual relationship. [13] As we noted in Bendix, [o]ne who interferes with a competitor's contracts ordinarily has little to lose and much to gain by successfully causing a breach of contract. Encouraging contractual stability may require imposing legal liability to stop such behavior when it steps beyond limits acceptable to society. [14] [T]he essential question in determining if interference is justified is whether the [defendant's] conduct is motivated by a desire to protect [its] economic interest, or whether it is motivated by spite, malice, or some other improper objective. [15] Thus, in cases in which a defendant's interference exposes it to potential gain but not loss, the interference may nevertheless be privileged if it does not step beyond limits acceptable to societyi.e., if it is not motivated by spite, malice, or some other improper objective. [16] For example, we held in RAN that a landlord had a direct financial interest in a lessee's proposed assignment of a lease because: (1) [a]n effective lease assignment makes the assignee the tenant of the owner; the assignee becomes the lessee and has a direct contractual relationship with the owner; [17] (2) [t]he tenant also has an obligation to pay rent directly to the owner, and the use, or abuse, of the property by the assignee may affect its value to the owner; [18] (3) the owner may know of another potential assignee who will pay more rent than the prospective assignee; [19] and (4) the owner may wish to terminate the lease based on knowledge of a more profitable use for the property. [20] We did not discuss whether the landlord's interference also exposed him to potential loss. [21] Because there was no evidence of spite, malice or other improper objective, [22] we concluded that the landlord was privileged to interfere with his tenant's lease assignment contract. [23] In any event, Allstate's alleged interference with the contractual relationship between Lindman and Dr. Waldroup subjected it to both potential gain and loss. Dr. Waldroup concedes that Allstate could potentially gain by interfering with the contract between Lindman and Dr. Waldroup: Allstate's interference in the contract between Dr. Waldroup and Lindman ... could result in Allstate paying less than it would otherwise be required to pay under its insurance contract with Lindman. Lindman's auto insurance policy with Allstate obligated Allstate [to] pay to or on behalf of a person insured all reasonable expenses incurred for necessary treatment actually rendered within one year of [an] accident because of [a] bodily injury. By interfering, Allstate could potentially gain because Dr. Waldroup might decide not to pursue legal action given the dollar amount in question and the cost of litigation, or might settle for less than the full amount Lindman owed. Allstate's alleged interference also exposed it to potential loss. Allstate's letter promised to defend Lindman in any action filed by the clinic or HealthBeat of Alaska, even though its insurance policy did not clearly require it to do so. Thus, by interfering with the contractual relationship, Allstate was prospectively exposed to the cost of defending Lindman if Dr. Waldroup sued her for payment. Dr. Waldroup also cites Speer v. Cimosz, in which the Court of Appeals of New Mexico upheld a jury verdict against a workers' compensation insurer for interference with contractual relations. [24] In Speer, a workers' compensation insurer had denied payment to a chiropractor for treatment it considered unreasonable and had assured its insureds that `in the event suit is filed against you, the company will provide a complete defense of any action....' [25] On appeal, the insurer argued that the trial court had erred by denying its motion for a directed verdict. [26] But the court of appeals held that the evidence [at trial] sustained the claim of interference and the jury was not erroneously instructed thereon. [27] Dr. Waldroup argues that Speer necessarily implies that an insurer is not privileged to interfere with its insured's contractual relationship with a healthcare provider. But Speer is distinguishable. The court there defined privilege as a good faith assertion or threat by the one interfering to protect a legally-protected interest of his [or her] own which he [or she] believes might otherwise be impaired or destroyed by performance of the contract. [28] The court then held that the insurer's argument that it would have lost the right to pay its insureds' medical bills if it did not inject itself into the contracts between its insureds and the chiropractor was `full of sound and fury, signifying nothing.' [29] The court's definition of privilege did not turn on whether the defendant had a direct financial interest in the plaintiff's contractual relationship. [30] Dr. Waldroup's reliance on Speer is therefore misplaced. The terms of Allstate's insurance policy with Lindman and evidence of Lindman's February 1995 automobile accident made out a prima facie case for summary judgment on the issue of Allstate's direct financial interest in the contractual relationship between Dr. Waldroup and Lindman. Because Dr. Waldroup did not raise a genuine fact dispute regarding Allstate's direct financial interest, we affirm the grant of summary judgment on this issue.