Opinion ID: 2468601
Heading Depth: 1
Heading Rank: 3

Heading: business disparagement and tortious interference with contract rights

Text: The plaintiffs also obtained favorable jury findings on their claims of business disparagement and tortious interference with contract. In analyzing these claims and the evidence supporting them, the court of appeals concluded that they were in essence a claim for slander and barred by the one year statute of limitations. TEX.REV.CIV.STAT.ANN. Art. 5524(1) (Vernon 1958). We find no reversible error in the judgment of the court of appeals as it pertains to these two claims. The general elements of a claim for business disparagement are publication by the defendant of the disparaging words, falsity, malice, lack of privilege, and special damages. J. Fleming, The Law of Torts at 697-700 (5th Ed.1977); Annot., 74 A.L.R.3d 298, 301 (1976). The tort is part of the body of law concerned with the subject of interference with commercial or economic relations. The Restatement identifies the tort by the name injurious falsehood and notes its application in cases of the disparagement of property in land, chattels, or intangible things or of their quality. Restatement (Second) of Torts § 623A, comment a (1977). The court of appeals recognizes that an action for injurious falsehood or business disparagement is similar in many respects to an action for defamation. Both involve the imposition of liability for injury sustained through publications to third parties of a false statement affecting the plaintiff. The two torts, however, protect different interests. The action for defamation is to protect the personal reputation of the injured party, whereas the action for injurious falsehood or business disparagement is to protect the economic interests of the injured party against pecuniary loss. More stringent requirements have always been imposed on the plaintiff seeking to recover for injurious falsehood in three important respectsfalsity of the statement, fault of the defendant and proof of damage. Restatement (Second) of Torts § 623A, comment g (1977). Regarding falsity, the common law presumed the defamatory statement to be false and truth was a defensive matter. The plaintiff in a business disparagement claim, however, must plead and prove the falsity of the statement as part of his cause of action. Regarding fault, the defendant in a defamation action was held strictly liable for his false statement whereas the defendant in an action for business disparagement or injurious falsehood is subject to liability only if he knew of the falsity or acted with reckless disregard concerning it, or if he acted with ill will or intended to interfere in the economic interest of the plaintiff in an unprivileged fashion. Id. Finally regarding damages, the common law required plaintiff in a defamation action to prove special damages in only a limited number of situations, whereas pecuniary loss to the plaintiff must always be proved to establish a cause of action for business disparagement. In the present case there is evidence to support findings that the statements of Gulf Atlantic were false and malicious in the sense that Gulf Atlantic knew them to be false. It is, however, with the element of special damages that the plaintiffs have some difficulty. Proof of special damages is an essential part of the plaintiffs' cause of action for business disparagement. The requirement goes to the cause of action itself and requires that plaintiff establish pecuniary loss that has been realized or liquidated as in the case of specific lost sales. W. Keeton, Prosser and Keeton on the Law of Torts, § 128 at 971 (5th Ed.1984). Furthermore, the communication must play a substantial part in inducing others not to deal with the plaintiff with the result that special damage, in the form of the loss of trade or other dealings, is established. Id. at 967; Restatement (Second) of Torts § 632 (1977). Our examination of the record reveals no evidence of the direct, pecuniary loss necessary to satisfy the special damage element of a claim for business disparagement. The court of appeals found no evidence of special injury to the business, writing: No evidence was offered of damages resulting from loss of business expected from any particular customer or prospective customer to whom disparaging statements were made by defendants. The damages alleged and proved resulted only indirectly from the disparaging statements alleged, and more immediately from the receivership, the orders revoking their licenses, and their prosecution for misappropriation of insurance premiums. 696 S.W.2d at 98-9. In this regard we agree with the Court of Appeals that the damages proven were personal to the plaintiffs. Similarly, the plaintiffs have not produced evidence supporting a claim for tortious interference with contract. As the court of appeals observed, plaintiffs did not allege or prove any contract rights with which defendants interfered, other than Gulf Atlantic's own breach of contract with them and plaintiffs have asserted no claims for breach of contract. 696 S.W.2d at 100. It is difficult to imagine a set of circumstances under which plaintiffs' theories of fraud and tortious interference with contract can co-exist. Although no specific contracts were proven, it was plaintiffs' testimony that any contract rights between their agency and the entities to which they were selling group health insurance were to be underwritten by Gulf Atlantic. Hurlbut and Hovater were acting as agents for Gulf Atlantic and the economic benefits they expected from these contracts were to come from Gulf Atlantic in the form of commissions. Perhaps Gulf Atlantic breached its contract with plaintiffs when it refused to honor their agreement and perhaps Gulf Atlantic's conduct in the matter was fraudulent, but we see no evidence here supporting plaintiffs' claim that Gulf Atlantic tortiously interfered with any specific contract rights.