Opinion ID: 69784
Heading Depth: 2
Heading Rank: 2

Heading: Ford's Justification

Text: The Court reviews de novo a grant of summary judgment. Croft v. Governor of Texas, 562 F.3d 735, 742 (5th Cir.2009). The Court affirms the district court's judgment if the record reveals no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Id. When conducting its review, the Court evaluates the evidence in the light most favorable to the non-movant. Breaux v. Halliburton Energy Servs., 562 F.3d 358, 364 (5th Cir.2009). Marathon argues that Ford was not justified as a matter of law because it was insufficient for Ford to claim that Marathon had no evidence to prove lack of justification. Marathon alleges that Ford willfully and intentionally devised a plan that would necessarily disrupt the contractual relationships of outside VSC providers and their insurers, including Marathon and API, and the A- rating was instituted in order to drive RRGs out of the market. According to Marathon, if Ford had a benign intent, it would have considered each RRG separately, or at least would have considered the time necessary for qualification for the A- rating. In favor of affirming that it was justified as a matter of law, Ford argues that its actions were justified business decisions and no evidence exists to the contrary, and Marathon produced no evidence to carry its burden or negate Ford's evidence. In order to prevail on an Illinois claim for intentional interference with contractual relations, the plaintiff must show that: (1) there was an enforceable contract; (2) the defendant was aware of that contract; (3) the defendant intentionally and unjustifiably induced a breach of the contract; (4) breach resulted from the defendant's wrongful conduct; and (5) the plaintiff has been damaged. Smock v. Nolan, 361 F.3d 367, 372 (7th Cir.2004) (citing HPI Health Care Servs., 137 Ill.Dec. 19, 545 N.E.2d at 676). With respect to justification, [a] defendant who is protected by a privilege... is not justified in engaging in conduct which is totally unrelated or even antagonistic to the interest which gave rise to defendant's privilege. HPI Health Care Servs., 137 Ill.Dec. 19, 545 N.E.2d at 677. Additionally, upon examining the privilege of corporate officers to act on behalf of a corporation in accordance with their business judgment, the Illinois Supreme Court determined that if the company benefitted from the challenged action of the corporate officer in breaking the contract, the officer ... could not be liable in tort. Fellhauer, 154 Ill.Dec. 649, 568 N.E.2d at 878-79. As discussed above, Marathon has the burden to demonstrate Ford's lack of justification. HPI establishes that the defendant's lack of justification is one of the required elements in Marathon's intentional interference claim. Celotex states the fundamental guidelines governing summary judgment: [T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be no genuine issue as to any material fact, since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is entitled to a judgment as a matter of law because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see also St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 440 (5th Cir. 2000) (Before the non-moving party is required to produce evidence in opposition to the motion, the moving party must first satisfy its obligation of demonstrating that there are no factual issues warranting trial.). Therefore, Ford's proffer of evidence in addition to pointing out Marathon's lack of evidence is a proper basis for summary judgment. Ford has presented abundant uncontroverted evidence of justification. A sample of such evidence includes:  Ford's decision making process following the NWIC bankruptcy, which prompted a thorough review of Ford's policies for the financing of transactions that included VSCs. Ford recognized that the bankruptcy of a VSC provider raised significant issues for consumers, dealers, and Ford as a whole. If the dealer honored the contracts, it would absorb the cost of repairs. If it did not honor the contracts, the dealer and Ford faced the prospect of angry customers who, in the future, would take their business elsewhere or would stop making payments on the vehicle. The NWIC bankruptcy exposed flaws in relying on a reinsurance arrangement. Concerned about the effects of such a bankruptcy, Ford determined that it would no longer finance transactions that included the sale of a VSC unless the VSC was insured by carrier with an A.M. Best rating of A- or better.  Ford rejected Marathon's proposal to offer a letter of credit because it did not believe that it had the manpower or skill set to monitor the letter of credit adequately or to review Marathon's financial status periodically.  Allen Kreke, Marathon's Chief Executive Officer, testified that terms requiring an A- rating by A.M. Best were pretty much established in the industry in such contracts and relatively standard terms.  Marathon's industry expert, Kurt Schwamberger, testified as follows: Q: And you had either the option to do business with a hundred A.M. Best rated companies or go through the process of analyzing the letters of credit from 100 unrated, we'll take RRGs, which would you prefer? A: If I didn't have the resources, I would have to go with the A.M. Best rated companies. Q: And ultimately it's a business decision that [Ford] or any other company would make. A: I don't think that would be an unrealistic decision to make.  Ford had neither the personnel nor internal expertise to duplicate the type of financial review performed by A.M. Best. It could not take on the constant monitoring necessary to ensure that VSC providers continued to be insured by companies on sound financial footing. Marathon disputed none of this evidence. The evidence supports a finding that Ford's decision regarding changing the rating requirement was based on business considerations  particularly in light of the NWIC bankruptcy problems. Although Marathon vehemently insists that Ford willfully and intentionally devised a plan that would necessarily disrupt the contractual relationships of outside VSC providers and their insurers, including Marathon and API, it provides no evidence that Ford lacked justification. In support of its claims, Marathon asserts that John Hanlon, Director of Ford Credit's Global Process Management department, admitted that management discussed that the A- rating requirement might have the effect of removing some RRGs from the marketplace. Marathon also points to the statements of Larry King, the Director of Ford's VSC business, in which he admitted that he informed dealers that there were risks associated with using RRGs in order to get more business. The portion of Hanlon's deposition that Marathon relies upon merely establishes Ford was aware that the rating change might cut many RRGs out of the marketplace for Ford-backed financing of Ford vehicles, to the extent that they couldn't or wouldn't meet the standard of getting, of submitting whatever was required to A.M. Best in obtaining the requisite rating. This knowledge is undisputed; the fact that Ford contemplated a possible outcome of a business decision does not, as Marathon asserts, compel the conclusion that Ford knew, and intended, that the A- edict would stop performance of the AMI/Marathon contract.... The only other concrete evidence proffered by Marathon is the testimony of King, who stated in his deposition: Q: What did you mean when you say scare some of our dealers? A: We would basically show them that there are risks associated with writing these companies' vehicle service contracts. The questioning was as to why King, upon receiving notice that another RRG was in trouble, forwarded that information on to dealers. He admitted that he hoped that information would help get more business. However, seeking to gain a competitive advantage in this manner would not be totally unrelated or even antagonistic to the interest which gave rise to [Ford's] privilege, HPI Health Care Servs., 137 Ill.Dec. 19, 545 N.E.2d at 677, because the company [would benefit] from the challenged action.... Fellhauer, 154 Ill.Dec. 649, 568 N.E.2d at 878-79. [4] The summary judgment evidence also demonstrates that Ford did not implement the credit rating change to steal Marathon's business. In fact, API found another insurer that met the rating requirement and continued to do business with Ford. Further, Marathon's insistence that the A- rating was instituted in order to drive RRGs out of the market, because a benign intent would have considered each RRG separately essentially demands that Ford should be required to, on an individual basis, determine if there was good cause to deny financing for each insurer of VSCs. As Ford contends, that's exactly what it did. Those insurers that met the A- standard continued to be financed, and those that did not meet the standard were declined. Based on this individual information, Ford decided that Marathon was not worth the risk. Thus, Marathon has  as the district court held  proffer[ed] absolutely no evidence.... Therefore, the district court's grant of summary judgment was appropriate based on Ford's justification as a matter of law. [5]