Opinion ID: 2144201
Heading Depth: 1
Heading Rank: 2

Heading: Tortious interference with contractual relationships

Text: This state has recognized a cause of action for wrongful interference with both present and prospective contractual relations. Wild v. Rarig, 302 Minn. 419, 234 N.W.2d 775 (1975); Witte Transportation Co. v. Murphy Motor Freight Lines, Inc., 291 Minn. 461, 193 N.W.2d 148 (1971). In its claim that appellant has interfered with United's present contracts, United points to three United employees: Judy Wahl, Larry Carstens, and Tony Sciullo. United does not argue that Nelson induced the breach of any present contracts held by United with its customers. In an action for tortious interference with contractual relations, the plaintiff carries the burden of proving that interference was caused by the defendant. Electric Service Co. of Duluth, Inc. v. Lakehead Electric Co., 291 Minn. 22, 189 N.W.2d 489 (1971); Snowden v. Sorenson, 246 Minn. 526, 75 N.W.2d 795 (1956). United did not meet its burden in the instant case. As concerns employees Wahl and Carstens, United has made no showing of activities of Nelson or his company Northland that could be considered interference. Rather, all the record shows is that Judy Wahl, employed by Northland as a secretary, is a former United employee and the wife of a former United general manager, and that Carstens may have himself approached Nelson in search of employment. No wrongdoing or interference on the part of Nelson has been shown. Neither has interference on the part of Nelson been shown as to United's employment contract with Tony Sciullo. In July 1980, Northland hired Tony Sciullo as its sales manager. Mr. Sciullo was, prior to joining Northland, sales manager for United. He terminated his employment with United after being demoted; United had not cut his pay, but had limited his duties. Although after quitting his job with United, Sciullo became employed almost immediately with Northland, there has been no showing that Nelson induced Sciullo to break with United. In the absence of such a showing, an action for tortious interference will not lie. The Restatement of Torts sets out the elements of the tort of intentional interference with prospective contractual relations. Restatement (Second) of Torts § 766B (1979). Section 766B states that: One who intentionally and improperly interferes with another's prospective contractual relation (except a contract to marry) is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relations, whether the interference consists of (a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or (b) preventing the other from acquiring or continuing the prospective relation. Id. It is not disputed that appellant did solicit and enter into contracts with United's potential customers. The question is whether this solicitation was improper. Competition is favored in the law. The law's preference for competition is illustrated by the establishment of a special privilege for competitors. That privilege is set out by the Restatement as follows: (1) One who intentionally causes a third person not to enter into a prospective contractual relation with another who is his competitor or not to continue an existing contract terminable at will does not interfere improperly with the other's relation if (a) the relation concerns a matter involved in the competition between the actor and the other and (b) the actor does not employ wrongful means and (c) his action does not create or continue an unlawful restraint of trade and (d) his purpose is at least in part to advance his interest in competing with the other. (2) The fact that one is a competitor of another 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 § 768 (1979). Application of the factors listed in section 768 to the facts of this case shows that Nelson's interference was not improper. Here, the prospective contractual relations Nelson interfered with concerned the buying and selling of wild rice. These activities fall squarely within the ambit of competition between Nelson and United. Nelson did not employ wrongful means in carrying out the interference [4] and the interference does not constitute an unlawful restraint of trade. Finally, Nelson's purpose was, at least in part, to advance his interest in competing with United. On this point, the trial court made the following finding: In the conduct of the business of Northland, Nelson has utilized his intimate knowledge of United's affairs not only to gain a competitive advantage but also to bring to reality his prediction that United was destined to fail and that he could profit therefrom. (Emphasis added). Nelson's motives were mixed; he desired to improve his own position but also to worsen that of United. In situations such as presented by the instant case, however, there will always be some desire on the part of the ex-employee to best the former employer. Nelson's activities did cause interference with United prospective contractual relations; that interference, however, was not improper.