Opinion ID: 170976
Heading Depth: 2
Heading Rank: 3

Heading: Tortious Interference with Current and Prospective Business Relations

Text: Mr. Campfield's complaint presented two theories of tortious interference by State Farm and Lynx. He first alleged that the defendants wrongfully interfered with current and prospective licensees of the Ultra Bond process by providing false information to State Farm insureds and refusing to include market-rate compensation for long crack repair within the Agreement. Comp. ¶ 73. He also alleged that the defendants steered away potential patrons of his windshield repair shop by falsely informing them that his services would not be reimbursed by State Farm, that long crack repair is more dangerous than windshield replacement, and that the repair could adversely affect warranties on their vehicle or future insurance premiums. Comp. ¶ 74. The latter argument was not raised by Mr. Campfield in his briefs in opposition to the defendants' motion for summary judgment to the district court, nor in his appellate briefs. This argument is therefore waived. A claim of tortious interference with current business relations requires Mr. Campfield to show: (1) he had a contract with a third party; (2) defendants knew of the contract's existence; (3) defendants intentionally induced the third party to breach the existing contract; (4) defendants acted improperly; and (5) defendants' actions caused plaintiff to incur damages. Steinbach v. Dillon Cos., Inc., 253 F.3d 538, 540 (10th Cir.2001). Tortious interference with prospective business relations requires identical elements, with the exception that an existing contract need not be alleged. Rather, Mr. Campfield must show that there was a reasonable likelihood that a contract would have resulted but for the wrongful interference. Klein v. Grynberg, 44 F.3d 1497, 1506 (10th Cir.1995). We affirm the district court's grant of summary judgment in favor of the defendants because Mr. Campfield has failed to provide sufficient evidence of an improper act. Mr. Campfield claims that misrepresentations made by Lynx representatives induced insureds not to seek windshield repair services, which interfered with his current and prospective licensing contracts by depressing demand for the Ultra Bond process. For the same reasons that Mr. Campfield is unable to show misrepresentations or omissions that constituted a deceptive trade practice under the CCPA, Mr. Campfield is unable to show that the defendants made knowing misrepresentations to insureds that qualify as a wrongful act for purposes of tortious interference. Therefore, this theory of tortious interference must fail. Mr. Campfield's remaining theory of tortious interference is that by refusing to pay a fair market rate for long crack repair under the Agreement, State Farm wrongfully interfered with his current and prospective business relations with licensees or potential licensees. His claim also fails because he does not provide sufficient evidence of a wrongful act. There is no evidence in the record from which a reasonable jury could conclude that the lack of a reasonable reimbursement rate for long crack repair was anything other than a legitimate business practice. Rather, even drawing all inferences in favor of Mr. Campfield, the evidence unequivocally supports the conclusion that State Farm maintained the same reimbursement rate for all types of crack repair because of concerns about the long term durability of long crack repair and consumer dissatisfaction with the appearance of the repair. Such competitively motivated behavior is not, by itself, improper. State Farm reimbursed glass shops $50 per repair, no matter how long the crack. Mr. Campfield claims that $100 to $150 is fair market rate for the repair of a long crack. App. 943 (repairs done at Mr. Campfield's shop cost on average $116.80); App. 1099, 1102, 1113, 1126. State Farm, however, provides undisputed evidence of legitimate reasons for discouraging long crack repairs. In its March 9, 1998, Evaluation of Windshield Long Crack Repair Report on methods demonstrated by various vendors, State Farm expressed concerns about the process that were not, in its judgment, resolved by the demonstrations. These concerns included the durability and visibility of long cracks after repair. The Report noted that the inconsistencies among methods created confusion over whether or not long crack repair provides a good long-term solution. App. 2141. Although [t]he initial strength of the repaired cracks may be good (there is no way to really be sure)... the true concern is the long term durability of the repair. App. 2143. The report notes that although lab tests had been conducted on the repair processes, these do not take into account real world concerns for long term durability. App. 2141. State Farm was also not satisfied with the aesthetic result of the repairs; [a]ll but one of the repairs allows some or a lot of light refraction that accentuates the crack itself and makes for an unsightly final repair. App. 2142. The question is not whether State Farm was correct in these assessments but whether State Farm desired to bring about the interference [with Mr. Campfield's licensees] as a sole or partial reason for [its] conduct. Restatement (Second) of Torts, § 767, comment d (1977); Trimble v. City and County of Denver, 697 P.2d 716, 726 (Colo. 1985) (overruled by statute on other grounds). Mr. Campfield has failed to provide any evidence to contradict the legitimate business motives expressed in the Report. Given the Report's documentation of State Farm's bases for recommending against and under-compensating long crack repair, there is no reasonable basis on which a jury could conclude that State Farm's repair policy wrongfully interfered with Ultra Bond licensing contracts. The Restatement explicitly states that competition is a necessary or desirable incident of free enterprise, Restatement (Second) of Torts § 768, cmt. e. We recognize that § 768 of the Restatement, which narrows the scope of tortious interference if parties are in direct competition with one another, does not apply here because State Farm and Lynx are not in competition with Mr. Campfield. Nonetheless, the above statement is a generally applicable principle. A legitimate business activity intended to achieve an advantage over competitors, but which does not rely on improper methods, cannot provide a basis for liability-even if, as here, a non-competitor is harmed as a result. See R-G Denver, Ltd. v. First City Holdings of Colo., 789 F.2d 1469, 1476-77 (10th Cir. 1986). Mr. Campfield also alleges in his complaint that State Farm conspired to set prices so low as to make it economically unfeasible for a repair entity to exist profitably. Comp. ¶ 73. Improper exercise of market power in an anticompetitive manner is wrongful conduct on which a claim of tortious interference might be based. Mr. Campfield does not, however, expand this theory of liability in his briefs before the district court or those before us. It is unclear from the complaint with what entity State Farm is alleged to have conspired, or how such a conspiracy would allow State Farm to set less-than-competitive rates for long crack repair. That auto glass repair shops could no longer exist profitably is not itself evidence of a wrongful act by State Farmthe more likely explanation is that there is simply not enough demand by the market for windshield crack repair to support specialized shops. The only evidence of wrongful conduct offered by Mr. Campfield is Lynx's status as the wholly owned subsidiary of PPG, the largest manufacturer of windshields in the United States. Mr. Campfield suggests that the defendants intentionally under-compensated long crack repairs to increase the sale of windshields. Even if such a scheme qualified as a wrongful act under the tort, Mr. Campfield's allegations are insufficient because there is no evidence of a causal relationship between PPG's interest in selling windshields and the adoption of the long-crack compensation policy by State Farm. State Farm's agreement with Lynx explicitly states that State Farm will establish the pricing that State Farm will offer to glass facilities under the O & A Program. App. 2230. Mr. Campfield is unable to show that Lynx was involved in negotiating the terms of the agreements or had any other opportunity to influence State Farm in setting its long crack policy. There is, therefore, no basis on which a jury could conclude that the agreements were imposed to increase PPG's windshield sales. Because Mr. Campfield has failed to provide sufficient evidence of any wrongful act by the defendants, we affirm the district court's grant of summary judgment.