Opinion ID: 565168
Heading Depth: 2
Heading Rank: 2

Heading: Victoria's Secret

Text: 42 In entering summary judgment against Shortstop on its tortious interference claim, the court canvassed the entire wardrobe of Texas suits on the privilege issue and, after a thorough analysis, concluded that a litigant is privileged to file a lawsuit which interferes with the contract of another so long as the litigant is asserting a colorable claim, or at least believes in good faith that it is asserting a colorable claim. Recognizing that colorable claims come in many hues, the court did not attempt to define what showing is necessary to establish conclusively that a claim is objectively colorable. Memorandum opinion at 13. Instead, the court found that the evidence in the record established conclusively that Rally's had filed the Arkansas lawsuit in good faith. Accordingly, the district court held that Rally's had established, as a matter of law, its qualified privilege to file the Arkansas lawsuit. 43 The district court's interpretation of the nature of the interference privilege turned on its reading of Sakowitz, Inc. v. Steck, 11 the leading Texas Supreme Court case on the issue of privilege. In Sakowitz, Plaintiff Steck brought suit against her former employer, defendant Sakowitz, Inc., for tortious interference with employment contract. Steck alleged that Sakowitz, Inc. sent a letter to Steck's current employer, Oshman's Sporting Goods, Inc., complaining that Steck's employment was a breach of her prior non-competition agreement with Sakowitz, Inc. The letter to Oshman's threatened Oshman's with a lawsuit: The letter asked that Oshman's honor the terms of Sakowitz's contract and advised that failure to do so would leave no alternative 'but to consider legal action against your company.'  669 S.W.2d at 107. Oshman's terminated Steck's employment upon receipt of the letter. 44 The trial court granted summary judgment for defendant Sakowitz. The Supreme Court of Texas affirmed, holding that Sakowitz had produced sufficient evidence to establish its privilege to assert its claim to the noncompetition agreement; the privilege defeated Steck's claim of tortious interference. Plaintiff Steck, the nonmoving party, had failed to produce evidence sufficient to raise a fact question regarding the lack of justification for Sakowitz's letter to Oshman's. Id. at 108. The court held, therefore, that summary judgment was appropriate. On the question of privilege, the court emphasized that: 45 One is privileged to interfere with a contract of another if it is done in the bona fide exercise of his own rights or if he has an equal or superior right in the subject matter to that of the plaintiff. This privilege extends to the actual assertion or threatened assertion of rights. 46 Many lawsuits are asserted even though their validity is not absolute. The uncertainty of a dispute is often the reason that one resorts to the courthouse for resolution. In analogous situations, the failure to prevail after the institution and prosecution of a suit is not regarded as malicious. The basis for the rule is that good faith litigants should be assured access to the judicial system. One may not recover in an action for malicious prosecution because the opposing party was mistaken about the strength of a claim. 47 The similar rule applicable to suits for tortious interference with contracts as stated in Tidal Western Oil Corp. v. Shackelford, 297 S.W. 279 (Tex.Civ.App.--Fort Worth 1927, writ ref'd), is: 48 It would be a strange doctrine indeed to hold that a person having a well grounded and justifiable belief of a right in or to property may be held liable in damages because of an assertion of such a right. 49 Id. at 107 (emphasis added and citations omitted). 50 In Sakowitz, the allegedly tortious act was not the actual filing of a lawsuit but rather the threatened filing of a lawsuit. The district court considered that to be a distinction without a difference, and concluded, contrary to Rally's' contention, that the filing of a lawsuit is not absolutely privileged. 12 The district court reasoned that the Sakowitz court explicitly sought to protect only the bona fide (i.e. good faith) exercise of one's rights. Accordingly, the district court held that the privilege to file a lawsuit was qualified by a good faith requirement. 51 Although we ultimately decline to define the contours of the good faith qualification of the privilege, we note that like the district court, we are not persuaded that Texas law provides for an unqualified privilege to file a lawsuit. We see no principled basis for affording the bad faith assertion of rights any greater protection merely because the assertion of rights occurs inside the courthouse rather than on the courthouse steps or elsewhere. That a civil complaint carries with it the imprimatur of the docket clerk's seal does not, in our view, make a bad faith lawsuit any less tortious or any more privileged. 52 In concluding that the privilege to interfere is qualified, the district court declined to subscribe to Shortstop's view that the filing of a lawsuit with malice, that is with tortious intent, under cuts the privilege. The district court observed that in its review of the case law, bad faith nowhere is equated to tortious intent. Memorandum opinion at 12. 13 The court read[ ] Sakowitz to say that an alleged interferer may claim a privilege as a defense to tortious interference if the allegedly interfering lawsuit was filed in good faith. That means the good faith belief [that] the interfering claim was colorable. Id. 53 Were Sakowitz the lockstitch on this issue, we would be inclined to agree that the filing of an interfering lawsuit is privileged if the asserted claim is either colorable or filed in the good faith belief that it is colorable. But we now find ourselves at the regal coronation of Victoria, and the district court, not being endowed--as we are not--with clairvoyance, did not anticipate her ruling impact. 54 In Victoria Bank & Trust Co. v. Brady, 14 decided months after the district court entered judgment in this case, the Supreme Court of Texas embroidered upon the legal fabric. There, the counter-plaintiff brought a tortious interference claim against the counter-defendant bank notwithstanding the assertion of the interference privilege. After a jury trial, judgment was entered in favor of the counter-plaintiff on the tortious interference claim. The Supreme Court of Texas affirmed, holding that the counter-defendant bank did not establish the privilege (or defense) of legal justification or excuse for its 'interference' with the business relationship between the counter-plaintiff and a business associate. Id. at 940. 55 The case involved banks, money, and cattle. The counter-defendant bank extended counter-plaintiff, Cattle Company (and its principal and business partners), a line of credit to operate its cattle business. This line of credit was secured by a promissory note by the joint venturers, a lien on Cattle Company's cattle, and other collateral not relevant here. The bank also extended Cattle Company a second, separate line of credit which was also secured by a lien in Cattle Company's cattle. Cattle Company subsequently became disenchanted with the bank and decided to close out this separate line of credit. Toward that end, Cattle Company paid the debt incurred under the separate line of credit. However, the bank refused to release the lien on the cattle. 56 Thereafter, Cattle Company sold some cattle to a buyer who paid Cattle Company with a draft drawn on the same bank. When Cattle Company presented the check to the bank for payment, the bank denied payment on the draft until Cattle Company agreed to deduct $40,000 and apply it toward the remaining debt on the promissory note relating to the first line of credit. Although the bank could have asserted its security interest on the cattle based on the security agreement relating to the first line of credit, the bank claimed a security interest under the security agreement in connection with the separate, already satisfied, line of credit. Under protest, Cattle Company deducted the $40,000 and the bank finally released the security interest on the cattle. 57 The bank won the race to the courthouse steps and filed suit against Cattle Company and others. The bank's victory in the race to the courthouse was a Pyrrhic one, however: the jury returned verdicts against the bank on all of its claims and in favor of Cattle Company on its counterclaims. In affirming the judgment on the tortious interference claim, the Supreme Court of Texas held that: 58 Even if the Bank asserted a 'colorable legal right' against the Cattle Company for the proceeds of the [bank] draft, only good faith assertions of legal rights are protected. Since the Bank retained the September 21, 1984 security agreement and failed to release the security interest or lien after payment of the debt and asserted the security interest or lien in the cattle sold to [the buyer], we conclude that there is some evidence that the Bank did not act in good faith when it claimed a security interest or lien in the proceeds of the [bank] draft. 59 Id. at 940 (emphasis added). Interestingly, the court was not satisfied that the bank in fact had a valid (hence colorable) claim against Cattle Company in connection with the first line of credit. The court was persuaded that the evidence was sufficient to establish that the bank did not act in good faith when it asserted its right to the cattle, a right which it validly could claim. Presumably, the court concluded that the intentions of the party asserting a claim were germane to the privilege--that it was not enough that the party in fact had a colorable, or even valid, claim, but that the party had to assert its claim in good faith. 60 We believe that Victoria has ripped a few stitches from the lining of the privilege cloak, but we decline to rethread the needle ourselves. We choose instead to remand this case to the district court to allow it in the first instance to make the necessary alterations, if any. In a case like this one where a district court had granted summary judgment prematurely, the Court of Appeals for the Third Circuit vacated the summary judgment without resolving the delicate state law issues. See Sames, 732 F.2d at 52. Instead, the court of appeals remanded, indicating that [t]he district court ... remain[ed] free to reconsider its legal holding 'at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties to the district court.'  Id. (quoting Fed.R.Civ.P. 54(b)). We believe that the Third Circuit's disposition is tailor-made for this lawsuit.