Opinion ID: 2630547
Heading Depth: 1
Heading Rank: 7

Heading: the majority's substantial certainty standard is incorrect under prior california decisions.

Text: The majority holds that to state a claim for intentional interference with prospective economic advantage, a plaintiff need not plead that the defendant acted with the specific intent, or purpose, of disrupting the plaintiffs prospective economic advantage. (Maj. opn., ante, 131 Cal. Rptr.2d at p. 45, 63 P.3d at pp. 949-950.) Instead, the majority states, to satisfy the intent requirement for this tort, it is sufficient to plead that the defendant knew that the interference was certain or substantially certain to occur as a result of its action. ( Ibid. ) The majority's conclusion is incorrect under existing California law. In Seaman's Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752, 758, 206 Cal.Rptr. 354, 686 P.2d 1158 ( Seaman's) , we expressly considered whether `intent' [is] an element of a cause of action for intentional interference with contractual relations. We answered this question affirmatively, holding: [I]n an action for inducing breach of contract it is essential that plaintiff plead and prove that the defendant `intended to induce a breach thereof. . . .' [Citations.] Similarly, to prevail on a cause of action for intentional interference with prospective economic advantage, plaintiff must plead and prove `intentional acts on the part of the defendant designed to disrupt the relationship.' [Citations.] ( Id. at p. 766, 206 Cal.Rptr. 354, 686 P.2d 1158.) Thus, we rejected the plaintiffs argument that [the defendant's] `intent' to interfere with the contract is not a necessary prerequisite to liability. ( Id. at pp. 766-767, 206 Cal. Rptr. 354, 686 P.2d 1158, fn. omitted.) Notably, in defining the intent requirement, we also expressly rejected the plaintiffs argument that to establish intent, it is necessarily sufficient to show that the defendant knew that interference with the contract was `substantially certain' to result from its conduct. ( Id. at p. 765, 206 Cal.Rptr. 354, 686 P.2d 1158.) We explained: Intent, of course, may be established by inference as well as by direct proof. Thus, the trial court could properly have instructed the jury that it might infer culpable intent from conduct `substantially certain' to interfere with the contract. Here, though, the jury was instructed that culpable intent was `deemed' to exist if [the defendant] knew that its conduct would interfere with the contract. Under the principles outlined above, this instruction was clearly error. ( Id, at p. 767, 206 Cal.Rptr. 354, 686 P.2d 1158.) Thus, Seaman's rejects the very standard the majority here adopts. Our Courts of Appeal have followed Seaman's in this regard. (E.g., Kasparian v. County of Los Angeles (1995) 38 Cal.App.4th 242, 270-271, 45 Cal. Rptr.2d 90; Savage v. Pacific Gas & Electric Co. (1993) 21 Cal.App.4th 434, 449, 26 Cal.Rptr.2d 305.) In reaching its conclusion, the majority virtually ignores our holding in Seaman's and relies instead on dictum in Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 77 Cal.Rptr.2d 709, 960 P.2d 513 ( Quelimane) . (Maj. opn., ante, 131 Cal.Rptr.2d at pp. 46-48, 63 P.3d at pp. 951-952.) In Quelimane, the only issue the defendant raised in challenging the adequacy of the plaintiffs claim for intentional interference with contract was the plaintiffs failure to allege that the defendant's conduct was wrong. ( Quelimane, supra, 19 Cal.4th at p. 55, 77 Cal.Rptr.2d 709, 960 P.2d 513.) We disagreed, holding that [w]rongfulness independent of the inducement to breach the contract is not an element of the tort of intentional interference with existing contractual relations. . . . ( Ibid. ) In dictum, we went on to state: Moreover, the tort of intentional interference with performance of a contract does not require that the actor's primary purpose be disruption of the contract. As explained in comment j to section 766 of the Restatement Second . . .: `The rule stated in this Section is applicable if the actor acts for the primary purpose of interfering with the performance of the contract, and also if he desires to interfere, even though he acts for some other purpose in addition. The rule is broader, however, in its application than to cases in which the defendant has acted with this purpose or desire. It applies also to intentional interference, as that term is defined in § 8A, in which the actor does not act for the purpose of interfering with the contract or desire it but knows that the interference is certain or substantially certain to occur as a result of his action. The rule applies, in other words, to an interference that is incidental to the actor's independent purpose and desire but known to him to be a necessary consequence of his action. [¶] `The fact that this interference with the other's contract was not desired and was purely incidental in character is, however, a factor to be considered in determining whether the interference is improper.' ( Quelimane, supra, 19 Cal.4th at p. 56, 77 Cal.Rptr.2d 709, 960 P.2d 513, fn. omitted.) For several reasons, Quelimane is insufficient authority to support the majority's holding. First, as already noted, Quelimane's discussion of the intent requirement is dictum because the defendant did not raise this issue. It is dictum for another reason as well; the complaint in Quelimane allege[d] that `defendants . . . ha[d] deliberately, willfully, and intentionally interfered with the [plaintiffs] contractual relations. . . .' ( Quelimane, supra, 19 Cal.4th at p. 57, 77 Cal.Rptr.2d 709, 960 P.2d 513.) Thus, we had no need in Quelimane to consider whether an allegation of substantial certainty is enough to state a claim. [11] Second, Quelimane's dictum addressed the intent requirement for interference with contract, not intentional interference with prospective economic advantage. ( Quelimane at p. 56, 77 Cal. Rptr.2d 709, 960 P.2d 513.) As Quelimane also explained, because existing contracts receive[] greater solicitude than merely prospective economic advantages, the elements of interference with contract and intentional interference with prospective economic advantage are not identical. ( Id. at pp. 55-56, 77 Cal.Rptr.2d 709, 960 P.2d 513.) We made the same point earlier in Delia Penna, explaining that [e]conomic relationships short of contractual  i.e., prospective economic relationships  should stand on a different legal footing as far as the potential for tort liability is reckoned. ( Delia Penna, supra, 11 Cal.4th at p. 392, 45 Cal.Rptr.2d 436, 902 P.2d 740.) Logically, because prospective economic advantages receive less protection than existing contracts, the intent requirement for intentional interference with prospective economic advantage should be heightened. Third, Quelimane did not involve a plaintiff, like KSC, whose alleged injuries were only an indirect and remote consequence of the defendant's conduct; the complaint in Quelimane alleged that the defendants directly interfered with the plaintiffs' existing land sales contracts by refusing to issue title insurance. ( Quelimane, supra, 19 Cal.4th at pp. 55-57, 77 Cal.Rptr.2d 709, 960 P.2d 513.) Because remoteness was not a factor in Quelimane, its dictum regarding the intent required to recover for direct injuries carries even less weight in the case now before us. Finally, Quelimane did not consider or even cite Seaman's, which directly considered the intent question and held that proof of substantial certainty permits an inference of intent, but that substantial certainty is not a substitute for or an alternative articulation of intent to interfere. The majority gives only slightly more consideration to Seaman's than did Quelimane; its discussion is as incorrect as it is brief. Relegating Seaman's to a mere footnote, the majority states that in Delia Penna, we expressly disapproved of /Seaman's to the extent that it was inconsistent with Delia Penna. (Maj. opn., ante, 131 Cal.Rptr.2d at pp. 46-47, fn. 7, 63 P.3d at p. 951, fn. 7.) The majority's statement, though accurate (see Delia Penna, supra, 11 Cal.4th at p. 393, fn. 5, 45 Cal.Rptr.2d 436, 902 P.2d 740), is completely irrelevant because with regard to the intent requirement, Seaman's is not in any way inconsistent with Delia Penna. Delia Penna never discussed the intent requirement and, as the majority concedes, did not affect the elements of the tort other than to add the wrongfulness requirement. (Maj. opn., ante, 131 Cal.Rptr.2d at pp. 45-6, 63 P.3d at pp. 950-951.) Consistent with its concession, the majority cites nothing in Delia Penna to support its (the majority's) suggestion that Seaman's is somehow inconsistent with Della Penna with regard to the intent requirement. The majority also stresses Delia Penna's observation that Seaman's `rel[ied] on the first Restatement [of Torts] . . . without reviewing or even mentioning intervening revaluations of the tort by the Restatement Second, other state high courts and our own Court of Appeal.' [Citation.] (Maj. opn., ante, 131 Cal.Rptr.2d at pp. 46-17, fn. 7, 63 P.3d at p. 951, fn. 7.) However, in Seaman's, we based our holding regarding the intent requirement on prior decisions of both this court and our Courts of Appeal, and mentioned the first Restatement of Torts only briefly. ( Seaman's, supra, 36 Cal.3d at pp. 765-767, 206 Cal.Rptr. 354, 686 P.2d 1158.) Notably, the majority fails to cite a single decision from our Courts of Appeal  or from the courts of other states  that Seaman's should have, but failed to, consider. Nor did Quelimane cite a case from either California or from some other jurisdiction to support its dictum regarding the intent requirement; as I have already explained and as the majority acknowledges (maj. opn., ante, 131 Cal. Rptr.2d at pp. 46-47, fn. 7, 63 P.3d at p. 951, fn. 7), Quelimane completely ignored Seaman's (and the cases following it) and relied instead exclusively on the Restatement Second. Unlike the majority, I consider a prior holding of this court to be more binding  and a better representation of California law (maj. opn., ante, 131 Cal.Rptr.2d at pp. 46-7, fn. 7, 63 P.3d at p. 951, fn. 7)  than the Restatement Second, or dictum that relied exclusively on the Restatement Second. The other basis for the majority's conclusion  that specific intent to interfere is unnecessary in light of Delia Penna's wrongful act requirement for intentional interference with prospective economic advantage (maj. opn., ante, 131 Cal.Rptr.2d at pp. 50-52, 63 P.3d at pp. 954-956)  is both questionable and ironic. It is questionable because, as I have explained and as the majority acknowledges (maj. opn., ante, 131 Cal.Rptr.2d at pp. 45-46, 63 P.3d at pp. 950-951), Della Penna never discussed the intent requirement or considered whether the wrongful act requirement would affect the intent requirement. The majority's analysis is ironic because, as I have also already explained, our purpose in Della Penna in adopting the wrongful act requirement was to restrict the scope of the tort of intentional interference with prospective economic advantage. The majority again turns Delia Penna on its head by citing its wrongful act requirement as justification for relaxing the intent requirement and greatly expanding the tort's scope. Thus, the majority's conclusion that a plaintiff may state a claim by pleading that the defendant knew that the interference was certain or substantially certain to occur, and need not plead that the defendant acted with the specific intent . . . of disrupting the plaintiffs prospective economic advantage (maj. opn., ante, 131 Cal.Rptr.2d at p. 45, 63 P.3d at pp. 949-950), is inconsistent with California case law. Under Seaman's and the cases following it, a plaintiff who alleges injury that only remotely and indirectly follows from a defendant's intentional interference with the prospective economic advantage of some third party should be allowed to recover, if at all, only upon pleading and proving that the defendant specifically intended to interfere with the plaintiffs prospective economic advantage. Finally, I disagree with the majority's assertion that its substantial certainty requirement is an appropriate limitation on both the potential number of plaintiffs that may bring a claim under this tort and the remoteness of these plaintiffs to a defendant's wrongful conduct. (Maj. opn., ante, 131 Cal.Rptr.2d at p. 54, 63 P.3d at p. 958.) As explained in the law review article on which the majority relies, [e]conomic relationships are intertwined so intimately that disruption of one may have far-reaching consequences. Furthermore, the chain reaction of economic harm flows from one person to another without the intervention of other forces. Courts facing a case of pure economic loss thus confront the potential for liability of enormous scope, with no easily marked intermediate points and no ready recourse to traditional liability-limiting devices such as intervening cause. (Perlman, Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine, supra, 49 U.Chi. L.Rev. at p. 72, fns. omitted.) However, if a plaintiff suffering economic loss is required to show that [the defendant] knew of [the plaintiffs] contract or expectancy and purposely disrupted it, the number of successful plaintiffs and the extent of liability are considerably smaller. ( Id at p. 77, italics added.) Thus, requiring the plaintiff to show intent by the defendant to interfere with a particular contract or expectancy would help distinguish[] the plaintiffs loss from injuries resulting more indirectly from the defendant's act. ( Id. at p. 76, fn. omitted.) By contrast, the majority's relaxed substantial certainty requirement does little to narrow the enormous scope of potential liability for harm to economic relationships and offers no principled way to cut off a myriad of other indirect claimants who can each claim that their business was somehow impacted or adversely affected by MacDonald's loss of the contract. [12] ( Sharp v. United Airlines, Inc., supra, 967 F.2d at p. 409.)