Opinion ID: 1213053
Heading Depth: 1
Heading Rank: 1

Heading: Elements of a Prima Facie Case of Interference with Contract

Text: Alaska recognized the theory of tortious interference with contract in Long v. Newby, 488 P.2d 719 (Alaska 1971). In Weiss v. Marcus, 51 Cal. App.3d 590, 124 Cal. Rptr. 297 (1975), a California Court of Appeal listed the following five elements of a prima facie case: (1) a valid contract existing between plaintiff and another person; (2) defendant had knowledge of the contract and intended to induce a breach thereof; (3) the contract was breached by the other party thereto; (4) the breach was caused by defendant's wrongful or unjustified conduct; (5) plaintiff suffered damage as a result of the breach. Id., 124 Cal. Rptr. at 304. [5] Bendix argues that Adams presented insufficient evidence to show that Bendix knew of the contract between Adams and Marine, or that its conduct caused the breach. Bendix claims the trial judge erroneously denied its motion for a directed verdict and judgment n.o.v. The standard of review for motions for directed verdict and judgment n.o.v. is to determine whether the evidence, when viewed in the light most favorable to the nonmoving party, is such that reasonable men could not differ in their judgment. Holiday Inns of America, Inc. v. Peck, 520 P.2d 87, 92 (Alaska 1974). The test is objective; and, if there is room for diversity of opinion among reasonable people, the question is one for the jury. City of Whittier v. Whittier Fuel & Marine Corp., 577 P.2d 216, 220 (Alaska 1978). At trial there was introduced sufficient evidence of Bendix's knowledge of the Marine-Adams contract to make the question properly one for the jury. Hugh Thralls was chairman of the board of both Marine and United Geophysical, another wholly-owned subsidiary of Bendix. From 1968 to 1972, he had a 4-year contract with the Bendix Corporation to manage their engineering resources area. In particular, Thralls testified that he was very familiar with Marine's individual projects, and that he knew about Adams. Paul Horrer, president of Marine, testified that Thralls knew Marine's equipment was on board Adams' barges in 1970. A memorandum addressed to Thralls from Horrer on September 26, 1969, discusses the fact that in 1970 Marine would have its equipment in the Prudhoe Bay area before its competitors. Bendix argues that knowledge of Hugh Thralls cannot be imputed to the Bendix Corporation, citing the Restatement (Second) of Agency § 14C (1958), which states: Neither the board of directors nor an individual director of a business is, as such, an agent of the corporation or of its members. Bendix's argument misses the point. The Restatement section would apply in a situation where one might attempt to prove that Thralls was the agent of Marine Advisors. The fact that Thralls was a member of Marine's board is irrelevant to the question of whether he was an agent of the Bendix Corporation. The appropriate rule is the Restatement (Second) of Agency § 272 (1958) and Comment a to that section, which states: [T]he liability of a principal is affected by the knowledge of an agent concerning a matter as to which he acts within his power to bind the principal or upon which it is his duty to give the principal information. Comment a. ... The principal is affected by the agent's knowledge whenever the knowledge is of importance in the act which the agent is authorized to perform. The knowledge may be of importance where: ..... (2) the conduct of an agent or principal interferes with the protected interest of another and thereby may constitute a tort against such other... . Thralls' management contract with Bendix would support an inference that he was an agent of Bendix. Although there may have been some dispute over the existence of a valid contract between Adams and Marine, there was enough evidence in the record, given the fact that Marine stored its equipment aboard Adams' barges in 1970, to find that Thralls knew of some arrangement with Adams. Under the Restatement view, Adams would not need to prove that Thralls knew of an actual legal contract in any event, so long as he knew of underlying facts which would give rise to contractual liability. Restatement (Second) of Torts § 766, Comment g (1979). In addition to Thralls, two Bendix employees sat on Marine's board. One was R.J. Shaffer, Bendix's West Coast legal advisor. Shaffer was an addressee on Horrer's September 26 memorandum. Horrer apparently intended to keep Shaffer informed of Marine's operations. C.E. Heitman, a Bendix vice-president, also sat on Marine's board. Even if Thralls were not an agent of Bendix, there was sufficient evidence to support an inference that the two Bendix employees on Marine's board would have had some knowledge of Marine's arrangements with Adams. Bendix's second contention, that a decision to cease speculative activity on the North Slope was not a material and substantial cause of a breach of Adams' contract, was also a question for the jury. W. Prosser, The Law of Torts § 129 at 934 (4th ed. 1971); Restatement (Second) of Torts § 766, Comment o (1979). Because of the general uncertainty of business conditions on the North Slope in 1970, and Marine's inability to obtain work on contract, it would be reasonable to assume that by ordering a cessation in speculative work, Marine might be forced to breach its contract with Adams. Contrary to Bendix's contention, there was sufficient evidence in the record to infer that Bendix management issued a directive preventing Marine from carrying out its proposed plan to continue speculative survey work in the Arctic. In a portion of a pretrial deposition read at trial, Marine's vice president, Charles Rambo, described the decision as follows: A. [Rambo] We were directed by Bendix, and I'm not sure of the date, time, context, here that we were  that we would not pursue anything of a speculative nature from that point on. Q. And this project [Prudhoe Bay] included? A. That's right. Paul Horrer, Marine's president and a board member, also testified concerning the decision in his deposition. Q. In addition, by that time you had received a binding directive from Bendix not to proceed on your own with it. A. [Horrer] Yes. Q. Does the board of directors institute such a restriction? I mean, is there one man that can do so or is it a board decision that then becomes a binding decision? A. As I recall, it was a board decision, but one man issued the directive. Q. Who would that man  would have been that man? A. That man was Hugh Thralls, who was the group executive to whom I reported. Q. Group executive that actually controls the various subsidiary operations? A. Yes, 2 subsidiaries reported to him, one was United Geophysical and the other Marine Advisors. Q. His directive is sufficient, he does not  he doesn't need any further authority, is that correct? Or did not. A. That is correct. Although Bendix introduced contradictory testimony at trial in an attempt to prove that Marine made an independent decision to cease speculative activity, the question was one for the jury, and the jury resolved the conflict in favor of Adams. In summary, there was sufficient evidence to establish a prima facie case.