Court Opinion

ID: 9538614
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:38:19.317264+00
Date Added: 2024-06-11T14:58:00.212114
License: Public Domain

BURKE, Justice,
dissenting.
I respectfully dissent.
We once observed that “[b]ona fide competition for customers ... not only is allowable, but is fundamental to our economic system.” Ellis v. City of Valdez, 686 P.2d 700, 707 n. 14 (Alaska 1984). Thus, we have held that one may be privileged to interfere with another’s contract when the actor has a direct financial interest in the contract. Bendix Cory. v. Adams, 610 P.2d 24 (Alaska 1980). In determining the question of privilege, however, “the essential question ... is whether the person’s conduct is motivated by a desire to protect [the person’s] economic interest, or whether it is motivated by spite, malice, or some other improper objective.” Id. at 31.1
One is privileged to interfere with another’s contractual interests only when acting to promote the interest of oneself, others, or the public, and only if the interest promoted by the invasion is superior in social importance to the interest invaded. See Alyeska Pipeline Service Co. v. Aurora Air Service, Inc., 604 P.2d 1090, 1094 (Alaska 1979); see also 2 F. Harper, F. James & 0. Gray, The Law of Torts § 6.12, at 350 (2d ed. 1986). Moreover, few privileges are sufficiently well recognized to support their application as a matter of law:
[Recurrent factual patterns may have developed, reflecting identifiable standards of business ethics or recognized community customs as to acceptable conduct and leading the court to feel that the determination of whether the interference was improper should be made as a matter of law.... [But] when there is room for different views, the determination of whether the interference was improper or not is ordinarily left to the jury, to obtain its common feel for the state of community mores and for the manner in which they would operate upon the facts in question.
Restatement (Second) of Torts § 767 comment l, at 39 (1979).
In the case at bar, the record provides no reasonable assurance that Smith and Hudesman interfered in the assignment *651contract in order to protect Hudesman’s economic interest in the property. In fact, the record suggests that Smith and Hudes-man were motivated to interfere in the assignment to RAN solely because they wanted to consummate a business deal with Reinwand. There was no direct economic reason to prefer either of the competing tenants; RAN and Reinwand proposed to use the property in nearly identical ways, and both agreed to pay precisely the same rent. Overall, it is quite apparent that it was Reinwand’s interest in the property, not Hudesman’s, that motivated Smith and Hudesman to interfere with the Harris-RAN assignment contract.
Also, the interest Smith and Hudesman had in the contract differed greatly from the personal stake that formed the basis of the privilege that we applied as a matter of law in Bendix. When Smith and Hudes-man threatened Harris with litigation if he “pushed” RAN as his assignee, they did so free of any real economic concern. They stood to lose nothing by forcing Harris to relinquish his right to assign his lease to the person of his choice.
Opposite RAN’s conditional interest in the assignment contract stands the interest Smith and Hudesman had in furthering Hudesman’s business connections.2 In evaluating the relative social importance of these two interests, we consider factors such as “the nature of the actor’s conduct,” Restatement (Second) of Torts § 767(a), at 26 (1979), and “the social interests in protecting the freedom of action of the actor and the contractual interests of the other.” Id. § 767(e), at 27. When these factors are considered, I think the proper disposition of this case becomes obvious.
Society’s interest in protecting contractual rights such as RAN’s is certainly important, despite the conditional nature of that right. In contrast, there is no societal interest in protecting conduct which includes threats of litigation such as those made by Smith and Hudesman in the instant case. In particular, Hudesman’s agent, Smith, threatened Harris with litigation in order to dissuade him from exercising his right to assign his lease rights to RAN.3 Relative to this subject, the Restatement has this to say:
Litigation and the threat of litigation are powerful weapons. When wrongfully instituted, litigation entails harmful consequences to the public interest in judicial *652administration as well as to the actor’s adversaries. The use of these weapons of inducement is ordinarily wrongful if the actor has no belief in the merit of the litigation or if, though having some belief in its merit, he nevertheless institutes or threatens to institute the litigation in bad faith, intending only to harass the third parties and not to bring his claim to definitive adjudication.
Restatement (Second) of Torts at § 767 comment c, at 30-31.
The evidence of threats made in the case at bar should temper .any consideration we might otherwise give to the importance of Smith’s and Hudesman’s freedom to conduct business. A lawsuit instituted or threatened only to harass may constitute actionable interference with contractual relations, even if it has merit. See, e.g., C.N. C. Chemical Corp. v. Pennwalt Corp., 690 F.Supp. 139, 143 (D.R.I.1988) (initiation of lawsuit “without probable cause and for the purpose of interfering with ... contractual relations” constituted improper interference); Nesler v. Fisher & Co., 452 N.W.2d 191, 198 (Iowa 1990). Consequently, we should be especially troubled by evidence in the record tending to show that Smith and Hudesman held no belief they had a meritorious claim to assert against Harris, ór a claim that even arguably had merit. Such evidence easily supports the inference that Smith threatened Harris with litigation in utter bad faith for no other purpose than disrupting the Harris-RAN assignment contract. There is, of course, no societal interest to be served by affording privileged status to such behavior.
The privilege we recognized in Bendix is indeed broad,4 but not so broad as to encompass, as a matter of law, the conduct alleged here. The question in this case is whether Smith and Hudesman acted acceptably, given the current community standards and the manner in which business persons are expected to conduct their affairs. See Restatement (Second) of Torts § 767 comment l (1979). This is not a theoretical problem to be resolved by this court according to abstract notions of how society should work. Rather, this is a genuine issue of material fact. As such, it should be determined by the trier of fact, after thorough review of the evidence produced at trial. See C.N.C. Chemical Corp., 690 F.Supp. at 143; Powers v. Leno, 24 Mass.App.Ct. 381, 509 N.E.2d 46, 49 (1987); see also Snow v. Western Savings & Loan Ass’n, 152 Ariz. 27, 730 P.2d 204 (1986).5
I would hold that the superior court erred in concluding, as a matter of law, that the conduct of Smith and Hudesman was privileged because such conduct was protective of a direct financial interest. I would reverse the judgment and remand the matter for trial.

. Hudesman, as owner, probably had a strong interest in any contract that affected his property. But, as lessor, he had relinquished to Harris much of his right in the property. For example, although Hudesman retained the right to exercise reasonable approval prerogative over the assignment to RAN, he simultaneously lost his right to deny approval merely because he preferred to have some other tenant take possession of the property. See Hendrickson v. Freer-icks, 620 P.2d 205, 211 (Alaska 1980) (if lessor’s consent is required for assignment, lessor may withhold consent only with reasonable grounds). Thus, just as the conditional nature of its contract weakened RAN’s interest, so did the lease weaken Hudesman’s interest. Even assuming, then, that Smith and Hudesman acted, in part, for the purpose of protecting Hudes-man's interest in the property, the relative social importance of that interest does not by itself render RAN’s conditional interest unworthy of protection. Additionally, it is important to underscore the distinction between an interest in a contract and an action undertaken for the purpose of protecting that interest. Smith and Hudesman must show the latter in order to prove that their interference was privileged.

. The majority concludes that "the condition precedent in the proposed lease agreement between Harris and RAN ... fail[ed]” at some moment before Smith and Hudesman threatened Harris with litigation. As a result, the majority considers the threats of litigation “irrelevant.” The majority first presumes to construct from the record the exact condition RAN and Harris had agreed to include in their contract, then presumes to find that its own version of the condition "failed.” Such fact finding by this court ranges well beyond the review of the record that is appropriate in an appeal from a grant of summary judgment. Moreover, even on its own version of the facts, the court’s conclusion that Hudesman’s "disapproval” unilaterally terminated RAN’s contract seems suspect. A conditioned contractual duty is discharged when the condition becomes "impossible of performance.” 3A A. Corbin, Corbin on Contracts § 630, at 20 (1960). At the earliest, Hudesman’s approval became "impossible” to obtain only after Harris decided not to assert his rights to assign to the subtenant of his choice. We may reasonably infer that Hudesman’s litigation threats coerced Harris not to resist Hudesman’s disapproval of the assignment. Thus, the threats are essential to an evaluation of this case.

. Other courts have adopted a similar, but narrower privilege, limited only to cases involving the interference of parent corporations in their subsidiaries’ contracts. E.g., Phil Crowley Steel Corp. v. Sharon Steel Corp., 702 F.2d 719, 722 (8th Cir.1983); James M. King & Assoc, v. G.D. Van Wagenen Co., 717 F.Supp. 667, 681 (D.Minn.1989). Although the facts of Bendix involved only a parent corporation's interference with the contract of its subsidiary, we stated the direct financial interest privilege in very broad terms, and as a result the privilege logically could apply generally to cases in which the interferer has a direct stake in the contract interfered with. See Bendix, 610 P.2d at 29-31.

. In Snow, a mortgagee threatened to invoke a due-on-sale clause in an attempt to interfere with the mortgagor's contract to sell the mortgaged property. Snow, 730 P.2d at 206-07. The Arizona Supreme Court reversed a grant of summary judgment for the mortgagee and remanded for the trier of fact to determine whether the threats to invoke the due-on-sale clause were made in good faith and to determine whether the mortgagee truly had acted to protect any of its interests related to the sale of the mortgaged property. Id. at 213-14. Similar determinations should concern the trier of fact in this case. See id.; see also Phil Crowley Steel Corp. v. Sharon Steel Corp., 782 F.2d 781, 784 (8th Cir.1986).