Court Opinion

ID: 33964
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:11:07+00
Date Added: 2024-06-11T14:57:00.776430
License: Public Domain

In the
United States Court of Appeals
         for the Fifth Circuit
                 _______________

                   m 01-41269
                 _______________

        DOOR CONTROL SERVICES, INC.,

                       Plaintiff-Counter-Defendant-Appellee-
                       Cross-Appellant,

                      VERSUS

  BESAM AUTOMATED ENTRANCE SYSTEMS, INC.,

                       Defendant-Third-Party Plaintiff-Counter
                       Claimant-Appellant-Cross-Appellee.

           _________________________

     Appeal from the United States District Court
          for the Eastern District of Texas
                  m 6:00-CV-293
          _________________________
                  February 5, 2003
Before JONES, SMITH, and SILER,*                           grant it a distributorship for the Houston and
  Circuit Judges.**                                        San Antonio areas. Door Control took out a
                                                           loan to finance its expansion into those mar-
JERRY E. SMITH, Circuit Judge:                             kets.

   Besam Automated Entrance Systems, Inc.                     In February or March 2000, Besam in-
(“Besam”), appeals a jury award of $6,000,-                formed Door Control that it would directly
000 to Door Control Services, Inc. (Door                   distribute and service its doors in the Houston
Control”), for fraud. Door Control cross-ap-               area. Besam later asked Door Control to stop
peals a judgment as a matter of law (“j.m.l.”)             servicing clients in the area, but Door Control
on its claims of breach of contract, breach of             refused. Besam then terminated Door Con-
duty of good faith and fair dealing, and tor-              trol’s north/east/central Texas distributorship.
tious interference with contractual relations.             Lacking a major door line to sell, Door Con-
We affirm in part, reverse in part, and remand             trol suffered a decline in business.
for further proceedings.
                                                                                   B.
                         I.                                   Door Control sued Besam in Texas state
                        A.                                 court alleging, inter alia, breach of contract,
   Besam manufactures a line of commercial                 breach of the duty of good faith and fair deal-
automatic doors that are sold and serviced by              ing, fraud, and tortious interference. Besam
independent distributors. From 1983 to 2000,               removed the case to federal court based on di-
Door Control was Besam’s distributor for the               versity jurisdiction and asserted counterclaims.
north/east/central Texas region, which includ-             The case proceeded to trial, and Besam moved
ed the Dallas and Fort Worth markets. After                for j.m.l. at the close of Door Control’s pre-
1986, their legal relationship was controlled by           sentation of evidence. The district court
a written agreement (the “Distributorship                  granted j.m.l. on all claims except fraud, on
Agreement”); Door Control claims the agree-                which the jury awarded $6,000,000 in lost
ment has been orally modified over the years.              profits and $400,000 in reliance damages.1

   In 1999, the Houston area distributor of                                        II.
Besam doors faced serious financial difficulties               Besam contends it is entitled to j.m.l. with
and could not meet installation deadlines for              respect to lost profits because the record con-
several large clients; Door Control helped Be-             tains insufficient evidence to support the ver-
sam meet those installation deadlines and                  dict, in light of the fact that Door Control’s
claims that, in return, Besam orally agreed to             damages expert testified as to lost gross prof-
                                                           its, rather than lost net profits as required un-
                                                           der Texas law. Door Control argues that be-
   *
                                                           cause the jury was properly instructed that it
     Judge of the United States Court of Appeals
for the Sixth Circuit, sitting by designation.
   **
      Pursuant to 5TH CIR. R. 47.5, the court has
                                                              1
determined that this opinion should not be pub-                 Besam was awarded $360,711 on its counter-
lished and is not precedent except under the limited       claim for Door Control’s failure to pay money due
circumstances set forth in 5TH CIR. R. 47.5.4.             under the Distributorship Agreement.

                                                       2
was to award net profits,2 it was allowed to                 The plaintiff is not required to calculate lost
consider other evidence that supported the                profits precisely; rather, “it is sufficient that
amount awarded.                                           there be data from which they may be ascer-
                                                          tained with a reasonable degree of certainty
                        A.                                and exactness.” Tex. Instruments, Inc. v. Tele-
    We review de novo a ruling on a motion for            tron Energy Mgmt., Inc., 877 S.W.2d 276, at
j.m.l. “whether based upon an interpretation of           279 (Tex. 1994) (quoting Southwest Battery
Texas law or based upon the sufficiency of the            Corp. v. Owen, 115 S.W.2d 1097, 1098 (Tex.
evidence.” Info. Communication Corp. v.                   1938)). Still, this burden is onerous, and
Unisys Corp., 181 F.3d 629, 633 (5th Cir.                 “Texas courts have not hesitated to direct ver-
1999). We review the record as a whole and                dicts where plaintiffs have failed to present ev-
draw all reasonable inferences in favor of the            idence of lost profits meeting these standards.”
non- moving party. Phillips v. Monroe Coun-               Info. Communication Corp., 181 F.3d at 633.
ty, 311 F.3d 369, 373 (5th Cir. 2002). In an
action tried to a jury, a motion for j.m.l. chal-                                C.
lenges the legal sufficiency of the evidence                 Door Control contends that the jury prop-
supporting the verdict. Cozzo v. Tangipahoa               erly used net profits as the measure of lost
Parish Council-President Gov’t, 279 F.3d                  profits. It argues that the jury could have tak-
273, 280 (5th Cir. 2002). Thus, the “‘standard            en the damage expert’s estimate of lost gross
of review with respect to a jury verdict is es-           profits of between $8,619,070.94 and $15,-
pecially deferential.’” Id. (quoting Brown v.             000,000 and reduced it to $6,000,000 by tak-
Bryan County, Okla., 219 F.3d 450, 456 (5th               ing into account future expenses. Door Con-
Cir. 2000)).                                              trol reasons that these expenses were predict-
                                                          able, because financial statements from 1997
                         B.                               through the first quarter of 2001 were admit-
    In Texas, the proper measure of damages               ted into evidence, and Door Control’s con-
for lost profits is lost net profits. Holt Ather-         troller explained that the financial statements
ton Indus., Inc. v. Heine, 835 S.W.2d 80, 83              accurately represented Door Control’s income
n.1 (Tex. 1992). “[T]he injured party must do             and expenses.
more than show that it suffered some lost pro-
fits.” Helena Chem. Co. v. Wilkins, 47                       In Fury Imports, Inc. v. Shakespeare Co.,
S.W.3d 486, 504 (Tex. 2001). Recovery must                554 F.2d 1376, 1387 (5th Cir. 1977), which
be “predicated on one complete calculation,”              applied New York law, we considered the evi-
and “opinions or estimates of lost profits must           dence supporting lost profits damages awarded
be based on objective facts, figures, or data             to a distributor for the manufacturer’s breach
from which the amount of lost profits may be              of contract. Evidence was presented showing
ascertained.” Szczepanik v. First S. Trust Co.,           the amount of lost gross profits caused by the
883 S.W.2d 648, 649 (Tex. 1994).                          manufacturer’s breach and resulting lost retail
                                                          sales. Though the plaintiff presented evidence
                                                          that there were multiple categories of expenses
   2
    The district court defined net profits as “what       that would have increased in different ways
remains in the conduct of a business after deduct-        had the sales not been lost, there was no esti-
ing from its total receipts all of the expenses           mate of how each of these categories would
incurred in carrying on the business.”

                                                      3
have varied with increased sales, nor even                                        D.
what the overall effect on expenses might have                Door Control contends that other evidence
been. Instead, the jury was provided profit-              supports the award. Its controller, Ricky
and-loss statements from previous years. We               Northcutt, testified that, based on a year-end
concluded that these financial records did not            comparison of net profits from 1999 and 2000,
provide the jury with sufficient evidence to cal-         Door Control experienced a decrease in net
culate lost net profits, because the jury had no          profits of $120,000. He also stated that in the
way of extrapolating, from the past actual ex-            first quarter of 2001, profits were down $483,-
penses, a prediction for how future expenses              000 compared to the first quarter of 2000.
would have increased. Absent proper guid-                 Don Gilchrist, the owner of Door Control, tes-
ance, there “was simply no evidence at all as to          tified that it would take five to ten years to re-
net, as distinguished from gross, profits.” Id.           turn Door Control to the level of profitability
                                                          it experienced when it was Besam’s distributor
    The reasoning of Fury Imports is persua-              for the north/east/central Texas region. Door
sive here. Although Door Control provided                 Control contends that a jury could find that it
the jury an estimate of lost gross profits, it            suffered $6,000,000 of lost net profits based
gave no similar guidance as to how future ex-             on the combined testimony of Northcutt and
penses would have varied. We have thorough-               Gilchrist, by projecting the two quarters of re-
ly reviewed the financial records considered by           duced net profit testified to by Northcutt over
Door Control’s expert in estimating lost gross            the time period of injury testified to by Gil-
profits. With each financial statement, gross             christ.
and net profits varied greatly and were not
correlated in any way that is readily apparent.              The testimony of Northcutt and Gilchrist
                                                          does not combine to form a calculation that
   For example, from 1999 to 2000, gross                  demonstrates lost net profits with the reason-
profits grew by about 30%, from $2,608,-                  able certainty necessary to support an award of
986.52 to $3,381,366, yet net profits fell                damages. Evidence to establish profits must
$120,786.30, a decrease of over 20% from the              not be uncertain or speculative. Tex. Instru-
previous year. Similarly, the fourth quarter of           ments, 877 S.W.2d at 279. Northcutt testified
1999 represented both the best quarter of the             only that profits were lower than in the previ-
year for gross profits and the worst quarter of           ous year; he did not state how large those pro-
the year for net profits. This historical data is
insufficient to allow a jury to determine, with
                                                             3
reasonable certainly, how expenses would                      (...continued)
have changed in future years.3                            the lost gross profits were likely to have remained
                                                          as net profits after expenses, it could have em-
                                                          ployed the Door Control expert’s projected lost
                                                          gross profits and awarded between $1,500,000 and
   3
     Even were we to find that these past expenses        $2,500,000. The best year on record yielded net
were competent evidence to predict future expens-         profits that were 22% of gross profits, which, if ex-
es, the records contain no information that even          trapolated, would lead to an estimate of lost net
arguably could support a verdict of $6,000,000.           profits of between $1,900,000 and $3,000,000.
From 1998 through 2000, net profits were 17% of           The award of $6,000,000 is 40% to 70% of the
gross profits. Had the jury determined that 17% of        range of projected lost gross profits, a percentage
                                     (continued...)       nowhere suggested by the financial records.

                                                      4
fits would have been absent Besam’s fraud,                 writing.
nor did he even assert that this drop was at-
tributable to Besam’s conduct. He also pro-                   The Distribution Agreement contains a
vided no evidence that could be used as the                clause that prohibits modification of the con-
basis for a projection of future net profits be-           tract except by a written agreement by a duly
yond the two quarters named.                               authorized Besam representative. If the New
                                                           Jersey common law for contracts applies,6 the
   Gilchrist offered no support, based on ob-              Distribution Agreement could have been modi-
jective facts or data, for his assertion that it           fied orally, notwithstanding this provision;
would take five to ten years for Door Control              New Jersey law allows every agreement, no
to regain profitability.4 Gilchrist’s speculative          matter how firmly drawn, to be modified by
testimony is not competent evidence to sup-                another agreement.7 The Uniform Commercial
port an award of lost profits. See Szczepanik,             Code covers all contracts for the sale of goods
883 S.W.2d at 650. On this record, there is no             sold for $500 or more. N.J. STAT. ANN. §
evidence of lost profits damages, so the denial            12A:2-201(1). Had the UCC applied to the
of Besam’s motion for j.m.l. is reversed.5                 contract, its statute of frauds would have
                                                           required that all modifications be in writing.
                       III.                                See § 12A:2-209; 5-80 N.J. TRANSACTION
    Door Control contends that the district                GUIDE § 80.34.
court erred in granting Besam’s motion for
j.m.l. on the breach of contract claim, because               “[B]ecause of the mixed character of many
Door Control presented sufficient evidence to              distributorships, the UCC’s statute of frauds
allow a reasonable jury to find that Besam’s               may or may not apply in a given case.” Cus-
termination of Door Control’s north/east/cen-              tom Communications Eng’g, Inc. v. E.F.
tral Texas distributorship breached the Distrib-           Johnson Co., 636 A.2d 80, 85 (N.J. Super. Ct.
utorship Agreement. Door Control argues                    App. Div. 1993). Custom Communications
that the agreement had been orally modified                distinguishes between contracts involving a
and that Besam breached the agreement as                   transaction of goods plus incidental services,
modified. Besam avers that the Uniform Com-                which are covered by the UCC, and contracts
mercial Code’s statute of frauds, N.J. STAT.               for services plus the incidental sale of goods,
ANN. § 12A:2-201, applies to the agreement,                which are covered by customary contract law.
requiring that any modifications had to be in              Id. at 83. The court in Custom Communica-
                                                           tions found the law of other jurisdictions per-
   4
     To provide context to the remarks, we note
                                                              6
that Gilchrist next declared that it would also take            The distributorship agreement provides that
“take thousands of sales calls to get people to un-        New Jersey law controls the performance and con-
derstand the new line” and “probably five to ten           struction of the contract.
million dollars.” His testimony was based on con-
                                                              7
jecture, not reasoned analysis supported by facts.              Estate of Connelly v. United States, 398 F.
                                                           Supp. 815, 827 (D.N.J. 1975) (“Even a formal
   5
     Besam challenges the award of lost profits on         agreement which expressly states that it cannot be
several other grounds. Because the evidence is in-         modified except in writing, is subject to modifi-
sufficient to support lost profit damages, we need         cation by oral agreement since the requirement for
not address those arguments.                               a writing is itself subject to modification.”).

                                                       5
suasive, stating:                                     sufficient evidence for a jury to find that Be-
                                                      sam intended to deprive Door Control of its
   The common theme expressed in nearly               distributorship before the time of termination
   all of the cases is that, although most            and that it withheld this information from Door
   dealership or distributorship agreements           Control in violation of the implied covenant of
   involve more than a mere sale of goods,            good faith and fair dealing found in the con-
   the sales aspect of the relationship pre-          tract under New Jersey law. Besam answers
   dominates. Accordingly, courts have                that Door Control has waived the right to ar-
   not hesitated to conclude that a direct            gue that New Jersey law applies, and Besam
   dealership agreement, as here, is subject          contends that, under Texas law, the duty of
   to the . . . UCC. We adopt the majority            good faith and fair dealing does not extend to
   rule as sound, since it is entirely consis-        ordinary contractual relationships.
   tent with the underlying purposes of the
   UCC: to foster consistency and predict-                                    A.
   ability in the commercial marketplace.                Besam asserts that Door Control waived its
                                                      argument under New Jersey law because it did
Id. at 84. See also Spring Motors Distribs.,          not specifically raise New Jersey law in its oral
Inc. v. Ford Motor Co., 489 A.2d 660, 668             response to Besam’s motion for j.m.l. The
(N.J. 1985) (“[T]he U.C.C. is the more appro-         record demonstrates that the district court was
priate vehicle for resolving commercial dis-          sufficiently aware of the grounds for Door
putes arising out of business transactions            Control’s objections to Besam’s motion for
between persons in a distributive chain.”).           j.m.l., including its position under New Jersey
                                                      law.
    New Jersey law adopts a strong presump-
tion that the UCC applies to distribution                Formal exceptions to rulings or orders
agreements. The Distribution Agreement is                of the court are unnecessary; but for all
sufficiently similar to those found in the many          purposes for which an exception has
cases cited by the Custom Communications                 heretofore been necessary it is sufficient
court to apply the UCC statute of frauds to its          that a party, at the time the ruling or
enforcement. Custom Communications, 636                  order of the court is made or sought,
A.2d at 84 (citing cases). Oral modifications            makes known to the court the action
therefore were not allowed. The agreement                which the party desires the court to take
provided that it could be terminated for any             or the party’s objection to the action of
reason on thirty days’ notice. Besam exercised           the court and the grounds therefor; and,
its rights in accordance with this provision             if a party has no opportunity to object to
when it terminated Door Control’s distributor-           a ruling or order at the time it is made,
ship, so the district court properly granted             the absence of an objection does not
j.m.l. in this regard.                                   thereafter prejudice the party.

                     IV.                              FED. R. CIV. P. 46. “The purpose of the rule is
   Door Control appeals the j.m.l. with regard        that the district court should be given notice of
to its claim for breach of duty of good faith         an alleged defect so the court has an opportu-
and fair dealing. It argues that it presented         nity to cure it.” Hartford Lloyd’s Ins. Co. v

                                                  6
Teachworth, 898 F.2d 1058, 1060 (5th Cir.                the court announced that it already had pre-
1990).                                                   pared its ruling, which it began reading. After
                                                         listing all of Door Control’s claims except the
   Normally, “that purpose can be ade-                   fraud claim, the court stated that it “finds that
   quately served only by the making of an               plaintiff has failed to present legally-sufficient
   objection on the record, but if the court             evidence, regardless of whether Texas or new
   and the other litigants know what action
   a party desires the court to take, the
                                                            8
   purpose of the rule is served.” Stone v.                 (...continued)
   Morris, 546 F.2d 730, 736 (7th Cir.                      MR. BURKE: If I can maybe say one sen-
   1976). In such circumstances, a formal                   tence about each one of the plaintiff’s claims
   objection is not required, “and the fail-                and limit it to that?
   ure of the court to take the desired ac-
                                                            THE COURT: I don’t think that is going to
   tion may be asserted as error on appeal.”
                                                            be necessary.
Id. at 1060-61; see also 9 CHARLES A.                    Burke proceeded quickly to outline his motion, and
WRIGHT & ARTHUR R. MILLER, FEDERAL                       at his conclusion, Mr. Travis, trial counsel for
PRACTICE AND PROCEDURE § 2472, at 92-105                 Door Control, began.
(2d ed. 1995).
                                                            MR. TRAVIS:         May I respond, Your
    Door Control made a pretrial motion that                Honor?
was never ruled on, asking the court to recog-
nize the applicability of New Jersey law to all             THE COURT: Briefly.
contractual claims. In the pretrial order, the
applicability of New Jersey law to the claim for            MR. TRAVIS: Your Honor, I will en-
breach of good faith and fair dealing was listed            deavor–
specifically as a contested issue of law. The
                                                            THE COURT: Your response has been
district court never ruled on the question.
                                                            what you have been putting on for four
    It is apparent that neither side was expected           days.
to say much regarding the motions, because
the court decided that it was unnecessary to                MR. BURKE: I was going to make your
listen to arguments with which it was already               job easier and make a concessionSSI was
familiar.8 As soon as both sides had finished,              going to make your job easier and concede
                                                            on someSScertain claims. Would you like
                                                            me to do that, or shall we keep all our
   8
       Moments after Besam’s trial counsel,                 claims?
Mr.Burke, began making his motion for j.m.l., the
court interrupted him:                                      THE COURT: If you can be brief about it.
                                                            I’ve heard the evidence for four days. I
   THE COURT: I don’t want you to go into                   don’t think it is necessary for you to repeat
   the testimony. Just make your motions, and               it to me.
   I think it is broad enough the way you have
   already made it, unless you want to add to            At the court’s instruction, counsel quickly listed
   it.                                                   which claims he was withdrawing and which ones
                                    (continued...)       he intended to pursue.

                                                     7
Jersey law controls, such that a reasonable             vesting substantial sums of money to expand
Jury could find in its favor on these claims.”          its operations within the territory.
Consequently, before the motion for j.m.l. was
made, Door Control had sufficiently made                    Door Control presented evidence to sup-
known to the court its position on the applica-         port a claim under breach of good faith and
bility of New Jersey law to satisfy the require-        fair dealing. It demonstrated that Besam at-
ments of rule 46.                                       tempted to purchase all or part of Door Con-
                                                        trol on more than one occasion, but, each time,
                       B.                               Door Control refused the offer. There also
    The UCC, including its choice-of-law                was evidence that Besam attempted to hire
provision, applies to the Distributorship               several Door Control employees months be-
Agreement. See Davidson Oil Country Supply              fore Besam terminated the distributorship. Ev-
Co. v. Klockner, Inc., 908 F.2d 1238, 1248              idence indicated that Besam may have con-
(5th Cir. 1990). The relevant provision is              tacted competitors of Door Control in at-
identical in the law of Texas and New Jersey;           tempts to purchase them, potentially in an ef-
it provides that “when a transaction bears a            fort to transfer the distributorship to the newly
reasonable relation to this State and also to           owned competitor.
another state or nation the parties may agree
that the law either of this State or of such               Gilcrest also testified that he received a
other state or nation shall govern their rights         secret call from a Besam employee advising
and duties.” TEX.BUS. & COM.CODE ANN.                   him to look for a second line of doors, because
§ 1.105(a); N.J. STAT. § 12A:1-105(1).                  others at Besam were “planning on doing
                                                        some things with our distributorship that he
    This requirement is satisfied here with re-         didn’t think was right.” Door Control present-
spect to Texas and New Jersey. New Jersey               ed sufficient evidence for a reasonable jury to
law therefore applies to the issue of breach of         find that Besam breached an implied covenant
good faith and fair dealing, because the choice         of good faith and fair dealing under New Jer-
of law provision in the Distributorship Agree-          sey law, so the j.m.l. in this respect is revers-
ment provides that New Jersey law applies to            ible error.
the performance and construction of the agree-
ment.                                                                          V.
                                                           Door Control argues that the district court
                        C.                              erred in granting Besam’s motion for j.m.l. on
    Under New Jersey law, every contract has            the tortious interference claim, because Door
an implied covenant of good faith and fair              Control presented sufficient evidence for a jury
dealing. Onderdonk v. Presbyterian Homes,               to find that Besam tortiously interfered with
425 A.2d 1057, 1062 (N.J. 1981). In Bak-A-              employment contracts between Door Control
Lum Corp. of Am. v. Alcoa Bldg. Prods., Inc.,           and its employees. Besam argues that under
351 A.2d 349, 350-52 (N.J. 1976), the court             Texas law, third-party interference in at-will
held that a manufacturer breached its implied           employment is not tortious interference and
covenant of good faith and fair dealing when it         that competitors are privileged to compete for
failed to tell a distributor that it was planning       employees’ services.
to end the exclusivity of the distributor’s ter-
ritory, knowing that the distributor was in-

                                                    8
                        A.                                 all at will employees was proper.10
    Texas law adopts the view of the second
Restatement that employment at will is treated                                    B.
analogously to prospective contracts with re-                 One former Door Control employee, Pat-
spect to tortious interference:9 “[T]o establish           rick Lyness, was under an employment con-
liability for interference with a prospective              tract that contained a covenant not to compete
contractual or business relation the plaintiff             when he left to work for Besam; therefore, in-
must prove that it was harmed by the defen-                terference with his employment must be ana-
dant’s conduct that was either independently               lyzed separately. Evidence indicated that Be-
tortious or unlawful. By ‘independently tor-               sam contacted Lyness about potential employ-
tious’ we mean conduct that would violate                  ment before he quit his job and that he went to
some other recognized tort duty.’” Wal-Mart,               work for Besam two weeks after leaving Door
52 S.W.3d at 713. This holding employs more                Control.
limiting language than did the second Restate-
ment or prior Texas law, though the court                     Lyness’s employment contract and cove-
noted “that the case law is generally consistent           nant not to compete, if valid, may form the
with this position as a matter of outcomes as              basis of a claim for interference with contrac-
distinct from articulation.” Id. at 721.                   tual relations. Travel Masters, Inc. v. Star
                                                           Tours, Inc., 827 S.W.2d 830, 833 (Tex. 1991).
   We read Wal-Mart to apply to at-will con-
tracts. Because Door Control has neither
                                                              10
proven nor alleged any independently tortious                    Before Wal-Mart was decided, the view was
or unlawful conduct by Besam in its efforts to             that “Texas law supports a claim for interference
lure Door Control’s employees, j.m.l. on the               with a terminable-at-will contract where a
claim of tortious interference with respect to             third-party has induced the contract’s breach with-
                                                           out any economic justification or goal other than
                                                           evisceration of the underlying contract.” C.E.
                                                           Servs., Inc. v. Control Data Corp., 759 F.2d 1241,
                                                           1249 n.11 (5th Cir. 1985). With an economic mo-
                                                           tive, and absent otherwise illegal conduct, however,
   9
     See Sterner v. Marathon Oil Co., 767 S.W.2d           the conduct is justified. Id. Door Control’s claim
686, 689 (Tex. 1989) (citing RESTATEMENT (SEC-             fails under this standard, as well, because it has
OND) OF TORTS § 766 comment g); Wal-Mart                   asserted that Besam’s goal was economic in nature.
Stores, Inc. v. Sturges, 52 S.W.3d 711, 719 (Tex.
2001) (“The second Restatement, like the first,                We further recognize that the Texas Supreme
provided that lawful competition was not tortious          Court, in the context of tortious interference with
interference with a prospective business relation          employment at will, has held that legal justification
although it might be tortious interference with any        or excuse is an affirmative defense on which the
contract not terminable at will.”) (emphasis add-          defendant has the burden of proof. Sterner v.
ed); see also RESTATEMENT (SECOND) OF TORTS                Marathon Oil Co., 767 S.W.2d 686 690. We read
§ 766 comment g (“One’s interest in a contract ter-        that holding to be limited to the context therein
minable at will is primarily an interest in future         described, where a third-party is alleged to have
relations between the parties, and he has no legal         intervened to cause an employer to terminate an
assurance of them. For this reason, an interference        employee. See id. at 688. In any case, Besam has
with this interest is closely analogous to interfer-       asserted legal justification, and it is uncontroverted
ence with prospective contractual relations.”).            that such justification existed.

                                                       9
Besam has not challenged the validity of this
agreement, nor has it offered a defense.11 The
district court committed reversible error in
granting j.m.l. on Door Control’s claim of tor-
tious interference with Lyness’s employment
contract.

   The judgment is AFFIRMED in part, RE-
VERSED in part, and REMANDED for fur-
ther appropriate proceedings.

   11
      Besam’s arguments addressed only the law
applicable to at-will employees. Though Besam
asserts that it is a competitor, “[t]he fact that one is
a competitor of another for the business of a third
person does not prevent his causing a breach of an
existing contract with the other from being an
improper interference if the contract is not
terminable at will.” RESTATEMENT (SECOND) OF
TORTS § 768(2); see also Wal-Mart, 52 S.W.3d at
719 n.32 (quoting § 768).

                                                           10