Court Opinion

ID: 4644585
Source: CourtListenerOpinion
Date Created: 2020-12-18 15:08:46.81721+00
Date Added: 2024-06-11T08:00:46.518852
License: Public Domain

RENDERED: DECEMBER 11, 2020; 10:00 A.M.
                      NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                         Court of Appeals

                            NO. 2019-CA-0816-MR

UNITED PROPANE GAS, INC., AND STC, INC.                        APPELLANTS

              APPEAL FROM MCCRACKEN CIRCUIT COURT
v.            HONORABLE TIMOTHY KALTENBACH, JUDGE
                       ACTION NO. 15-CI-00643

NGL ENERGY PARTNERS, LP                                           APPELLEE

                                   OPINION
                                  AFFIRMING

                                 ** ** ** ** **

BEFORE: CALDWELL, JONES, AND KRAMER, JUDGES.

JONES, JUDGE: Appellants United Propane Gas, Inc. (“UPG”) and STC, Inc.

(“STC”) appeal the judgment of the McCracken Circuit Court granting summary

judgment to NGL Energy Partners, LP (“NGL Energy”) on a claim for tortious

interference. Following review of the record and applicable law, we AFFIRM for

the reasons more fully explained below.
                 I.   BACKGROUND AND PROCEDURAL HISTORY

             NGL Supply Terminal Company, LLC (“NGL Supply”), a wholly-

owned subsidiary of Appellant NGL Energy, is a wholesale marketer of natural gas

and crude oil. NGL Supply markets its natural gas liquids to wholesalers and

retailers using its fleet of leased railcars and its owned and leased terminals located

throughout the United States. Customers of NGL Supply may obtain propane,

among other products, at NGL Supply’s many terminals.

             Appellants UPG and STC (collectively referred to as “UPG”) are

Kentucky corporations in the business of selling propane and propane products.

UPG is a retailer selling propane to residential customers across the eastern United

States, while STC is a shipping and trucking company affiliated with UPG. On

February 20, 2015, UPG entered into a Terminal Access Agreement with NGL

Supply granting UPG access to NGL Supply’s terminals nationwide to obtain

certain propane products from UPG’s supplier, CHS, Inc.

             NGL Supply routinely requires customers seeking to obtain propane

at NGL Supply’s terminals to sign terminal access agreements. NGL’s terminal

access agreement specifies that it is to be interpreted consistently with Oklahoma

law, requires customers to comply with local terminal rules and follow federal

safety regulations, and otherwise sets terms and conditions relating to the future

sale of oil and gas products. It does not entitle the customer to purchase any

                                          -2-
product and does not provide any continued right of access to the terminals.

Instead, it merely sets forth the terms upon which a customer may access NGL

Supply’s terminals to make a purchase. NGL Supply’s Terminal Access

Agreement with UPG further provided:

             4. Revocation, Term and Termination

             (a) Revocation. User [UPG] agrees that NGL’s grant of
             permission hereunder to User to enter Terminals is
             nonexclusive and nonassignable and may be revoked by
             NGL at any time, in its sole discretion, without prior
             notice. Upon revocation, User shall immediately cease
             using all Devices issued hereunder and shall promptly
             return all such Devices to NGL.

Record (“R.”) at 199.

             That same day, NGL Supply verified that UPG met all conditions

imposed to access the terminal, and UPG obtained written confirmation from NGL

Supply that it could access the NGL Supply terminals in West Memphis, Arkansas,

and Dexter, Missouri. UPG then picked up three loads of propane from NGL

Supply’s Dexter terminal without incident.

             Upon learning of the agreement between NGL Supply and UPG, NGL

Energy immediately instructed its subsidiary to revoke UPG’s access. Four days

later, on February 24, 2015, NGL Supply terminated the agreement and revoked

UPG’s access without explanation. NGL Supply prohibited Appellants from

having any further access to the terminals.

                                         -3-
              UPG claims NGL Supply and NGL Energy have since offered

conflicting rationales as to why UPG’s access was revoked. R. at 231. According

to a February 24, 2015, email, NGL Supply initially informed UPG that UPG was

not “set up” in NGL Supply’s system. Melissa Roberts, an NGL Energy

employee, testified that UPG was considered “not set up” only after access was

revoked following UPG’s first pickup. That same day, Roberts emailed the

Dexter, Missouri, and West Memphis, Arkansas, NGL Supply terminal managers

on behalf of NGL Energy, stating: “Please lockout carrier STC. We didn’t realize

at the time they were setup [sic] that they operated as United Propane Gas, which

we do not do business with . . . .” Melissa Roberts explained in her deposition that

NGL Energy does not currently sell propane directly to UPG.

              However, Roberts and two other NGL Energy employees, Aaron

Reece and Bryan Lehman, later testified during deposition that UPG was denied

access to NGL Supply’s terminals due to safety concerns following a report that a

bumper had fallen off a UPG truck inside the terminal. Reece, a senior vice

president of NGL Liquids,1 testified that he decided to revoke UPG’s access

because he felt that UPG was an unsafe operator and that he had a duty to keep

everyone in the terminal safe.

1
 NGL Energy, NGL Supply’s parent company, is made up of five subdivisions, one of which is
NGL Liquids, LLC. According to corporate documentation, NGL Liquids, LLC, is the sole
member of NGL Supply.

                                            -4-
             On August 14, 2015, UPG filed suit against NGL Supply and NGL

Energy in McCracken Circuit Court, claiming: (1) NGL Supply breached its

contract with UPG; (2) in the alternative, the contract was enforceable through

promissory estoppel; and (3) NGL Energy tortiously interfered with the contract

between NGL Supply and UPG. On November 12, 2015, UPG obtained leave of

court to file an amended complaint adding STC as a co-plaintiff, which was

granted on November 20, 2015.

             On June 9, 2016, the McCracken Circuit Court granted summary

judgment in favor of NGL Supply and NGL Energy on all counts. The McCracken

Circuit Court held that (1) there had been no breach of contract because the

contract was expressly terminable at will; (2) any detrimental reliance on UPG’s

part could not create greater rights than the contract itself created; and (3) NGL

Energy did not tortiously interfere with the contract between its subsidiary and

UPG because the contract in question had not been breached. UPG and STC

appealed to this court in appellate action No. 2016-CA-000994-MR.

             On March 16, 2018, this Court affirmed the McCracken Circuit

Court’s decision on the breach of contract and promissory estoppel claims but

remanded for further proof on the tort claim. United Propane Gas, Inc. v. NGL

Supply Terminal Co., LLC, Nos. 2016-CA-000994-MR and 2016-CA-001621-MR,

2018 WL 1357480, at *4 (Ky. App. Mar. 16, 2018). We specifically held that the

                                         -5-
contract in question was indeed terminable at will, and, accordingly, had no

implied covenant of good faith and fair dealing. However, we reversed regarding

UPG’s tortious interference claim against NGL Energy, holding that such a tort

may be predicated on causing a third person party “not to continue an existing

contract terminable at will[.]” Id. (internal citations omitted). In doing so, our

Court noted that the circuit court’s sole basis for dismissing this claim, and NGL

Energy’s sole appellate argument for affirmation, was that no breach occurred

when NGL Supply terminated the contract. Our Court further noted that while the

pleadings and exhibits filed of record indicated that NGL Supply was a subsidiary

of NGL Energy, “that issue played no role in the circuit court’s judgment and has

not been raised on appeal.” Id. at *6 n.6.

              On May 1, 2019, the McCracken Circuit Court granted NGL Energy’s

renewed motion for summary judgment under both Kentucky and Oklahoma law2

on the tortious interference claim. The circuit court concluded that UPG had failed

to create a genuine issue of material fact regarding whether NGL Energy was

privileged to interfere with the contractual relations of its wholly-owned

2
  At no point has either the circuit court or this Court determined whether to apply Kentucky or
Oklahoma law, as both courts agree that both states’ laws are substantially the same regarding
tortious interference. United Propane Gas, Inc., 2018 WL 1357480, at *4 n.4 (“The parties seem
to disagree over whether Kentucky or Oklahoma law applies to this tort claim, but it makes little
difference for our purposes. This provision of the Restatement has been adopted as law in
Kentucky and Oklahoma.”); May 1, 2019, Opinion Granting Renewed Motion for Summary
Judgment at 2 (“As an initial matter, the parties apparently disagree as to whether Kentucky or
Oklahoma law govern this claim; however, the result is the same under either state’s law.”).

                                              -6-
subsidiary, NGL Supply, or used wrongful means to do so. The court determined

that, given the nature of the contract and the parent-subsidiary relationship between

NGL Energy and NGL Supply, NGL Energy was privileged to interfere with the

contract of its subsidiary under Oklahoma law. In its analysis under Kentucky law,

the circuit court concluded that NGL had a privilege to interfere in the contractual

relations of its wholly-owned subsidiary and UPG had failed to create an issue of

material fact as to whether NGL Energy had acted detrimentally to UPG’s interests

or with wrongful means. The circuit court additionally noted that although UPG

requested additional time to investigate NGL Energy’s corporate structure, it had

been over a year since the remand giving UPG “ample time to take discovery.”

             This appeal followed.

                          II.   STANDARD OF REVIEW

             “[S]ummary judgment is to be cautiously applied and should not be

used as a substitute for trial” unless “there is no legitimate claim under the law and

it would be impossible to assert one given the facts.” Steelvest, Inc. v. Scansteel

Serv. Ctr., Inc., 807 S.W.2d 476, 483 (Ky. 1991); Shelton v. Kentucky Easter Seals

Soc., Inc., 413 S.W.3d 901, 916 (Ky. 2013). A motion for summary judgment

should only be granted “when it appears impossible for the nonmoving party to

produce evidence at trial warranting a judgment in his favor” even when the

evidence is viewed in the light most favorable to him. Steelvest, 807 S.W.2d at

                                         -7-
482; Shelton, 413 S.W.3d at 905. To survive a properly supported summary

judgment motion, the opposing party must have presented at least some affirmative

evidence showing that there is a genuine issue of material fact for trial. Steelvest,
807 S.W.2d at 482.

                Designed to be narrow and exacting so as to preserve
                one’s right to trial by jury, summary judgment is
                nevertheless appropriate in cases where the nonmoving
                party relies on little more than “speculation and
                supposition” to support his claims. O’Bryan v. Cave, 202
S.W.3d 585, 588 (Ky. 2006). “The party opposing
                summary judgment cannot rely on their own claims or
                arguments without significant evidence in order to
                prevent a summary judgment.” Wymer v. JH Properties,
                Inc., 50 S.W.3d 195, 199 (Ky. 2001).

Blackstone Mining Company v. Travelers Insurance Company, 351 S.W.3d 193,

201 (Ky. 2010); Patton v. Bickford, 529 S.W.3d 717, 736 (Ky. 2016).

                The standard of review on appeal from summary judgment is

“whether the trial court correctly found that there were no genuine issues as to any

material fact and that the moving party was entitled to judgment as a matter of

law.” Lewis v. B & R Corp., 56 S.W.3d 432, 436 (Ky. App. 2001) (citing Scifres v.

Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996); Palmer v. International Ass’n of

Machinists & Aerospace Workers, 882 S.W.2d 117, 120 (Ky. 1994); CR3 56.03).

Because there are no factual findings at issue, the appellate court may review that

3
    Kentucky Rules of Civil Procedure.

                                          -8-
trial court’s decision de novo. Shelton, 413 S.W.3d at 905; Barnette v. Hosp. of

Louisa, Inc., 64 S.W.3d 828, 829 (Ky. App. 2002). On appeal, the record must be

viewed in a light most favorable to the party who opposed the motion for summary

judgment, and all doubts are to be resolved in his favor. Malone v. Kentucky Farm

Bureau Mut. Ins. Co., 287 S.W.3d 656, 658 (Ky. 2009).

                                III.   ANALYSIS

             On appeal, UPG asserts the following counts of error: (1) the circuit

court erred in failing to conduct a veil-piercing analysis under Kentucky law; (2)

the circuit court “failed to address the exception to the parent company’s privilege

based on its own wrongful conduct”; and (3) the circuit court erred in failing to

find an issue of material fact as to whether NGL Energy acted with an improper

purpose when interfering with its subsidiary’s contract with UPG. Appellants’ Br.

at 4. UPG contends that NGL Energy was not privileged to interfere in NGL

Supply’s contract with UPG, and, even if it was, NGL Energy’s various reasons for

terminating the Terminal Access Agreement are evidence of wrongful means, as

UPG believes these reasons are “later-conceived” and therefore “shams to hide

NGL Energy’s improper conduct.” Appellants’ Br. at 2.

             As a preliminary matter, the parties disagree over whether Kentucky

or Oklahoma law applies to this tort claim, and neither our Court nor the circuit

court made a determination. For the purpose of this appeal, it makes little

                                         -9-
difference, as the result is the same under both Kentucky and Oklahoma state law.

As such, we will apply both, even though it is more likely that Kentucky law

would govern the case before us.4

               Both the Kentucky and Oklahoma courts have adopted the

Restatement (Second) of Torts § 769 governing intentional interference with

contractual or business relations:

               One who, having a financial interest in the business of a
               third person intentionally causes that person not to enter
               into a prospective contractual relation with another, does
               not interfere improperly with the other’s relation if he

               (a) does not employ wrongful means and

4
  Kentucky applies the “significant contacts” test in tort cases. Foster v. Leggett, 484 S.W.2d
827, 829 (Ky. 1972). “Kentucky has a strong preference for applying its own law, and we have
noted previously this ‘provincial tendency in Kentucky choice-of-law rules.’” Hackney v.
Lincoln Nat’l Fire Ins. Co., 657 F. App’x 563, 571 (6th Cir. 2016) (quoting Asher v. Unarco
Material Handling, Inc., 737 F. Supp. 2d 662, 667 (E.D. Ky. 2010) (internal citations omitted).
“Importantly, Kentucky’s tort and products liability laws are intended to protect Kentucky
residents and provide compensation when they are the injured party.” Custom Prod., Inc. v.
Fluor Daniel Canada, Inc., 262 F. Supp. 2d 767, 773 (W.D. Ky. 2003). Accordingly, Oklahoma
law would apply in this case only upon demonstrating “overwhelming interests to the contrary.”

Although NGL Supply included a choice of law provision in its contract with UPG, this
provision serves to govern contractual disputes rather than tort claims. UPG argues that
Oklahoma law ought to control because the alleged injury – the termination of the contract with
NGL Supply – was terminated in Tulsa, Oklahoma, where the offices of both NGL Supply and
NGL Energy are located. UPG points out that STC’s truck was denied access to a particular fuel
terminal in Arkansas, that UPG has seventy-three plants spanning ten states, and that NGL
Supply had no terminals in Kentucky. This is to no avail. While there are certainly significant
contacts with Oklahoma, perhaps even the most significant contacts, Kentucky has a strong
interest in governing tort claims brought in Kentucky by Kentucky plaintiffs. See Foster, 484
S.W.2d at 829 (“[I]f there are significant contacts–not necessarily the most significant contacts–
with Kentucky, the Kentucky law should be applied.”). Ultimately, however, choice of law is
not outcome-determinative in the case before us.

                                              -10-
             (b) acts to protect his interest from being prejudiced by
                 the relation.

RESTATEMENT (SECOND) OF TORTS § 769 (1979).

             Kentucky case law further provides that “a parent corporation has a

privilege to interfere in the contractual relations of its wholly-owned subsidiary,

unless it employs wrongful means or acts contrary to its subsidiary’s interests.”

Sparkman v. CONSOL Energy, Inc., 571 S.W.3d 569, 572 (Ky. 2019). Our

Supreme Court only recently addressed this issue in 2019 in the case Sparkman v.

CONSOL Energy, Inc. Sparkman, the sole proprietor of a janitorial company, had

entered into several contracts with CONSOL of Kentucky, Inc. (“CKI”), the

wholly-owned subsidiary of CONSOL Energy, Inc. (“Energy”). Id. at 570. A year

after Sparkman hired Amy Little as part of his cleaning crew, CKI prematurely

cancelled two of those contracts without explanation and hired Little to take over

janitorial duties. Id. Sparkman brought suit, alleging in part that Energy had

interfered with the contractual relationship between CKI and Sparkman by

terminating the contracts and giving them to Little, who was having an extramarital

affair with one of Energy’s employees. Id.

             In evaluating Sparkman’s tortious interference claim, our Supreme

Court noted its adherence to the Restatement (Second) of Torts approach to claims

of tortious interference. Nat’l Collegiate Athletic Ass’n By & Through Bellarmine

Coll. v. Hornung, 754 S.W.2d 855, 857 (Ky. 1988); RESTATEMENT (SECOND) OF

                                         -11-
TORTS § 769 (1979). The Sparkman Court was additionally persuaded by

Tennessee law to place the burden of proving wrongful means upon the plaintiff.
571 S.W.3d at 572 (citing Waste Conversion Sys., Inc. v. Greenstone Indus. Inc.,

33 S.W.3d 779, 780 (Tenn. 2000)). Our Supreme Court further adopted the

Tennessee definition of wrongful means and determined that Energy’s terminating

CKI’s contract to Sparkman in favor of Little was not wrongful, even if motivated

by the affair. Id. The Court explained that wrongful means were limited to “acts

which are wrongful in and of themselves, such as misrepresentations of facts,

threats, violence, defamation, trespass, restraint of trade, or any other wrongful act

recognized by statute or common law.” Id.

             UPG contends that the circuit court erred in failing to undertake a

piercing-the-veil analysis as allegedly required by Kentucky tortious interference

law. UPG argues that “the trial court jumped to the conclusion that NGL Supply,

as a wholly-owned subsidiary, was identical to NGL Energy without performing

any analysis related to whether equity supported veil piercing.” Appellants’ Br. at

6. This is incorrect for a number of reasons, not least of which is that UPG has

raised this argument for the first time before our court. “It is axiomatic that a party

may not raise an issue for the first time on appeal.” Sunrise Children’s Servs., Inc.

v. Kentucky Unemployment Ins. Comm’n, 515 S.W.3d 186, 192 (Ky. App. 2016).

                                         -12-
             Even if it had been properly raised before the circuit court, Kentucky

law clearly does not require veil-piercing in a tortious interference claim. Our

Supreme Court definitively set out the legal analysis for a tortious interference

claim in Sparkman, which provides parent companies privilege to interfere with

their wholly-owned subsidiaries’ contracts. However, UPG argues that because

our Supreme Court based its Sparkman analysis in part upon the Eighth Circuit’s

Phil Crowley Steel Corp. v. Sharon Steel Corp., 782 F.2d 781 (8th Cir. 1986)

(“Crowley II”), we should also find the associated appeal, Phil Crowley Steel Corp.

v. Sharon Steel Corp., 702 F.2d 719 (8th Cir. 1983) (“Crowley I”), persuasive in

requiring a piercing-the-veil analysis.

             According to UPG, Crowley I demonstrates that a veil-piercing

analysis is necessary to afford a parent corporation privilege in interfering with its

subsidiary’s contractual and business relations. Appellants’ Br. at 5. This is not

the case. Crowley I did not hold that a parent corporation’s subsidiary must be its

alter ego to establish privilege in a tortious interference claim. Crowley I, 702 F.2d

at 722. Indeed, the Eighth Circuit applied Missouri law in Crowley I, which, like

Kentucky, abides by Restatement (Second) of Torts § 769 in claims of tortious

interference. Id. Crowley I held that a parent corporation could not be deemed “in

privity” with its subsidiary for the purposes of avoiding paying a successful

plaintiff’s attorneys’ fees in its subsidiary’s collateral litigation. Id. The court

                                          -13-
observed that “[i]n cases where a creditor seeks to recover from a parent

corporation for its subsidiary’s debts, . . . full ownership is not enough to find a

parent corporation identical to its subsidiary.” Id. As such, the holding of Crowley

I is irrelevant to the appeal before us.

               Finally, neither the plain text of the Restatement (Second) of Torts §

769 nor any holding or dicta provided by the Sparkman Court suggests that a

parent corporation may only avoid liability for interference with its subsidiary’s

contractual relationships if it is identical to its subsidiary. Instead, a parent

corporation must only prove that it “wholly owns” its subsidiary,5 as NGL Energy

has done.

5
 Our Supreme Court laid out the analysis for piercing the corporate veil in Inter-Tel
Technologies, Inc. v. Linn Station Properties, LLC, explaining:

               A Kentucky trial court may proceed under the traditional alter ego
               formulation or the instrumentality theory because the tests are
               essentially interchangeable. Each resolves to two dispositive
               elements: (1) domination of the corporation resulting in a loss of
               corporate separateness and (2) circumstances under which
               continued recognition of the corporation would sanction fraud or
               promote injustice. In assessing the first element, the courts should
               look beyond the five factors enumerated in White to the more
               expansive lists of factors . . . .

                      ....

                        In any event, where the parent is the wholly-owned
               subsidiary of the grandparent; the grandparent has provided 100%
               of the funds for the parent’s purchase of the subsidiary; the parent
               itself has failed to follow corporate formalities; the grandparent
               pays the subsidiary’s employees; the grandparent acts
               interchangeably with the parent in filing tax returns regarding what
               is supposedly the subsidiary’s business; and the officers of the

                                               -14-
               Therefore, it is sufficient that NGL Energy has shown by affidavit that

it wholly owns NGL Supply.6 Thus, the burden fell on UPG to show that NGL

Energy acted detrimentally to NGL Supply’s interests or with wrongful means.

               We agree with the circuit court that UPG failed to provide evidence

that NGL Energy acted detrimentally to NGL Supply’s interests. In its response to

NGL Energy’s motion for summary judgment, UPG merely asserts: “it is certainly

hard to envision that such termination served the economic interest of its

subsidiary.” R. at 232. Aaron Reece, Bryan Lehman, and Melissa Roberts, all

NGL Energy employees, testified that UPG was denied access to NGL Supply’s

terminals due to safety concerns following a report that a bumper had fallen off a

UPG truck inside the terminal. Reece testified that he revoked UPG’s access

               subsidiary and parent are also officers of the grandparent it is
               apparent that little, if any, effort has been exerted in maintaining
               separate corporate identities . . . .

360 S.W.3d 152, 165, 166 (Ky. 2012). The Inter-Tel Court held that the first factor of the alter
ego test could be met in part by showing complete ownership of the subsidiary by the parent as
well as complete unity of interest and control. Id. at 166. Accordingly, showing that a
subsidiary is wholly-owned is only one small facet of the more rigorous alter ego test. Compare
with Sparkman, 571 S.W.3d at 572 (emphasis added) (“Based on the weight of authority in other
jurisdictions and this Court’s adherence to the Restatement (Second) of Torts on this issue, we
hold, as a matter of law, that a parent corporation has a privilege to interfere in the contractual
relations of its wholly-owned subsidiary, unless it employs wrongful means or acts contrary to its
subsidiary’s interests.”).
6
  Although UPG contends that it ought to be given additional time for discovery into NGL
Energy’s corporate structure, we agree with the circuit court that UPG has had ample time to
take discovery. Over a year passed after our Court’s remand of this case back to the circuit court
before the circuit court’s second summary judgment, and UPG did not attempt to undertake any
further discovery during that time.

                                                -15-
because he thought they were an unsafe operator and that he had a duty to keep

everyone in the terminal safe. “[A] third party who has a financial interest in the

business of another may interfere with the contractual relations of that business if

he . . . acts to protect his interest from being prejudiced by the relation.”

Sparkman, 571 S.W.3d at 571 (citing RESTATEMENT (SECOND) OF TORTS § 769).

Protecting NGL Supply and NGL Energy’s employees, reputations, and economic

interests from lawsuits due to accidents is in the interest of both companies.

             Nevertheless, NGL Energy might still be held liable if there is

evidence NGL Energy used wrongful means to interfere with NGL Supply’s

contract with UPG. “The issue [with wrongful means] is not simply whether the

actor is justified in causing the harm, but rather whether he is justified in causing it

in the manner in which he does cause it.” RESTATEMENT (SECOND) OF TORTS § 767

cmt. c (1979). According to the Sparkman Court:

             Wrongful means is “defined to include acts which are
             wrongful in and of themselves, such as
             misrepresentations of facts, threats, violence, defamation,
             trespass, restraint of trade, or any other wrongful act
             recognized by statute or common law.” Id. at 784
             (citations omitted); see also Restatement (Second) of
             Torts § 769 cmt. d (referring back to wrongful means
             stated in § 767 cmt. c, which include physical violence,
             misrepresentation, prosecution of civil suits, criminal
             suits, violations of recognized ethical codes, and other
             unlawful conduct).

                                          -16-
Sparkman, 571 S.W.3d at 572. According to Crowley II, wrongful means may be

shown through misrepresentation. Crowley II, 782 F.2d at 783-84. “Fraudulent

misrepresentations are also ordinarily a wrongful means of interference and make

an interference improper.” RESTATEMENT (SECOND) OF TORTS § 767 cmt. c (1979).

“A representation is fraudulent when, to the knowledge or belief of its utterer, it is

false in the sense in which it is intended to be understood by its recipient.”

RESTATEMENT (SECOND) OF TORTS § 767 cmt. c (1979); Yung v. Grant Thornton,

LLP, 563 S.W.3d 22, 45 (Ky. 2018) (explaining that negligent misrepresentation

requires “that the declarant knew the representation was false or made it

recklessly”). “The misrepresentations that usually represent wrongful means are

those directed at the party ultimately breaching its contract with another.” Crowley

II, 782 F.2d at 783-84 (emphasis added).

              UPG argues NGL Energy and NGL Supply’s “numerous and

conflicting” reasons as to why it terminated UPG’s access to its terminal constitute

misrepresentations. Additionally, UPG asserts that NGL Energy and Supply’s

explanations for termination, including UPG no longer being “set up” in NGL

Supply’s system and safety concerns, are false.7 In support of this argument, UPG

7
  UPG claims without citation that these concerns were later proven false. Appellants’ Reply Br.
at 5.

                                             -17-
posed a series of questions to our Court.8 However, as the circuit court

summarized, there is no affirmative evidence to support UPG’s speculative

contentions:

                 The only statements from NGL Energy to NGL Supply,
                 the breaching party, are the ones from Melissa Roberts to
                 the Dexter, Missouri and West Memphis, Arkansas
                 terminal managers. An email sent on February 24,
                 2015[,] at 2:23 p.m. states: “Please lockout carrier STC.
                 We didn’t realize at the time they were setup [sic] that
                 they operated as United Propane Gas, which we do not
                 do business with . . . .” Melissa Roberts explained in her
                 deposition that NGL does not currently sell propane
                 directly to UPG. UPG has provided no evidence that this
                 is a misrepresentation of fact.

                 Further, UPG alleges that it was falsely told its terminal
                 access was denied because it was not “set up” in NGL’s
                 system. In two emails, NGL Supply’s terminal
                 manager[,] Eddie Malone[,] told UPG: “My home office
                 called to let me know that you are not setup [sic] to load
                 at West Memphis, AR or Dexter, MO. Do not send
                 anymore [sic] trucks to these locations for loads. We
                 cannot load them” and “All I know is I was told that you
                 were not setup [sic] and we could not load your trucks at
                 Dexter or West Memphis.” However, Melissa Roberts

8
    UPG queried, again without citation:

                 If safety were the reason for termination, why would the NGL
                 entities give other opposing and unrelated rationales including the
                 false representations that it was related to technology problems or
                 payment concerns? How could Bryan Lehman make the decision
                 to terminate the agreement based on safety concerns if he was not
                 aware of any issues with an alleged malfunctioning truck? If it
                 were truly a policy of NGL to exclude carriers for safety concerns,
                 how had the company failed to turn away any other carrier or
                 implement any other safety-related exclusion in the past?

Appellants’ Reply Br. at 5.

                                                -18-
               testified in her deposition about the conversation with
               Eddie Malone, clarifying: “[W]henever we made the
               decision to lock out the carrier we, I notified the terminal
               [because] we had, you know, told them that they were
               cleared, so we were then going back and telling them that
               they were not cleared, so don’t load them.” These
               statements were not misrepresentations of fact
               constituting “wrongful means.”

R. at 278-79.

               “[A] party opposing a properly supported summary judgment motion

cannot defeat it without presenting at least some affirmative evidence showing that

there is a genuine issue of material fact for trial.” Patton, 529 S.W.3d at 723

(citation omitted). “In order for circumstantial evidence to be sufficient to prove a

civil claim it must do more than suggest a possibility, and a recovery is not

authorized if liability is a matter of conjecture, surmise or speculation; if a [fact-

finder] is required to speculate, the party must lose upon whom the burden of proof

ultimately rests.” Gross v. Barrett, 350 S.W.2d 457, 459 (Ky. 1961).

Accordingly, we agree with the circuit court.

               UPG additionally argues that there exists an issue of material fact as

to whether NGL Energy acted with “improper purpose” in causing NGL Supply to

terminate its Terminal Access Agreement under Hornung, 754 S.W.2d 855.9 In

9
  UPG incorrectly maintains that cases interpreting § 769 of the Restatement (Second) of Torts
use the terms “wrongful means” and “improper purpose” interchangeably as a “defining
limitation of parent company privilege to interfere with subsidiaries’ contracts.” To support this
claim, UPG cites to cases applying Arkansas and Missouri law. See Crowley II, 782 F.2d at 783

                                               -19-
that case, our Supreme Court concluded that Section 767 of the Restatement “fairly

reflect[s] the prevailing law of Kentucky” regarding improper interference with

contractual relations. Id. at 857. Thirty-one years later, our Supreme Court relied

upon Hornung in choosing to apply the Restatement (Second) of Torts § 769 to

claims of intentional interference by parent corporations in contracts of their

wholly-owned subsidiaries. Sparkman, 571 S.W.3d at 571. Thus, Hornung

supplies a general rule for claims that “the opposing party ‘improperly interfered’

with [a party’s] prospective contractual relation[,]” whereas Sparkman applies to

specific situations in which a parent corporation has already been shown to wholly

own its subsidiary. Hornung, 754 S.W.2d at 859; Sparkman, 571 S.W.3d at 571;

see also RESTATEMENT (SECOND) OF TORTS § 767 cmt. b (1979).

               Even if the “improper purpose” analysis were deemed to apply, UPG

has not presented the Court with a genuine issue of material fact as to whether

NGL Energy improperly interfered with NGL Supply’s access agreement with

UPG. Under Hornung, “Section 767 sets forth seven factors to be considered by

(holding that a parent company could be liable for interfering with its subsidiary’s contracts “to
the extent that they did not employ wrongful means or act for an improper purpose when
interfering”); T.P. Leasing Corp. v. Baker Leasing Corp., 293 Ark. 166, 171, 732 S.W.2d 480,
483 (1987) (“[A] parent corporation’s privilege permits it to interfere with another’s contractual
relations when the contract threatens a present economic interest of its wholly owned subsidiary,
absent clear evidence that the parent employed wrongful means or acted with an improper
purpose.”). The Sparkman majority cited both of these opinions and chose to exclude “improper
purpose” from its legal analysis; only the Sparkman dissent chose to impose this additional
element on parent corporations. Sparkman, 571 S.W.3d at 571-72, 574.

                                              -20-
the court . . .”; however, “[u]nless there is evidence of improper interference, after

due consideration of the factors provided for determining such, the case should not

be submitted to the jury.” Hornung, 754 S.W.2d at 858. In that case, Hornung

was denied a college football broadcast announcer position due to past gambling

activity, his playboy persona in a beer commercial, and his close association with

professional football. Id. at 859. Hornung alleged that those reasons were mere

subterfuge and he was in fact rejected so that another contender would get the job.
Id. Our Supreme Court held that, while improper means may “be inferred in an

interference action by proof of lack of justification,” something more than

speculation must be “presented to contradict the reasons given.” Id.

             UPG again argues that “[t]he varied and conflicting reasons offered by

NGL Supply and NGL energy [are] certainly evidence sufficient to infer an

improper purpose for the underlying decision to cause the contract to be

terminated.” Appellants’ Br. at 11. UPG further alleges that NGL Energy’s safety

concern was frivolous because UPG’s tank was allowed to exit NGL Supply’s

terminal carrying propane, questioning: “If safety was the real reason for

termination, wouldn’t NGL Supply and NGL Energy maintain an incident report or

other evidence to record such a significant event? Would the same safety standard

be applied to other entities accessing the terminal?” Id.

                                         -21-
             From this argument, it is unclear what, if any, improper purpose the

fact-finder is intended to infer. UPG has failed to offer any evidence other than

conjecture to suggest that NGL Energy was not justified in its interference in its

subsidiary’s contract. “‘[C]onclusory allegations based on suspicion and

conjecture’ are not sufficient to create an issue of fact to defeat summary

judgment.” Henninger v. Brewster, 357 S.W.3d 920, 929 (Ky. App. 2012)

(quoting Harstad v. Whiteman, 338 S.W.3d 804, 812 (Ky. App. 2011)).

             Summary judgment is also appropriate under Oklahoma law. To

establish a claim of tortious interference under Oklahoma law, a plaintiff must

prove: “(1) the interference was with an existing contractual or business right; (2)

such interference was malicious and wrongful; (3) the interference was neither

justified, privileged nor excusable; and (4) the interference proximately caused

damage.” Wilspec Techs., Inc. v. DunAn Holding Grp., Co., Ltd., 2009 OK 12, ¶

15, 204 P.3d 69, 74 (Okla. 2009). “Additionally, the claim is viable only if the

interferor is not a party to the contract or business relationship.” Id. “[T]he

determination of whether a parent corporation can be liable for tortious

interference with the contracts of a subsidiary is a question that must be determined

on a case by case basis, analyzing the factors provided in the Restatement

[(Second) of Torts § 767.]” Hawk Enterprises, Inc. v. Cash Am. Int’l, Inc., 2012

                                         -22-
OK CIV APP 66, ¶ 19, 282 P.3d 786, 794 (Okla. 2012). The Restatement

(Second) of Torts § 767 provides:

             In determining whether an actor’s conduct in
             intentionally interfering with a contract or a prospective
             contractual relation of another is improper or not,
             consideration is given to the following factors:

             (a) the nature of the actor’s conduct,

             (b) the actor’s motive,

             (c) the interests of the other with which the actor’s
                 conduct interferes,

             (d) the interests sought to be advanced by the actor,

             (e) the social interests in protecting the freedom of action
                 of the actor and the contractual interests of the other,

             (f) the proximity or remoteness of the actor’s conduct to
                 the interference and

             (g) the relations between the parties.

             In Hawk, the court concluded that the exact relationship between the

defendant corporation and its subsidiary was not developed sufficiently to make a

determination as to their relationship. Hawk, 282 P.3d at 796. In that case, the

evidence did not establish whether the subsidiary was wholly or partially-owned,

nor did it disclose the extend of the decision-making authority of any shared

employees. The Hawk court held that the majority of the § 767 analysis was

informed by the relationship between the parties. Id. at 794.

                                         -23-
            This view was adopted by the Western District of Oklahoma in Davis

v. PMA Companies, Inc., although that court provided the following distinction:

            Focusing on the last of § 767’s seven factors, the
            relationship between the parties, the Hawk court reversed
            summary judgment and remanded the case for additional
            proceedings. In analyzing whether the parent-defendant
            was a stranger to the contract between its subsidiary and
            the plaintiff, the court looked both at the nature of the
            underlying agreement—a franchise contract between the
            plaintiff and the subsidiary, for which the parent had
            signed a guaranty—and the relationship of the parent and
            subsidiary. Emphasizing that “the exact relationship
            between [the subsidiary] and the [parent-defendant]
            [was] not fully developed in this record,” meaning it was
            unclear whether the parent wholly or only partially
            owned the subsidiary and the extent of the decision-
            making authority and control of the parent over the
            subsidiary, the court directed the parties to address those
            “material” issues on remand. Id. ¶ ¶ 20–22, 292 P.3d at
            795.

            Unlike in Hawk, the relationship between the parties in
            this case is clear. Not only does PMA wholly own
            MMC, the SPA expressly gave PMA control over MMC
            by granting PMA three of the five positions on MMC’s
            Board of Directors. Moreover, the contracts involved in
            this matter are different than those at issue in Hawk.
            PMA is not just a guarantor of one party’s obligations to
            another agreement. In contrast, the Employment
            Agreement between MMC and Davis came about as a
            result of the SPA between PMA and Davis. Given the
            nature of the contracts and PMA’s control over MMC,
            PMA is a party to the Employment Agreement. Thus,
            since the alleged interferor—PMA—is not a stranger or
            third-party, Davis cannot maintain a cause of action for
            tortious interference.

                                       -24-
Davis v. PMA Companies, Inc., No. CIV-11-359-C, 2013 WL 866893, at *5 (W.D.

Okla. Mar. 7, 2013).

             Similar to the case in Davis, the record in this case establishes that

NGL Energy was not a third party to the contract between NGL Supply and UPG.

Instead, NGL Energy wholly owns and exercises control over NGL Supply.

Reece, the Senior Vice President of NGL Liquids, a division of NGL Energy,

established that he directed, controlled, and signed the agreement between NGL

Supply and UPG. Reece further testified that “because we are [NGL Supply’s]

sole customer . . . we would be the ones that are kind of in charge of the terminal

access agreements . . . . We’re involved in the contract between NGL Supply and

UPG.” In this case, NGL Energy and NGL Supply were acting as and through

one, single person – Reece. This evidence is uncontroverted.

             Given the nature of the contract and the relationship between NGL

Energy and NGL Supply, NGL Energy is not a stranger or third-party to the

terminal access agreement and is therefore privileged to interfere with the contract.

Under Oklahoma law, UPG cannot maintain a claim of tortious interference.

                                IV.    CONCLUSION

             In light of the foregoing, we affirm the judgment of the McCracken

Circuit Court.

             ALL CONCUR.

                                         -25-
BRIEFS FOR APPELLANTS:     BRIEF FOR APPELLEE:

David L. Kelly             C. Thomas Miller
Paducah, Kentucky          Matthew S. Eddy
                           Paducah, Kentucky

                         -26-