Court Opinion

ID: 9580369
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:04:28.279734+00
Date Added: 2024-06-11T13:36:14.681575
License: Public Domain

WHITING, J.,
dissenting.
The majority recognizes that Adams, as the attorney for the seller in this terminable-at-will contract, might have been justified in advising his client to terminate the contract if “he was responsible for her welfare.” Because that justification is an affirmative defense, the majority concludes that the case cannot be disposed of upon a demurrer.
However, the motion for judgment incorporates by reference not only the contracts between the original seller (Williams) and the original buyer (Duggin), but also Duggin’s subsequent contracts with Centennial Contractors (Centennial), as well as Adams’ contract with his client, Williams. Therefore, we must consider these exhibits as a part of the plaintiffs pleadings. Hagan Estates, Inc. v. New York Mining & Mfg. Co., 184 Va. 1064, 1071, 37 S.E.2d 75, 78 (1946). I believe these exhibits establish Adams’ justification or privilege as a matter of law.
The Williams-Duggin and Williams-Adams contracts differ in the following significant respects:
(1) The original Duggin purchase price of $950,000 for 4.578 acres, or 199,456.88 square feet at $4.76 per square foot, was conditioned on future rezoning of the land for shopping center development. Because the zoning contingency in the first contract, dated March 7, 1978, could not be met, the parties reduced the zoning requirement and, therefore, the purchase price to $4.00 per square foot, or $797,827.52. These reductions were reflected in an addendum dated March 19, 1979, and confirmed in the contracts Duggin made with Centennial on August 8, 1980 and July 22, 1981. Moreover, Duggin’s counsel stated in oral argument that at the time of the proposed closing, the land was zoned for office building development. For that reason, Duggin, who was a shopping center developer, assigned his contract with Williams to Centennial, an office building developer. This assignment resulted in a profit to Duggin of $119,673.60.
*231(2) On July 23, 1981, after Williams had exercised her contractual right to terminate the Adams’ contract, she contracted to sell Adams the property, which was then zoned for office building development, for $850,000. At oral argument, Duggin’s counsel said that after Williams terminated her contract with Duggin, Adams went to Centennial and offered to sell Centennial the property at an increase of $119,673.60 over the amount Duggin had agreed to pay Williams. Duggin’s counsel also stated Adams and Williams were going to split that amount. The increase of $52,172.48 between Williams’ purchase price to Adams and her purchase price to Duggin was approximately half of the entire additional amount earned by cancelling Duggin’s contract. Adams was to pay 12% interest quarterly on his unpaid balance of the purchase price he would have owed Williams, but Duggin would' only have paid an effective interest rate of 10-’/2% on his unpaid balance of the purchase price he would have owed Williams. Adams’ counsel said in oral argument, without contradiction by Duggin’s counsel, that the differential in interest comprised the balance of one-half of the sum of $119,673.60 (or $59,836.80), earned by Williams cancel-ling the Duggin contract.
Thus, it was obviously to Williams’ advantage to terminate her at-will contract with Duggin. Because the documents incorporated by reference are a part of the pleadings, I believe the issue of Adams’ justification is now before us whether Adams could advise his client to take an action obviously for her benefit without liability to Duggin.
Even though Adams’ advice was to his personal benefit and in competition with Duggin, the pleadings show that Adams was also acting as Williams’ attorney in advising her to terminate the contract. Whether Duggin could have maintained an action for tortious interference with his contract had the termination been to Williams’ disadvantage1 or profited only Adams is not at issue.
As the majority notes, we have allowed a recovery for tortious interference with contracts at will, provided the intentional interference is accomplished by “improper methods.” See Hechler Chevrolet v. General Motors Corp., 230 Va. 396, 402, 337 S.E.2d *232744, 748 (1985). Duggin alleges Adams employed the following “improper methods”:
(1) Adams acquired confidential information and used it for his own benefit. The premise is faulty. Information released to an opposing party to a contract is not confidential in the absence of an agreement to treat it in confidence. Neither counsel cite any cases on this subject, and I have found none. However, we see the principle of confidentiality in operation in attorney-client and husband-wife privileged communication cases. One of the basic requirements of the privilege in each instance is that the information not be communicated by the holder of the privilege to the confidant in the known presence of a third party who is outside that confidential relationship. See United States v. United States Shoe Corp., 89 F. Supp. 357-58 (D. Mass. 1950); C. Friend, The Law of Evidence in Virginia, § 64 (2d ed. 1983). Williams and Adams, as parties on the opposite side of Duggin in these competitive matters, were not in a confidential relation with Duggin. Therefore, in the absence of Williams’ express agreement to limit the use of Duggin’s information, any communication from Duggin could be used in any way Williams and Adams deemed beneficial.2
The express agreement to treat the information released as confidential in Island Air, Inc. v. LaBar, 18 Wash. App. 129, 566 P.2d 972 (1977), distinguishes that majority-cited case from this case. No such agreement appears in the pleadings in this case.
(2) Adams breached a fiduciary relationship. We have decided a case involving tortious interference with a contract in connection with the breach of a fiduciary duty. Allen Realty Corp. v. Holbert, 227 Va. 441, 449, 318 S.E.2d 592, 597 (1984). However, we found the Allen Realty defendant breached a fiduciary duty he owed his client; Adams’ sole fiduciary duty was to his client, Williams. Code of Professional Responsibility Part 6 § II, Canon 7, EC 7-9, EC 5-21 (1983).3 Adams had no fiduciary duty to Dug-*233gin, the opposing party to the contract. In Glass v. Glass, 228 Va. 39, 53, 321 S.E.2d 69, 77-78 (1984), we recognized this distinction in pointing out that while an executor might have had to answer to the estate for failing to encourage competitive bidding for shares of corporate stock held by the estate because of his alleged misrepresentations which avoided such bidding, such misrepresentations were “irrelevant” in a claim against the executor by other stockholders whose contractual expectations were damaged by the executor’s contract.
At least one court has considered a case with facts similar to those in this case. See Livoti v. Elston, 52 A.D.2d 444, 384 N.Y.S.2d 484 (1976). In Livoti, an attorney for the seller of real estate offered his client more money for the real estate than the purchaser had contracted to pay in an oral contract of sale. The court held that while there could be a tortious interference with a voidable contract, the attorney had not improperly interfered with the contract because he was not guilty of either fraud or misrepresentation in inducing the seller to sell the property to him. As the court said, the attorney “owed no duty to the [buyers] to refrain from offering [his client, the seller] a higher price than they had agreed to pay, although the ethical propriety of his conduct is open to question in view of his role in the negotiations.” Id. at 447, 384 N.Y.S.2d at 486.
(3) Duggin refers to Adams’ letter to him in which Adams claimed Duggin had forfeited his deposit because Duggin had not closed within the required period as an instance of Adams’ wrongful attempts to “fraudulently mislead and intimidate [Duggin] into giving up his contractual rights.” There are two flaws in this as a ground for relief. First, the pleadings show that the letter did not cause Duggin to give up his contractual rights and it is, therefore, irrelevant. Second, the forfeiture would only have benefited Adams’ client and not Adams. If we held that an attorney’s attempt to secure a benefit solely for his client was an “improper method” of interfering with a contract, this would stretch the majority-created duties an attorney now owes his client and the opposing party beyond the bounds of reason.4
*234Because Duggin alleges no “improper methods” of interference, I believe the demurrer should be sustained on either of two reasons:
(1) Duggin had the burden to allege “improper methods” in his motion for judgment. The motion for judgment contains conclusory allegations of “improper methods,” “malicious, knowing, intentional, wrongful, willful, wanton [interference].” However, the “material facts . . . properly pleaded,” Bowman v. State Bank of Keysville, 229 Va. 534, 536, 331 S.E.2d 797, 798 (1985), in the motion for judgment, and exhibits attached, set forth the particulars of the “improper methods,” and they demonstrate privilege or justification as a matter of law.
(2) Where the allegations in a motion for judgment show contributory negligence as a matter of law, we have sustained a demurrer even though contributory negligence is an affirmative defense. Baker v. Butterworth, 119 Va. 402, 407, 89 S.E. 849, 849-50 (1916). While I recognize that Adams has the burden of establishing the affirmative defense of justification or privilege, Chaves v. Johnson, 230 Va. 112, 121, 335 S.E.2d 97, 103 (1985), I believe that defense conclusively appears from Duggin’s pleadings and exhibits. Cf. Freed v. Manchester Service, Inc., 165 Cal. App. 2d 186, 190-91, 331 P.2d 689, 691-93 (1958).
Duggin’s claim for a loss of profit because of Adams’ conduct presents a case of superficial merit. However, an analysis of the claim reveals its flaws. More importantly, the majority decision places yet another strain on our traditional attorney-client relationship. See Saltzburg, Lawyers, Clients and the Adversary System, 37 Mercer L. Rev. 647 (1986). I would sustain the demurrer, for the reasons I have assigned.

 In oial argument, Duggin’s counsel asserted that Adams could have cancelled his contract with Williams if proposed engineering and economic surveys were unsatisfactory to Adams. However, that right was never exercised and expired by its own terms 60 days after the parties executed the contract.

 This statement is not to imply any approval of Adams’ conduct vis-a-vis Williams. He may well have had seridus ethical problems if Williams had found that she could have dealt directly with Centennial without “splitting the profit with Adams.”

 Canon 7 is entitled: “A lawyer should represent his client zealously within the bounds of the law.” EC 7-9 provides in pertinent part: “In the exercise of his professional judgment on those decisions which are for his determination in the handling of a legal matter, a lawyer should always act in a manner consistent with the best interests of his client.” EC 5-21 provides in pertinent part: “The obligation of a lawyer to exercise professional judg*233ment solely on behalf of his client requires that he disregard the desires of others that might impair his free judgment.”

 I fear this may be a necessary consequence of the majority holding; the next case we hear may be one in which the attorney did everything Adams did, but simply had his client reap the entire reward.