Court Opinion

ID: 3029274
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:42:32.532361+00
Date Added: 2024-06-11T12:05:33.170242
License: Public Domain

United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 01-3992
                                 ___________

Construction Management and        *
Inspection, Inc.,                  *
                                   *
                Appellant,         *
                                   * Appeal from the United States
     v.                            * District Court for the Western
                                   * District of Arkansas
Caprock Communications Corp./      *
Caprock Telecommunications Corp.,  *
                                   *
                Appellee.          *
                                   *
                              ___________

                           Submitted: June 12, 2002

                                Filed: August 30, 2002
                                 ___________

Before RILEY, BEAM, and MELLOY, Circuit Judges.
                           ___________

MELLOY, Circuit Judge.

      Construction Management and Inspection, Inc. (CMI) sued Caprock for
tortious interference with a business expectancy and breach of contract under
Arkansas law. The district court1 granted Caprock’s motion for summary judgment

      1
      The Honorable Robert T. Dawson, United States District Judge for the
Western District of Arkansas.
on the tortious interference claim. Following a bench trial on the breach of contract
claim, the district court entered judgment in favor of CMI and awarded CMI
approximately $140,000 in damages. CMI appeals the adverse grant of summary
judgment on its claim of tortious interference with a business expectancy. We review
the district court’s grant of summary judgment de novo. See Wal-Mart Stores, Inc.
v. RLI Ins. Co., 292 F.3d 583, 586 (8th Cir. 2002). The district court decision is
affirmed.

      Caprock is a local exchange and long distance telecommunications company.
Caprock’s facilities include buried fiber optic cable installed by independent
contractors. Caprock also contracts with separate inspection companies that ensure
the contractor properly installs the fiber optic cables. One such company, CMI,
provided inspection services to Caprock pursuant to a one year contract entered into
on March 9, 1999. The contract expired on March 9, 2000, but the parties continued
their relationship on an at-will basis under the same terms and conditions as set forth
in the original contract.

      On May 8, 2000, Caprock sought bids from independent contractors, including
CMI, for the services then being provided by CMI. Although CMI submitted a bid,
a Caprock interoffice email, dated May 10, 2000, indicated that CMI’s bid would not
be considered. On May 12, 2000, Caprock accepted bids from five other companies
to perform the inspection services. On June 5, 2000, Caprock informed CMI
inspectors that Caprock had terminated its contract with CMI. Caprock advised CMI
inspectors that they could seek employment with the companies awarded contracts
if they wanted to continue working on Caprock projects. CMI alleges that 150 of its

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employees terminated their employment with CMI and went to work for the
companies awarded the Caprock contracts.

      CMI directs its claim of tortious interference with a business expectancy at
Caprock’s relationship with the CMI inspectors. In essence, CMI alleges that
Caprock formulated and executed a plan to disrupt CMI’s business by ending its
relationship with CMI and inducing CMI’s employees to quit and work for CMI’s
competitors. To prove the claim of tortious interference with a business expectancy,
CMI must establish that: (1) CMI had a valid business expectancy; (2) Caprock had
knowledge of the business expectancy; (3) intentional and improper interference by
Caprock induced or caused a disruption or termination of the business expectancy;
and (4) the disruption or termination was the proximate cause of CMI’s damages. See
McNeill v. Sec. Benefit Life Ins. Co., 28 F.3d 891, 893-94 (8th Cir. 1994) (applying
Arkansas law and citing Mid-South Beverages, Inc. v. Forrest City Grocery Co., 778
S.W.2d 218, 219 (Ark. 1989)); Mason v. Wal-Mart Stores, Inc., 969 S.W.2d 160,
163-65 (Ark. 1998) (adopting the Restatement (Second) of Torts § 766 elements of
tortious interference with a business expectancy).

      The district court concluded that CMI failed to demonstrate the existence of a
genuine issue of fact on the third element, that is, that CMI could not show Caprock
engaged in intentional and improper interference in a business expectancy. Arkansas
has adopted the Restatement (Second) of Torts § 767, which provides a template for
examining CMI’s claim of tortious interference. See Mason, 969 S.W.2d at 165
(“Our review of our cases leads us to the position that, as Restatement § 766, our law
requires that the conduct of the defendant be at least ‘improper,’ and we look to

                                         -3-
factors such as those stated in § 767 to determine whether the defendant’s conduct fits
that description.”). Therefore, under Arkansas law, the determination of whether
Caprock’s conduct rises to the level of intentional and improper interference with a
contract or a prospective contractual relation of another involves an analysis of the
following factors: (1) the nature of Caprock’s conduct; (2) Caprock’s motive; (3) the
interests of CMI with which Caprock’s conduct interferes; (4) the interests sought to
be advanced by Caprock; (5) the social interests in protecting the freedom of action
of Caprock and the contractual interests of CMI; (6) the proximity or remoteness of
Caprock’s conduct to the interference; and (7) the relations between CMI and
Caprock. Id. at 164; Restatement (Second) of Torts § 767 (1977). An evaluation of
these factors supports the district court’s ruling.

      At the time Caprock let the bids for the inspection services, it maintained an
at-will, customer-provider relationship with CMI. The parties no longer operated
under a contract and the solicitation of bids evidenced Caprock’s intention to conduct
business with companies other than CMI. Likewise, CMI had an at-will employer-
employee relationship with its inspectors. After openly seeking bids for inspection
services on its fiber optic projects, Caprock accepted the bids of five separate
companies. After accepting the bids of the five companies, Caprock advised CMI
inspectors of its decision. Caprock also informed the inspectors they could choose
to remain with CMI and not be involved in Caprock projects, or, they could continue
to work on Caprock projects by seeking employment with one of the companies
awarded a Caprock contract.

                                          -4-
      CMI makes much of the fact that Caprock solicited a bid from CMI while at
the same time secretly indicating by interoffice memos that it would not award a
contract to CMI. We agree with the district court that, in terminating its relationship
with CMI, Caprock could have been more candid with CMI as a matter of
professional courtesy. However, that lack of candor, alone, is not sufficient to show
an intentional and improper interference with a prospective business relationship.
Because Caprock and CMI were working on an at-will, customer-provider basis,
Caprock had a legitimate business interest in not alerting CMI that it would not be
considered for future employment and running the risk that CMI would walk off the
job prior to Caprock entering into a contract with new inspection firms.

      Caprock's statement to the CMI inspectors that new firms had been awarded
the inspection contracts was likewise not improper. Caprock merely informed the
CMI employees of the status of Caprock’s relationship with CMI. Employees were
accurately advised that if they wanted to continue to work on the Caprock projects,
they would have to seek employment with the new inspection firms. There is nothing
to indicate that the employees were induced to leave employment with CMI, other
than the fact that other firms would be doing the Caprock inspection work. The fact
that the inspectors terminated their employment relationship with CMI is not in itself
evidence of intentional or improper interference by Caprock. As the record makes
clear, it was common for CMI inspectors to leave CMI to work for several different
companies and to return to CMI when more work was available. CMI presented no
evidence that it would have had any work available for the 150 inspectors at the time
they chose to leave CMI employment.

                                         -5-
      The evidence presented to and relied upon by the district court supports the
conclusion that CMI failed to prove an essential element of its claim. We agree with
the district court that the departure of the CMI inspectors was free of intentional and
improper interference by Caprock. Accordingly, we affirm the district court’s
decision to grant summary judgment.

      A true copy.

             Attest:

                CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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