Court Opinion

ID: 6942381
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:09:31.704387+00
Date Added: 2024-06-11T16:07:45.110449
License: Public Domain

BOOCHEVER, Circuit Judge,
dissenting:
Because I believe that we should remand for a new trial on the issue of R/F’s direct liability, and because I believe Tennessee law does not require ill will or “actual malice” for inducement to breach a contract, I dissent in part.
I
There is no doubt that R/F’s direct liability was an issue at the outset of the case. The complaint clearly sets forth a claim for inducement to breach the contract against R/F, explicitly alleging:
Defendant Rotocast Plastic Products, Inc. [R/F] ... knew, or should have known of the contract which Plaintiff had with Defendant Plastic Industries, Inc. [PI].
Defendant Rotocast Plastic Products, Inc. [R/F] ... intentionally induced the breach of said contract.
The conduct of Defendant Rotocast Plastic Products, Inc. [R/F] ... was improper.
The inducement of Defendant Plastic Industries, Inc. to breach its contract with the plaintiff was the proximate result of acts of Defendant Rotocast Plastic Products, Inc. [R/F]_
The complaint, however, does not allege an alter ego claim against R/F. Nevertheless, the district court dismissed the alter ego claim against R/F at the close of McClaran’s evidence. None of the court’s statements thereafter explicitly indicates that the direct liability claim was dismissed as well. The court minutes of July 30, 1992, the ninth day of trial, state that the defendants’ motion for directed verdict was “denied except as to Alter Ego Claims.” There is no mention of direct liability. Thus, the claim that was before the court in the complaint was never explicitly dismissed. The record, even as quoted by the majority, is capable of the interpretation that the direct liability claim survived. Certainly McClaran thought so. As the majority acknowledges, he fought to include jury instructions on direct liability.
The majority fails to take into account any statements made after the dismissal of the alter ego claim. Yet surely those statements are relevant to the extent they show that at least McClaran believed the direct liability claim survived. At best, the record is ambiguous whether the court meant to dismiss all the claims against R/F, and statements after the dismissal make this ambiguity more acute.
Parklane Hosiery v. Shore, 439 U.S. 322, 327 n. 7, 99 S.Ct. 645, 649 n. 7, 58 L.Ed.2d 552 (1979), is quoted for the proposition that due process is violated if a judgment is used to bind “a litigant who was not a party or privy and therefore never had an opportunity to be heard.” That proposition is unexceptional when applied in the collateral estoppel context (as in Parklane): an earlier judgment may not be used against a litigant who was entirely uninvolved in the earlier case. In this case, however, R/F was a party, and perhaps a privy as well, that participated in the litigation-at least until the dismissal on one of the theories of liability.
It is not clear, however, whether R/F was led to believe it was dismissed entirely from the case. I therefore reluctantly conclude that the appropriate remedy is a remand for a new trial on the issue of R/F’s direct liability, assuring R/F its full day in court. In Anthuis v. Colt Indus. Operating Corp., 789 F.2d 207 (3d Cir.1986), the Third Circuit reached a similar conclusion in an equally confusing situation in which
acting on a motion against an earlier defendant who ostensibly is no longer in the case, the district court entered summary judgment against two new defendants who were never named in the complaint and who never had an opportunity to respond to the allegations raised in the affidavits. ...
Id. at 211. While the Third Circuit held that “a defendant must be given notice and an opportunity to respond before a case is disposed of on the merits against that party ... even where the party in question is present in the case in some other capacity,” id. at 211-12, it remanded for a new trial because the ease was “complex,” and “the pleadings and orders entered are, to say the least, confusing, and ... the legal theories on which the district court relied are not apparent.” Id. at 213. In this case, as in Anthuis, I believe a new trial is necessary because *366“both the parties and this court should be fully informed as to the bases of the district court’s decision.” Id.
II
I also respectfully disagree with the majority’s conclusion that the Tennessee common-law claim of inducement to breach a contract requires actual malice, or “ill will, hatred, or spite.” Both the Sixth Circuit and a federal district court, interpreting Tennessee law, have held that “malice” for the tort of inducement means legal malice, “the willful violation of a known right.” Edwards v. Travelers Ins. of Hartford, 563 F.2d 105, 121 (6th Cir.1977); AmeriGas Propane, Inc. v. Crook, 844 F.Supp. 379, 389 (M.D.Tenn.1993) (quotations omitted). Such a violation can be shown by words and actions of the defendant demonstrating that he knew of the plaintiff’s rights and yet acted in disregard of them. Id.; see also Continental Motel Brokers, Inc., v. Blankenship, 739 F.2d 226, 229-30 (6th Cir.1984). The Tennessee Court of Appeals recently reiterated its position that legal malice is all that is required in Riggs v. Royal Beauty Supply, Inc., 879 S.W.2d 848, 851 (Tenn.Ct.App.1994) (“malice, in this sense, -is not factual malice, that is, hatred or spite or ill will. It’s legal malice ... a wilful violation of a known right”).
By contrast, none of the published cases cited by the majority expressly requires more. Testerman v. Tragesser, 789 S.W.2d 553 (Tenn.Ct.App.1989), the only Tennessee authority cited by the majority for the requirement of actual malice, merely states “malice or ill will must be established in order to recover for tortious interference with another’s business ” (emphasis added), a different tort. Id. at 556. Testerman then states that “malice” is a necessary element in inducement actions, without defining what malice means in those circumstances, and citing to TSC Indus. v. Tomlin, 743 S.W.2d 169, 173 (Tenn.Ct.App.1987), a case that does not define malice as ill will or spite. Testerman, 789 S.W.2d at 557. Such an oblique reference is not enough to create a real conflict with the clear weight of Tennessee authority. Ill will or spite may be required before a court may award punitive damages, see Hodges v. S.C. Toof & Co., 833 S.W.2d 896 (Tenn.1992), but the Hodges court does not discuss the tort of inducement to breach a contract.
In fact, requiring no more than a variety of legal malice for inducement is in accordance with the great weight of general authority on this issue. As the Restatement of Torts 2d explains at length, the malice element is equivalent to a requirement that the tortfea-sor’s conduct be unjustifiable or “improper.” Restatement (Second) of Torts § 766, introductory note (1979). Such a requirement is not merely duplicative of a requirement that the conduct be intentional; it adds an inquiry “whether the actor was motivated, in whole or in part, by a desire to interfere with the other’s contractual relations.” Id. at § 767 cmt. d. While it may be easy to find such a motivation if the actor demonstrates ill will or spite, “[i]t has long been clear, however, that ‘malice’ in the sense of ill-will or spite is not required for liability.” W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 129, at 983 (5th ed. 1984). See, e.g., G.K.A Beverage Corp. v. Honickman, 55 F.3d 762, 767 (2d Cir.) (New York law requires knowledge and intent), cert. denied, — U.S. -, 116 S.Ct. 381, 133 L.Ed.2d 304 (1995); Thrift v. Hubbard, 44 F.3d 348, 356-57 (5th Cir.1995) (Texas law requires willfulness and intent, but not “malice”); Alvord-Polk, Inc. v. F. Schumacher & Co., 37 F.3d 996, 1015 (3d Cir.1994) (Pennsylvania law requires intentional and improper interference), cert. denied, — U.S. -, 115 S.Ct. 1691, 131 L.Ed.2d 556 (1995); Tata Consultancy Serv. v. Systems Int’l, Inc., 31 F.3d 416, 425 (6th Cir.1994) (Michigan law does not require hatred or ill will; economic motivation is enough); McNeill v. Security Ben. Life Ins. Co., 28 F.3d 891, 894 (8th Cir.1994) (Arkansas law requires purpose to interfere); Williams v. Shell Oil Co., 18 F.3d 396, 402 (7th Cir.1994) (Illinois law requires intentional and unjustified inducement); Summit Machine Tool Mfg. Corp. v. Victor CNC Systems, Inc., 7 F.3d 1434, 1442 (9th Cir.1993) (California law requires intentional, unjustified and wrongful breach); Brown Mackie College v. Graham, 981 F.2d 1149, 1152 (10th Cir.1992) (Kansas law requires *367intentional interference without legal justification).
There is no clear published authority that malice requires ill will, and ample authority — in and out of Tennessee — for not requiring ill will or spite. The district court was thus correct in denying R/T’s motion for a directed verdict on this issue, and we should affirm the district court’s finding of common-law inducement to breach. To do otherwise misinterprets Tennessee law and places the state outside the mainstream of inducement law.