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RISC Upholds Finding of Tortious Interference With Contract

The Rhode Island Supreme Court has upheld a Superior Court finding that defendant tortiously interfered with a contract plaintiff had with a codefendant to purchase marina slips.  The Court also held that although the Superior Court improperly relied on evidence not in the record, there was abundant evidence in the record to sustain the finding. 

Plaintiff is a corporation with a single shareholder who is its CEO.  (The Court's opinion refers to the corporation and individual collectively by the individual's name.  This summary will use "plaintiff" to refer to them both).  Plaintiff had acquired land and condominium dock slips at a marina in Newport.  In 1995, Smiley put six more slips on the market.  Plaintiff and Smiley's real estate broker negotiated a purchase of the six slips for $165,000, which the broker confirmed in a letter to plaintiff's attorney. 

Shortly thereafter, Smiley entered into a purchase and sale agreement with Friedrich, the codefendant and appellant, for the sale of the same six slips for $175,000.  Copious, long-running litigation ensued, including several prior appeals to and decisions by the Supreme Court.  These included an opinion that the confirming letter from Smiley's broker to plaintiff's attorney was an enforceable contract.  Ultimately, there was a two-day bench trial of plaintiff's claim against Friedrich for tortious interference with contract.  That trial resulted in a finding that appellant had tortiously interfered with the contract and awarding damages of $61,258.05, plus interest for a judgment of $90,532.39. 

Friedrich appealed arguing that the trial justice had improperly relied on deposition testimony not in evidence to find tortious interference.  Friedrich also argued the trial justice erred by assessing pre-judgment interest for the entire period since the alleged interference because 29 months of the time was attributable to two unsuccessful appeals by plaintiff.

The Supreme Court reviewed the elements of a claim for tortious interference with contract:  the existence of a contract; the defendant's knowledge of the contract; the defendant's intentional interference; and damaging resulting from the interference.  The Court said the interference must be "improper," which is determined by a consideration of seven non-exclusive factors:  the nature of the defendant's conduct; the defendant's motive; the contractual interest with which the conduct interferes; the interest sought to be advanced by the defendant; the balance of the societal interest in protecting the freedom of the defendant and the contractual freedom of the plaintiff; the proximity of the defendant's conduct and the interference; and, the parties' relationship.

The trial court found that there was evidence that plaintiff and Friedrich had a long-standing feud over the operation of the marina association, of which Friedrich was a member of the board of directors and president as of 1994, including prior lawsuit over other disputes.  When Friedrich learned through a third-party that Smiley was selling his slips to plaintiff, Friedrich ran off and later called Smiley and "chewed him out" for not letting him know the slips were for sale. Apparently, plaintiff's acquisition of the slips would give her a greater voting interest in the association's governance.

The trial court noted there were numerous occasions during the trial in which Friedrich, Smiley and the third-party were impeached by prior inconsistent statements in their depositions. In addition, the trial court commented unfavorable on Friedrich's demeanor and testimony while on the stand.

The trial court found that the parties had an acrimonious relationship, that Friedrich has been "covert and aggressive" in undermining plaintiff's ability to buy the dock slips and that he had a personal animus in doing so because he wanted to thwart any increase of her voting interest in the association.  The trial court found the balance of the societal interest weighed in favor of plaintiff because Friedrich interfered with plaintiff's contract immediately after learning of it. Accordingly, the trial court found the interference was improper. 

The Court agreed the trial court had improperly relied on deposition testimony that was not in evidence at the trial. However, it found there was sufficient evidence in the trial record to sustain the trial court's finding.  The Supreme Court said the prior inconsistent statements constituted sufficient evidence to uphold the trial court's finding.  Accordingly, that error was harmless. 

The Court rejected Friedrich's attempt to argue that evidence about other lawsuits between the parties should not have been admitted pursuant to the Noerr-Pennington doctrine respecting the constitutional right to petition the government.  The Court said that argument was not raised until the parties filed post-trial memoranda and, therefore, it had been waived. 

Finally, the Court rejected Friedrich's argument that he should not be assessed pre-judgment interest for the entire period because trial had been delayed for 29 months by two unsuccessful appeals taken by plaintiff.  The Court declined to adopt a "fault-based analysis" with respect to awards of pre-judgment interest because that interest was not a penalty but simply the cost of having another person's money for the specified period.

Greensleeves, Inc. v. Smiley, 2013 WL 3013645 (R.I. June 18, 2013). 

http://www.sfandllaw.com/Practice-Areas/Business-Commercial-Litigation.shtml

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