Kollar v. Martin

Kollar v. Martin  (96-253); 167 Vt. 592; 706 A.2d 945

[Filed 9-Dec-1997]


                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 96-253

                              APRIL TERM, 1997


Edward Kollar                   }     APPEALED FROM:
                                }
                                }
     v.                         }     Lamoille Superior Court
                                }
Stella Martin                   }
                                }     DOCKET NO.  S135-6-95Lecv


       In the above-entitled cause, the Clerk will enter:

       Defendant Stella Martin appeals from a superior court order that held
  Martin liable to plaintiff Edward Kollar for intentionally interfering with
  Kollar's contract to sell real estate to third-party Martin Feldman. 
  Martin argues that neither her threat to sue Feldman nor her refusal to
  sign a release waiving all rights to sue Feldman was wrongful or improper
  conduct that supports a claim for intentional interference with contractual
  relations.  We agree and reverse.

       In February 1993, Martin and Kollar entered into a purchase and sale
  agreement in which Martin agreed to purchase from Kollar a house and barn
  on South Main Street in the Village of Stowe for $115,000.  The agreement
  was contingent on Martin being able to obtain financing for the purchase. 
  Martin had difficulty obtaining financing, and the parties extended the
  agreement to allow Martin additional time to meet this contingency.  The
  extension provided that "[i]f the financing has not been completed by
  August 20, 1993, the Seller shall have the right to show the property for
  sale to potential customers."

       Martin planned to develop the property into a four- or five-unit
  retail/office complex. She became a tenant on the property in June 1993,
  but was unable to obtain financing, and her agreement with Kollar expired. 
  Martin then spoke with Feldman, indicating that she was still interested in
  purchasing the property and explaining her plan to develop the property. 
  Martin asked Feldman if he wanted to become her partner, but Feldman told
  her he was not interested in a partnership with her.  Martin then went to a
  bank to inquire about obtaining a loan to purchase the property.  Kollar
  was unaware of Martin's continued efforts to secure financing or her
  discussions with Feldman.

       On November 2, 1993, Kollar accepted an offer from Feldman and John
  Lupien, Jr. to purchase the property for $116,000.  The agreement was
  contingent on purchasers' review of all leases, and Kollar was required to
  convey the property free and clear of any lease that was not approved by
  purchasers.  The agreement also provided, "In the event Seller conveys
  property free and clear of tenants, said tenants will not have any rights
  of action against purchasers."  Feldman visited the property on November
  13, 1993, while Martin was still a tenant, and Martin told Feldman that she
  intended to sue him and the real estate agency if he went through with the
  purchase.  Kollar's attorney then sent Martin a letter telling Martin that
  her threat to sue Feldman was the only obstacle to closing the sale and
  asking Martin to sign a release.  Martin refused.  Consequently, the
  agreement between Kollar and Feldman/Lupien was terminated.  Kollar
  eventually sold the property in 1995 for $106,000.

 

       Prior to selling the property, Kollar filed a collection suit against
  Martin for three months' rent, unpaid utility bills and the final $250
  payment Martin was to have paid Kollar for the extension of the purchase
  and sale agreement.  Martin filed a counterclaim and a third-party
  complaint against the real estate agency, two real estate agents and
  Feldman for intentional interference with prospective contractual
  relations.  Kollar then moved to amend his original complaint by adding a
  second claim alleging that Martin had interfered with his contract with
  Feldman.  All the claims except Kollar's claim against Martin for
  interfering with the Kollar-Feldman/Lupien agreement were resolved by
  consent to judgment or dismissals pursuant to stipulation.

       Following a trial before the court, the court concluded that Martin
  had intentionally and improperly interfered with the agreement between
  Kollar and Feldman/Lupien.  Judgment was entered for Kollar in the amount
  of $23,331.74, the total for a $10,000 loss in profit for the sale of the
  property and $13,331.74 in expenses arising from the continued ownership of
  the property.  Martin appeals.

       "[T]o be liable for interference with a contractual relationship, the
  defendant must have intentionally and improperly induced or caused [a third
  party] not to perform under [his] contract with the plaintiff."  Williams
  v. Chittenden Trust Co., 145 Vt. 76, 80, 484 A.2d 911, 913 (1984) (emphasis
  added).  The right protected is the right to be secure in one's business
  relations.  Mitchell v. Aldrich, 122 Vt. 19, 23, 163 A.2d 833, 836 (1960). 
  Not every act that disturbs a contract is actionable, however.  Blake v.
  Levy, 464 A.2d 52, 54 (Conn. 1983).  The act of interference must be
  wrongful or improper, see Williams, 145 Vt. at 80, 484 A.2d  at 913, by some
  measure beyond the fact of interference itself.  Blake, 464 A.2d  at 55.

       The Restatement (Second) of Torts indicates that there is a conflict
  in authority on whether the plaintiff has the burden of proving that the
  defendant's interference with the contract was improper or whether the
  defendant must allege justification as an affirmative defense. Restatement
  (Second) of Torts, ch. 37, introductory note, at 6; see also Blake, 464 A.2d  at 55 (although some courts place burden on defendant to plead and
  prove justification or privilege, better approach requires plaintiff to
  plead and prove improper motive or means).  In the instant case, the
  parties dispute who has this burden, an issue we need not address here in
  view of our rule in Jacobsen v. Garzo, 149 Vt. 205, 542 A.2d 265 (1988).

       Although we have not previously considered whether the threat of
  lawsuit may be an improper action, in Jacobsen we held, "as a matter of
  law, the filing of a lawsuit alone cannot constitute tortious interference
  with contractual relations."  Id. at 209, 542 A.2d  at 268.  "[F]ree access
  to the courts is an essential right recognized by our state constitution." 
  Id.; see Vt. Const. ch. I, art. 4 (remedy at law secured to all).  Thus, we
  have limited the remedy for serious abuses of this right to two carefully
  restricted torts: abuse of process and malicious prosecution.  Jacobsen,
  149 Vt. at 209, 542 A.2d  at 268.  Having reached this "well-reasoned
  balance" between the right to access the courts and a remedy for serious
  abuses of this right, id., we will not permit litigants to circumvent the
  balance by allowing an action brought under a different label.  In
  Jacobsen, we concluded that defendant Garzo's prior act of filing a lawsuit
  was not itself improper as a matter of law, and thus, did not establish a
  claim for interference with contractual relations even though the
  litigation had ended unfavorably to him.  Id.

       We hold in this case that the threat of filing a lawsuit is similarly
  protected by our constitutional right to access the courts.  Plaintiff has
  indicated no reason that the rule in Jacobsen should not apply to a threat
  to file a lawsuit, nor can we conceive of one.  Moreover, the Restatement
  does not distinguish between filing a lawsuit and threatening to file a
  lawsuit.

 

  See Restatement (Second) of Torts § 767 cmt. c, at 31 (instituting
  litigation or threatening to institute litigation must be done in bad faith
  to support claim for contract interference); id. § 773 illus. 1 (good faith
  threat to bring legal proceeding is not improper).

       There is no dispute that Martin's actions caused Kollar's contract
  with Feldman/Lupien to fail, nor that Martin knew that her actions would
  have this effect.  Thus, the sole issue on appeal is whether Martin's
  actions -- either the threat to sue or the refusal to sign the release --
  were improper or wrongful.  Having extended the rule of Jacobsen to include
  threats of lawsuits, we conclude that Martin's threat to file a lawsuit
  against Feldman cannot alone constitute tortious interference with
  contractual relations.  Further, Martin had no obligation to sign the
  release waiving her constitutional right to access the courts; thus, this
  conduct was in no way improper of wrongful.

       Reversed.




                              BY THE COURT:



                              _______________________________________
                              Jeffrey L. Amestoy, Chief Justice

                              _______________________________________
                              Ernest W. Gibson III, Associate Justice

                              _______________________________________
                              John A. Dooley, Associate Justice

                              _______________________________________
                              James L. Morse, Associate Justice

                              _______________________________________
                              Denise R. Johnson, Associate Justice