HOLD IT PRODUCTS CORP V TEXTUS INTL INC
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STATE OF MICHIGAN
COURT OF APPEALS
HOLD IT PRODUCTS CORPORATION,
UNPUBLISHED
Plaintiff-Counterdefendant-Appellant,
v
TEXTUS INTERNATIONAL, INC. and DAVID
SMITH,
No. 201847
Oakland Circuit Court
LC No. 95-507260 CZ
Defendants-Appellees,
and
TEXTUS USA, INC.,
Defendant-Counterplaintiff-Appellee.
Before: Hood, P.J., and Markman and Talbot, JJ.
MARKMAN, J., (dissenting).
I respectfully dissent. In my judgment, the majority would impose liability upon defendants
without evidence that defendants sought specifically to interfere with plaintiff’s contract. Although I
largely concur with the majority’s description of Michigan law regarding the tort of tortious interference
with contractual relations, the elements of such tort were not clearly established by plaintiff in this case.
I would, therefore, affirm the trial court’s grant of a directed verdict in favor of defendants. Because I
believe that there is an ever-present risk of treating legitimately competitive business practices (as well
as business practices that are merely unethical as opposed to unlawful) as falling within the scope of this
tort, it is particularly important that this Court ensure that each of its traditional elements be clearly
satisifed.
First, the following additional facts are critical to this case. Plaintiff’s president, John Armaly
(“Armaly”), testified that in 1992, plaintiff and Cubbison’s entered into an oral “strategic partnership”
agreement, whereby plaintiff gave Cubbison’s exclusive distribution rights for its sacks in grocery stores
in the fourteen western states in which Cubbison’s distributed its products; and Cubbison’s agreed “to
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buy only Hold It Products stuffing sacks.” Cubbison’s continued to order sacks in June or July of each
year but was not obligated to buy any particular number of sacks in any given year or any sacks at all.
Indeed, Armaly testified that, under the terms of the agreement, Cubbison’s could have purchased
sacks from another supplier but then they would no longer have had exclusivity with regard to Hold It
products in the western states. Either party could terminate the agreement at any time if they “let each
other know if we weren’t going to go any further.”
In late 1992, defendants contacted Cubbison’s to see if it would purchase the sacks that plaintiff
had rejected. After defendants contacted Cubbison’s, they became aware that plaintiffs supplied sacks
to Cubbison’s. Defendants’ owner, David Smith (“Smith”), testified that he maintained a relationship
with Cubbison’s because he believed that there were difficulties between Cubbison’s and plaintiff.
Finally, in September 1993, defendants offered to sell sacks directly to Cubbison’s. In early 1994,
Cubbison’s told plaintiff that “they were not going to be in a position to buy sacks.” Plaintiff assumed
that Cubbison’s was getting out of the sack business altogether and began planning to distribute sacks
on its own in the western states. On June 1, 1994, Cubbison’s ordered sacks from defendants. On
June 14, 1994, plaintiff wrote a letter to Cubbison’s informing it that plaintiff was terminating their
exclusivity contract. In October 1994, Armaly stated, Smith met with Armaly and explained the
competition for Cubbison’s business by saying, “you hurt me in 1992 and I was going to hurt you,”
referring to plaintiff’s refusal to accept defendants’ sacks in 1992. There was never any evidence
introduced that showed that defendants knew that plaintiff had any contract with Cubbison’s.
Second, before analyzing the facts of this case, I believe that the law regarding tortious
interference with a contract must be clarified. The majority accurately set out the current and precise
statement of the law, as follows:
[O]ne who alleges tortious interference with a contractual . . . relationship must allege
the intentional doing of a per se wrongful act or the doing of a lawful act with malice and
unjustified in law for the purpose of invading the contractual rights . . . of another.
[Feldman v Green, 138 Mich App 360, 378; 360 NW2d 881 (1985).]
However, in order to be fully understood, these requirements must be read in conjunction with the
definitions and explanations provided in earlier Michigan case law, from which this Court condensed the
above version of the law in Feldman, supra. Based on this law, the tort of tortious interference with a
contract can be established by the “intentional doing of a per se wrongful act.” Id. “Wrongful” was
defined by the Supreme Court in Wilkinson v Powe, 300 Mich 275, 1 NW2d 539 (1942), as an act
“done to accomplish an unlawful purpose, i.e., to bring about a breach of contract.” A “per se
wrongful act” is that which is “inherently wrongful” or can never be “justified under any
circumstances.”1 Formall, Inc, v Community National Bank of Pontiac, 166 Mich App 772, 780;
421 NW2d 289 (1988). Accordingly, the Supreme Court in Meyering v Russell, 393 Mich 770; 224
NW2d 280 (1974), adopted the dissenting opinion of Justice O’Hara (retired and sitting on the Court
of Appeals by assignment) from this Court’s decision, 53 Mich App 695, 710; 220 NW2d 121
(1974), which found no tortious interference where the defendant did not resort to “unlawful methods of
competition” or “illegal means.” This language refers to the requirement of an unlawful purpose for the
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interference, and does not make “per se illegal acts” a prerequisite to liability. Feldman, supra at 369,
377.
Tortious interference with a contract can also be established by doing “a lawful act with malice
and unjustified in law for the purpose of invading the contractual rights . . . of another.” Id. This second
option pertains to the Supreme Court’s holding in Bahr v Miller Brothers Creamery, 365 Mich 415,
425; 112 NW2d 463 (1961), that “otherwise lawful acts may be actionable” if the defendant
“intentionally and actively induced the breach.” The Court in Wilkinson, supra at 282-85, held that an
action is malicious if, “with the knowledge of [the plaintiff’s] rights, [the defendant] intentionally and
knowingly and for unworthy or selfish purposes, destroys them by inducing [plaintiff’s contractor] to
break his contract.” Thus, based on these explanations, it is clear that neither an inherently tortious act
nor a criminal act is a preliminary requirement to tortious interference with a contract; yet neither can
liability be imposed where the defendant engages in outbidding or outmaneuvering a rival, where there is
no unlawful purpose or malice, even where a breach of contract may result.
I next look to see whether all of the elements of the tort were established in this case. In my
judgment, they were not. In regard to the first element, after viewing the evidence in the light most
favorable to plaintiff, it does appear that plaintiff had a contract with Cubbison’s and defendants do not
dispute this finding. However, the second and third elements are more questionable. In regard to the
second element, there appears to be no evidence that defendants ever knew that plaintiff and
Cubbison’s had an exclusive “strategic partnership” contract. Smith admitted that at some point in
1992, he became aware that plaintiff was supplying Cubbison’s with sacks. However, this is only
evidence that Smith knew that there was a business relationship.2 Hypothetically, even knowledge of a
contract to purchase sacks would not implicate defendants here, since plaintiff alleged that Cubbison’s
breached the exclusive contract by purchasing from someone other than its exclusive supplier. Although
we must view the evidence in the light most favorable to the nonmoving party, this does not mean that
we must blindly follow plaintiff’s bare assertions. There must be some evidence from which to draw
reasonable inferences. Here, there is no evidence that defendants knew of the exclusive contract.
The third element of this tort is that defendants intentionally and improperly interfered with the
contract, in essence that defendants acted with an unlawful purpose or malice. Plaintiff argued that
defendants knew about plaintiff’s relationship with Cubbison’s and that Smith told Armaly that he
competed to get Cubbison’s business because “you hurt me in 1992 and I was going to hurt you.”
Again, it would be impossible for defendants to act with an unlawful purpose, to induce the breach,
when there was no evidence that defendants even knew that there was an exclusive contract. Although
defendants may have tried to get Cubbison’s to shift their business from plaintiff to defendants, this is not
actionable under tortious interference with a contract. Defendants’ alleged motive of hurting plaintiff
may be circumstantial evidence of his intent to interfere with a relationship between plaintiff and
Cubbison’s, but here it does not show any intent to induce a breach of contract, as required.
The majority finds, without additional comment, that these three elements were established,
seeming to assume that knowledge of a business relationship is the same as knowledge of a specific
contract. In my judgment, this assumption is incorrect. Indeed, there are separate torts for interference
with a contract and interference with a business relationship specifically because the status of a
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contractor is different from that of a mere business associate with an expectation. As to the remaining
elements of breach and damages, in my opinion there is no reason to reach these questions, since I find
that plaintiff did not establish two preliminary elements.
Therefore, based upon the above facts, viewed in the light most favorable to plaintiff, I find that
plaintiff did not establish a prima facie case of tortious interference with a contract. In my judgment,
plaintiff did not put forth any evidence from which a court could conclude that a fact question existed
upon which reasonable persons may differ. Plaintiff only made a showing that defendants knew of a
business relationship between plaintiff and Cubbison’s, which defendants admitted. This knowledge
does not amount to knowledge of a specific or exclusive contract absent other evidence from which the
trier of fact could reasonably infer knowledge of a contract. Nor could defendants have had the
unlawful purpose of inducing a breach of contract when they did not know of a contract. Thus, I would
find that the trial court appropriately granted defendants’ motion for directed verdict.
/s/ Stephen J. Markman
1
“No categorical answer can be made to the question of what will constitute justification,” determined
the Supreme Court in Wilkinson, supra at 283, “and it is usually held that this question is one for the
jury.”
2
I note without deciding that plaintiff’s claim of tortious interference with a business relationship may
have been better served by the facts of this case. However, it also appears that the standard may be
higher for this tort, requiring “illegal, unethical or fraudulent” behavior, since “[t]he social desirability of
encouraging competition will justify some actions in an advantageous business relationship case which
would be tortious if a contract existed.” Trepel v Pontiac Osteopathic Hospital, 135 Mich App 361,
374-375; 354 NW2d 341 (1984). Since plaintiff did not appeal the dismissal of this count, however, I
will not address it further.
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