What are the Elements for a Tortious Interference Claim Under California Law?
The law of contracts governs a wide range of business and commercial activity, allowing individuals and businesses to take risks with the knowledge that they have legal recourse. Breach of contract claims, however, are only possible between parties to a binding contract. This does not cover many situations in which someone else interferes in a contractual or economic relationship. Tortious interference, also known in California as economic interference, is a category of tort claims that allows recovery of damages for intentional or negligent acts that cause economic damage.
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Tortious Interference Claims
Tort claims may be intentional or negligent. An intentional tort requires proof that the defendant intended to cause the alleged harm to the plaintiff, or knew that harm was likely to result from their actions. Negligence requires a plaintiff to show that the defendant owed them a particular duty of care and breached that duty, and that this breach caused them measurable harm.
The two main types of tortious interference are “interference with prospective economic advantage” (IWPEA) and “interference with contractual relations” (IWCR). A claim of IWPEA can involve anything from a vast array of economic relationships, including contracts. In that sense, a claim for IWCR is a type of IWPEA claim. A claim for “inducing breach of contract” (IBC) is therefore a type of IWCR claim.
Intentional Interference with Prospective Economic Advantage
Intentional IWPEA occurs when a defendant interferes in an economic relationship between the plaintiff and a third party. California law identifies seven elements:
- An economic relationship that was likely to benefit the plaintiff;
- The defendant’s knowledge of this relationship;
- Independent wrongful conduct by the defendant;
- Intent on the defendant’s part to disrupt the economic relationship, or knowledge that disruption was likely because of their conduct;
- Disruption of the relationship;
- Harm to the plaintiff; and
- A causal connection between the wrongful act and the harm.
The interference must have been wrongful "by some measure beyond the fact of the interference itself." Della Penna v. Toyota Motor Sales, USA, Inc., 11 Cal.4th 376, 393 (1995). An IWPEA claim does not require proof of a written contract, and can be asserted in situations where the statute of frauds would otherwise require one. Buckaloo v. Johnson, 14 Cal.3d 815, 824 (1975).
Negligent Interference with Prospective Economic Advantage
The elements of a negligent IWPEA claim are almost the same as an intentional IWPEA claim. Instead of proving actual knowledge of the economic relationship, however, the plaintiff must prove that the defendant knew or should have known about it, and knew or should have known that they would disrupt it by failing to act with reasonable care. Again, a defendant’s conduct must be “independently wrongful apart from the interference itself.” Lange v. TIG Ins. Co., 81 Cal.Rptr.2d 39, 44 (2d Dist. 1998).
Intentional Interference with a Contractual Relationship
Intentional IWCR also shares many elements with intentional IWPEA. A plaintiff must prove that:
- A contract existed between the plaintiff and a third party;
- The defendant knew about the contract;
- The defendant engaged in conduct that prevented or hindered performance of the contract;
- The defendant intended this result, or knew it was likely;
- This harmed the plaintiff; and
- The defendant’s conduct substantially caused this harm.
Update: The California Supreme Court held on August 3, 2020 in Ixchel Pharma, LLC v. Biogen, Inc. that a plaintiff asserting a claim for tortious interference with an at-will contract must also prove independently wrongful conduct as an element of the claim.
Negligent Interference with a Contractual Relationship
California courts do not recognize negligent IWCR as a cause of action. Fifield Manor v. Finston, 54 Cal.2d 632 (1960).
Inducing Breach of Contract
IBC is essentially the same as intentional IWCR, except the plaintiff must prove that the defendant’s conduct caused the contract to be breached, and that the defendant intended this or knew that it was likely to happen. Punitive damages may be available if the defendant acted with malice. Duff v. Engelberg, 237 Cal.App.2d 505 (3d Dist. 1965).
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