Tortious Interference With Credit Expectancy

David A. Szwak

Tortious Interference With Credit Expectancy

Postby David A. Szwak » Mon Oct 24, 2005 9:43 am

Bell v. May Dept. Stores Co.,
Not Reported in S.W.2d,
1999 WL 152575,
Mo.App. E.D., Mar 23, 1999

Contrary to Bell's assertion, we find Franklin v. Mercantile Trust Co., N.A., 650 S.W.2d 644 (Mo.App.1983), is inapposite to the instant case on the issue of the existence of a valid credit expectancy. In Franklin, the defendant submitted derogatory reports to credit reporting agencies from October 1978 through March 1980. 650 S.W.2d at 646. During that period, the plaintiff attempted to obtain financing from Landmark Bank, Ford Motor Credit, North St. Louis Trust Company and two other lenders unnamed in the opinion. Id. The plaintiff was denied credit from Landmark Bank because of the defendant's refusal to divulge information to Landmark Bank's "credit checkers." Id. The plaintiff did obtain credit financing through Ford Motor Credit, but the annual percentage rate was 2.83 points greater than he would have received at Landmark Bank. The plaintiff was denied credit from North St. Louis Trust Company and an unnamed lender because of derogatory information contained in a report from a credit reporting agency. Id. He was able to obtain credit to finance the purchase of a van, but was forced to pay off the loan in a shorter amount of time than North St. Louis Trust Company would have required. Id.

It is evident that in Franklin, the plaintiff actively applied for loans during the time the defendant reported derogatory information to the credit reporting agencies. As a result of the defendant's report of derogatory information, the plaintiff was denied credit or received a less favorable annual percentage rate and payment schedule. During the period in which the defendant reported derogatory information to credit reporting agencies, the plaintiff in Franklin harbored more than a "mere hope" of a credit expectancy with lenders. The plaintiff entered into a business relationship with the lenders in which his application was submitted, reviewed and approved or denied by the lenders during the period in question. Id. Such is not the record before us.

In this case, Bell had not attempted to establish a business relationship with EAB until at least eight months after Famous Barr transmitted the report of derogatory credit information to the credit reporting agencies. There is no evidence that Famous Barr continued to report derogatory information to the credit reporting agencies after Bell submitted his application for credit to EAB. Bell failed to show summary judgment facts establishing a genuine dispute as to the existence of a valid expectancy at the time Famous Barr issued the derogatory credit report.

B. Knowledge of the contract or expectancy

Next, we take up the issue of Famous Barr's knowledge of Bell's credit expectancy at the time of its conduct. In analyzing this issue, we recognize that "[i]ntentional interference presupposes knowledge of the plaintiff's contract or interest, or at least facts which would lead a reasonable person to believe that such interest exists. Without such knowledge there can be no intent and no liability." W. Page Keeton et al., Prosser and Keeton on the Law of Torts section 129, at 982 (5 th ed.1987). In Franklin, the court found the plaintiff had satisfied the elements of intent and knowledge. The defendant initially submitted derogatory reports to the credit reporting agencies after a dispute as to the payment of a car loan. Franklin, 650 S.W.2d at 646. The plaintiff filed a petition against the dealer and the defendant for rescission and cancellation of the note. Id. The plaintiff was then denied credit due to the "refusal of [the defendant] to divulge further information concerning plaintiff's credit" to the lender's "credit checkers." Id. The plaintiff then amended his petition and added a count alleging the defendant had intentionally interfered with the plaintiff's credit expectancy and business relationships. Id. Even after the plaintiff amended his petition, the defendant continued to report derogatory information about the plaintiff, and the plaintiff was denied credit or received unfavorable terms from three additional lenders. Id. The Franklin court found that under those facts, the elements of knowledge and intent were satisfied. [FN12] Id. at 648.
In this case, Famous Barr had no knowledge of Bell's credit expectancy or business relationship with EAB at the time EAB declined to extend credit to Bell. The record does not indicate that Famous Barr was advised of Bell's relationship with EAB. Bell failed to show summary judgment facts establishing the existence of a genuine dispute as to Famous Barr's knowledge of Bell's credit expectancy with EAB at the time the derogatory credit reports were submitted. See Thomas Phelps Found. v. Custom Ins. Co., Inc., 977 S.W.2d 33, 37-38 (Mo.App.1998).

The lack of evidence to allow the trier of fact to find the existence of any element is sufficient to support Famous Barr's prima facie showing that it is entitled to summary judgment. Bell failed to show that the facts asserted by Famous Barr as to the issues of the existence of a valid expectancy and knowledge were genuinely disputed. The trial court did not err in entering summary judgment in favor of Famous Barr on Bell's claim of tortious interference with a business relationship or expectancy in Count II.

David A. Szwak

Postby David A. Szwak » Mon Oct 24, 2005 9:47 am

Aylward v. Fleet Bank,
122 F.3d 616
8th Cir.(Mo.), Aug 14, 1997

Credit applicant brought action against bank based on negative credit references made by bank to credit reporting agencies as result of unpaid credit card charges allegedly incurred by third party using applicant's name. Bank moved to dismiss for lack of personal jurisdiction. The United States District Court for the Eastern District of Missouri, Stephen Nathaniel Limbaugh, J., granted motion. Applicant appealed. The Court of Appeals, Morris Sheppard Arnold, Circuit Judge, held that personal jurisdiction did not exist over bank.

We turn, then, to the third criterion to be used in considering the question of personal jurisdiction under the due process clause.
To evaluate meaningfully the third criterion (the relationship between the cause of action and the contacts), we must examine Mr. Aylward's complaint. It alleges that Fleet Bank defamed Mr. Aylward, interfered with his business expectancy "to be extended credit as necessary for his personal and professional endeavors," committed fraud, and made negligent misrepresentations by communicating "derogatory credit references"--"false statements of fact"--to credit reporting agencies, and then failing to correct those references, knowing that they would eventually be seen by others. The complaint also alleges that by those actions, Fleet Bank committed a "prima facie tort," i.e., acts "done with the intent of causing harm ... and ... without valid business justification," presumably describing an actionable wrong similar to the tort of outrage or the intentional infliction of emotional distress.

It is true that Fleet Bank's contacts with Mr. Aylward, and thus Missouri, were related to the acts that he complains of, in the sense that the telephone calls and the letter all concerned the credit cards and the notice of a past-due balance or a "charged off" delinquency on Mr. Aylward's credit record. But this relationship is merely tangential, not causal, and it is not otherwise of any particular significance. We certainly cannot say that Mr. Aylward's injuries arose from those telephone calls and letter. Even accepting for purposes of this opinion the assumption that Fleet Bank knew, after the first telephone call in January, 1995, that Mr. Aylward was not the true miscreant (a finding that the district court carefully avoided making), at least one notice of a past-due balance went to a credit reporting agency in mid-1994, six months earlier. Mr. Aylward's own affidavit declares, moreover, that during the second telephone call, also in January, 1995, Fleet Bank advised him that "erroneous credit information ... had [already] been reported to the national credit reporting agencies."

The acts that Mr. Aylward cites in his complaint as tortious are the communications of "derogatory credit references" to credit reporting agencies and the failures to correct those references. Those acts and omissions took place either in Albany, New York, the principal place of business for Fleet Bank; in Niagara Falls, New York, the location of Fleet Bank's credit card operations; in West Seneca, New York, the location of the office that attempts to collect overdue accounts for Fleet Bank credit cards; in Omaha, Nebraska, the source for electronic transfers of information to credit reporting agencies about overdue accounts on Fleet Bank credit cards; or, possibly, in Alphretta, Georgia, or Chicago, Illinois, or Allen, Texas, the locations of the three credit reporting agencies allegedly involved in this case. None of those acts or omissions occurred in Missouri.
Nor can we say that Fleet Bank directed its activities specifically at Missouri residents. The credit card applications showed an East Moriches, New York, address, and it seems to be merely happenstance that the "real" Ronald Aylward lives in Missouri. In other words, the chances seem equally likely that the "real" Ronald Aylward would live in any of the 50 states or, at least, in any of the 48 states in the continental United States. Thus we see none of the kind of intentional reaching out to Missouri residents that seems to be contemplated by the case law. See, e.g., Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-76, 105 S.Ct. 2174, 2181-83, 85 L.Ed.2d 528 (1985). We conclude, accordingly, that the district court properly granted Fleet Bank's motion to dismiss.

David A. Szwak

Postby David A. Szwak » Mon Oct 24, 2005 9:55 am

Maberry v. Said,
911 F.Supp. 1393
D.Kan., Dec 29, 1995

Interference with prospective advantage, negligence, tortious interference with contract, prima facie tort, and injurious falsehood are cognizable under Missouri law; tort of economic embarrassment is not recognized in Missouri.

Prima facie case of tortious interference with contract under Missouri law requires plaintiff to prove contract or valid business expectancy, defendant's knowledge of contract or relationship, breach induced or caused by defendant's intentional interference, absence of justification, and damages.

In addition to the burden of proof required of a plaintiff as prescribed in Tri-Continental [Leasing Co. v. Neidhardt], supra, [540 S.W.2d 210] [Mo.App.1976], it has been declared in Gerstner Electric, Inc. v. American Insurance Company, 520 F.2d 790, 794 (8th Cir.1975): "To recover in Missouri on a claim for wrongful interference with a contract by inducing its breach, the wrongful act must be intentionally done. Beggs v. Universal C.I.T. Credit Corp., 409 S.W.2d 719, 722 (Mo.1966). There must be proof that the defendant not only intended to commit an act which is ascertained to be wrongful but also that he knew it was wrongful at the time he did it."

David A. Szwak

Postby David A. Szwak » Mon Oct 24, 2005 9:57 am

A prima facie case of tortious interference with contract requires a plaintiff to prove "(1)
a contract or valid business expectancy; (2) defendant's knowledge of the contract or relationship; (3) a breach induced or caused by defendant's intentional interference; (*1405 4) absence of justification; and (5) damages." Nazeri v. Missouri Valley College, 860 S.W.2d 303, 316 (Mo.1993) (en banc). Citizens contends that the record is devoid of any evidence suggesting that it intended to interfere with Mr. Maberry's contracts or business expectancies, that Mr. Maberry cannot demonstrate an absence of justification, and that Mr. Maberry suffered no damages from the credit report. None of these contentions merit summary judgment. Missouri draws its definition of intent from the Restatement (Second) of Torts. In Francisco v. Kansas City Star Co., 629 S.W.2d 524, 530 (Mo.Ct.App.1981), the court stated the following: The element of intent in [tortious interference with contract] actions has been delineated by the RESTATEMENT OF TORTS 2d, §§ 766, Comment j (1979) as:
j. Intent and purpose. The rule stated in this Section is applicable if the actor acts for the primary purpose of interfering with the performance of the contract, and also if he desires to interfere, even though he acts for some other purpose in addition. The rule is broader, however, in its application than to cases in which the defendant has acted with this purpose or desire. It applies also to intentional interference, as that term is defined in §§ 8A, in which the actor does not act for the purpose of interfering with the contract or desire it but knows that the interference is certain or substantially certain to occur as a result of his action. The rule applies, in other words, to an interference that is incidental to the actor's independent purpose and desire but known to him to be a necessary consequence of his action. Further, in §§ 766, under Comment h, the following is found: The essential thing is the intent to cause the result. If the actor does not have this intent, his conduct does not subject him to liability under this rule even if it has the unintended effect of deterring the third person from dealing with the other. Restatement of Torts 2d, §§ 8A (1965) reads: 8A. Intent The word 'intent' is used throughout the Restatement of this Subject to denote that the actor desires to cause consequences of his act, or that he believes that the consequences are substantially certain to result from it.

David A. Szwak

Texas law

Postby David A. Szwak » Mon Oct 24, 2005 10:05 am

To recover on tortious interference with prospective contractual relations claim under Texas law, plaintiff must establish that: (1) there was reasonable probability that plaintiff would have entered into contractual relationship; (2) defendant acted maliciously by intentionally preventing relationship from occurring with purpose of harming plaintiff; (3) defendant was not privileged or justified; and (4) actual harm or damage occurred as result.

Yeager v. TRW, Inc.
984 F.Supp. 517

David A. Szwak

Texas law #2

Postby David A. Szwak » Mon Oct 24, 2005 10:09 am

Levine v. First Nat. Bank of Eagle Pass,
706 S.W.2d 749, Tex.App.-San Antonio, Mar 05, 1986

Applicant for Small Business Administration loan brought action against bank which gave her negative credit report for tortious interference with business relations. The 293rd District Court, Maverick County, Ben Martinez, J., dismissed on basis that action was barred by applicable two-year limitation period, and applicant appealed. The Court of Appeals, Cantu, J., held that tortious interference with business relations action was governed by general four-year limitation period, because no other specific limitations provision applied to actions for tortious interference.
Reversed and remanded.

To establish a cause of action for tortious interference with business or prospective contractual relations, the plaintiff must show:
1. A reasonable probability that the parties would enter into a contractual relationship;
2. that the defendant acted maliciously by intentionally preventing the relationship from occurring with the purpose of harming the plaintiff;
3. the defendant was not privileged or justified; and
4. actual harm or damage occurred as a result of the interference.
Verkin v. Melroy, 699 F.2d 729 (5th Cir.1983); see also Leonard Duckworth, Inc. v. Michael L. Field & Co., 516 F.2d 952 (5th Cir.1975); CF & I Steel Corp. v. Pete Sublett & Co., 623 S.W.2d 709 (Tex.Civ.App.-- Houston [1st Dist.] 1981, writ ref'd n.r.e.).

Return to “Damages Under FCRA”

Who is online

Users browsing this forum: No registered users and 2 guests