Missouri law: Bell v. May Dept. Stores

David A. Szwak

Missouri law: Bell v. May Dept. Stores

Postby David A. Szwak » Fri Dec 02, 2005 2:53 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 Jan 23, 2006 9:56 pm

Bell v. May Dept. Stores Co.
6 S.W.3d 871
Mo.,1999.
Nov 23, 1999

III. Count II--Intentional Interference with Credit Expectancy
[5] Count II of Bell's petition claims Famous Barr intentionally interfered with Bell's credit expectancy by reporting false and negative information to credit agencies. This tort is one sort of intentional interference with a business expectancy and is comprised of the following elements: (1) a valid credit expectancy; (2) defendant's knowledge of the expectancy; (3) a denial of credit induced or caused by defendant's intentional interference; (4) absence of justification; and (5) damages. [FN18] We find Bell presented genuinely disputed facts to meet each of these five elements so that a jury could find that Famous Barr intentionally interfered with his valid credit expectancy.


FN18. See Rice v. Hodapp, 919 S.W.2d 240, 245 (Mo. banc 1996) (finding plaintiffs claim of intentional interference with a business relationship failed because defendant had an unqualified right to interfere); see also Franklin v. Mercantile Trust, 650 S.W.2d 644, 648 (Mo.App.1983) (holding plaintiff could make a claim of intentional interference with a contract based on his reasonable expectancy of receiving financing for loans).



A. Credit Expectancy
[6] An expectancy is "that which is expected or hoped for." [FN19] To have valid credit expectancy one need not have a formal contract. [FN20] There must be, however, a reasonable expectation of obtaining credit. [FN21] This expectancy cannot be too indefinite or remote. [FN22]


FN19. Black's Law Dictionary 576 (6th ed.1990).



FN20. See American Bank of Princeton v. Stiles, 731 S.W.2d 332, 343 (Mo.App.1987) (finding no tortious interference with a contract because of insufficient evidence that defendant interfered).



FN21. See Killian Construction v. Jack D. Ball & Associates, 865 S.W.2d 889, 891 (Mo.App.1993) (finding lowest responsible bidder for public project had protectable business expectancy of receiving contract).



FN22. Genovese v. DCA Food Industries, Inc., 911 F.Supp. 378, 380 (E.D.Mo.1996) (finding expectancy of an agreement with the Chinese government to develop and market products based on contacts with certain government officials too indefinite to support a business expectancy).


[7] The dispute in this case centers on whether Bell could have had valid credit expectancy at the time derogatory information was reported without having had a credit application pending with any creditor. Famous Barr argues the analysis of the court in Haas [FN23] and the facts of Franklin [FN24] suggest a pending credit application is necessary for credit expectancy as a matter of law. We disagree and hold no pending credit application is necessary for credit expectancy.


FN23. Haas v. Town and Country Mortgage Co., 886 S.W.2d 225 (Mo.App.1994)



FN24. Franklin v. Mercantile Trust, 650 S.W.2d 644, 648 (Mo.App.1983) (holding plaintiff presented sufficient evidence to defeat motion for directed verdict on claim for intentional interference with a business expectancy where defendant filed a derogatory report after plaintiff had a pending credit application).


[8] Bell presented undisputed evidence that he had a perfect credit history until *877 Famous Barr reported derogatory information. He made $15,000.00 in credit card purchases per year on average, had financing for his home, and no creditor had ever reported him delinquent. He also had a credit account with Famous Barr for twenty-two years, which he paid in full every month. In addition, Bell never was denied credit until denied by EAB. Finally, Bell showed he repeatedly asked Famous Barr to remove derogatory information from his credit report. Although Bell had no credit application pending at the time Famous Barr reported derogatory information, a reasonable jury could find he had valid credit expectancy based on his longstanding clean credit history, and his efforts to keep it clean. This holding is consistent with the rule that no formal contract is required for valid credit expectancy. [FN25]


FN25. See, e.g., American Bank of Princeton v. Stiles, 731 S.W.2d 332, 343 (Mo.App.1987).


We stress that only a valid or reasonable expectancy of credit satisfies the test. Not only must plaintiff expect to apply for credit, but also plaintiff must have a reasonable chance of obtaining credit. What constitutes a reasonable chance of obtaining credit is usually a question of fact for the jury to decide where fair-minded persons could disagree. In this case, a reasonable jury could find Bell's chance of obtaining credit was reasonable by his credit report being devoid of any delinquency. We hold a reasonable jury could find Bell had valid credit expectancy.
Famous Barr argues we should follow Haas v. Town and Country Mortgage Company [FN26] to conclude Bell had no valid expectancy of credit because he had no credit application pending with EAB when Famous Barr reported derogatory information. In Haas, plaintiffs sought to buy a piece of property that was being foreclosed and assumed the mortgage from the owner. Plaintiffs were negligent by not inquiring about the eligibility requirements of the mortgage loan they assumed, and one week after closing defendant mortgagee informed them they were ineligible because the loan was reserved for first time buyers. Defendant gave plaintiffs certain options, none of which plaintiffs exercised. Despite being advised by their own title company to make loan payments until the problem was resolved, plaintiffs missed payments. Consequently, defendant reported that plaintiffs were delinquent. Plaintiffs thereafter were denied credit and charged higher-than-normal interest rates on a car loan. The court of appeals reversed the judgment the trial court entered in favor of plaintiffs' claim for tortious interference with a business expectancy. It found "no evidence in the record that at the time [defendant] issued the credit reports that plaintiffs had established a business relationship either with any of the credit card companies which denied them credit or with the lender of the car loan." [FN27]


FN26. 886 S.W.2d 225.



FN27. Id. at 228.


Despite similarities between Haas and the instant case, Haas does not control because of important factual differences. Unlike the instant case, in Haas there was no evidence defendant wrongfully reported derogatory information to credit card companies. Plaintiffs neglected to learn the eligibility requirements of their loan and they were advised to continue repaying the loan. It is reasonable to conclude the court rejected plaintiffs' claim of intentional interference with a business expectancy claim because defendant was justified in reporting the derogatory information--the fourth element of this tort claim.
Also unlike the instant case, in Haas there was no evidence of the strength of plaintiffs' credit history. It found plaintiff's "mere hope" of establishing a credit relationship "tenuous" and not "evinc[ing] the existence of a valid business relationship or expectancy." The court may have found that while plaintiffs had credit expectancy, they lacked a valid or reasonable *878 expectancy. This language also suggests the court rejected plaintiff's claim because insufficient evidence showed defendant's actions caused plaintiffs' creditors to deny them credit--the third element of this tort claim.
Notwithstanding these factual differences, the court in Haas may have under-appreciated the claim of tortious interference with credit expectancy. It ruled against plaintiffs because they had no "established" business relationship with a creditor. It considered the "mere hope" of establishing a credit relationship "tenuous" and not "evinc[ing] the existence of a valid business relationship or expectancy." The court incorrectly focused exclusively on an established business relationship. As explained above, a formal credit contract is not necessary for valid credit expectancy. [FN28] Expectancy is just that: hope. If that hope is reasonable, then plaintiff has valid credit expectancy. In neither its factual background nor its analysis did the court in Haas cite any evidence of plaintiffs' credit history. Nor did it consider the reasonableness or validity of plaintiff's hope of obtaining credit.


FN28. See American Bank of Princeton v. Stiles, 731 S.W.2d 332, 343 (Mo.App.1987).


To the extent Haas and Franklin require a pending credit application in order to find valid credit expectancy, they are overruled.

B. Knowledge of Credit Expectancy
[9] The tort of intentional interference with credit expectancy "presupposes [defendant's] knowledge of the plaintiff's [expectancy], or at least facts which would lead a reasonable person to believe that such [expectancy] exists. Without such knowledge, there can be no intent and no liability." [FN29]


FN29. W. Page Keeton et al., Prosser and Keeton on the Law of Torts, section 129, at 982 (5th ed.1987) (using "contract or interest" instead of [expectancy]").


[10] The evidence Bell presented shows a genuine dispute whether Famous Barr knew or should have known of his credit expectancy. In July 1993, Famous Barr wrote Bell one of a series of dunning letters threatening, "[Y]our credit bureau report will show a derogatory rating of R9 for the next seven years. This may result in denial when trying to obtain car loans, charge cards, apartment rental, home mortgage, and even employment." These letters permit an inference that Famous Barr believed Bell cared about the affect a derogatory rating would have on his ability to obtain credit and likely were attempts to encourage Bell to pay to avoid a derogatory report. In addition, Bell repeatedly notified Famous Barr of his receipt of these letters and asked it not to make derogatory reports. Finally, although plaintiff need not show defendant knew or should have known plaintiff's credit expectancy was valid or reasonable, it may be fairly inferred that Famous Barr knew or reasonably should have known of Bell's valid credit expectancy because his credit history with Famous Barr was perfect.
It is also irrelevant that Famous Barr could not have known Bell would apply specifically to EAB for credit. As noted above, there is evidence Famous Barr knew or reasonably should have known of Bell's more general credit expectancy.

C. Intent and Causation
[11] "The person claiming tortious interference has the burden of proving that the other party actively and affirmatively took steps to induce the breach and that the expectancy would have come to fruition but for the actor's improper conduct." [FN30] Bell must show both intent and causation. [FN31]


FN30. American Bank of Princeton v. Stiles, 731 S.W.2d 332, 344 (Mo.App.1987).



FN31. Id.


*879 [12] Famous Barr had the requisite intent if it knew interference was certain or substantially certain to occur as a result of its actions, even if its express purpose was not to interfere. [FN32] The evidence Bell presented shows a genuine dispute whether Famous Barr had this intent or knowledge. Bell showed he disputed the bill for the fan, and that Famous Barr recognized and conceded this dispute. He repeatedly notified Famous Barr that, in light of the billing error, derogatory reports were wrongful. Famous Barr threatened to file and actually filed the reports anyway. Bell also presented evidence that derogatory information filed by Famous Barr remained on his credit report even after Bell paid for the fan. Finally, its dunning letters show Famous Barr knew these derogatory reports were detrimental to Bell's credit rating. Famous Barr claims its intent was negated by its attempts to correct the derogatory reports, by its automated reporting system, by its claim not to know how credit providers use credit reports, or by the cooperation of its employees. This evidence, however, merely shows a dispute of fact. A reasonable jury could find Famous Barr intended to interfere with Bell's credit expectancy, even if only by knowing the report was substantially certain to interfere.


FN32. See Francisco v. Kansas City Star Co., 629 S.W.2d 524 (Mo.App.1981) (concluding plaintiff did not make a submissible case of intentional interference with a contract upon the element of intent) (quoting Restatement of Torts 2d, section 766, Comment j (1979)).


[13] The evidence Bell presented also shows a genuine dispute whether Famous Barr's derogatory report caused EAB to deny credit to Bell. Bell presented evidence EAB denied credit to Bell because of derogatory information on Bell's TRW-credit report. The only such derogatory information on that report was supplied by Famous Barr. Bell also presented evidence Famous Barr continued, for a time, to report derogatory information even after promising to desist. Famous Barr does present evidence showing how it unsuccessfully tried to remove all derogatory information from Bell's credit reports. It is also undisputed Famous Barr never contacted EAB directly. This evidence, however, merely shows causation is disputed. In a light most favorable to Bell, a reasonable jury could find that but for Famous Barr's improper conduct, EAB would not have denied credit to Bell.

D. Justification
[14] [15] "One may act in a manner that interferes with another's business expectancy if by so doing one is acting to protect one's own economic interests." [FN33] The evidence Bell presented shows a genuine dispute whether Famous Barr was justified in reporting derogatory information to protect its economic interests. Bell presented evidence he properly rejected the fan, Famous Barr promised to replace it but never did, and Famous Barr reported derogatory information while assuring Bell it did not expect payment. As explained in Part II above, a reasonable jury could find Famous Barr reported derogatory information while a billing error existed in violation of the Federal Truth in Lending Act. [FN34] As such, the actions of Famous Barr may not have been justified. [FN35]


FN33. Tri-County Retreading, Inc. v. Bandag, Inc., 851 S.W.2d 780, 785 (Mo.App.1993) (holding plaintiff's claim of intentional interference with a business expectancy failed because defendant's interference was justified to protect its economic interests) (quoting O'Connor v.
Shelman, 769 S.W.2d 458, 461 (Mo.App.1989)).



FN34. See 15 U.S.C. section 1601 et seq.



FN35. See Franklin v. Mercantile Trust Co., 650 S.W.2d 644, 649 (Mo.App.1983) (holding defendant was unjustified in publishing derogatory credit information that plaintiff was delinquent in payments if plaintiff properly rejected defective goods).



E. Damages
Famous Barr does not dispute that Bell was damaged when EAB denied him credit *880 and the chance to earn TWA frequent flyer miles. We do not decide whether summary judgment is proper on Bell's claim for punitive damages in Count II because it was never reached by the trial court.

IV. Conclusion
For the foregoing reasons, we reverse the judgment of the trial court and remand for further proceedings in accordance with this opinion.

PRICE, C.J., LIMBAUGH, HOLSTEIN, WOLFF and BENTON, JJ., and SCHAEPERKOETTER, Special Judge, concur.

COVINGTON, J., not participating.
Mo.,1999.
Bell v. May Dept. Stores Co.
6 S.W.3d 871


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