Anytime a firm seeks to extricate itself from a Boston business contract, company executives must take great care to ensure that termination of the contract isn’t due to the personal interests of any one person or group of people at the firm.
If this is not done, the executives might find themselves accused of tortious interference, also sometimes called wrongful or intentional interference with contracts.
Typically, this kind of claim involves a third party. For example, Company A and Company B have a business contract. Company C then convinces or encourages Company B to violate the terms of the agreement with Company A. In this case, Company C might be found liable for tortious interference.
Such a claim might also be filed by an employee. For example, if a company fires an employee, thereby terminating the employment contract, on the basis of false statements made by a third party regarding the employee, that third party may be found liable for tortious interference.
Generally, what must be proven is that a valid contractual relationship existed between two parties, a third party had knowledge of that contract, the third party intended to convince or induce one of the parties to commit a breach, the third party wasn’t authorized to induce this breach and the non-breaching party suffered some type of measurable damage as a result.
Allegations of tortious interference against company executives working with the allegedly breaching party are more rare, in part because they are tougher to prove. The plaintiff would need to show that the executives were acting on behalf of their own personal interest, as opposed to in the interests of the company, when deciding to terminate or breach the contract.
Such was the issue at hand in Vazirani v. Heitz, decided last month by the Tenth Circuit Court of Appeals. Here, the plaintiff in this case, Vazirani, contracted with Aviva, an annuity company.
Aviva didn’t usually sell life insurance or annuities directly to consumers, but instead contracted with agents who in turn made sales to businesses, families and individuals.
Vazirani was one of these agents, entering into an agreement with the firm in 2005 that stipulated either party was allowed to terminate the relationship with written notice at any time, with or without cause.
The defendants in the case had served as executives in various positions at the company between 2005 and the time the Vazirani contract was terminated. Both parties had the authority to terminate contracts with its agents.
The defendants contended that starting in 2008, the business relationship with Vazirani and Aviva became strained after Vazirani broke several of Aviva’s policy rules for agents. After the fourth violation, Aviva terminated its relationship with Vazirani. Also playing into the decision were the fact that Aviva had taken steps to slow its annuity sales, and thousands of other agent contracts had also been terminated around this time.
Vazirani responded with a federal lawsuit, alleging that Aviva executives had tortiously interfered with his business relationship with Aviva and his business expectancies, as well as committed defamation and trade libel.
Such claims are serious, and require a significant amount of proof. The court outright dismissed the claims for trade libel and defamation. It later granted the defendants’ motion for a summary judgment, holding that Vazirani had failed to show that that the actions of the Aviva executives were motivated by any personal interest or that either acted outside the scope of his employment.
The Brown Law Firm, LLC, has offices in Belmont and Boston. For a free and confidential consultation, call 617-489-0817 or contact us online.
Vazirani v. Heitz, Dec. 20, 2013, U.S. Court of Appeals for the Tenth Circuit
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