CORPORATE LAW: TORTIOUS INTERFERENCE QUESTION
I have a major client That I have had a business
relationship since 1999 (16.5 years). My company has served this client under several service contracts
for a segment of waste management. In 2008, my company made an investment
for waste processing for which my client is a major user, constituting about 70 percent by weight of the material being processed. The client was made aware of the investment and encouraged the investment in order to have improved service infrastructure locally.
Recently, my client hired a new company that oversees and manages our area of work. My client also has a consultant for management of this area as well. Both of these individuals represent separate entities. One of important functions they perform for my client is to seek out savings opportunities.
These two entities recently introduced my client to a competitor for management of a component of waste that we are currently under contract to manage, and we have managed since 1999. The entities advised my client that they were legally capable of contracting this component to the competitor and remove it from our right to manage. The customer chose to do this.
Our contract with my customer is a five year term contract with a termination for convenience clause that requires a 30 day notice prior to termination. I have consulted with legal counsel and have been advised that my client has breached my contract. The damage is for 30 days for not executing a termination notice as required. There may be more damage under the good faith covenant requirement, which my state, Arizona, recognizes. The client chose a competitor for a cheaper price, and case law “usually” views this reason to execute the termination for convenience clause as an act in bad faith.
My question is do I also have a case for tortious interference against the two parties that introduced my client to a competitor for management of a component of our contracted right? According to my research, a claim for tortious interference must meet several standards:
A valid contract or contractual relationship existed
The tortfeasor had knowledge of this contract or relationship
The tortfeasor intended to induce one of the contracting parties to commit breach
The tortfeasor was not otherwise privileged or authorized to induce breach
The contract was in fact breached
The plaintiff suffered specific economic damage as a result
All of these requirements for tortious interfenence have been met by the meddling entities. Their motivation was, at least, to curry favor with my customer to save them money. We have terminated the contract with my client for breach of contract. The damages are as follows:\
43 months remaining on the term for lost revenue for the lost component is about $50,000; or
Lost revenue for the entire contract 43 months is about $500,000, or
Damage for improper termination by customer for the unexecuted 30 days notice for cancellation is about 11,500.
Do I have a case for tortious interference against the meddling parties and how will the court apply damages? Our position is that the tortfeasors are liable for the damages for lost profits for the remaining 43 months since tort law shall be applied as opposed to contract law and they shall not be protected by the 30 day termination for convenience clause liability that my client enjoys under contract law. The tortfeasors are fully aware of our investment for waste processing, and that removal of the component could harm the viability of that investment.