Interference with business relations, malicious prosecution, and abuse of process

Black-letter propositions

1. 01

   Intentional interference with contractual relations requires a valid contract between the plaintiff and a third party, the defendant's knowledge of it, the defendant's intentional acts designed to induce a breach or disruption, an actual breach or disruption, and resulting damage; a stranger to the contract may be liable.

2. 02

   Interference with prospective economic advantage protects the same interest in stable economic relationships but does not require a legally binding contract, and in California the plaintiff must also prove that the defendant's conduct was wrongful by some measure other than the interference itself.

3. 03

   A plaintiff need not always prove an actual breach: interference that makes performance of the contract more costly or burdensome may be enough, and inducing a party to terminate a contract according to its own terms may be actionable.

4. 04

   When the interference consists of inducing another to sue on a colorable claim, the plaintiff must allege that the litigation was brought without probable cause and ended in the plaintiff's favor, so the interference claim cannot sidestep the requirements of malicious prosecution.

5. 05

   Malicious prosecution requires that the prior action was commenced by or at the direction of the defendant and pursued to a legal termination in the plaintiff's favor, was brought without probable cause, and was initiated with malice; probable cause is judged objectively, and a legally tenable prior action defeats the claim however little research preceded it.

6. 06

   Abuse of process requires that the defendant misused legal process, for example to extort, harass or threaten the plaintiff, and it may lie even when the underlying action was properly brought.

Use this attack sequence under time

Common wrong turns

• Ordinary competition is not enough for interference with prospective advantage; the defendant's conduct must be wrongful by some other measure.
• A malicious prosecution claim cannot be brought while the underlying action is still pending, because favorable termination is an element.
• A lawsuit that had probable cause cannot support malicious prosecution even if the plaintiff filed it for a bad motive; abuse of process may still be available.

Worked example

A rival electrician knows that a homeowner has signed a contract to have Dana rewire her house. The rival lies to the homeowner that Dana is unlicensed, and the homeowner cancels the contract.

Practice this topic

Interference with contractual and prospective relations

Cornell's Wex entry defines tortious interference as a common law tort allowing damages against a defendant who wrongfully and intentionally interferes with the plaintiff's contractual or business relationships. In Pacific Gas & Electric Co. v. Bear Stearns & Co., the California Supreme Court restated the elements of intentional interference with contractual relations: a valid contract between the plaintiff and a third party, the defendant's knowledge of it, the defendant's intentional acts designed to induce a breach or disruption, an actual breach or disruption, and resulting damage. It noted that a stranger to a contract may be liable, and that interference with prospective advantage does not require a legally binding contract.

The same opinion held that a plaintiff need not allege an actual or inevitable breach, because interference that makes performance more costly or burdensome may give rise to the claim, and that it may be actionable to induce a party to terminate a contract according to its terms.

The wrongful-act requirement

In Della Penna v. Toyota Motor Sales, the court considered the tort variously called interference with prospective economic advantage. It held that the plaintiff's burden includes proof that the defendant's conduct was wrongful by some measure other than an interference with the plaintiff's interest itself. The court wrote that the requirement redresses the balance between providing a remedy for predatory economic behavior and keeping legitimate business competition outside litigative bounds, and it left open whether the wrongful act must be independently tortious or unlawful.

Pacific Gas & Electric added a limit for litigation. A plaintiff who claims interference because the defendant induced another to sue must allege that the litigation was brought without probable cause and concluded in the plaintiff's favor, which are malicious prosecution's requirements, because the malicious prosecution cases strike the balance between free access to the courts and freedom from the cost of defending litigation.

Malicious prosecution and abuse of process

Sheldon Appel Co. v. Albert & Oliker states the elements of malicious prosecution of a criminal or civil proceeding: the prior action was commenced by or at the direction of the defendant and pursued to a legal termination in the plaintiff's favor, was brought without probable cause, and was initiated with malice. The court held that when the facts on which an attorney acted are undisputed, whether there was probable cause is a legal question decided objectively by asking whether the prior action was legally tenable. If it was tenable, probable cause exists and the malicious prosecution claim fails regardless of how much legal research the attorney did.

Cornell's Wex entry on false imprisonment, in discussing related torts, says malicious prosecution requires that the defendant acted without probable cause and with malice, caused the prosecution to proceed, and that the plaintiff was not guilty. It says abuse of process requires proof that the defendant misused the legal process to extort, harass or threaten the plaintiff.

Frequently asked questions