Computers Unlimited, Inc. v. Midwest Data Systems, Inc.

• Decision Date: 08 November 1995
• Docket Number: No. 49A02-9501-CV-3,49A02-9501-CV-3
• Citation: 657 N.E.2d 165
• Parties: COMPUTERS UNLIMITED, INC., Appellant-Plaintiff, v. MIDWEST DATA SYSTEMS, INC., an Illinois Corporation; and GVS Enterprises Limited, an Illinois Corporation, Appellees-Defendants.
• Court: Indiana Appellate Court

Page 165

657 N.E.2d 165

COMPUTERS UNLIMITED, INC., Appellant-Plaintiff, v. MIDWEST DATA SYSTEMS, INC., an Illinois Corporation; and GVS Enterprises Limited, an Illinois Corporation Appellees-Defendants.

No. 49A02-9501-CV-3.

Court of Appeals of Indiana.

Nov. 8, 1995.

Stephen M. Sherman, Sherman & Associates, Indianapolis, for appellant.

Donald G. Orzeske, Donald K. Broad, Osborn Hiner Lisher & Orzeske, Indianapolis, Michael C. Terrell, Mary T. Doherty, Sommer & Barnard, Indianapolis, for appellees.

OPINION

ROBERTSON, Judge.

Computers Unlimited, Inc., appeals the grant of summary judgment in favor of Midwest Data Systems, Inc., and GVS Enterprises Limited. Computers Unlimited presents the following issues:

I. Whether the Court erred in granting the motions of Defendants Midwest Data Systems, Inc., and GVS Enterprises Limited Motions to Strike Plaintiff Computers Unlimited Inc.'s Response and supporting papers in opposition to Defendant's separate Summary Judgment Motions.

II. Whether the Court erred in granting Defendant GVS Enterprises Limited's Motion for Summary Judgment.

III. Whether the Court erred in granting Defendant Midwest Data Systems, Inc.'s Motion for Summary Judgment.

Inasmuch as a resolution of the first issue would not affect the results of this appeal, we consider only the arguments addressed to the propriety of summary judgment. We affirm in part and reverse in part.

Summary judgment is appropriate only if the pleadings and evidence sanctioned show that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. Winkler v V.G. Reed & Sons, Inc. (1994), Ind., 638 N.E.2d 1228. The movant bears the burden to prove the non-existence of a genuine issue of material fact and may meet the burden with a demonstration that the undisputed material facts negate at least one element of the claim against it. Id. If the movant sustains the burden, then the opponent may not rest upon the pleadings but must set forth specific facts which show a genuine issue exists for trial. Id.

The evidentiary matter most favorable to Computers Unlimited reveals that Liebhardt Mills sought to consolidate its business operations and hired Computers Unlimited both to provide computer hardware and to integrate Liebhardt Mills' software into the new system. Computers Unlimited provided an Alpha Micro hardware system and provided programming services. Computers Unlimited also eventually provided software to Liebhardt Mills.

Liebhardt Mills experienced problems with the system from the outset and believed Computers Unlimited to be at fault. Liebhardt Mills contacted Alpha Micro for a list of other computer hardware dealers and subsequently contacted Midwest Data. In general, Midwest Data did not perform software programming services but recommended GVS Enterprises for the work. Liebhardt Mills met with Midwest Data and GVS Enterprises and related to them the problems it had experienced with Computers Unlimited. During the meeting, GVS Enterprises presented to Liebhardt Mills its standard terms and rates.

Liebhardt Mills subsequently decided to purchase a new computer hardware system from Midwest Data and to hire GVS Enterprises to provide the software consulting and programming services. On the weekend of March 6, 1992, Midwest Data installed the new computer hardware system and transferred software and data to the new system. Midwest Data also transferred to the new system a software security chip encoded with information which permitted the use of some of the software. On March 7, 1992, GVS Enterprises began to perform its services for Liebhardt Mills. On March 9, 1992, Liebhardt Mills notified Computers Unlimited that their relationship was terminated because Computers Unlimited had not maintained and supported the previous computer system sufficiently.

II

Computers Unlimited alleged, in Count V of its complaint, that GVS Enterprises had tortiously interfered with its business relationship with Liebhardt Mills. Computers Unlimited alleged that GVS Enterprises had made an evaluation of the previous computer system which was critical of Computers Unlimited's services and that the evaluation had caused Liebhardt Mills to terminate its relationship with Computers Unlimited.

In support of its motion for summary judgment, GVS Enterprises designated certain evidentiary matter. GVS Enterprises identified a report it had submitted to Liebhardt Mills on March 19, 1992, and also identified answers which Computers Unlimited had given to interrogatories and other questions which related that its business relationship with Liebhardt Mills had terminated on March 9, 1992, that is, before the date of the report from GVS Enterprises.

One element of a cause of action for tortious interference with a contract is the existence of a valid and enforceable contract. Winkler, 638 N.E.2d at 1235. Similarly, one element of a cause of action for tortious interference with a business relationship is the existence of a valid business relationship. Comfax v. North American Van Lines (1992), Ind.App., 587 N.E.2d 118, 124. The undisputed material facts demonstrate that no valid and enforceable contract or valid business relationship existed between Computers Unlimited and Liebhardt Mills after March 9, 1992. Computers Unlimited has set forth no specific facts to show otherwise. GVS Enterprises issued the written report only after the termination. Also, Computers Unlimited and Liebhardt Mills had a disagreement about payments for services previously rendered; but one could not reasonably conclude that negotiations between the two on those matters constituted a continuance of the business relationship. Thus, GVS Enterprises bore its burden to prove the non-existence of a genuine issue of material fact on claims of tortious interference with either a contract or a business relationship after March 9, 1992.

Computers Unlimited, however, indicated that the written report was only one of the reasons Liebhardt Mills had terminated their business relationship. The undisputed material facts demonstrate that Computers Unlimited had a valid and enforceable contract with Liebhardt Mills until March 9, 1992. Before that time, GVS Enterprises had met with Liebhardt Mills, had submitted standard terms and rates to Liebhardt Mills, and had begun to perform services for Liebhardt Mills.

Regardless, one element of a claim of tortious interference with a contract is the absence of justification. Winkler, 638 N.E.2d at 1235. GVS Enterprises claims the undisputed material facts show that it acted with justification, that is, in the spirit of competition. GVS Enterprises cites Economation, Inc. v. Automated Conveyor Systems, Inc. (1988 S.D.Ind.), 694 F.Supp. 553, which indicates that competition can constitute a justification in an action for tortious interference with a business relationship.

Our supreme court has referred to the Restatement (Second) of Torts § 767 (1977), for factors which may be considered on the issue of the existence of justification. Winkler, 638 N.E.2d at 1235. The present case, however, involves competitors. The section of the Restatement just mentioned, at comment a, refers to § 768 of the Restatement for situations which deal specifically with the question of whether competition is a proper or improper interference with contractual relations, either existing or prospective. The section reads:

§ 768 Competition as Proper or Improper Interference

(1) One who intentionally causes a third person not to enter into a prospective contractual relation with another who is his competitor or not to continue an existing contract terminable at will does not interfere improperly with the other's relation if

(a) the relation concerns a matter involved in the competition between the actor and the other and

(b) the actor does not employ wrongful means and

(c) his action does not create or continue an unlawful restraint of trade and

(d) his purpose is at least in part to advance his interest in competing with the other.

(2) The fact that one is a competitor of another for the business of a third person does not prevent his causing a breach of an existing contract with the other from being an improper interference if the contract is not terminable at will.

Restatement (Second) of Torts § 768 (1977). Further:

One's privilege to engage in business and to compete with others implies a privilege to induce third persons to do their business with him rather than with his competitors. In order not to hamper competition unduly, the rule stated in this Section entitles one not only to seek to divert business from his competitors generally but also from a particular competitor. And he may seek to do so directly by express inducement as well as indirectly by attractive offers of...