Construction Management v. Caprock Communications, 01-3992.

• Decision Date: 30 August 2002
• Docket Number: No. 01-3992.,01-3992.
• Citation: 301 F.3d 939
• Parties: CONSTRUCTION MANAGEMENT AND INSPECTION, INC., Appellant, v. CAPROCK COMMUNICATIONS CORP./CAPROCK TELECOMMUNICATIONS CORP., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

301 F.3d 939

CONSTRUCTION MANAGEMENT AND INSPECTION, INC., Appellant, v. CAPROCK COMMUNICATIONS CORP./CAPROCK TELECOMMUNICATIONS CORP., Appellee.

No. 01-3992.

United States Court of Appeals, Eighth Circuit.

Submitted: June 12, 2002.

Filed: August 30, 2002.

Michael Hamby, argued, Greenwood, AR (Bill Walters, on the brief), for appellant.

Stephen K. Cuffman, argued, Little Rock, AR, for appellee.

Before: RILEY, BEAM, and MELLOY, Circuit Judges.

MELLOY, Circuit Judge.

Construction Management and Inspection, Inc. (CMI) sued Caprock for tortious interference with a business expectancy and breach of contract under Arkansas law. The district court¹ granted Caprock's motion for summary judgment on the tortious interference claim. Following a bench trial on the breach of contract claim, the district court entered judgment in favor of CMI and awarded CMI approximately $140,000 in damages. CMI appeals the adverse grant of summary judgment on its claim of tortious interference with a business expectancy. We review the district court's grant of summary judgment de novo. See Wal-Mart Stores, Inc. v. RLI Ins. Co., 292 F.3d 583, 586 (8th Cir.2002). The district court decision is affirmed.

Caprock is a local exchange and long distance telecommunications company. Caprock's facilities include buried fiber optic cable installed by independent contractors. Caprock also contracts with separate inspection companies that ensure the contractor properly installs the fiber optic cables. One such company, CMI, provided inspection services to Caprock pursuant to a one year contract entered into on March 9, 1999. The contract expired on March 9, 2000, but the parties continued their relationship on an at-will basis under the same terms and conditions as set forth in the original contract.

On May 8, 2000, Caprock sought bids from independent contractors, including CMI, for the services then being provided by CMI. Although CMI submitted a bid, a Caprock interoffice email, dated May 10, 2000, indicated that CMI's bid would not be considered. On May 12, 2000, Caprock accepted bids from five other companies to perform the inspection services. On June 5, 2000, Caprock informed CMI inspectors that Caprock had terminated its contract with CMI. Caprock advised CMI inspectors that they could seek employment with the companies awarded contracts if they wanted to continue working on Caprock projects. CMI alleges that 150 of its employees terminated their employment with CMI and went to work for the companies awarded the Caprock contracts.

CMI directs its claim of tortious interference with a business expectancy at Caprock's relationship with the CMI inspectors. In essence, CMI alleges that Caprock formulated and executed a plan to disrupt CMI's business by ending its relationship with CMI and inducing CMI's employees to quit and work for CMI's competitors. To prove the claim of tortious interference with a business expectancy, CMI must establish that: (1) CMI had a valid business expectancy; (2) Caprock had knowledge of the business expectancy; (3) intentional and improper interference by Caprock induced or caused a disruption or termination of the business expectancy; and (4) the disruption or termination was the proximate cause of CMI's damages. See McNeill v. Sec. Benefit Life Ins. Co., 28 F.3d 891, 893-94 (8th Cir.1994) (applying Arkansas law and citing Mid-South Beverages, Inc. v. Forrest City Grocery Co., 300 Ark. 204, 778 S.W.2d 218, 219 (Ark.1989)); Mason v. Wal-Mart Stores, Inc., 333 Ark. 3, 969 S.W.2d 160, 163-65 (Ark.1998) (adopting the Restatement (Second) of Torts § 766 elements of tortious interference with a business expectancy).

The district court concluded that CMI failed to demonstrate the existence of a genuine issue of fact on the third element, that is, that CMI could not show Caprock engaged in intentional and improper interference in a business expectancy. Arkansas has adopted the Restatement (Second) of Torts § 767, which provides a template for examining CMI's claim of tortious interference. See Mason, 969 S.W.2d at 165 ("Our review of our cases leads us to the position that, as Restatement § 766, our law requires that the conduct of the defendant be at least `improper,' and we look to factors such as those stated in § 767 to determine whether the defendant's conduct fits that description."). Therefore, under...