Edwards v. Anaconda Co.

• Decision Date: 28 March 1977
• Docket Number: CA-CIV,No. 2,2
• Citation: 565 P.2d 190,115 Ariz. 313
• Parties: C. George EDWARDS, Appellant, v. The ANACONDA COMPANY, a Foreign Corporation, J. B. (Jack) Knaebel and Jane Doe Knaebel, Robert Lynn and Jane Doe Lynn, John Doe, Jane Doe, Richard Roe, the ABC Company, and XYZ Company, Appellees. 2232.
• Court: Arizona Court of Appeals

Page 190

565 P.2d 190

115 Ariz. 313

C. George EDWARDS, Appellant, v. The ANACONDA COMPANY, a Foreign Corporation, J. B. (Jack) Knaebel and Jane Doe Knaebel, Robert Lynn and Jane Doe Lynn, John Doe, Jane Doe, Richard Roe, the ABC Company, and XYZ Company, Appellees.

No. 2 CA-CIV 2232.

Court of Appeals of Arizona, Division 2.

March 28, 1977.

Rehearing Denied May 3, 1977.

Review Denied June 1, 1977.

Verity, Smith, Lacy, Allen & Kearns, P. C., by Kenneth L. Allen and John F. Munger, Tucson, for appellant.

Chandler, Tullar, Udall & Richmond by Thomas Chandler and Dan Cavett, Tucson, for appellees.

HATHAWAY, Judge.

The appellant, George Edwards, sued the Anaconda Company for intentional interference with prospective business advantage and also for breach of contract. The two claims were tried together. The lower court entered judgment directing a verdict against the plaintiff on the tort claim and in favor of the plaintiff on the contract action. The court ordered that only nominal damages be awarded for breach of contract. The plaintiff appealed, challenging the directed verdict against him on the tort claim and also the award of nominal damages.

Edwards' suit for intentional interference with prospective business advantage is based upon the following facts. In 1971, he entered into negotiations with Continental Oil Company, Conoco, for possible purchase by Conoco of his mining claims. After slightly more than five months of negotiations, Conoco informed Mr. Edwards that it was no longer interested in his property. Edwards then brought suit against Anaconda alleging that Anaconda's intentional interference was the proximate cause of Conoco's loss of interest.

The breach of contract claim arises out of an option agreement entered into between Anaconda and Edwards on February 12, 1965. Under this agreement, Anaconda was allowed to explore Mr. Edwards' property and, upon termination of the agreement, Anaconda was to give Mr. Edwards all geological and geophysical information which Anaconda had obtained concerning the property. Anaconda decided to terminate its option in April 1966 but, despite requests, failed to release all of the data it had obtained. Mr. Edwards' suit for breach of contract is based upon this refusal.

We affirm the trial court's direction of a verdict in favor of appellee on the issue of whether a tort was committed. For the purposes of reviewing the directed verdict, we are required to accept as true all competent evidence introduced by the appellant and any reasonable inferences therefrom. Tanner v. Levie, 105 Ariz. 149, 460 P.2d 995 (1969). Having done so, we must conclude that although appellant's evidence establishes a prima facie case of intentional interference with a prospective or continuing business relation, it also establishes that appellee's actions were privileged. Appellee therefore is not liable for the interference.

Arizona recognizes the tort of intentional interference with business expectancies. Pre-Fit Door, Inc. v. Dor-Ways, Inc., 13 Ariz.App. 438, 477 P.2d 557 (1970). This tort is defined in Restatement of Torts, § 766, as follows:

'Except as stated in Section 698 [betrothal promises], one who, without a privilege to do so, induces or otherwise purposely causes a third person not to . . . enter into or continue a business relation with another is liable to the other for the harm caused thereby.'

It is not necessary for there to have been an existing business relation, since there could be a tortious interference if Mr. Edwards was about to enter into such a relation but had not done so. There was evidence from which a jury could have found the existence of a business expectancy between Edwards and Conoco.

The language 'induces or otherwise purposely causes' clearly indicates intent is an essential element of this tort. Appellant presented evidence which raised a jury question regarding intent to interfere. He argues that Anaconda's intent to interfere is shown by its acts in maintaining mining claims which overlapped those of appellant. The act of maintaining overlapping claims does not, in itself, indicate an intent to interfere. Junior claims may be located so as to overlap the boundaries of a senior location. This is justifiable where the junior locator cannot determine the validity of the underlying claims. 1 American Law of Mining, § 5.19. Since appellant's claims are unpatented, Anaconda's maintenance of overlapping claims could be legitimate under this rationale. Appellant admitted at trial that 'overlapping is exceedingly common. It does not automatically present a conflict.' There was testimony at trial, however, from which the jury could have inferred an intent to interfere. Edwards testified that in January 1965, an Anaconda representative assured him that Anaconda did not really want the conflicting claims and that 'they recognized my superior possessory rights . . . so don't worry . . .'

Comment e, Restatement of Torts, § 766, states that 'To be subject to liability under the rule stated in this Section, the actor must have knowledge of the business expectancy with which he is interfering.' Appellant was not required to show that Anaconda had specific knowledge of the relation between him and Conoco so long as Anaconda knew that appellant had a business expectancy in that he would be continually attempting to negotiate with other companies. There are many cases in which tortious interference was found to exist because the defendant drove away plaintiff's customers or other persons with whom he wished to deal. The defendant's intent in these cases was not directed at the plaintiff's relation with any particular customer or person but rather was an intent to keep away all who might otherwise deal with the plaintiff. King v. City of Seattle, 84 Wash.2d 239, 525 P.2d 228, 230 (1974); Graham v. St. Charles St. R. Co., 47 La.Ann. 214, 16 So. 806 (1895); Tuttle v. Buck, 107 Minn. 145, 119 N.W. 946 (1909); Boggs v. Duncan-Schell Furniture Co., 163 Iowa 106, 143 N.W. 482 (1913). The comments to Restatement of Torts, § 768, which relate to competitor's privilege as a defense, impliedly support this interpretation of the knowledge requirement in cases where the interference is with a general business expectancy. Comment d gives the following example:

'A and B are competing distributors of shoes. A induces prospective customers of B not to purchase from him. A is privileged under the conditions stated in this Section.'

The example given in comment e similarly indicates that the knowledge requirement of the restatement is knowledge of the general expectancy.

'A operates a large manufacturing plant in a small town. He also operates there a general store in which he sells goods at retail. B operates a store in the same town. A instructs the employees in his plant that they must patronize only his store and that if they should be found patronizing B's store, they will be instantly discharged. The Institute takes no position as to whether A is privileged under the rule stated in this Section.'

Prosser recognizes that one of the business expectancies covered by the tort is 'the opportunity of obtaining customers.' The loss resulting from interference with this expectancy can be measured by looking to 'a background of business experience' rather than a particular relationship. W. Prosser, Handbook of the Law of Torts, § 130, p. 950 (4th ed. 1971). This indicates that intent to interfere with a single specific relationship is not required. In addition, Prosser indicates that the tort of interference with prospective advantage...