Ethyl Corp. v. Balter
| Decision Date | 08 July 1980 |
| Docket Number | No. 78-994,78-994 |
| Citation | 386 So.2d 1220 |
| Parties | ETHYL CORPORATION, a Foreign Corporation, Appellant, v. David BALTER, Appellee. |
| Court | Florida District Court of Appeals |
Britton, Cohen, Kaufman, Zinkow, Benson & Schantz and John L. Britton, Fort Lauderdale, for appellant.
Bailey & Dawes and Guy B. Bailey, Jr., Miami, for appellee.
Before HENDRY, HUBBART and SCHWARTZ, JJ.
Ethyl Corporation, one of several defendants below, appeals from a final judgment for large amounts of compensatory and punitive damages entered in favor of the plaintiff, David Balter. The judgment was entered on a jury verdict which, in answer to a special interrogatory, found that Ethyl had maliciously interfered with Balter's advantageous business relations. Upon the conclusion that the evidence establishes as a matter of law that Ethyl committed no such tort, we reverse the judgment below and order that one be entered for the appellant instead.
Balter's claims for damages stem ultimately from the loss of his interest in, and employment opportunities with Pac-Craft Corp., a now-defunct Dade County concern, of which he was once the president, chief operating officer, and owner of 50% of the capital stock. Pac-Craft was engaged in the processing and printing of polyethylene film. It obtained the vast majority of its primary raw material, the film itself, from Ethyl, one of the largest manufacturers of that product in the country. During the late 1960's, Pac-Craft encountered severe financial difficulties which primarily included its inability to pay its outstanding account with Ethyl, by far its largest creditor. As a result, Pac-Craft negotiated a $450,000 loan from the City National Bank of Miami (CNB), which was personally guaranteed both by Balter and Stanley Fromm, the owner of the other half of Pac-Craft, and which was secured by their stock in the company. The only reason the bank agreed to the loan was that Ethyl guaranteed it. Ethyl had decided, rather than forcing Pac-Craft into bankruptcy, instead to attempt to preserve the existence of an important customer in the hopes of receiving a greater return on its outstanding balance and of securing future business as well. In March of 1969, however, Pac-Craft defaulted on the loan. In accordance with the guarantee agreement, the CNB debt was satisfied by Ethyl which was assigned both the pledged Pac-Craft stock and the personal guarantees of Balter and Fromm.
Free now to direct the affairs of Pac-Craft as it wished, Ethyl entered into an agreement with Balter 1 under which he would receive back all of the Pac-Craft stock and be released from his personal guarantee if he were able to effectuate a reorganization of Pac-Craft under Chapter XI of the Bankruptcy Act. In order to comply with this agreement by supplying sufficient funds to achieve a satisfactory Chapter XI plan, Balter entered into a separate contract with a financier named Paul Wolf, who was represented by John Scussel. This agreement called for Wolf to provide $170,000 of partial funding to Pac-Craft in return for making Wolf a director of the company, and granting him the option to purchase 48% of the stock upon Balter's receipt of all the shares from Ethyl. Balter, however, was unable to produce an additional $34,000 2 which was necessary to fund the plan which had been finally approved by the Chapter XI bankruptcy court and by Ethyl and the Pac-Craft creditors' committee which Ethyl dominated as the control creditor. 3 Wolf then withdrew $100,000 of the $170,000 he had deposited with the court, dooming Balter's plan to failure. Subsequently, Wolf, supposedly in order to protect the remaining $70,000 he could not withdraw, himself financed the entire amount necessary to reorganize Pac-Craft. Thereafter, he received all of the stock from Ethyl, which he held until he sold his holdings in 1971. Wolf's plan involved a payment to creditors of some 37% of the outstanding indebtedness. Ethyl thus lost more than $300,000 out-of-pocket in its dealings with Balter and Pac-Craft.
In December, 1969, Balter filed suit against Wolf, alleging a breach of their agreement because of Wolf's withdrawal of the $100,000. Two years later, Balter filed an amended complaint against several more parties-defendant, including Ethyl. The only counts against Ethyl which now concern us alleged (1) a breach of contract, based upon Ethyl's refusal to approve initial plans of reorganization submitted by Balter, which would have required no or substantially less monies to fund, but which would also have brought Ethyl far less return on its outstanding claim; and (2) "malicious interference with contract and with reasonable business expectancies." The latter count was, apparently, primarily based on an alleged interference with the Balter-Wolf agreement, because of Ethyl's solicitation from others of subsequent and more favorable offers to reorganize. Balter claimed that the submission of such an offer by the Smart-Pac Corp. made it necessary for him to sweeten "his" plan by the additional $34,000 he subsequently was unable to raise. It was thus claimed that Ethyl had thereby become responsible for Wolf's withdrawal of his funds in breach of his contract.
After a three-week trial, the jury found in favor of Ethyl on the breach of contract claim. 4 As to the interference count, however, the jury answered "yes" to a special interrogatory which asked "Do you find that Ethyl Corp. maliciously interfered with the contract or with reasonable business expectations of David Balter, which was a legal cause of loss to David Balter?" Ethyl's appeal results from the judgment entered pursuant to this conclusion. 5
While Ethyl's attempted interference with the Balter-Wolf contract was apparently the primary tortious act upon which the plaintiff relied below, the trial involved a confusing amalgam of the entire decade-old and immensely complex set of relationships between and among all the parties involved. Our analysis of the massive record on appeal has been hampered by this fact; by the failure of the special verdict to specify precisely with which "contract or . . . reasonable business expectations" Ethyl was found guilty of interfering; and even more by Balter's understandable inability to articulate a coherent, consistent theory of liability. Nevertheless, we have carefully reviewed the entire transcript in the light of the applicable law. We find no evidence whatever to sustain the verdict against Ethyl on any basis. 6
To establish the tort of interference with a contractual or business relationship, it is well-settled in Florida that one must allege and prove (1) the existence of a business relationship under which the plaintiff has legal rights, (2) an intentional and unjustified interference with that relationship by the defendant and (3) damage to the plaintiff as a result of the breach of the business relationship. E. g., Nitzberg v. Zalesky, 370 So.2d 389 (Fla. 3d DCA 1979); Symon v. J. Rolfe Davis, Inc., 245 So.2d 278 (Fla. 1st DCA 1971). Turning first to Ethyl's alleged interference with the Balter-Wolf agreement, the existence of the agreement itself may satisfy the first requisite of the tort. There are any number of reasons, however, why the remaining requirements have not been met. First and foremost, the evidence presented at trial conclusively established and Balter has admitted that Ethyl never attempted to interfere directly with the Balter-Wolf relationship, and did not even communicate with Wolf until after he had already withdrawn his $100,000. Thus, there was a total lack of proof of a direct interference with that agreement, which is indispensible to the existence of an actionable wrong. Balter was able to show, at most, that steps taken by Ethyl very indirectly led to Wolf's withdrawal from the arrangement. Even if those acts were not privileged, as we hold infra they were, such conduct simply does not meet the requirements of the intentional tort of interference. There is no such thing as a cause of action for interference which is only negligently or consequentially effected. 4 Restatement (Second) of Torts § 766 C (1979). See also Hales v. Ashland Oil, Inc., 342 So.2d 984 (Fla. 3d DCA 1977), and cases cited. Furthermore, the only expectations which Balter would even arguably have realized had Wolf not reneged on his agreement were those which flowed solely and directly from Ethyl's own contract to return the stock if a plan of arrangement were consummated. Hence, Ethyl was essentially accused of interfering with its own undertaking to Balter. 7 No such action lies under the law of Florida. See United Yacht Brokers, Inc. v. Gillespie, 377 So.2d 668 (Fla.1979), and cases cited.
Balter also apparently contends that Ethyl may be held liable because of various pre-Chapter XI actions including selling Pac-Craft allegedly defective film and "causing" City National to call its loan which he says "forced" the corporation into reorganization. Again, there are numerous reasons why such claims may not be recognized. Primary among them is the fact that these activities were not directed against Balter or his relationship with Pac-Craft at all, but merely to the corporation itself. While they may or may not have justified an action by Pac-Craft against Ethyl, or a stockholder's derivative action filed by Balter in the name of Pac-Craft, they did not invade Balter's individual rights and therefore cannot form the basis of a tort action by him individually. See, e. g., Alario v. Miller, 354 So.2d 925 (Fla. 2d DCA 1978), and cases cited; Remy Beverages, Inc. v. Myer, 56 N.Y.S.2d 828 (Sup.Ct.1945), aff'd 269 App.Div. 1013, 59 N.Y.S.2d 371 (1945). In addition, Balter specifically released Ethyl from any such personal claims in return for its release of his $360,000 guarantee on the CNB note Ethyl had satisfied. See Genung v. Loftin, 152 Fla. 759, 13 So.2d 149 (1943); Berry...
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