Hare v. Family Publications Service, Inc.

• Decision Date: 03 December 1971
• Docket Number: Civ. No. 71-152-M.
• Citation: 334 F. Supp. 953
• Parties: Walter J. HARE and Elizabeth F. Hare v. FAMILY PUBLICATIONS SERVICE, INC., a Delaware corporation, et al.
• Court: U.S. District Court — District of Maryland

334 F. Supp. 953

Walter J. HARE and Elizabeth F. Hare v. FAMILY PUBLICATIONS SERVICE, INC., a Delaware corporation, et al.

Civ. No. 71-152-M.

United States District Court, D. Maryland.

December 3, 1971.

Sheldon H. Braiterman and Michael J. Milton, Baltimore, Md., for plaintiffs.

H. Vernon Eney and Lee M. Miller, Baltimore, Md., for all defendants except Kingston.

Benjamin C. Howard and L. Keith Simmer, Baltimore, Md., for defendant Robert G. Kingston.

JAMES R. MILLER, Jr., District Judge.

Memorandum Opinion and Order

In a third amended complaint Walter J. Hare and Elizabeth F. Hare have sued Family Publications Service, Inc. (FPS), Time, Incorporated (Time), William J. Conway (Conway), John W. Watters (Watters), Samuel B. Ananian (Ananian), and Robert G. Kingston (Kingston) in one count on what appear to be at least three causes of action. The first apparent cause of action alleged is one against FPS for breach of a contract between FPS and Walter J. Hare and his wife, Elizabeth. The second is one against Time, FPS, and the individual defendants on the ground that they conspired to induce the breach of said contract. The third is one against Time and the individual defendants on the ground that they did intentionally induce the breach by FPS of said contract.

All of the individual defendants were served with process outside of the State of Maryland. The two corporate defendants were served with substituted process. All of the defendants except FPS have filed motions to dismiss under Rule 12(b) F.R.Civ.P., raising, among other things, the jurisdiction of this court over them. Against this background the court is called upon to rule on the motion of the plaintiffs to compel answers to a number of interrogatories directed by the plaintiffs to the defendants under an order in which the court granted the plaintiffs leave to file interrogatories directed solely to factual issues of jurisdiction raised by the motions to dismiss.

The objections by the defendants to the plaintiffs' interrogatories fall generally within four categories, as follows:

(1) Lack of relevancy to the factual issues raised by the motions to dismiss;

(2) The information sought is protected by the accountant-client privilege;

(3) The information sought is protected by the attorney-client privilege; and

(4) A legal conclusion rather than a fact is sought.

Jurisdiction is alleged to be based upon diversity of citizenship. Therefore, the Maryland "long arm" statute, Art. 75, §§ 94-100, Md.Ann.Code (1969 Repl. Vol., as amended), is the statute under which personal jurisdiction of the defendants must be obtained. Haynes v. James H. Carr, Inc., 427 F.2d 700 (4th Cir. 1970), cert. denied, 400 U.S. 942, 91 S. Ct. 238, 27 L.Ed.2d 245 (1970); Rule 4(e) F.R.Civ.P. The parties seem to agree that jurisdiction, if it exists, as to Time and the individual defendants is conferred by § 96(a) (3) and § 96(a) (4), Art. 75, Md.Ann.Code (1969 Repl. Vol., as amended). Said sections provide in pertinent part as follows:

"(a) A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the person's

* * * * * *

"(3) Causing tortious injury in this State by an act or omission in this State;

"(4) Causing tortious injury in this State or outside of this State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in this State or derives substantial revenue from goods, food, services or manufactured products used or consumed in this State;"

* * * * * *

Section 96(b) of the "long arm" statute limits jurisdiction based solely upon § 96 to "* * * a cause of action arising from acts enumerated in this section * * *."

For the purposes of the jurisdictional argument only, Time has conceded that it engaged in a persistent course of conduct in the State of Maryland and that it intentionally induced a breach of contract by FPS. The individual defendants, Conway, Watters, and Ananian have conceded for the purpose of the jurisdictional argument only that they intentionally induced a breach of contract by FPS. Kingston, who is sued individually and as a general partner of the national accounting firm of Ernst & Ernst, has filed an affidavit in connection with his motion to dismiss in which he denies any contact with the claims of the plaintiffs in Maryland and denies that he has any substantial contact with Maryland in any other way.

The complaint alleges that FPS is a wholly owned subsidiary of Time. It further alleges that Conway, Watters, and Ananian are employees or directors of FPS. Kingston is alleged to be a partner in the national accounting firm of Ernst & Ernst.

The validity of the objections to the interrogatories based on lack of relevancy depends upon an analysis of the jurisdictional argument raised by the motions to dismiss and upon the extent to which evidence as to jurisdictional facts should be received at this stage of this proceeding. The position generally of Time is that since it has conceded for the purposes of jurisdiction that it engages in a persistent course of conduct in Maryland, the only question remaining as far as it is concerned is whether or not "tortious injury" has occurred under either § 96(a) (3) or § 96(a) (4) of the Maryland "long arm" statute. Time further argues that although it has conceded for the purpose of jurisdiction that it intentionally induced FPS to breach its contract, there have been no specific factual allegations by the plaintiffs showing that the actions of Time were not privileged, the argument continuing that if the actions of Time were privileged they would not constitute the basis of a tort and hence could not cause "tortious injury" as required by §§ 96(a) (3) and (4). Watters, Conway, and Ananian make similar arguments although they have not conceded that they have performed any acts in this state nor engaged in any course of conduct in this state nor derived substantial revenue from goods, food, services or manufactured products used or consumed in this state.

The burden of alleging and proving jurisdictional facts rests upon the plaintiff. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); Haynes v. James H. Carr, Inc., supra; Malinow v. Eberly, 322 F.Supp. 594, 600 (D.Md. 1971). Ordinarily this burden must be met by the plaintiff prior to trial when the allegations of jurisdictional facts are contradicted or denied. Malinow v. Eberly, supra. See Rule 12(d) F.R.Civ.P. As will be later developed in this opinion, however, this latter rule does not require a finding of jurisdictional fact by the court when the jurisdictional facts are essentially the same as the ultimate facts involved in the merits of the case. In view of the concessions previously noted, there are uncontradicted jurisdictional fact allegations, at least insofar as Time, Watters, Conway, and Ananian are concerned, that the contract was breached and that they intentionally breached it. The complaint alleges without contradiction that the plaintiffs were injured by the breach. Assuming then the existence of uncontradicted allegations of injury caused by an intentional inducement to a third party to breach a contract with the injured party and by a conspiracy to accomplish the breach, are there further factual allegations needed sufficiently to comply with the requirements of §§ 96(a) (3) and (4) as to "tortious injury" so as to withstand a motion to dismiss?

In Maryland, the torts of intentional inducement to breach of contract, Damazo v. Wahby, 259 Md. 627, 270 A.2d 814 (1970); Rinaldi v. Tana, 252 Md. 544, 250 A.2d 533 (1969); United Rental Equipment Co. v. Potts and Callahan, 231 Md. 552, 191 A.2d 570 (1963); Horn v. Seth, 201 Md. 589, 95 A.2d 312 (1953); Stannard v. McCool, 198 Md. 609, 84 A.2d 862 (1951); Cumberland Glass Mf'g Co. v. DeWitt, 120 Md. 381, 87 A. 927 (1913); Sumwalt Ice & Coal Co. v. Knickerbocker Ice Co., 114 Md. 403, 80 A. 408 (1911); Knickerbocker Ice Co. v. Gardiner Dairy Co., 107 Md. 556, 69 A. 405 (1908); and conspiracy to induce breach of contract, Damazo v. Wahby, supra; Edison Realty Co. v. Bauernschub, 191 Md. 451, 62 A.2d 354 (1948); Western Maryland Dairy v. Chenowith, 180 Md. 236, 23 A.2d 660 (1942), have long been recognized. The Maryland courts have held that the primary tort consists of the intentional inducement to a third party to breach a lawful contract without legal justification or excuse, Stannard v. McCool, supra, 198 Md. 617, 618, 84 A.2d 862 and cases therein cited, resulting in injury to the plaintiff, Damazo v. Wahby, supra, 259 Md. 627, 638, 270 A.2d 814 and cases therein cited. The defendants, in their respective motions to dismiss, argue that the requirement that there be lack of "legal justification or excuse" is an essential element of either tort and that the plaintiffs must negative the existence of any legal justification or excuse for the actions of the defendants in order to establish the existence of "tortious injury" as required by §§ 96(a) (3) and (4) of the "long arm" statute. The question then becomes one of determining to what extent, if any, the plaintiffs are obliged to negative or disprove the existence of privilege on the part of the defendants.

Prosser, in his work on torts,¹ on page 942, states:

". . . today it is generally agreed that an intentional interference with the existing contractual relations of another is prima facie sufficient for liability and that the burden of proving that it is `justified' rests upon the defendant. Otherwise stated and perhaps more accurately, the defendant may show that the interference is privileged by reason of the interests furthered by his conduct but the burden rests on him to do so."

This view is in accord with the general weight of authority. Smith v. American Guild of Variety Artists, 349 F.2d 975 (8th Cir. 1965); Keene Lumber Co. v....