Lake Shore Investors v. Rite Aid Corp., 1222

• Decision Date: 01 September 1985
• Docket Number: No. 1222,1222
• Citation: 67 Md.App. 743,509 A.2d 727
• Parties: LAKE SHORE INVESTORS v. RITE AID CORPORATION, et al. ,
• Court: Court of Special Appeals of Maryland

Page 743

67 Md.App. 743

509 A.2d 727

LAKE SHORE INVESTORS v. RITE AID CORPORATION, et al.

No. 1222, Sept. Term, 1985.

Court of Special Appeals of Maryland.

June 5, 1986.

Shale D. Stiller (Robert B. Levin and Frank, Bernstein, Conaway & Goldman, on brief), Baltimore, for appellant.

Steven K. Fedder (Leslie C. Bender, Davis, Fedder & Allen, M. Albert Figinski, Stephen B. Caplis and Melnicove, Kaufman, Weiner & Smouse, P.A., on brief), Baltimore, for appellees.

Argued before MOYLAN, ADKINS, and ROSALYN B. BELL, JJ.

ADKINS, Judge.

The principal question we must address in this case is whether a defendant who induces cancellation of a contract may be liable for tortious interference even though no breach of the contract has occurred. A secondary question is whether the record contains a showing of compensatory damages sufficient to withstand a motion for summary judgment.

The party seeking to recover damages for tortious interference is appellant, Lake Shore Investors (Lake Shore). The Circuit Court for Baltimore City granted summary judgment in favor of appellees, Rite Aid Corporation and Rite Aid of Maryland, Inc. (Rite Aid). ¹ The court found that factual disputes as to the damages claimed by Lake Shore precluded entry of summary judgment on that issue, but held that Lake Shore's tortious interference claim could not be sustained absent a showing of a breach of the contract with which Rite Aid had purportedly interfered. We hold that the court was correct on the damages point, but erred on the tortious interference issue. Accordingly, we reverse.

Facts

Some aspects of the controversy between Lake Shore and Rite Aid previously have been before this court and the Court of Appeals. Lake Shore Investors v. Rite Aid Corp., 55 Md.App. 171, 461 A.2d 725 (1983), aff'd sub nom. Rite Aid Corp. v. Lake Shore Investors, 298 Md. 611, 471 A.2d 735 (1984). We need not repeat all the history set forth in those opinions. For present purposes it is enough to outline the facts briefly.

In 1975 and 1978 Lake Shore acquired property in Anne Arundel County. It intended to develop that property, or some of it, as a shopping center. To that end, it entered into negotiations looking to the leasing of space in the center to Read's Inc., corporate predecessor of Rite Aid. No lease agreement, however, was ever consummated with Read's or Rite Aid. ²

Lake Shore then leased space in the shopping center to Drug Fair, Inc. Rite Aid learned of this in early 1979 and threatened litigation against Lake Shore unless the latter agreed to include a Rite Aid store in the center. Lake Shore responded that no lease existed between it and Rite Aid.

In August 1979, Lake Shore found itself short of funds. It agreed to sell the shopping center property to BTR Realty, Inc. BTR was aware of Rite Aid's threat to Lake Shore, however, as well as its claim of a leasehold interest, and insisted that the purchase agreement include a clause permitting BTR to withdraw from it if Lake Shore could not furnish BTR with a written release from Rite Aid. Rite Aid, continuing to insist that it had a valid lease with Lake Shore, refused to execute the release. BTR withdrew from the purchase agreement. This suit followed.

Breach of Contract as an Element of Tortious Interference

Count Two of Lake Shore's second amended declaration against Rite Aid is captioned "Wrongful Interference With Contracts." Alleging the facts we have summarized, as well as others, it avers, in pertinent part, that Rite Aid

maliciously, with ill-will and spite toward Lake Shore, wrongfully interfered with Lake Shore's contractual undertakings with B.T.R. ... by ... threatening B.T.R. with action that would delay construction of the shopping center ... so that B.T.R. did cancel its contract with Lake Shore.

Rite Aid moved for summary judgment on this count. Its argument was (and before us, is) that neither the allegations we have quoted nor the facts we have recited (treated as undisputed for purposes of the motion) show that BTR breached its contract with Lake Shore. Instead, the facts show only that BTR exercised its contractual right to withdraw from the purchase agreement when Rite Aid refused to execute the release. This, according to Rite Aid, is fatal, because breach of the contract is an essential element of the tort of tortious interference with that contract. The trial judge agreed, but we do not.

To be sure, there are tortious interference cases in which the tortfeasor caused or induced the breach of the contract. That was true in the leading English case of Lumley v. Gye, 2 El. & Bl. 216, 118 Eng.Rep. 749 (1853). It was also true in the leading Maryland case of Knickerbocker Ice Co. v. Gardiner Dairy Co., 107 Md. 556, 69 A. 405 (1908). In Knickerbocker, for example, the Court of Appeals thought "[i]t may be safely said that if wrongful or unlawful means are employed to induce the breach of a contract, and injury ensues, the party so causing the breach is liable in an action in tort." 107 Md. at 566, 69 A. 405. Similar cases include Daugherty v. Kessler, 264 Md. 281, 286 A.2d 95 (1972), Baird v. Chesapeake and Potomac Telephone Co., 208 Md. 245, 117 A.2d 873 (1955), Stannard v. McCool, 198 Md. 609, 84 A.2d 862 (1951), Cumberland Glass Manufacturing Co. v. DeWitt, 120 Md. 381, 87 A. 927 (1913), and Gore v. Condon, 87 Md. 368, 376, 39 A. 1042 (1898) ("The right to maintain an action can also be sustained, upon the doctrine that a man who induces one of two parties to a contract to break it, intending thereby to injure the other or to obtain a benefit for himself, does the other an actionable wrong."). In each of those cases, the Court recognized that under appropriate circumstances proof of wrongful inducement of a breach of contract could sustain a cause of action for tortious interference with contractual rights. In none of them, however, did the Court hold that the action could not be sustained without proof of a breach of contract.

A parallel line of authority indicates that proof of breach of contract is not an essential element of the tort. In Lucke v. The Clothing Cutters and Trimmers Assembly, 77 Md. 396, 26 A. 505 (1893), a union induced an employer to discharge a nonunion employee. There was no breach of contract, because the worker was an employee at will. The evidence nevertheless showed that but for the union's improper actions, the employment likely would have continued. The Court of Appeals characterized Lucke's action as one "to recover damages for the wrongful and malicious interference of [the union], by which [Lucke] was discharged from his employment and prevented the free exercise of his trade and occupation, and thereby deprived of his means of livelihood." 77 Md. at 397-98, 26 A. 505. It concluded that the action was viable despite the absence of a breach of contract. In like vein the Court, in a later case, discussed interference with contracts and unlawful interference with a person's trade, business, or employment. As to the latter area, it explained that "the authorities both in England and America have established the proposition that any unlawful or wrongful interference by A with the liberty of B to pursue his lawful ... business, or calling, whereby B suffers damage, is actionable...." The Sumwalt Ice and Coal Co. v. The Knickerbocker Ice Co., 114 Md. 403, 414, 80 A. 48 (1911). "[U]nlawful or wrongful interference" with one's business interests may, but clearly need not, encompass breach of contract.

More specific is the language of Goldman v. Harford Road Building Assn., 150 Md. 677, 133 A. 843 (1926). There the Court recognized that if the Building Association had induced an owner of land to breach a contract with Goldman, Goldman would have had a cause of action. 150 Md. at 681, 133 A. 843. But it went on to say that "a right of action is given under this rule [the rule stated in Cumberland Glass, Sumwalt, Knickerbocker Ice Co., and Gore, all supra ] against a third party who unjustifiably causes an existing contract to be terminated without breach." 150 Md. at 681-82, 133 A. 843 [emphasis supplied].

The principle stated in Goldman was reaffirmed in Wilmington Trust Co. v. Clark, 289 Md. 313, 329, 424 A.2d 744 (1981). In that case the Court of Appeals observed: "We have recognized that a third party who, without legal justification, intentionally interferes with the rights of a party to a contract, or induces a breach thereof, is liable in tort to the injured contracting party" [emphasis supplied]. The use of the disjunctive "or" is, we think, significant; it demonstrates that either breach or other interference with contractual rights may provide a basis for a tort claim. ³

Quite recently, in Orfanos v. Athenian, Inc., 66 Md.App. 507, 521, 505 A.2d 131 (1986), we had occasion to discuss the elements of a tortious interference claim. We did not list breach of contract as one of them. Instead, we thought the elements of the action were "not substantially different" from those listed in Restatement (2d) Torts, § 766. That section, as we shall see, does not require proof of breach of contract to sustain the action. Orfanos is consistent with the decision in Sharrow v. State Farm Mutual Insurance Co., 63 Md.App. 412, 492 A.2d 977, cert. granted, 304 Md. 362, 999 A.2d 191 (1985). Sharrow involved a client who settled a claim directly with the defendant's insurance carrier, thereby depriving the client's lawyer of a contingent fee. There was, of course, no breach of the contract between the client and the lawyer because, as we pointed out, that contract was revocable at the will of the client, and had been effectively terminated. 63 Md.App. at 418. We found no liability for tortious interference on the part of the carrier, because there was no evidence of culpable conduct on its part. But, despite the absence of a breach of contract, we observed: "If, to achieve its own ends, an insurer deliberately induces the claimant to repudiate...