McGanty v. Staudenraus

• Jurisdiction: Oregon
• Parties: , 10 IER Cases 1793 Jennifer L. McGANTY, Petitioner on Review, v. Robert L. STAUDENRAUS and Metropolitan Agencies, Inc., Respondents on Review. CC CV91-357; CA A75978; SC S40963.
• Citation: 321 Or. 532,901 P.2d 841
• Court: Oregon Supreme Court
• Decision Date: 08 September 1995

Page 841

901 P.2d 841

321 Or. 532, 10 IER Cases 1793

Jennifer L. McGANTY, Petitioner on Review, v. Robert L. STAUDENRAUS and Metropolitan Agencies, Inc. Respondents on Review.

CC CV91-357; CA A75978; SC S40963.

Supreme Court of Oregon In Banc.

Argued and Submitted Sept. 8, 1994.

Decided Sept. 8, 1995.

[321 Or. 533-A] Gary A. Rueter, of Haugeberg, Rueter, Stone, Gowell & Fredricks, P.C., McMinnville, argued the cause and filed the petition for petitioner on review.

Jeffrey M. Batchelor, of Lane Powell Spears Lubersky, Portland, argued the cause for respondents on review. With him on the response were Paula A. Barran and Jill Goldsmith Dinse.

GRABER, Justice.

This case involves the requirements for pleading three torts: intentional interference with economic relations, intentional infliction of severe emotional distress, and wrongful discharge. We hold that the trial court did not commit reversible error when it dismissed plaintiff's claim for intentional interference with economic relations, but that it did err in dismissing plaintiff's claims for intentional infliction of severe emotional distress and wrongful discharge.

Plaintiff was an employee of defendant Metropolitan Agencies, Inc. (Metropolitan), a collection agency. Defendant Staudenraus was president of, and an owner of, Metropolitan. He was plaintiff's immediate supervisor.

Plaintiff filed a complaint against Staudenraus and Metropolitan in December 1991. She asserted four claims against both defendants: intentional infliction of severe emotional distress, wrongful discharge, battery, and breach of contract. In addition, against Staudenraus only, she asserted a claim for intentional interference with economic relations.

The underlying factual allegations in the complaint, concerning all five claims, were these:

"From January, 1989, through August 17, 1990, the Defendant Staudenraus, while acting as Plaintiff's supervisor, engaged in a course of conduct constituting a continuing pattern of sexual harassment and abuse of the Plaintiff in the form of unwelcome sexual advances and comments directed at Plaintiff, and physical conduct by rubbing his hands and body against Plaintiff's shoulders, back and buttocks."

Pursuant to ORCP 21 A(8), defendants moved to dismiss the claims for intentional interference with economic relations, intentional infliction of severe emotional distress, wrongful discharge, and breach of contract, on the ground that the complaint failed to state ultimate facts sufficient to constitute those claims. Defendants did not challenge the sufficiency of the claim for battery. The trial court granted defendants' motion as to the tort claims but not as to the claim for breach of contract. The trial court entered a judgment, pursuant to ORCP 67 B, ¹ dismissing plaintiff's claims for intentional interference with economic relations, intentional infliction of severe emotional distress, and wrongful discharge.

Plaintiff appealed. The Court of Appeals held that the trial court erred in dismissing plaintiff's claims for intentional infliction of severe emotional distress and wrongful discharge. McGanty v. Staudenraus, 123 Or.App. 393, 395-97, 859 P.2d 1187 (1993). The Court of Appeals held, however, that the trial court's dismissal of the claim for intentional interference with economic relations was proper. Id. at 397, 859 P.2d 1187.

Plaintiff sought review in this court, arguing that she pleaded adequately a claim for intentional interference with economic relations. Defendants sought review of the decision of the Court of Appeals concerning plaintiff's claims for intentional infliction of severe emotional distress and wrongful discharge. We allowed review. ² We affirm, in part on different grounds.

INTENTIONAL INTERFERENCE WITH ECONOMIC RELATIONS

To state a claim for intentional interference with economic relations, a plaintiff must allege each of the following elements: (1) the existence of a professional or business relationship (which could include, e.g., a contract or a prospective economic advantage), (2) intentional interference with that relationship, (3) by a third party, (4) accomplished through improper means or for an improper purpose, (5) a causal effect between the interference and damage to the economic relationship, and (6) damages. Straube v. Larson, 287 Or. 357, 360-61, 600 P.2d 371 (1979); Wampler v. Palmerton, 250 Or. 65, 73-76, 439 P.2d 601 (1968). On review of the dismissal of this claim pursuant to ORCP 21 A(8), "we accept all well-pleaded allegations of the complaint as true and give plaintiff[ ] the benefit of all favorable inferences that may be drawn from the facts alleged." Stringer v. Car Data Systems, Inc., 314 Or. 576, 584, 841 P.2d 1183 (1992).

The dispositive issue in this case concerns the third requirement listed above, the "third-party" element. The Court of Appeals held that plaintiff failed to plead the "third- party" element of the tort of intentional interference with economic relations. McGanty, 123 OrApp at 397, 859 P.2d 1187. For the following reasons, we agree.

As this court recognized in Wampler, the modern tort of intentional interference with economic relations has deep historical roots. Wampler, 250 Or. at 72, 439 P.2d 601. In Top Service Body Shop v. Allstate Ins Co., 283 Or. 201, 204, 582 P.2d 1365 (1978), this court explained:

"Tort claims for wrongful interference with the economic relationships of another have an ancient lineage. Their history has been traced from interference with members of another's household in Roman law or with his tenants in English law, with his workmen after the 1349 Ordinance of Labourers, with prospective workmen or customers, with existing contracts for personal services, and with contracts generally, to contemporary forms not dependent on the existence of a contract. Despite these antecedents, protection in tort against interference with business relations has been described as largely a twentieth century development." (Citations omitted.)

The tort serves as a means of protecting contracting parties against interference in their contracts from outside parties. See Wampler, 250 Or. at 73, 439 P.2d 601 ("The interest protected * * * is the interest of the individual in the security and integrity of the contractual relations into which he has entered. Economic relations are controlled by contract and the public also has an interest in maintaining the security of such transactions. Therefore the law provides protection." (footnote omitted)). The tort allows a party to a contract, when that contract is breached by the other contracting (second) party, to seek damages from a third party that induced the second party to breach the contract.

On several occasions, in addressing the third-party element of the tort, this court has stated the general principle that a party to a contract cannot be liable for interference with that contract. Wampler, 250 Or. at 74-76, 439 P.2d 601; Sakelaris v. Mayfair Realty, Inc., 284 Or. 581, 588, 588 P.2d 23 (1978); Lewis v. Oregon Beauty Supply Co., 302 Or. 616, 625-26, 733 P.2d 430 (1987). Wampler also considered generally the "complicating ingredient [that] is added when the party induced to breach its contract is a corporation and the third person who induces the breach is not a stranger, but is a person who owes a duty of advice and action to the corporation." 250 Or. at 74, 439 P.2d 601. In that context, the court in Wampler said:

"So long as an officer or employe acts within the general range of his authority intending to benefit the corporation, the law identifies his actions with the corporation. In such a situation the officer is not liable for interfering with a contract of the corporation any more than the corporation could be liable in tort for interfering with it. The words 'good faith' should not be employed to render a corporate officer or employe liable for engaging in morally questionable activities upon behalf of his principal that nevertheless would not be tortious if he were acting for himself as the party to the contract.

"The interest protected by the interference with contract action is the interest of the plaintiff in not having his contract rights interfered with by intermeddling strangers. However, so long as the person inducing the breach of a corporate contract is an officer or employe acting for the benefit of the corporation and within the scope of his authority, the plaintiff cannot show that this interest was invaded and therefore cannot maintain an interference with contract action." Id. at 76-77, 439 P.2d 601 (footnote omitted; emphasis added).

None of our prior cases has analyzed the precise issue that is raised here, however: when (if at all) is an employee, who is alleged to have used improper means to interfere with a contract of the employer, a third party to a contract between the employer and another. This case calls for an analysis of that issue. Staudenraus argues that, even if he used allegedly improper means, he cannot be a third party to the contract between plaintiff and Metropolitan because, according to the complaint, Staudenraus was acting as Metropolitan at all pertinent times. If Staudenraus is not a third party to the contract between Metropolitan and plaintiff, but rather is acting as a party to the contract between Metropolitan and plaintiff, then Staudenraus cannot be liable for intentional interference with that contract. Therefore, we must consider whether, under the allegations in the complaint, Staudenraus was or was not acting as Metropolitan, his corporate employer.

The long-established doctrine of respondeat superior provides the appropriate guidance. Under that doctrine, "an employer is liable for an employee's torts when the employee acts within the scope of employment." Chesterman v. Barmon, 305 Or. 439, 442, 753 P.2d 404 (1988). The rationale behind the doctrine is that "[w]hen one employs a servant or agent to do his work, the...