Middleton v. Wallichs Music & Entertainment Co., Inc.
| Decision Date | 19 June 1975 |
| Docket Number | No. 1,CA-CIV,1 |
| Citation | 536 P.2d 1072,24 Ariz.App. 180 |
| Parties | Charles MIDDLETON dba TV Leo's and Trudy Middleton, his wife, Appellants, v. WALLICHS MUSIC AND ENTERTAINMENT COMPANY, INC., dba Wallichs Music City, Appellees. 2242. |
| Court | Arizona Court of Appeals |
On this appeal we are required to determine whether the trial judge erred in directing a verdict against appellants' claim for intentional interference with appellants' claimed rights under a restrictive competition covenant in the lease. The covenant in question reads as follows:
'Lessor hereby covenants and agrees that it will not enter into a lease with any tenant if the tenant is primarily engaged in a television, radio and high-fidelity sales and service business.'
The lessor sued the tenant (appellants) for amounts due under the lease provisions. 1 The tenant then counterclaimed against the lessor asserting two counts. The first count alleged that the lessor had breached the above-quoted covenant by entering into a subsequent lease with appellee, Wallichs Music City. The second count of the tenant's counterclaim against the lessor was based upon the same facts, but asserted as a legal premise an intentional and willful interference with an advantageous contractual relationship, apparently with a view to enabling the tenant to collect punitive damages from the lessor.
In addition to the two count counterclaim against the lessor, the tenant also filed a third party complaint against the appellee, Wallichs Music City. The claim asserted against Wallichs Music City alleged that Wallichs had intentionally and willfully interfered with the tenant's advantageous contractual relationship with the lessor by inducing the lessor to breach the above-quoted restrictive covenant contained in the tenant's lease.
After a jury trial, the trial judge directed a verdict in favor of Wallichs Music City on the tenant's claim for tortious interference. The jury returned a verdict in favor of the lessor on its claim for rental due from tenant in the amount of $30,322.65. On Count I of the tenant's counterclaim against the lessor, the jury returned a verdict in favor of the tenant in the amount of $38,000. A formal written judgment was entered in accordance with the verdicts, and the tenant has appealed from that portion of the judgment in favor of Wallichs Music City on the third party complaint for tortious interference. 2
The legal principles to be applied in determining the propriety of a directed verdict are well established in Arizona. In considering a motion for directed verdict the trial judge must consider all competent evidence and the inferences to be drawn therefrom most strongly against the moving party in order to determine whether or not a Prima facie case has been presented. Ruiz v. Faulkner, 12 Ariz.App. 352, 470 P.2d 500 (1970). A Prima facie case requires that there be evidence to justify, not necessarily compel, an inference of liability. A Prima facie case is one which, simply stated, gets the case to the jury for consideration. Robledo v. Kopp, 99 Ariz. 367, 409 P.2d 288 (1966). The motion admits the truth of whatever competent evidence the opposing party has introduced, including all inferences that can be reasonably drawn therefrom. E. L. Jones Construction Co. v. Noland, 105 Ariz. 446, 466 P.2d 740 (1970). The facts pertinent to the disposition of this appeal will be stated in accordance with the foregoing principles.
The legal basis for a cause of action for tortious inducement to breach a contract has long been recognized in this jurisdiction. See Meason v. Ralston Purina Co., 56 Ariz. 291, 107 P.2d 224 (1940). There the court stated that the claim is based upon the proposition that a contract is a property right and that a party to a contract has a cause of action against a third person who procures its breach by the other party unless the acts of that person are performed in the legitimate exercise of his own rights. In order to prove a claim for tortious inducement to breach a contract, the claimant must show: (1) the existence of a contract, Pre-Fit Door, Inc. v. Dor-Ways, Inc., 13 Ariz.App. 438, 477 P.2d 557 (1970); (2) the defendant's knowledge thereof, McNutt Oil & Refining Co. v. D'Ascoli, 79 Ariz. 28, 281 P.2d 966 (1955); (3) a breach of the contract induced by the defendant, Equitable Life & Casualty Insurance Co., Inc. v. Rutledge, 9 Ariz.App. 551, 454 P.2d 869 (1969); McNutt Oil & Refining Co. v. D'Ascoli, Supra; (4) the absence of privilege or justification, Meason v. Ralston Purina Co., Supra; D & S Farms v. Producers Cotton Oil Co., 16 Ariz.App. 180, 492 P.2d 429 (1972); and (5) damages resulting therefrom, including punitive damages if supported by the facts, McNutt Oil & Refining Co. v. D'Ascoli, Supra. See generally, Tipton v. Burson, 73 Ariz. 144, 238 P.2d 1098 (1951); 45 Am.Jur.2d, Interference, § 39. Restatement of Torts, Vol. 4, § 766 (1939).
Although we have found no decisions in which the courts have approved the allowance of a claim of the nature here involved based upon the induced breach of a restrictive leasing covenant, in McNutt Oil & Refining Co. v. D'Ascoli, Supra, the Arizona Supreme Court affirmed the trial court's judgment awarding the plaintiff damages against the defendant accused of inducing a violation by the sellers of a covenant not to compete entered into as part of a service station sale agreement. We see no logical reason why the same principles should not be applicable so as to afford relief for the tortious inducement to breach an otherwise legally enforceable restrictive leasing covenant.
Turning to the facts here presented, and applying those facts to the above-listed elements of a claim for tortious interference, there can be no question but that there was a contract in existence, and that Wallichs Music City had knowledge of the existence of the restrictive leasing covenant in that contract before it entered into its subsequent lease with the lessor. However, the third element presents a problem--the showing of a breach of that restrictive covenant Induced by Wallichs Music City. For the purposes of this opinion, we will assume, without deciding, that the evidence was adequate to present a jury question as to whether the lessor's conduct in entering into the lease with Wallichs Music City constituted a breach of the restrictive covenant. The major question is, was that breach 'induced' by Wallichs Music City?
The mere fact that Wallichs Music City contracted with the lessor with knowledge of the existence of the restrictive covenant and its possible breach by lessor in entering into the subsequent lease with Wallichs, is not, according to the better view, the...
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Southern Union Co. v. Southwest Gas Corp.
...business relationship with Southwest. (Id. at 5). To support his argument, Rose relies primarily on Middleton v. Wallichs Music & Entertainment Co., 24 Ariz.App. 180, 536 P.2d 1072 (1975) and comment h of § 766 of the Restatement (Second) of Torts ("Restatement"). Rose notes that in Middlet......
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Safeway Ins. Co., Inc. v. Guerrero
...indemnification agreement to prevent insured from entering a Morris agreement with plaintiff); cf. Middleton v. Wallichs Music & Entm't Co., 24 Ariz.App. 180, 183, 536 P.2d 1072, 1075 (1975) (stating that mere fact of prior knowledge by new tenant of restrictive covenant in lessor's lease w......
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Cowley v. Braden Industries, Inc.
...trial to indicate that Aeromotor had knowledge of a valid contract as required by Arizona law. See Middleton v. Wallichs Music and Entertainment Co., 24 Ariz.App. 180, 536 P.2d 1072 (1975). ...
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Southern Union Company v. Southwest Gas Corporation, CV-99-1294-PHX-ROS (D. Ariz. 1/2/2002)
...business relationship with Southwest. (Id. at 5). To support his argument, Rose relies primarily on Middleton v. Wallichs Music & Entertainment Co., 536 P.2d 1072 (Ariz. Ct. App. 1975) and comment h of § 766 of the Restatement (Second) of Torts ("Restatement"). Rose notes that in Middleton,......