Nichols v. Tri-State Brick and Tile Co., Inc., TRI-STATE

• Decision Date: 29 October 1992
• Docket Number: TRI-STATE,No. 07-CA-59648,07-CA-59648
• Parties: Robert G. NICHOLS, Trustee for Enertec Southern, Inc. v.BRICK AND TILE COMPANY, INCORPORATED, and Pan-Brick, Incorporated.
• Court: Mississippi Supreme Court

Page 324

608 So.2d 324

Robert G. NICHOLS, Trustee for Enertec Southern, Inc. v. TRI-STATE BRICK AND TILE COMPANY, INCORPORATED, and Pan-Brick, Incorporated.

No. 07-CA-59648.

Supreme Court of Mississippi.

Oct. 29, 1992.

As Corrected Nov. 12, 1992.

Stephen L. Beach, III, Fred A. Ross, Jr., Beach Luckett & Ross, Jackson, for appellant.

John C. Henegan, A. Camille Henick, Butler Snow O'Mara Stevens & Cannada, Rhesa H. Barksdale, David W. Clark, Wise Carter Child & Caraway, Jackson, for appellees.

Before ROY NOBLE LEE, C.J., and PITTMAN and BANKS, JJ.

BANKS, Justice, for the Court:

We are once again confronted with a grant of summary judgment, wherein it is alleged that there are material facts in dispute. Finding that, as to one defendant, the allegation is accurate, and further that defendants' alternate ground for affirmance based on a statute of limitations bar is not well taken, we reverse as to the defendant Tri-State Brick and Tile Company, Incorporated.

I.

In November of 1985, Enertec Southern, Incorporated (Enertec) sued Tri-State Brick and Tile Company (Tri-State) for breach of contract, fraud, and interference with contract. Tri-State moved for summary judgment and, as to the contract claim, the motion was granted. Enertec then filed an Amended Complaint in March of 1986 and Tri-State again sought summary disposition, this time requesting partial summary judgment.

Enertec then instituted bankruptcy proceedings in federal court against both Tri-State and Pan-Brick, Incorporated, (Pan-Brick) alleging antitrust and unfair competition violations. Enertec later amended its complaint and added malicious interference, conspiracy, and fraud; the antitrust and conspiracy claims against Tri-State were deleted with a second amendment. In final form, the complaint alleged malicious interference and fraud claims against Tri-State.

At the completion of discovery, summary judgment was granted in favor of Pan-Brick on the antitrust claims; the district court declined to rule on the merits of the remaining claims, holding that they would be best decided by this Court.

In May of 1988, Enertec filed its second amended complaint in the Hinds County Circuit Court. It joined Pan-Brick as a defendant, substituted contractual interference claims against Tri-State and Pan-Brick, and alleged fraud against Tri-State.

Both Tri-State and Pan-Brick moved for summary judgment which the court granted, without opinion, in September of 1988.

II. ¹

In the Spring of 1984, Enertec became interested in obtaining licenses to manufacture and sell pan-brick panels from the patent holder, Pan-Brick. ² Enertec was also in need of a regular supplier of one of the components of the panels, brick slices, and a distributor for the finished panels. It approached Tri-State as a slices supplier. Although Tri-State did not manufacture slices, it found sources for them. Through this contact, Tri-State became interested in being the distributor of the finished panels. In addition, Enertec was in need of financing for its new enterprise and sought assistance from Tri-State. As a consequence of its relationship with Enertec, Tri-State became involved in the negotiations between Enertec and Pan-Brick.

During April and May of 1984 a number of agreements were negotiated between Tri-State, Enertec, and Pan-Brick. Pan-Brick and Enertec entered into a license agreement; Enertec and Tri-State, a distributorship agreement and a loan guarantee agreement between Enertec, Tri-State and Rankin County Bank, wherein Tri-State guaranteed one-half of a $300,000 loan to Enertec.

The licensing agreement, dated April 30, 1984, made Enertec the sole license holder in the United States. The agreement authorized Enertec to manufacture and sell panels in Mississippi, Alabama, Louisiana, Arkansas, and Shelby County, Tennessee. ³ The distributorship agreement was executed on or about May 21, 1984. Tri-State, pursuant to this contract, was not authorized to begin to purchase panels from Enertec until March of 1985.

Tri-State also entered into an agreement with Pan-Brick. This contract, which is the primary source of Enertec's contentions in this litigation, is dated May 21, 1984. Tri-State claims that it entered into this agreement with the full knowledge of Enertec as additional security for its guarantee of the loan from Rankin County Bank to Enertec. Enertec denies any knowledge of the agreement prior to November 1985. This agreement essentially provided that should the Enertec license be terminated for any reason by either Pan-Brick or Enertec, Tri-State would have the option to cure any default and resume operations under the license without having to pay an additional license fee. At the time of trial, Tri-State had not exercised the option.

By September of 1984, Enertec was experiencing financial difficulty. At that time, it sought to delay royalty payments and requested further financial assistance from Tri-State, which refused. Enertec then sought funding from private investors, who conditioned funding upon Enertec acquiring licenses in other states. The parties paint slightly different scenarios as to what took place during the early stages of production and the months of subsequent production and financial difficulty, resulting in ultimate failure. Enertec emphasizes what it perceives as the failings of Tri-State with regard to supplying brick slices and marketing effort contending that these failings were a part of a deliberate plan to take over Enertec. Tri-State argues that Enertec's failing is attributable to its own poor management and decision-making and that Tri-State did nothing to interfere with Enertec's performance of its obligations.

Around mid-October of 1985, Enertec ceased operations. This litigation ensued.

III.

Enertec contends that the court erred in granting the defendants' motion for summary judgment. Specifically, it argues that its claims are not barred by the one-year statute of limitations applicable to intentional torts and its contentions of malicious interference with business relations and fraud against Tri-State and Pan-Brick withstand summary judgment on the merits.

Because this dispute arises in the context of a grant of a summary judgment motion, our analysis begins with the guidelines to which a trial court must adhere when presented with such a motion. Mississippi Rule of Civil Procedure 56 provides for summary disposition in cases where there is no genuine factual dispute between the parties. Allen v. Mayer, 587 So.2d 255 (Miss.1991). The lead case outlining the procedure to be followed by a trial court before granting or denying a summary judgment motion is Brown v. Credit Center, Inc., 444 So.2d 358 (Miss.1983). There, we held that a trial court, when presented with a motion to summarily dispose of a case, must carefully review all evidentiary matters. Id. at 362. If, after review, there is no genuine issue as to any material fact, then the moving party is entitled to judgment as a matter of law. Allen, 587 So.2d at 259 quoting Brown, 444 So.2d 358, 362. Summary judgment should be granted only where the pleadings, discovery materials, and affidavits show that there is no genuine issue of material fact. Galloway v. Travelers Ins. Co., 515 So.2d 678 (Miss.1987).

These principles guide our examination of the trial court's actions. The record on appeal is quite voluminous, consisting of more than 500 pages in briefs and supplements, 355 exhibits, and 19 depositions. It is fraught with factual disputes and issues of credibility. We see no other recourse than to reverse the disposition rendered below.

IV.

Enertec argues in support of its claim of malicious interference that Tri-State intended to put Enertec out of business from the very beginning and acquire Enertec's license. It contends that the agreement between Tri-State and Pan-Brick was detrimental to its interests and made it more advantageous to Tri-State that Enertec be put out of business. Tri-State argues that no issues of materiality were in dispute. Enertec's evidence, Tri-State contends, is conclusory, self-serving, fraught with hearsay, and not based on personal knowledge.

Enertec contends that Tri-State's bad faith and malicious purpose is evidenced clearly by the, allegedly secret, May 21 agreement executed between Pan-Brick and Tri-State which placed Tri-State in a position of competing with Enertec for its (Enertec's) license from Pan-Brick. By entering into its own agreement with Pan-Brick, it is asserted, Tri-State breached its duty to and is in direct competition and interference with Enertec.

Tri-State responds that Enertec's claim for malicious interference with contract is baseless because it did not cause Pan-Brick to breach its license with Enertec. It argues that Enertec can only claim breach of contract and that breach cannot be the basis for interference. Alternatively, Tri-State argues that its actions were privileged and Enertec has not established that it would have succeeded under the license but for the alleged interference. It also argues that Enertec knew of the agreement and there is no evidence that Tri-State took any action against Enertec as a result.

We have recognized malicious interference with the "right to pursue a lawful business, calling, trade or occupation" as a tort. Protective Service Ins. Co. v. Carter, 445 So.2d 215, 216 (Miss.1983). An action for interference with the contract ordinarily lies when "a party maliciously interferes with a valid and enforceable contract ... causing one party not to perform and resulting in injury to the other contracting party." Mid-Continent Telephone Corp. v. Home Telephone Co. 319 F.Supp. 1176, 1199 (N.D.Miss.1970). In this situation, the tort only arises if there is interference with the contract between plaintiff and some third party.

We also recognize a cause of action for interfering with a prospective business advantage. Business Equipment Center, Ltd. v. DeJur-Amsco...