Northern Plumbing & Heating, Inc. v. Henderson Bros., Inc., Docket No. 77-201

• Court: Court of Appeal of Michigan (US)
• Writing for the Court: Before DANHOF; T. M. BURNS; DANHOF
• Citation: 268 N.W.2d 296,83 Mich.App. 84
• Parties: NORTHERN PLUMBING AND HEATING, INC., Plaintiff-Appellant, v. HENDERSON BROTHERS, INC. and Phoenix Contractors, Inc., jointly and severally, Defendants-Appellees. 83 Mich.App. 84, 268 N.W.2d 296
• Docket Number: Docket No. 77-201
• Decision Date: 08 May 1978

Page 296

268 N.W.2d 296

NORTHERN PLUMBING AND HEATING, INC., Plaintiff-Appellant, v. HENDERSON BROTHERS, INC. and Phoenix Contractors, Inc.,

jointly and severally, Defendants-Appellees.

Docket No. 77-201.

83 Mich.App. 84, 268 N.W.2d 296

Court of Appeals of Michigan.

May 8, 1978.

Released for Publication Aug. 1, 1978.

[83 MICHAPP 88] Richard H. Scholl, Petoskey, for plaintiff-appellant.

Warner, Norcross & Judd by Robert H. Skilton, III, and Joseph G. Scoville, Grand Rapids, Lindsay & Lindsay by Francis E. Lindsay, Cheboygan, for defendants-appellees.

Before DANHOF, C. J., and KELLY and T. M. BURNS, JJ.

T. M. BURNS, Judge.

Plaintiff Northern Plumbing and Heating, Inc., appeals by right from the trial court's grant of summary judgment to defendant Phoenix Contractors, Inc., under GCR 1963, 117.2(3). Summary disposition of Northern's claims against Phoenix was improper and is reversed.

I

The underlying facts of this controversy arose out of bidding for construction contracts on the waste water treatment plant additions for the City of Cheboygan. Defendant Henderson Brothers, Inc., planned to bid as the general contractor for this project and solicited bids from various mechanical subcontractors, including Northern and Phoenix. In its bid to the city, Henderson listed Northern as a subcontractor, and this was done on the belief that Northern was the low bidder for the mechanical subcontracting work.

What happened from the time of the submission of the bid by Henderson listing Northern as a subcontractor until Henderson signed the contract with the city with Phoenix as the subcontractor, [83 MICHAPP 89] forms the basis of this action and should be submitted to a jury for factual determination.

II

Northern filed this suit against Henderson and Phoenix, claiming that it had a contract with Henderson to do the mechanical subcontracting work based on the custom in the trade and alleging a conspiracy between Henderson and Phoenix to breach that contract, tortious interference by Phoenix with the contract, and, alternatively, if no contract was found, tortious interference by Phoenix of an advantageous business relationship with Henderson. In this appeal, only Northern's claims against Phoenix are involved.

In response to the complaint, Phoenix filed motions for accelerated judgment, GCR 1963, 115.1(5) based on the statute of frauds M.C.L.A. § 566.132; M.S.A. § 26.922, and summary judgment, GCR 1963, 117.2(3), claiming there were no genuine issues of material fact with regard to the happening of acts of interference by Phoenix employees or causation, i. e., that Henderson did not contract with Northern, or that Henderson breached its contract with Northern, if one existed, solely for its own reasons, rather than any act by Phoenix.

After the parties had taken some depositions and submitted affidavits, the trial court granted Phoenix' motion for summary judgment. In doing so, the court assumed the existence of a contract but held that there was no showing that Phoenix had interfered with or caused Henderson to breach that contract. In effect, the court ruled that it was solely Henderson's decision not to proceed with Northern as the subcontractor on the Cheboygan project. In doing so, the court erred.

[83 MICHAPP 90]

III

The courts are liberal in finding that genuine issues of material fact do exist, especially in tort cases, and a motion under Rule 117.2(3) should be granted only where it is obvious that the nonmoving party's case is subject to some deficiency which cannot be overcome at trial. Rizzo v. Kretschmer, 389 Mich. 363, 207 N.W.2d 316 (1973).

In ruling that no issue of fact exists, the court must be careful to avoid substituting a trial by affidavit and deposition for trial by jury. Freeman v. Massachusetts Mutual Life Insurance Co., 27 Mich.App. 572, 183 N.W.2d 832 (1970). The court is not allowed to make findings of fact or to weigh the credibility of affiants or deponents. Bilicki v. W. T. Grant Co., 382 Mich. 319, 170 N.W.2d 30 (1969); Baker v. Detroit, 73 Mich.App. 67, 250 N.W.2d 543 (1976). The test is not whether plaintiff has presented facts sufficient to show a jury submissible case in response to the motion, but rather, whether there are genuine issues of material fact. Smith v. Woronoff, 75 Mich.App. 24, 254 N.W.2d 637 (1977).

With these principles in mind, it is held: that issues of fact do exist in regard to the existence of a contract, any acts of interference by Phoenix, and whether those acts were the cause of Henderson's decision not to use Northern on this project. See, Hutchings v. Dave Demarest & Co., 52 Mich.App. 274, 217 N.W.2d 72 (1974). The depositions of Phoenix' and Henderson's agents do tend to show that Henderson acted entirely on its own in proceeding with Phoenix as the subcontractor, but Northern's president's deposition raises the opposite inference. It is not for us or the trial court to decide this matter, but for the trier of fact. Given [83 MICHAPP 91] that the trial court allowed only a short period for plaintiff to show the existence of fact issues, it is not surprising that a complete case was not presented at the motion hearing. ¹

IV

Since the trial court assumed the existence of a contract, it never reached the question of the statute of frauds, and the effect it would have on the tortious conduct alleged by plaintiff against Phoenix.

Northern alleged three distinct torts against Phoenix; (1) a conspiracy to breach a contract between Phoenix and Henderson, (2) tortious interference with an existing contract by Phoenix, and (3) tortious interference with an advantageous business relationship. The statute of frauds is not a bar to the second and third actions.

A. Conspiracy

Where there is an allegation that a contracting party and a stranger to the contract have conspired to cause a breach of that contract, the plaintiff must show a writing sufficient to satisfy the statute of frauds. Jaques v. Smith, 62 Mich.App. 719, 233 N.W.2d 839 (1975), lv. den. 395 Mich. 829 [83 MICHAPP 92] (1976). ² If the contract is not enforceable against the contracting party, he would have committed no wrong in not performing the contract, and neither would a stranger to the contract. 16 Am.Jur.2d, Conspiracy, § 50. Different considerations apply to the other allegations in this case.

B. Tortious Interference With an Existing Contract

To prevail on this theory, plaintiff must show that a contract existed, that it was breached, that Phoenix instigated the breach and that it did so without justification. Dassance v. Nienhuis, 57 Mich.App. 422, 225 N.W.2d 789 (1975).

There is a division in the authorities concerning whether the interfering third party may rely on a contract defense, such as the statute of frauds, to defeat this action. See, 45 Am.Jur.2d, Interference, § 9, p. 286. Our Supreme Court has not specifically held for either position but in Coronet Development Co. v. F. S. W., Inc., 379 Mich. 302, 313, 150 N.W.2d 809, 814 (1967), the court stated:

"We are not unmindful of the strongly urged contention of plaintiff that the inducing of the breach of a contract, even though the contract be unenforceable under the statute of frauds, is actionable. With the proposition in general terms we have no disagreement. The authorities cited in support thereof sustain it." ³

[83 MICHAPP 93] The statute of frauds is not a bar to this type of action. This is a tort, not dependent on the enforceability of the contract per se, but rather, on the stranger's interference with it. Plaintiff must still show all of the elements for contract formation, that is, that a contract existed, but it is not necessary to show that the contract is enforceable in an action at law against the other contracting party.

C. Tortious Interference With Advantageous Business Relationships

"The basic elements which establish a prima facie tortious interference with a business relationship are the existence of a valid business relation (not necessarily evidenced by an enforceable contract) or expectancy; knowledge of the relationship or expectancy on the part of the interferer; an intentional interference inducing or causing a breach or termination of the relationship or expectancy; and resultant damage to the party whose relationship or expectancy has been disrupted. One is liable for commission of this tort who interferes with business relations of another, both existing and prospective, by inducing a third person not to enter into or continue a business relation with another or by preventing a third person from continuing a business relation with another." 45 Am.Jur.2d, Interference, § 50, p. 322.

Since this tort is not necessarily based on contract, the statute of frauds would be no bar.

V

The heart of this case is whether genuine issues of material fact exist relating to contract formation, whether Phoenix engaged in any acts of interference with the contract if one existed, or [83 MICHAPP 94] with an advantageous business relationship if no contract existed, and whether those acts induced Henderson to end its relationship with Northern. It is held that there are questions of fact, the summary judgment is reversed and the matter is remanded for trial. The type of actions alleged by Northern are not well developed in this state, and plaintiff should be allowed to proceed to trial. Hutchings v. Dave Demarest & Co., supra. Whether Northern will ultimately prevail depends on the facts that it will be able to present at trial, not on affidavits and depositions.

Reversed and remanded for proceedings not inconsistent with this opinion. Costs to appellant.

DANHOF, Chief Judge (dissenting).

This controversy arose out of the construction project. Defendant, Henderson Brothers, Inc. (Henderson) is a general contractor which, through a trade publication, requested sealed bids from subcontractors, including both plaintiff, Northern Plumbing and Heating, Inc. (Northern), and defendant, Phoenix Contractors,...