Trimed, Inc. v. Sherwood Medical Co.

• Decision Date: 12 August 1991
• Docket Number: Civ. A. No. MJG-87-1183.
• Citation: 772 F. Supp. 879
• Parties: TRIMED, INC. v. SHERWOOD MEDICAL COMPANY.
• Court: U.S. District Court — District of Maryland

772 F. Supp. 879

TRIMED, INC. v. SHERWOOD MEDICAL COMPANY.

Civ. A. No. MJG-87-1183.

United States District Court, D. Maryland.

August 12, 1991.

COPYRIGHT MATERIAL OMITTED

John E. Griffith, Jr. and Charles P. Scheeler, Baltimore, Md., for plaintiff.

J. Hardin Marion and Thomas M. Wilson, III, Baltimore, Md., for defendant.

MEMORANDUM

JOSEPH H. YOUNG, Senior District Judge.

Sherwood Medical Company ("Sherwood") moves for a Judgment Notwithstanding the Verdict ("j.n.o.v.") under Fed. R.Civ.P. 50 or in the alternative for a new trial under Fed.R.Civ.P. 59.

"The question to be resolved when deciding a motion for judgment notwithstanding the verdict is whether there is evidence on which a jury can properly base a verdict." Lust v. Clark Equip. Co., 792 F.2d 436, 437 (4th Cir.1986). In determining whether to grant a motion for j.n.o.v., the nonmoving party must be given the benefit of every legitimate inference in its favor, and the motion must be denied if there was evidence upon which the jury could reasonably return a verdict. Cobb v. Nizami, et al., 851 F.2d 730, 733 (4th Cir.1988), cert. denied, 489 U.S. 1046, 109 S.Ct. 1177, 103 L.Ed.2d 244 (1989), citing Mays v. Pioneer Lumber Corp., 502 F.2d 106 (4th Cir.1974), cert. denied, 420 U.S. 927, 95 S.Ct. 1125, 43 L.Ed.2d 398 (1975). (emphasis supplied). A motion for new trial may be granted even though a verdict is supported by substantial evidence if the trial judge "is of the opinion that the verdict is against the clear weight of the evidence, or is based upon evidence which is false or will result in a miscarriage of justice...." Wyatt v. Interstate & Ocean Transp. Co., 623 F.2d 888, 891-92 (4th Cir.1980), citing Williams v. Nichols, 266 F.2d 389, 392 (4th Cir.1959). In ruling on a motion for new trial, the district court may weigh the evidence and assess the credibility of witnesses to decide if the jury's verdict was justified. Wilhelm v. Blue Bell, Inc., 773 F.2d 1429, 1433 (4th Cir.1985), cert. denied, 475 U.S. 1016, 106 S.Ct. 1199, 89 L.Ed.2d 313 (1986).

Tortious Interference

Sherwood argues that it is entitled to j.n.o.v. on count I (tortious interference) because (1) the evidence is insufficient as a matter of law to support the jury's special verdict finding tortious interference with Trimed, Inc.'s contracts ("Trimed"); (2) the court improperly instructed the jury on the elements of tortious interference with contract and a properly instructed jury could not have returned a verdict for Trimed; and (3) any claimed interference with Trimed's contracts by Sherwood was justified because Sherwood had a legally protected interest in Trimed's contracts.

Sherwood contends that Trimed did not prove all five elements of a tortious interference claim as it relates to each of the customers: (1) that a valid contract existed between Trimed and that customer; (2) that Sherwood knew of the existence of that contract; (3) that Sherwood, without justification or privilege, intentionally persuaded the customer to breach that contract; (4) that the customer breached that contract because of Sherwood's conduct; and (5) that Trimed suffered monetary damages as a result of the breach caused by Sherwood's conduct. Stannard v. McCool, 198 Md. 609, 616, 618, 84 A.2d 862 (1951); Storch v. Ricker, 57 Md.App. 683, 703, 471 A.2d 1079, cert. denied, 300 Md. 154, 476 A.2d 722 (1984).

First, Sherwood argues that Trimed did not establish contracts with all twelve customers. Although Trimed conceded that it had no written contract with the Veterans Administration Hospital ("the VA" or "VA Hospital"), the evidence presented indicated that there was, at least, an oral contract between the two. See Tr. at 140 (1/23/91). At the time of Sherwood's alleged wrongful conduct, February 10, 1987, Trimed sold to the VA Hospital all of its enteral feeding product requirements. Pl.Exhs. 397, 398, 399, 400. Between March and December 1987, the VA placed eight orders with Sherwood. Pl. Exh. 440. Thus, there was sufficient evidence from which a rational juror could find that Trimed had an oral contract with the VA Hospital at the time of Sherwood's letter of termination.

Next, Sherwood argues that when Trimed wrote to its customers that Trimed was no longer an authorized distributor of Kangaroo products, it repudiated its contracts with those customers and those customers were entitled to treat those contracts as repudiated. However, testimony at trial indicated that Sherwood called, visited or wrote to each of these customers with the intent to induce these customers to cease purchasing from Trimed. (Testimony of Mssrs. Burns, Farb, Flynn, Green, Nixon, Green's calendar, Pl.Exh. 432; 2/10/87 Flynn letter to hospital representatives, Pl.Exh. 68).

Sherwood also argues that the court charged the jury improperly by suggesting that breach of contract is not an essential element of a claim for tortious interference. Therefore, it argues, the instruction permitted the jury to hold Sherwood liable for tortious interference if it found either that Sherwood persuaded customers to breach their contracts "or that Sherwood deliberately interfered with the carrying out of Trimed's contracts." Tr. at 31 (2/14/91).

In Lake Shore Investors v. Rite Aid Corp., 67 Md.App. 743, 509 A.2d 727 (1986), the Court held

a person who intentionally and wrongfully hinders contract performance, as by causing a party to cancel the contract, and thereby damages a party to the contract, is liable to the injured party even if there is no breach of contract. This sort of conduct is encompassed within the tort that we shall denominate interference with economic relations, and it includes tortious interference with contractual relations.

Id. at 753, 509 A.2d 727. In Orfanos v. Athenian, Inc., 66 Md.App. 507, 505 A.2d 131 (1987), the Court, commenting on intentional interference with contract, stated:

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 contracting party.

Id. at 520, 505 A.2d 131. (emphasis supplied). See also Restatement (2d), § 766 (1979) ("One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract"). (emphasis supplied).

Thus, the tort of tortious interference with contract is, contrary to Sherwood's contention, subsumed within the broader tort of interference with economic relations. Accordingly, the instruction given by the Court is a proper statement of the law. Consequently, Sherwood's argument that it is entitled to j.n.o.v. because Trimed did not allege all elements of tortious interference with contract when it judicially admitted that Sherwood did not breach Trimed's contracts with Greater Southeast Community Hospital, St. Joseph Hospital and Southern Maryland Hospital, see Trimed's Admission of Sherwood's Request for Admissions Nos. 582, 518 and 497, is meritless under Lake Shore and Orfanos, supra.

Sherwood also argues that if it did induce a breach, any conduct inducing a breach was privileged because Sherwood had protected interest in Trimed's contracts. This Court considered and rejected this argument in Sherwood's Motion for Summary Judgment on Counts I and IV and in Sherwood's Motion for Directed Verdict.¹

Sherwood then contends that the Court's failure to instruct the jury on the nature of the privilege available to Sherwood and the distinction between justified and unjustified conduct is reversible error. RCM Supply Co., Inc. v. Hunter Douglas, Inc., 686 F.2d 1074, 1078 (4th Cir.1982).

A privilege instruction in the case at bar is inapplicable. Such an instruction is mandated in a claim of tortious interference with business relations, not in a claim of tortious interference with contract as was the claim here. As discussed above, this Court rejected Sherwood's argument that it was privileged to induce a breach. Accordingly, a privilege instruction was unwarranted. See Horn v. Seth, 201 Md. 589, 593, 95 A.2d 312 (1952).

Unfair Competition

Sherwood maintains it is entitled to j.n.o.v. on count III because there was no evidence of conduct that constitutes unfair competition and alternatively, is entitled to a new trial because the court improperly refused to instruct the jury about Sherwood's right to compete.

The Court charged the jury as follows:

The law of unfair competition is based on the premise that while it encourages fair trade in every way, it aims to promote, not hamper competition, no one is justified in damaging or jeopardizing another's business by fraud, deceit, trickery, or unfair methods of any sort. What constitutes unfair competition in a given case must be decided largely on the particular facts and circumstances of this case.

.... You must be guided by the general principle that all dealings must be done on the basis of common honesty and fairness without taint of fraud or deception. If you find that any action by Sherwood such as interfering with Trimed's contracts with its customers, making disparaging remarks about Trimed to Trimed's customers, restricting product shipments, or selected price cutting, if any of those acts were taken to exclude Trimed and Knight Medical from the marketplace, or to damage them as competitors, then you may find that such conduct constituted unfair competition, and you may find for Trimed and award damages that were proximately caused by Sherwood's actions.

Tr. at 35-36 (2/14/91).

Sherwood incorrectly contends that the charge does not reflect the Maryland tort of unfair competition. The Court in Cavalier Mobile Homes, Inc. v. Liberty Homes Inc., 53 Md.App. 379, 389, 454 A.2d 367 (1983) stated that ...