Van Natta Mechanical Corp. v. Di Staulo

• Decision Date: 03 November 1994
• Citation: 277 N.J.Super. 175,649 A.2d 399
• Parties: , 1995-1 Trade Cases P 70,941 VAN NATTA MECHANICAL CORPORATION, Plaintiff-Appellant, v. Joseph Di STAULO, Individually, and Di Staulo Construction Co., Inc., Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 175

277 N.J.Super. 175

649 A.2d 399, 1995-1 Trade Cases P 70,941

VAN NATTA MECHANICAL CORPORATION, Plaintiff-Appellant, v. Joseph Di STAULO, Individually, and Di Staulo Construction Co., Inc., Defendants-Respondents.

Superior Court of New Jersey Appellate Division.

Argued Oct. 3, 1994.

Decided Nov. 3, 1994.

Jay R. Atkins, River Edge, for appellant (Sunshine, Atkins, Minassian & Tafuri, attorneys; Mr. Atkins on the brief).

Sheppard A. Guryan, Roseland, for respondents (Lasser, Hochman, Marcus, Guryan & Kuskin, attorneys; Mr. Guryan, of counsel and on the brief and Bruce H. Snyder, on the brief).

Before Judges J.H. COLEMAN, DREIER and VILLANUEVA.

The opinion of the court was delivered by

DREIER, J.A.D.

Plaintiff, Van Natta Mechanical Corporation, appeals from the dismissal of its complaint for failure to state a claim upon which relief can be granted. R. 4:6-2(e). Plaintiff also appeals from the denial of its motion to amend its complaint. Plaintiff's initial complaint alleged that defendants tortiously interfered with its contracts and prospective economic advantages and committed antitrust violations. It later sought unsuccessfully to amend its complaint to expand its count for the antitrust violations. This case explores the extent to which a business entity may refuse to deal with another in order to achieve anti-competitive effects upon a third party. We here determine that while some of the allegations of plaintiff's original complaint may have failed to state an actionable claim, its proposed amended complaint, the filing of which should have been permitted, stated at least one cognizable cause of action under New Jersey law.

Plaintiff is a mechanical subcontractor in the fields of electrical, plumbing, heating, ventilation and air conditioning. Over the past several years it has been a subcontractor to two competing contractors, defendant Di Staulo Construction Co., Inc. of which defendant Joseph Di Staulo is the principal and FSS Builders, Inc., both working in the affluent areas of Cresskill and Alpine in Bergen County. Plaintiff alleges that defendant ¹ as general contractor controls approximately half of the building projects in these areas. For the last ten years, plaintiff performed a majority of defendant's plumbing work and a substantial portion of its heating, ventilating and air conditioning work. In 1991 alone, plaintiff grossed $800,000 in its business dealings with defendant.

Plaintiff alleged that in November 1991 there was a meeting called by Joseph Di Staulo with Donald Van Natta, the president of plaintiff. At that meeting, Joseph Di Staulo allegedly insisted that plaintiff immediately cease dealing with FSS, thereby breaching all existing contracts, and that in the future if FSS bid on any job for which defendant also was submitting a bid, plaintiff must quote prices to FSS at least ten percent higher than the prices quoted to defendant. Di Staulo allegedly informed Van Natta that if plaintiff would not immediately comply with these conditions defendant would no longer accept any plumbing or HVAC bids from plaintiff. This included any jobs for which defendant had recently been awarded the general contract and all other jobs that might be awarded to defendant in the future. These demands were reasserted over the next few months, and when plaintiff would not comply, defendant severed all business relationships with plaintiff after their ongoing projects were concluded.

Plaintiff instituted this action, asserting tortious interference with contractual obligations, intentional interference with prospective economic advantages and a violation of New Jersey's antitrust laws. Plaintiff's amended complaint attempted to flesh out the antitrust allegations.

Defendant contended that it had an absolute right to deal or not deal with plaintiff, that it could not interfere with its own contract, and that its motives were irrelevant. Defendants asserted that FSS has brought no claim based upon defendants' alleged actions, and that plaintiff is and was not a competitor of defendant with proper standing to assert the claims plaintiff has made. In short, defendants defend the antitrust allegations by contending that there were no anti-competitive injuries to plaintiff. Lastly, defendants assert that even if there were to be some theory of liability inculpating the corporate defendant, there is no theory of liability under which its principal, Joseph Di Staulo, would be liable.

I

We start with the proposition that consideration of a motion made pursuant to R. 4:6-2(e) (that plaintiff's complaint failed to state a claim upon which relief could be granted) requires that the complaint be searched to determine if a cause of action can be found within its four corners. As stated in Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 746, 563 A.2d 31 (1989),

[A] reviewing court "searches the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary." ... At this preliminary stage of the litigation the Court is not concerned with the ability of plaintiffs to prove the allegation contained in the complaint.... For the purposes of analysis plaintiffs are entitled to every reasonable inference of fact.... The examination of a complaint's allegations of fact required by the aforestated principles should be one that is at once painstaking and undertaken with a generous and hospitable approach.

[citations omitted; quoting DiCristofaro v. Laurel Grove Memorial Park, 43 N.J.Super. 244, 252, 128 A.2d 281 (App.Div.1957). ]

As noted in Pressler, Current N.J. Court Rules comment 2 on R. 4:6-2 (1995), "Every reasonable inference is therefore accorded the plaintiff and the motion granted only in rare instances and ordinarily without prejudice." ² See also Lieberman v. Port Authority, 132 N.J. 76, 79, 622 A.2d 1295 (1993), cautioning: "Courts should approach motions to dismiss for failure to state a cause of action pursuant to Rule 4:6-2(e) with caution. Because such motions are usually brought at the earliest stages of litigation, they should be granted in 'only the rarest instances'." (Quoting Printing Mart-Morristown v. Sharp Electronics, supra, 116 N.J. at 772, 563 A.2d 31).

II

The facts in this case present an odd variant of the usual claims of interference with a present contract or prospective contractual advantage. If plaintiff had complied with defendants' demands, plaintiff would have suffered no damage in its relationship with defendant, because the relationship between the companies would presumably have continued as before. Plaintiff may possibly have lost some contracts with FSS because of its ten percent higher bids to FSS and would have been subject to breach of contract claims concerning the current jobs where plaintiff would have been forced to withdraw its workers. In addition, plaintiff may have caused itself to be a co-conspirator with defendants in its alleged attempts to monopolize the building business in the area. It is only because plaintiff refused to breach its existing contracts with FSS and to give FSS inflated bids in the future that it has suffered the loss of all future business with defendant, ending a ten-year association. We here must decide whether defendant's commercial practice falls within or without the protection of the civil law.

There is no question that New Jersey law protects both contracts and prospective business relationships from tortious interference. The plaintiff in Printing Mart-Morristown v. Sharp Electronic Corp., supra, was a printer who alleged intentional interference with its prospective economic relations concerning a printing bid submitted to Sharp. The Court noted that New Jersey law protects a party's interest in reasonable expectations of economic advantage and may find actionable interference even when there is no enforceable contract. 116 N.J. at 750, 563 A.2d 31. A complaint based on tortious interference must first show some protectable right which "need not equate with that found in an enforceable contract," so long as there are "allegations of fact giving rise to some 'reasonable expectation of economic advantage.' " Id. at 751, 563 A.2d 31, (quoting Harris v. Perl, 41 N.J. 455, 462, 197 A.2d 359 (1964)). Next, the complaint must allege that the defendant's actions were intentional and malicious, but "malice is defined to mean that the harm was inflicted intentionally and without justification or excuse." Ibid. Third, a plaintiff must show that the interference caused the loss of a prospective gain in that there "was a reasonable probability that the victim of the interference would have received the anticipated economic benefits." Ibid. Lastly, there must be proof that the injury caused the plaintiff damage. Id. at 752, 563 A.2d 31.

Fundamental to the cause of action, however, is a requirement that the claim be directed against defendants who are not parties to the relationship. Ibid. One cannot interfere with one's own economic relationship, since in such an instance the matter is governed by principles of contract law. Id. at 753, 563 A.2d 31. This latter requirement justified the dismissal of plaintiff's claims based on interference with contract and prospective economic relations. Additionally, defendants did not interfere with plaintiff's contract or prospective economic relations with FSS, although an unsuccessful attempt was made.

These principles, however, do not cover all actions in which one business entity may visit economic harm upon another. While plaintiff phrased its complaint in terms of tortious interference, the gravamen of the complaint was a refusal to deal motivated by improper purposes. The Supreme Court has stated that "[b]efore a contract is formed, either party may withdraw from negotiations without penalty." Printing Mart-Morristown, 116...