Kentucky CVS Pharmacy, LLC v. McKinney
5:13-cv-00025
E.D. Ky.Apr 15, 2013Background
- M & M Drug, owned by John and Mary McKinney, operated at the Big Hill Avenue property in Richmond, Kentucky prior to 2011.
- In 2003, title to the property was transferred to the Trust, with Eleanor McCord McKinney as sole Trustee.
- On May 31, 2011, CVS purchased certain assets of M & M Drug, including prescription files and goodwill, under an asset purchase agreement that included a ten-year non-competition covenant for the McKinneys within ten miles of CVS.
- The non-competition clause required the McKinneys to disclose ownership of the Big Hill Avenue property and be bound by the covenant; the McKinneys signed in the presence of the Trust’s trustees.
- Spencer Drug began operating as Madison Drug on the Big Hill Avenue property in November 2012, leasing the property from the Trust and marketing itself as the former M & M Drug.
- CVS alleges tortious interference against the Trust and Spencer Drug, claiming knowledge of the CVS–McKinney agreement and intentional acts that harmed CVS's contractual relationship and goodwill.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CVS pled a viable tortious interference claim against Spencer Drug. | CVS alleges intentional interference with contract and that Spencer Drug knew of the agreement and promoted itself as M&M. | Spencer Drug argues lack of knowledge specifics and improper interference; seeks dismissal for pleading deficiencies. | Denial of Spencer Drug's dismissal; sufficient pleading of knowledge and interference. |
| Whether CVS pled a viable tortious interference claim against the Trust. | CVS claims the Trust knowingly and improperly caused the McKinneys to breach the CVS contract. | Trust contends no enforceable contract exists with the Trust as landowner and that it did not interfere improperly. | Denial of the Trust's dismissal; facts support possible interference and lack of privilege. |
| Whether the non-competition agreement could be enforced against real-property owners via the Trust. | CVS seeks enforcement of the agreement's terms as to the McKinneys' conduct and implied restraints. | Trust argues a restrictive covenant on real property requires owner consent; McKinneys did not own the property. | Not dispositive at this stage; court treats the claim as tortious interference independent of enforceability of property covenant. |
| Whether CVS states a claim under the Restatement factors for improper interference. | Alleges governing factors show improper interference by Trust and McKinneys. | Defendants contest the sufficiency of allegations under § 767 factors. | Claims survive under Restatement § 767 factors; adequate allegations of conduct, motive, and interests. |
Key Cases Cited
- National Collegiate Athletic Association v. Hornung, 754 S.W.2d 855 (Ky. 1988) (Restatement factors reflect Kentucky law on tortious interference)
- ATC Distribution Group, Inc. v. Whatever It Takes, 402 F.3d 700 (6th Cir. 2005) (factors for improper interference, including actor's conduct and motives)
- Cullen v. South East Coal Co., 685 S.W.2d 187 (Ky. Ct. App. 1984) (fraud not required for tortious interference; improper interference element)