Nichols v. Tri-State Brick and Tile Co., Inc.Nichols v. Tri-State Brick and Tile Co., Inc.
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
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, Arkansаs, 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
By September of 1984, Enertec was experiencing financial difficulty. At that time, it sought to delay royalty payments and requested further financial assistancе 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.
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 conсlusory, self-serving, fraught with hearsay, and not based on personal knowledge.
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, 465 F. Supp. 775 (1978)4. Protective Service Ins. Co. v. Carter, 445 So.2d 215, 216 (Miss. 1983). The elements of this tort are
(1) that the acts were intentional and willful; (2) that they were calculated to cause damage to the plaintiffs in their lawful business; (3) that they were done with the unlawful purpose of causing damage and loss, without right or justifiable cause on the part of the defendant (which constitutes malice); and (4) that actual damage and loss resulted.
Galloway, 515 So.2d at 682, 683 quoting Carter, 445 So.2d at 217; Irby v. Citizens National Bank of Meridian, 239 Miss. 64, 121 So.2d 118, 119 (1960).
Enertec claims that from the very beginning, Tri-State intended to put it out of business and take over its operations. It relies inter alia upon the affidavit of Don Agent, the former Tri-State employee.5 Agent stated that he had frequent contacts with Tri-State personnel. He claimed that the Tri-State hierarchy made an affirmative determination and decision
The basic plan of Tri-State Brick & Tile Company, Inc. was to first allow Enertec Southern, Inc. enough time to get the production of “Pan-Brick” set up and running with all of the manufacturing startup “kinks” ironed out and when that occasion occurred, Tri-State Brick & Tile Company, Inc. had formulated a plan within which to put Enertec Southern, Inc. out of business against its will by withdrawing credit assistance with the Rankin County Bank and Tri-State Brick & Tile Company, Inc. and the deliberate withholding of the delivery of brick slices to Enertec Southern, Inc., thereby making it impossible for them to manufacture Pan-Brick.
[T]heir intent and purpose from the onset up until the later part of 1985 was to fraudulently acquire its assets with minimum exposure of liability.
One of the many things that I have personally witnessed and participated in was the telephoning of the brick slice suppliers in other states and instructing them to with-hоld timely delivery of brick slices to Enertec Southern, Inc., thereby depriving Enertec Southern, Inc. of the ability to manufacture Pan-Brick panels, for which we were obligated to purchase under the Distributorship Agreement.
Agent‘s statements alone satisfy each requirement of the cause of action of tortious interference with business relations.
Tri-State contends that, even if the claim for interference is allowed, summary judgment is proper because Enertec must prove that it would have succeeded under the license, but for the interferеnce, citing Bailey v. Richards, 236 Miss. 523, 533-537, 111 So.2d 402, 406-07 (1959); Johnson v. Warnaco, Inc. 426 F. Supp. 44, (S.D.Miss. 1976); and Martin v. Texaco, 304 F. Supp. 498, 502 (S.D.Miss. 1969). It argues that Enertec was doomed by September of 1984 because its capital was spent, and also due to delays and cost overruns6.
As an initial matter, Tri-State correctly states applicable legal principles. It is wrong, however, in its assertion that we can say with the certainty required for summary judgment that Enertec could not prove that it would have succeeded, absent Tri-State‘s interference. It should suffice to say that the question of the causation and quantum of damages in relation to tortious conduct is a jury issue sеldom amenable to summary disposition. It is not amenable here.
V.
Enertec lists eight representations of fraud it claims Tri-State made:
(A) Beginning in approximately March of 1984 through March of 1985, Defendant [Tri-State] by and through its personnel and agents made representations to the Plaintiff that [Tri-State] desired to be a business partner of the plaintiff.
(B) [Tri-State], by and through its personnel and agents, would supply brick slices on a reasonable, timely basis to the plaintiff.
(C) [Tri-State], by and through its personnel and agents, would purchase the entire production capаcity of the plaintiff.
(D) [Tri-State] would deal, at all times, with the plaintiff in good faith.
(E) [Tri-State] was not desirous of taking over or otherwise putting the plaintiff out of business.
(F) [Tri-State] would not use its dominant credit position as a tool to injure the plaintiff.
(G) On or about February 1985, [Tri-State] induced the current stockholders of the plaintiff to invest additional capital in the plaintiff with the promise that [Tri-State] likewise would make a capital investment.
(H) [Tri-State] would make a reasonable effort to market the products of the plaintiff.
Tri-State counters by stating that Enertec has not made an adequate showing for each element of this claim. Furthermore,
As with the tortious interference claim, Enertec prevails on this issue. The Court‘s most recent pronouncement concerning claims of fraud is found in Whittington v. Whittington, 535 So.2d 573 (Miss. 1988). There we held:
The elements of fraud are well established: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker‘s knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted upon by the person and in the manner reasonably contemplated; (6) the hearer‘s ignorance of its falsity; (7) his reliance on the truth; (8) his right to rely thereon; (9) his consequent and proximate injury. See, e.g. Martin v. Winfield, 455 So.2d 762, 764 (Miss. 1984); Hamilton v. McGill, 352 So.2d 825, 841 (Miss. 1977); Crawford v. Smith Brothers Lumber Co., 274 So.2d 675, 678 (Miss. 1973). It is likewise well established that fraud is never presumed but must be proven by clear and convincing evidence. Martin v. Winfield, 455 So.2d at 764; Gulf National Bank v. Wallace, 394 So.2d 864, 865 (Miss. 1981); Clement v. R.L. Burns Corp., 373 So.2d 790, 795 (Miss. 1979); Hamilton v. McGill, 352 So.2d at 831; Crawford v. Smith Bros. Lumber Co., Inc., 274 So.2d at 677. Furthermore, “fraud is essentially a question of fact.”
“This burden ... is a function of the degree of confidence we should have in the factual determination that one has perpetrated a fraud.” Great Southern National Bank v. McCullough, 595 So.2d 1282, 1289 (Miss. 1992) (emphasis added).
Application of the law to the evidence and viewing, as we must, the facts in the light most favorable to Enertec, leads to the conclusion that matеrial issues of fact exist.
Enertec claims that Tri-State made all of the above listed representations, and to the extent that such representations were promises to act in the future they were made when there was a present intent not to perform, as evinced by the Agent affidavit; Tri-State disagrees. Certainly disposition of this issue requires a determination by a finder of fact.
Claims against Pan-Brick
As correctly asserted by Pan-Brick, the only claim Enertec made against it is the claim of interference with business relations. Enertec claims that by entering into the Pаn-Brick/Tri-State agreement both defendants placed it in constant breach of the licensing agreement and intended to put it out of business. It asserts that neither Pan-Brick nor Tri-State had any right to do anything in the territories licensed to Enertec regarding manufacturing or selling the panels except through Enertec. It accuses both of preventing it from producing panels.
Enertec cannot overcome the hurdle of showing that Pan-Brick‘s actions of entering into the agreement was calculated to cause damage. Pan-Brick via the licensing agreement granted to Enertec a license to manufacture panels with its trademark. In consideration for the use of its trademark and technology, Pan-Brick was to receive royalties from the sales of the panels. Nothing in the May 21 agreement provides a motive for Pan-Brick to cause Enertec harm. As noted by Pan-Brick, it is nonsensical to contend that it would try or that it intended to destroy its license given to Enertec, Specifically, it states:
Why would Pan-Brick try to destroy its only license and only manufacturer in the United States? And even if Pan-Brick were so foolish as to try to undermine its only toe-hold in this vast new market area, why would it conspire or cooperate to replace Enertec with Tri-State, of whose proposed role it had been made aware, by Enertec, long before May 21, or May 24, 1984, and with whom it easily could have contracted instead of Enertec?
Pan-Brick calls our attention to Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corporation, 475 U.S. 574, 596, 106 S.Ct. 1348, 89 L.Ed.2d 538, 558 (1986). There, American manufacturers of consumer electronic products brought suit against Japanese competitors in Pennsylvania district court аlleging that these competitors violated provisions of the Sherman Antitrust Act, the Robinson Patman Act, as well as other federal statutes. Particularly, it was claimed that Japanese companies had conspired since the 1950‘s to drive domestic firms from the American market, by maintaining artificially high prices in Japan and selling at a loss in the United States. The district court granted the Japanese companies’ motion for summary judgment; the court of appeals reversed and remanded for further proceedings, determining that a reasonаble fact-finder could find a conspiracy to depress prices. On appeal, the United States Supreme Court reversed and remanded the case for further proceedings. Specifically, the Court held that
the absence of any plausible motive to engage in conduct is highly relevant to whether a ‘genuine issue for trial’ exists within the meaning of Rule 56(e). Lack of motive bears on the range of permissible conclusions that might be drawn from ambiguous evidence: if petitioners had no rational economic motive to conspirе, and if their conduct is consistent with other, equally plausible explanations, the conduct does not give rise to an inference of conspiracy.
Id. 475 U.S. at 596-97, 106 S.Ct. at 1361, 89 L.Ed.2d at 559. Here, Enertec‘s arguments against Pan-Brick for interference with business relations are just as implausible as that of the American companies in Matsushita. Thus, no genuine issue of material fact is presented and judgment summarily disposing of the claim against Pan-Brick should be affirmed. What is more, Enertec offers no evidentiary support, nor does the record reveal any for its claim that Pan-Brick intended not to honor the licensing agreement.
Enertec only sued Pan-Brick for malicious interference. On appeal, it lodges for the first time a claim for fraud against Pan-Brick7, but offers no support. Additionally, all of its representations concern Enertec only, not Pan-Brick. Thus, Enertec cannot, as far as Pan-Brick is concerned, overcome the hurdle imposed by
Enertec‘s failure to comply with both the rule and well-settled case law is fatal to its claim against Pan-Brick for fraud.
Pan-Brick and Tri-State argue that Enertec‘s claim is barred by the one-year statute of limitations found in
§ 15-1-35. Limitations applicable to actions for certain torts.
All actions for assault, assault and battery, maiming, false imprisonment, malicious arrest, or menace, and all actions for slanderous words concerning the person or title, for failure to employ, and for libels, shall be commenced within one (1) year next after the cause of such action accrued, and not after.
§ 15-1-49. Limitations applicable to actions not otherwise specifically provided for.
(1) All actions for which no other period of limitation is prescribed shall be commenced within three (3) years next after the cause of such action accrued and not after.
(2) In actions for which no other period of limitation is prescribed and which involve latent injury or disease, the cause of action does not accrue until the plaintiff has discovered, or by reasonable diligence should have discovered, the injury. (3) The provisions of subsection (2) of this section shall apply to all pending and subsequently filed actions.
In support, the defendants rely upon Dennis v. Traveler‘s Insurance Co., 234 So.2d 624 (Miss. 1970), where the Court held that the statute applied to an action brought for a “willful, malicious, and irresponsible ... threat of criminal prosecution... to enforce a purported civil debt.” The Court reasoned that:
It is clear that the
Miss. Code Ann. § 732 (1956) [predecessor of § 15-1-35], which provides an inclusive listing of the recognized intentional torts is controlling in the case at bar. There can be no escape from the bar of the statute of limitations applicable to intentional torts by the mere refusal to style the cause brought in a recognized statutory category and thereby circumvent prohibition of the stаtute.
The Court held that the letter, which was the basis for the action at bar, fell within the purview of that statute under the category of “menace.” The Court noted that the term “menace” meant the same thing as threat. Thus, since the letter written by Travelers was threatening, its actions fall within the category of menace.
We need not address the litany of federal cases cited by the parties, which, using Dennis as a springboard, extended the applicability of the one-year statute of limitations to other actions involving intentional torts. This Court has
consistеntly held in many cases ... that where a statute enumerates and specifies the subject of things upon which it is to operate, it is to be construed as excluding from its effect all those not expressly mentioned or under a general clause, those not of like kind or classification as those enumerated.
Southwest Drug Company v. Howard Brothers Pharmacy of Jackson, Inc., 320 So.2d 776, 779 (Miss. 1975).
Even a casual reading of the statute leads inescapably to the conclusion that it does not cover, and was not intended to cover, all intentional tortious conduct. Actions based on deceit and intentional damage to property are conspicuously absent. Surely such intentional wrongs were recognized intentional torts. The enumerated torts address damage to persons or their reputations exclusively.
Thus, in Brister v. Dunaway, 149 Miss. 5, 115 So. 36 (1928) this Court held the one-year statute inapplicable to an action for alienation of affections, a tort involving the intentional interference with marital relations. See, Stanton v. Cox, 162 Miss. 438, 139 So. 458 (1932). Similarly, in Dunn v. Dent, 169 Miss. 574, 153 So. 798 (1934) this Court noted without discussion that the six-year period of limitations in the predecessor to
Here the claims are for malicious interference with business relations and fraud. No one seriously argues that actions for fraud are covered by
In sum, Enertec‘s claims are not time barred by application of
The grant of summary judgment is reversed and the case remanded for further proceedings.
AFFIRMED IN PART, REVERSED AND REMANDED IN PART.
ROY NOBLE LEE, C.J., HAWKINS and DAN LEE, P.JJ., and PRATHER, SULLIVAN, PITTMAN and McRAE, JJ., concur.
ROBERTS, J., not participating according to supreme court internal rules.
Notes
Tri-State argues that Agent‘s testimony is privileged; it claims that the affidavit presents alleged communications between Tri-State and its attorneys. Thus, it is protected from disclosure pursuant to
Entertec responds that the record does not reveal whether the alleged occurrence, actions and statements Agent states took place were confidential. It argues just because lawyers were present, does not mean that the communication is privileged.
Whether or not the affidavit contains privileged information is a question for a fact-finder. The record does not permit a determination whether these statements allegedly made by Tri-State officials were communications to which the privilege would attach. For purposes of this appeal, we must treat the statements as non-privileged.