Opinion by
€ 1 Plaintiff, Slater Numismaties, LLC, appeals the trial court's summary judgment in favor of defendant, Driving Force, LLC, doing business as ANACS (ANACS). The court granted summary judgment for ANACS on Plaintiffs claims for intentional interference with contractual relations and unjust enrichment. It also entered an order awarding costs to ANACS. We reverse and remand for further proceedings.
T 2 As part of our analysis, we address and clarify the requirements for proof of the tort of intentional interference with contractual relations.
I. Evidence Presented to the Trial Court
113 Because Plaintiff seeks reversal of the summary judgment entered in favor of ANACS, we must review the evidence presented to the trial court in the light most favorable to Plaintiff, the nonmoving party. Rocky Mountain Festivals, Inc. v. Parsons Corp.,
T4 Plaintiff was in the business of purchase and sale of rare and modern coins. It had an ongoing relationship with Black Diamond Holding Company, doing business as Independent Coin Grading Company (ICG). After purchasing coins, Plaintiff sent them to ICG to be graded and packaged for sale. After these tasks were completed, ICG forwarded the graded and packaged coins to Plaintiff's eustomer, Cable Shopping Network (Cable), which purchased the coins from Plaintiff. Cable would sell the graded coins through television infomercials and call centers.
15 Initially, ICG did not have a direct business relationship with Cable. However, after learning that Cable was purchasing large quаntities of coins from Plaintiff, ICG approached Plaintiff and asked to enter into a referral agreement that would allow ICG to deal directly with Cable.
16 As a result of those discussions, Plaintiff and ICG entered into the Referral Agreement in issue here. That agreement provided that Plaintiff would refer to ICG all of the coin grading and valuing work for Cable. ICG would, "in good faith and with reasonable diligence, complete the work requested by [Cable] and bill [Cable] directly for all work performed." In exchange, ICG would pay Plaintiff each month a referral fee equal to 25% of the net grading fees derived from sales of grading services to Cable. Once the Referral Agreement was in place, Cable began purchasing its own coins and sending them directly to ICG to be graded, and ICG paid the referral fees to Plaintiff.
17 James Taylor was one of ICG's founding members. He worked for ICG from 1998 until 2005, when he left to work as the CEO for ANACS, a different coin grading company. Taylor returned to ICG in the role of Chief Executive Officer in 2007. °
{8 Brett Williams was ICG's Chief Financial Officer for nine years. In that capacity, he was responsible for billing customers for grading services. ‘
19 While Taylor and Williams were employed by ICG, they signed employment agreements that prohibited the disclosure of confidential information that was obtained during the course of their employment at ICG.
1 10 Taylor learned of the Referral Agreement while he served as Chief Executive
11 During Taylor's tenure as Chief Executive Officer of ICG, a dispute arose between ICG's shareholder representative and Taylor. In the wake of this dispute, Taylor began negotiations to purchase ICG. During the negotiations, Taylor discussed his intent to eventually purchase ANACS and merge that company with ICG. In a memorandum to other ICG principals, Taylor wrote: "We discussed purchasing ANACS and merging it, at the right time, with ICG.... This plan will likely include hiring away a number of the most important graders so ANACS [cannot] do its business, thereby being able [sic] to buy ANACS at a considerably lower price." The agreement to рurchase ICG eventually collapsed.
{ 12 While CEO of ICG, Taylor recognized that maintaining Cable as a client was critical to ICG's success. Cable's business generated a significant percentage of ICG's revenue, and Taylor referred to Cable as ICG's "golden goose." In a memorandum circulated to ICG employees, Taylor stated, "The [Cable account and one other account] are what pay our salaries.... We cannot lose them or give them any reason for even considering going elsewhere." -
(18 After his attempt to purchase ICG failed, Taylor again left ICG in November 2007. He formed defendant, Driving Force, LLC, which purchased ANACS one month after his 2007 departure. Williams was hired to be the Chief Financial Officer of ANACS on the same day he left his job at ICG.
{14 Taylor and Williams, having taken over operation of ANACS, implemented a plan to render ICG noncompetitive, using similar tactics to those described in Taylor's earlier memorandum about a plan to hire away ANACS's employees. Drawing on his insider knowledge about ICG's operations, Taylor knew that a mass exodus of ICG staff would, as he stated in a memorandum, "leave[ ] [ICG] worthless and immediately unable to function," and ICG "[wJould be out of business in weeks, if not sooner." This was so because there are very few persons in the United States qualified to perform coin grading. With Taylor at the helm, ANACS hired away all but two of ICG's employees.
15 In addition to hiring away ICG's employees, Taylor moved ANACS's offiсes from Austin, Texas to Englewood, Colorado, two miles away from ICG's offices.
1 16 Because of their knowledge of Cable's purchase of coin grading services from ICG, the principals of ANACS were able to approach Cable with an offer to provide those same services And, because ANACS did not have any obligation to pay the 25% referral fee to Plaintiff, ANACS was able to combine this competitive advantage with its knowledge of ICG's pricing structure to un-dereut ICG's price and acquire Cable's business.
1 17 Within a few months of Taylor's purchase of ANACS, Cable transferred its modern coin grading business from ICG to ANACS.
18 The trial court's order granting summary judgment to ANACS stated:
For the purposes of this motion, the Court assumes that a reasonable jury could find that Mr. Taylor and Mr. Williams intentionally set out to take away ICG's business with [Cable] by hiring away ICG's employees and selling coins to [Cable] for less by avoiding the 25% Referral Fee, all in violation of their contractual and fiduciary duties to ICG.
We agree that this assumption is supported by the evidence, when viewed in the light most favorable to Plaintiff, However, we disagree with the trial court's conclusion that, notwithstanding that evidence, ANACS was entitled to summary judgment.
II. Standard of Review
119 We review de novo a trial court's entry of summary judgment. Aspen Wilderness Workshop, Inc. v. Colorado Water Conservation Bd.,
120 Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, to
III. Intentional Interference with Contractual Relations
4 21 Plaintiff contends the trial court erred in granting summary judgment for ANACS on its claim for intentional interference with contractual relations. Because Plaintiff has alleged, and provided preliminary proof of facts tending to show, that the conduct оf ANACS and its principals interfered with IC's performance of its contract with Plaintiff in such a manner as to create a triable issue under Colorado law, we agree.
A. Colorado Precedents on Intentional Interference with Contractual Relations and Their Reliance on Restatement (Second) of Torts _
$22 Colorado Supreme Court precedents rely on the definition of the tort of intentional interference with contractual relations contained in § 766 of the Restatement (Second) of Torts (1977), which provides:
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 added.) See Trimble v. City & County of Denver,
123 Given the evidence presented to the trial court here, a reasonable jury could conclude that ANACS purposefully depleted the ranks of ICG, significantly impairing its ability to fulfill Cable's coin grading needs. When that cireumstance is combined with ANACS's use of Plaintiff's confidential information-including knowledge of the 25% referral fee-to make a play for Cable's business while undercutting ICG's pricing, a reasonable jury could conclude that ANACS caused ICG "not to perform" its contract with Plaintiff, within the meaning of § 766.
124 In reaching this conclusion, we are mindful of the following language employed by the supreme court in Krystkowiak v. W.O. Brisben Cos.,
To be liable for intentional interference with contract, a defendant must 1) be aware of a contract between two parties, 2) intend that one of the parties breach the contract, 3) and induce the party to breach or make it impossible for the party to perform the contract. See [Trimble,697 P.2d at 726 ]; see also[ ] Restatement (Second) of Torts § 766 comment h. In addition, thе defendant must have acted "improperly" in causing the result. Id.
Id. at 871 (emphasis added) (footnote‘omitted).
125 ANACS here argues that, because Plaintiff has not demonstrated that ANACS either caused ICG to breach its contract with Plaintiff or rendered ICG's performance impossible, Krystkowiak mandates the entry of summary judgment against Plaintiff. We disagree for two reasons.
T 26 First, as noted above, earlier supreme court decisions adopted other definitions of the tort that do not require proof of either impossibility of performance or a breach of contract, but rather require proof that the defendant induced or otherwise caused a third party not to perform the contract at issue. See Trimble,
T27 In 1993, the supreme court adopted a definition of the tort that closely aligned with the provisions of § 766, in Colorado National Bank v. Friedman,
The tortious conduct occurs when the defendant, not a party to the contract, induces the third party to breach the contract, or interferes with the third party's performance of the contract. Under Colorado law, the tort exists to protect parties to a contract; accordingly, it is the conduct of the third person who is not a party to the contract that is punished for inducing a breach or preventing performance of the contract.
Id. at 170 (citations omitted) (emphasis added); but see Radiology Professional Corp. v. Trinidad Area Health Ass'n,
128 Krystkowiak did not distinguish or disapprove of those earlier cases. On the contrary, Krystkowiak relied on Trimble,
(29 We discern no intent in Krystkowiak to overrule preexisting precedеnt concerning the elements of intentional interference with contractual relations. Because Krystkowiak did not repudiate the definitions of the tort expressed in Friedman, Westfield, Trimble, Memorial Gardens, or any of the supreme court's earlier precedents, we must assume that those precedents are still binding, and that Colorado courts may continue to apply the definition of the intentional interference tort contained in Restatement § 766. In our view, by discussing breach and impossibility in Krystkowiak, the supreme court was only expressing two of the possible ways in which the tort of intentional interference with contractual relations could be proved.
130 As discussed more fully below, our review of preеxisting Colorado case law, together with decisions from other jurisdictions applying § 766, persuades us that Plaintiff here has presented evidence establishing a triable intentional interference claim.
131 Second, the facts presented here are distinguishable from those of Krystkowiak. That case involved a suit by a developer against an individual homeowner. The developer allegedly had entered into a settlement agreement with a neighborhood association of which the homeowner was a member. Despite that agreement, the homeowner continued to oppose the developer's plans to develop an apartment complex across the street from the homeowner's home. The city council ultimately denied the development proposal. The developer alleged that the homeowner intentionally interfered with the association's performance of the settlement agreement by his continuing to oppose the development. The supreme court disagreed, noting that the homeowner, as an individual, was not bound by the association's settlement with the corporation. The court indicated that the corporation's claim against the homeowner was not of the type intended to be encompassed by the tort of intentional interference, in part because there was no allegation that the homeowner's cоnduct was "improper as contemplated by Trim-ble."
132 Here, in contrast, and as discussed more fully below, Plaintiff has asserted and preliminarily demonstrated that ANACS's conduct was improper, and was intended to, and did, "cause" ICG "not to perform" its contract with Plaintiff, within the meaning of § 766.
1 33 Thus, while it is true that Plaintiff has not demonstrated either that ANACS induced ICG to breach its contract with Plaintiff, or that ANACS made ICG's performance
B. The Meaning of "Inducing or Causing Not to Perform"
T 34 Older Colorado cases focused directly on the wоrds "interfer[ing]" and "inducing or . causing the third person not to perform the contract," as reflected in Restatement § 766.
{35 In Watson v. Settlemeyer,
Though [the third party] may have had the right to terminate [the plaintiffs] oral contract at will, ... [the defendant] had no right to induce such an act or to intentionally interfere between [the third party] and [the plaintiff] by promoting his purpose and intention to take over if [the third party] was successful in ousting [the plaintiff].
Id. at 380,
€ 36 In Weber v. Nonpareil Baking Co.,
¶ 37 When considered in combination with Colorado precedents, the comments to Restatement § 766, modern case law from around the United States, and recent treatises and commentary persuade us that impacts short of total breach or impossibility may constitute "causing [a] third person not to perform [a] contract" within the meaning of that section.
1. Comments to § 766 and Interpretations in Other Treatises
1 38 Comment c to § 766 makes clear that inducement to breach is not an absolute requirement for liability under that section. It states:
The liability for inducing breach of contract is now regarded as but one instance, rather tham the exclusive limit, of protection against improper interference in business relations.... The plaintiff's interest in his contractual rights and expectancies must be weighed, however, against the defendant's interest in freedom of action. If the defendant's conduct is predatory the seale on his side may weigh very lightly.... The issue is whether in the given cireumstances his interest and the social interest in allowing the freedom claimed by him are sufficient to outweigh the harm that his conduct is designed to produce. In deciding this issue, the nature of his conduct is an important factor.
Restatement (Second) of Torts, § 766 emt. c {emphasis added).
139 From the comments to § 766, it is aрparent that the authors of the Restatement intended to impart the following principles:
1. Conduct by the defendant in impairing a third party's performance of a contract with the plaintiff, short of inducing or causing the third party to breach a contract, may constitute actionable intentional interference with contractual relations, under appropriate circumstances.
2. Such cireumstances may be present where, for example, but without limitation, there is some combination of the following elements:
a. -the defendant leaves the third party no choice but to fail in some significant aspect of performance, such as by depriving the third party of the means of performance;
b. the defendant's conduct is wrongful; and
c. the defendant acts either for the primary purpose of interfering with the performance of the plaintiff's contract, or knowing that the interference iscertain or substantially certain to occur as a result of the defendant's action.
See Restatement § 766 cmts. c, h, J, k, o, p.
¶ 40 Other treatises support this interpretation of the law. See 2 Fowler V. Harper, Fleming James, Jr. & Oscar F. Gray, Harper, James and Gray on Torts §§ 6.7, 6.9, at 366, 379 (3d ed. 2006) ("The contemporary view of the action is that it lies{] more broadly"; "Protection is afforded the interest in contractual relations against harms other than inducement of breach. We may generalize that any intended and unprivileged interference ... that causes loss to either party to a transaction is actionable by the party suffering the loss."); id. § 6.8, at 377 ("The term inducing breach of contract is somewhat misleading as a description of the tort in question.") (emphasis in original), id. § 6.5, at $56 ("The interest involved in this tort may be described as the interest of the individual in the security and integrity of the contractual relations into which he has entered."); W. Prosser & W. Keeton, Torts § 129, at 991 (5th ed.1984) ("no actual repudiation of the contract is necessary for liability"); id. at 979 ("It may be sufficient for liability that the defendant has acted intentionally to interfere with a known contract or prospect, that he has caused harm 'in so doing, and that he has acted in pursuit of some purpose considered improper."); id. at 945 (indicating that a defendant may be liable when it commits a tort against a person with whom the plaintiff has a contract: "If the plaintiff's interests and those of the contracting party are sufficiently close, a tort to the one may be sufficient basis for liability to the other, if harm results."); 1A Callmann on Unfair Competition, Trademarks & Monopolies § 9:16 (4th ed. 1981) ("Some cases treat interference as a more comprehensive concept than inducement of breach; and therefore hold that there may be tort liability where a contractual relationship is rendered less valuable or more burdensome by some impairment, even though it is not breached.").
€41 "The most numerous of the tortious interference cases are those in which the disruptiоn is caused by an act directed not at the plaintiff, but at a third person: the defendant causes the promisor to breach his contract with the plaintiff or causes a third person not to confer a benefit on the plaintiff" Harvey S. Perlman, Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine, 49 U. Chi. L.Rev. 61, 106 (1982) (emphasis added). "In most jurisdictions, the fact of competition alone does not justify interference, and at least a prima facie case of liability attaches if the competitor intentionally interferes with a known contract." Id. (emphasis added) (citing Prosser, § 129, at 945).
2. Case Law from Other Jurisdictions
142 Our review of case law from around the United States indicates that, in cireum-stanсes such as those presented here, liability has been imposed on a defendant for intentional interference with contractual relations in the absence of a breach of contract or impossibility of performance, where the defendant has significantly induced or caused a contracting party not to perform its contract with plaintiff,
148 In Getschow v. Commonwealth Edison Co.,
1 44 Edison argued that the plaintiff could not maintain an intentional interference claim, because all of the plaintiff's contracts were terminable at will, and had lapsed or expired by their terms, and thus Edison could not have induced their breach. The Tllinois court rejected this assertion, concluding that action short of inducing breach of the plaintiff's contracts with his clients could support the claim. Id. at 584-85,
T 45 Getschow relied in part on Hannigan v. Sears, Roebuck & Co.,
T 46 In a similar manner to ANACS here, Sears defended on the basis that it had not induced any breach of Hannigan's contract with the manufacturer. Id. at 290. The court rejected that argument, concluding that the jury could have determined that the contract modification was involuntary, and "that Sears knew Hannigan had no practical alternative but to acquiesce in the contractual modification." Id. at 290-91.
T47 In rejecting Sears's position that the facts did not state a claim for intentional interference with contract, the Seventh Circuit stated:
To us, there is no legally significant distinction between unabashed third party conduct which induces one party to out-rightly [sic] repudiate and breach its contract with another and subtle third party conduct which achieves essentially the same result through the equally questionable means of coercing a contractual modificatiоn. Both approaches are equally tor-tious in nature and similarly interfere with the contractual relationships of others.
Id. at 291; but see George A. Fuller Co. v. Chicago Coll. of Osteopathic Med.,
3. Salient Principles
T48 Based on our review of the relevant authorities, we agree with the Restatement's formulation of the intentional interference with contractual relations tort expressed in § 766 and the comments
1. the defendant causes a third party to fail in some significant aspect of performance which the third party owes ' to the plaintiff, such as by depriving the third party in significant part of the means of performance; and
2. the defendant's conduct was wrongful; and
3. the defendant acted either for the primary purpose of interfering with the performance of the plaintiff's contract, or knowing that the interference was certain or substantially certain to occur as a result of the defendant's action.
See Restatement § 766 & cmts. c, h, j, k, o, p.
149 In so ruling, we agree with those authorities сoncluding that, in appropriate circumstances, a defendant's conduct short of causing breach or total impossibility of performance can be actionable under the theory of intentional interference with contractual relations. As stated in Hanmigan,
To distinguish between conduct which directly causes a breach of contract and unjustifiable coercive conduct which effects the same result without a breach would overly limit the significance of the tort of inducing breach of contract and invite today's superior economic forces to freely interfere with contractual relationships without fear of legal reprisal.
C. Application to Facts Presented Here
150 Here, under the Referral Agreement, Plaintiff was entitled to receive a fixed percentage of proceeds-net grading fees-from ICG's sales to Cable. Plaintiffs economic reward was thus dependent on ICG's ability to serve Cable's coin grading needs.
{51 As alleged and preliminarily shown here, a reasonable jury could conclude that ANACS caused ICG to fail in a significant aspect of performance оwed to Plaintiff by depriving ICG in a significant manner of the means of performance. A jury could conclude that, by hiring away nearly all of ICG's employees, in a market where there are very few persons qualified to perform coin grading services, ANACS so substantially interfered with ICG's ability to render services to Cable as to cause ICG not to perform its Referral Agreement with Plaintiff.
1 52 Taylor's memoranda could support the conclusion that ANACS acted either for the primary purpose of interfering with the performance of Plaintiff's contract, or knowing that the interference was certain or substantially certain to occur as a result of ANACS's action.
153 The evidence could be interpreted as showing that the impact of ANACS's conduct on Plaintiff was not incidental, but was a key part of the plan. The alleged tortious conduct was integrally related to Plaintiff's 25% referral fee. Taylor and Williams could exploit their knowledge of Plaintiff's relationship with Cable, acquired through the Referral Agreement, so that ANACS could approach Cable directly and undercut ICG's pricing structure precisely by eliminating the need to pay that 25% referral fee to Plaintiff. Thus, as in Getschow and Hannigan, this conduct tends to show much more than an incidental harmful impact on Plaintiff's economic interest. See also Perlman,
154 Plaintiff has also submitted evidence to prove that ANACS's conduct was wrongful. A reasonable jury could conclude that Taylor and Williams wrongfully used confidential information they acquired about the pricing structure of Plaintiff's Referral Agreement through breach of their confidentiality agreements with ICG. As officers of
155 Thus, as alleged here, a reasonable jury could conclude that ANACS's conduct satisfied the elements of wrongfulness required under Memorial Gardens,
In determining whether an actor's conduct in intentionally interfering with a contract or a prospective contractual relation of another is improper or not, consideration is given to the following factors:
(a) the nature of the actor's conduct,
(b) the actor's motive,
(c) the interests of the other with which the actor's conduct interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other,
(f) the proximity or remoteness: of the actor's conduct to the interference and
(g) the relations between the parties.
Restatement § 767.
1156 We can think of no principled reason for rejecting a theory of intentional interference with contract that would insulate ANACS's alleged conduct from liability to Plaintiff. While an outside observer could chalk up such collateral damage to Plaintiff by remarking, "That's just the nature of competition," we believe such alleged conduct fits within the very purpose for imposing tort liability on intentional interference with contractual relations.
157 The alleged employment of wrongful means to accomplish ANACS's intentional interference with Plaintiff's contractual relations with ICG distinguishes this case from the scenario described in the Restatement (Second) of Torts § 768, quoted with approval in Memorial Gardens,
(1) One who intentionally causes a third person not to ... continue an existing contract terminable at will does not interfere improperly with the other's relation if
(a) the relation concerns a matter involved in the competition between the actor and the other and
(b) the actor does not employ wrongful means and
(c) his action does not create or continue an unlawful restraint of trade and
(d) his purpose is at least in part to advance his interest in competing with the other.
Restatement (Second) of Torts § 768(1) (1977) (emphasis added); see also Westfield Development,
158 Plaintiff has also submitted evidence to establish the intent element of the intеntional interference tort. See Comtrol, Inc. v. Mountain States Tel. & Tel. Co.,
159 We conclude that Plaintiff here has established a triable claim for intentional interference with contractual relations. The evidence submitted to the trial court in opposition to the summary judgment motion was sufficient to create triable issues of fact, such that summary judgment should have been denied as to this claim.
IV. Unjust Enrichment
%61 Finally, Plaintiff contends the trial court erred in granting summary judgment for ANACS on Plaintiff's claim for unjust enrichment. We agree.
162 To recover under a theory of quasi-contract or unjust enrichment, a plaintiff must show that (1) the defendant received a benefit (2) at the plaintiff's expense (3) under cireumstances that would make it unjust for the defendant to retain the benefit without commensurate compensation. Lewis v. Lewis,
€63 Here, when viewed in the light most favorable to Plaintiff, the evidence shows the following: Plaintiff introduced ICG to Cable, and in accordance with the Referral Agreement, ICG was allowed to deal directly with Cable, so lоng as Plaintiff received the referral fee. Taylor and Williams, as employees of ANACS, then improperly used confidential information about the relationship with Cable and the pricing structure under the Referral Agreement to improperly secure Cable's business. A reasonable jury could determine that ANACS received a benefit at Plaintiff's expense, under circumstances that would make it unjust for ANACS to receive the benefit without compensating Plaintiff.
1 64 Therefore, we conclude that summary judgment should not have been granted on the unjust enrichment claim.
V. Costs Award
T65 Based on our conclusion that summary judgment should have been denied on both of Plaintiff's claims, we also reverse the award of costs to ANACS.
VIL Conelusion
166 The judgment and costs order are reversed, and the case is remanded to the trial court for further proceedings consistent with this opinion.