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California Breach of Contract: Tortious Interference Explained

contract-dispute.jpgIn California, it is unlawful for a third party to intentionally interfere with a commercial contract that has been agreed upon by two other parties. Indeed, this type of misconduct is known as tortious interference. Victims of tortious interference can bring a legal claim to hold the third party liable for any damages that they have sustained because of the contract breach. Here, our experienced San Jose business contract dispute lawyers discuss what you need to know about California tortious interference claims.

The Elements of Tortious Inference in California

Allegations that a third party tried to undermine a valid contract are not alone sufficient to establish liability. In order to prove tortious interference under California law, a plaintiff must be able to prove the following five things before the court:

  1. There was a valid contract between the plaintiff and another party;
  2. The (third party) defendant knew about the existence of that contract;
  3. The defendant intended to disrupt the contract;
  4. The actions of the defendant made contract performance less likely, or altogether impossible; and
  5. The plaintiff sustained real economic harm because of the contract interference.

An Example of Tortious Interference

Tortious interference has long been a viable legal claim in California. An instructive example of this concept can be found in the 1941 California Supreme Court case of Imperial Ice Co. v. Rossier. In this case, a man named S. L. Coker sold an ice distribution business to a company, and then that business was later acquired by Imperial Ice. Within the original sales contract, Mr. Coker agreed that he would no longer "compete" with the business in Santa Monica. He agreed that he was out of the ice distribution business within that territory.

Yet, within a few years, Mr, Coker was back in the ice distribution business in Santa Monica. According to the complaint, W. Rossier was supplying ice for distribution to Mr. Coker. Imperial Ice responded by taking legal action, seeking a restraining order against both Mr. Coker and Mr. Rossier. Through compelling evidence was presented during the proceedings, it was determined that Mr. Rossier had induced Mr. Coker to violate his previous contract. Thus, the California Supreme Court ruled that Mr. Rossier, as a tortious interferer, could be held liable for the damages sustained by Imperial Ice. Of course, Imperial Ice would still have a breach of contract claim against Mr. Coker as well. Though, with two defendants potentially sharing liability, full recovery of damages can be far less challenging.

Were You the Victim of Tortious Interference?

Our skilled San Jose business law attorneys can help. At Diemer, Whitman & Cardosi, LLP, we have extensive experience drafting and reviewing business contracts, as well as litigating contractual disputes. To set up your free business law consultation, please contact us today. From our office in San Jose, we proudly represent business throughout the entire Bay Area, including in Redwood City, Campbell, Milpitas and Santa Cruz.

Source:

http://scocal.stanford.edu/opinion/imperial-ice-co-v-rossier-25235

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