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Printing Mart-Morristown v. Sharp Electronics Corp.

Decided: August 29, 1989.

PRINTING MART-MORRISTOWN, A CORPORATION OF THE STATE OF NEW JERSEY, AND LAWRENCE A. QUALIANO, PLAINTIFFS-APPELLANTS,
v.
SHARP ELECTRONICS CORP., LAURRIET PRINTING, BERT ROSENTHAL, ALLEN ESSENFELD, LARRY SINOWAY, AND MANFRED EDELMAN, DEFENDANTS-RESPONDENTS, AND B-J PRINTING, INC., D/B/A PIPPERT PRESS, AND GEMINI GRAPHICS, DEFENDANTS



On certification to the Superior Court, Appellate Division.

For reversal and remandment -- Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None.

Per Curiam

We granted certification, 108 N.J. 200 (1987), to review the Appellate Division's determination that plaintiffs' complaint did not state a cause of action. The complaint seeks recovery of damages for intentional interference with prospective economic relations and for defamation. ("Intentional interference with prospective economic relations" is used in this opinion interchangeably with such expressions as "tortious interference with prospective economic advantage" or "economic benefit," "intentional interference with a prospective contractual relationship," and the like.)

Plaintiff Printing Mart-Morristown (Printing Mart) is in the business of printing and related services. Plaintiff Qualiano is

the corporate plaintiff's president. Defendant Sharp Electronics Corp. (Sharp) was a customer of Printing Mart, and defendants Essenfeld, Sinoway, and Edelman were employees of Sharp. Defendants Laurriet Printing (Laurriet), B-J Printing, Inc., d/b/a Pippert Press (Pippert), and Gemini Graphics (Gemini) were Printing Mart competitors. Defendant Bert Rosenthal was an employee of Laurriet.

The complaint charges that all the defendants tortiously interfered with plaintiffs' prospective contractual relationship with defendant Sharp. It further alleges that defendant Rosenthal and the Sharp-employee defendants defamed plaintiffs with statements the thrust of which was that Printing Mart and Qualiano were "ripping off" Sharp and that Printing Mart's work was shoddy and inadequate. Separate counts of the complaint allege that Sharp and Laurriet are liable for tortious interference and defamation under the doctrine of respondeat superior. On defendants' motion the trial court dismissed the complaint and all cross claims under Rule 4:6-2(e) for "failure to state a claim upon which relief may be granted." The Appellate Division, in an unreported opinion, affirmed "essentially for the reasons expressed" by the trial court. We reverse.

We conclude that the complaint states a claim against defendant Rosenthal for intentional interference with a prospective contractual relationship. Moreover, the complaint also contains allegations of statements made by the named defendants that are actionable in a cause of action for defamation against all of them. Liability for the claims of defamation and tortious interference against Rosenthal can be imputed to Laurriet. Liability for the claims of defamation against the Sharp-employee defendants can be imputed to Sharp. Given the bare-bones character of the record on this appeal and the principles of law, set forth below, that govern the determination of the sufficiency of facts alleged in a complaint, we are content to let stand so much of the complaint as (1) charges the Sharp-employee defendants with intentional interference with a prospective contractual

relationship, and (2) imputes that liability to Sharp under the doctrine of respondeat superior.

I

We approach our review of the judgment below mindful of the test for determining the adequacy of a pleading: whether a cause of action is "suggested" by the facts. Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192 (1988). In reviewing a complaint dismissed under Rule 4:6-2(e) our inquiry is limited to examining the legal sufficiency of the facts alleged on the face of the complaint. Rieder v. Department of Transp., 221 N.J. Super. 547, 552 (App.Div.1987). However, 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." Di Cristofaro v. Laurel Grove Memorial Park, 43 N.J. Super. 244, 252 (App.Div.1957). 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. Somers Constr. Co. v. Board of Educ., 198 F. Supp. 732, 734 (D.N.J.1961). For purposes of analysis plaintiffs are entitled to every reasonable inference of fact. Independent Dairy Workers Union v. Milk Drivers Local 680, 23 N.J. 85, 89 (1956). 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.

II

-A-

With the foregoing precepts in mind, we read the complaint to charge a conspiracy between defendant Rosenthal and the Sharp-employee defendants to drive Sharp's business away from Printing Mart. The claim for intentional interference with prospective economic advantage arises out of the bidding for a

job to print 800 "ECR" manuals for Sharp. The alleged conspiracy was designed to detour from Printing Mart the awarding of the printing contract not on the basis of competitive bids but on the basis of a pre-arrangement involving the submission of bogus bids.

The corporate plaintiff has performed printing services for Sharp since 1976. Sharp officials were apparently pleased with Printing Mart's work, because on May 30, 1984, they issued a directive stating that "whenever printing is done by [a] source other than Printing Mart (for items beyond their capabilities), several estimates should be obtained in order to achieve the best price available." An obvious legitimate implication to be drawn from that statement is that the Sharp directive reveals a policy to give Printing Mart all printing jobs within its capability.

Around September 20, 1985, Sharp-employee defendants Essenfeld, Sinoway, and Edelman allegedly sought to exclude Printing Mart from the bidding on the "ECR"-manual printing job, even though the job was not beyond the corporate plaintiff's capabilities. Defendant Sinoway, who is in charge of administrative purchasing for Sharp, communicated with defendant Rosenthal, a principal corporate officer of plaintiffs' competitor, Laurriet, about the "ECR"-manual printing job. In a conversation on or about September 20, 1985, Rosenthal submitted a bid of $21,095 to print 800 manuals.

But Rosenthal apparently did more in this conversation than simply submit Laurriet's bid: he submitted as well bids on behalf of two other printing companies -- Pippert, located in Newark, and Gemini, located on the lower west side of Manhattan. The complaint leaves to conjecture the source of any authorization for Rosenthal to submit bids for Pippert and Gemini. However, the complaint does allege that Rosenthal fixed the Pippert and Gemini bids to make the Laurriet bid look attractive and competitive. All three of the Sharp-employee defendants purportedly knew that the bids were rigged, their

purpose being to exclude Printing Mart from this limited competition.

As it turned out, Printing Mart was permitted to bid on the ECR manual printing job, because Sharp officials superior to Sinoway, Essenfeld, and Edelman demanded that Printing Mart's bid be included in the bidding competition. On October 10, 1985, Printing Mart president Qualiano received specifications for the Sharp job. Oddly, the job specified was to print 900 ECR manuals, not 800. Plaintiffs allege that defendant Essenfeld changed the quantity in the specification to insure that the Laurriet bid would be lower than the Printing Mart bid. On October 10, Printing Mart submitted a bid of $18,225 to print 900 manuals. That figure was $2,870 lower than Laurriet's bid for 800 manuals.

The complaint states that to beat Printing Mart's low estimate, Sharp parcelled the job out: printing pages, collating and packing, binding, and tabbing. Sinoway allegedly called Rosenthal after Sharp had received the Printing Mart bid and instructed Rosenthal to come in with a bid of around $8,600 for printing alone. Rosenthal submitted a second bid on behalf of Laurriet of $8,665 covering page printing only. In its bid for the entire job, Printing Mart had estimated that the printing would cost $9,400.

Printing Mart was not afforded an opportunity to rebid separately on the printing. The complaint charges that defendant Sinoway told plaintiff Qualiano that "Printing Mart was not asked to bid on the printing only because he, Sinoway, did not want him [Qualiano] to bid and he [Sinoway] had no intention of giving Printing Mart the job under any circumstances." Undaunted, Printing Mart wrote to another Sharp official and quoted a price of $8,247.50 for the printing and collating of 900 ECR manuals. However, on October 30, 1985, Sharp issued three purchase orders for components of the printing job. Laurriet was to print the pages of the manuals for $9,768; Pippert was to collate and package the manuals for

$3,890; and a third printer, not a party to this action, was to place the collated pages in binders with tabs for $3,744. By employing three contractors, Sharp kept the entire cost to $17,402. Printing Mart's estimate for the entire job had been $823 more.

There are two tortious-interference counts. The prayer for relief on the first, Count One, states that plaintiffs "seek Judgment of this Count against the defendants Rosenthal, Sinoway, Edelman, Essenfeld, Pippert and Gemini." Absent from the claim on that count are defendants Sharp and Laurriet. The only claim of intentional interference with prospective economic relations against Sharp, which would have been a party to the prospective contract, is found in the fourth count, in which the tortious actions of the Sharp-employees defendants Sinoway, Edelman, and Essenfeld are imputed to Sharp under the doctrine of respondeat superior. In the fifth count the tortious conduct of defendant Rosenthal is imputed to his employer, Laurriet, under the same theory. Whether the tortious interference of an employee can be imputed under respondeat superior to either party to a prospective contract or a third-party competitor presents a question separate, of course, from whether the complaint states an independent claim against the employees of Sharp and Laurriet for intentional interference with a prospective economic relation.

In dismissing the intentional-interference claims, the trial court concluded that the tactic resorted to by Rosenthal and the Sharp employees was nothing more than "a better sales job." Moreover, the trial court held the view that absent an agreement that would obligate Sharp to continue doing business with Printing Mart (no such agreement is alleged in the complaint), there was no basis for an intentional-interference claim. Finally, the trial court determined that Sharp could not "tortiously interfere with its own contract," but it did not consider the question of whether the Sharp-employee defendants could be individually liable.

-B-

An action for tortious interference with a prospective business relation protects the right "to pursue one's business, calling or occupation free from undue influence or molestation." Louis Kamm, Inc. v. Flink, 113 N.J.L. 582, 586 (E. & A.1934). What is actionable is "[t]he luring away, by devious, improper and unrighteous means, of the customer of another." Ibid. Therein lie the elements of a prima facie case. The holding of the courts below that plaintiffs' complaint for interference with a prospective contractual relationship was deficient because it did not allege interference with a valid and enforceable contract cannot stand.

The separate cause of action for the intentional interference with a prospective contractual or economic relationship has long been recognized as distinct from the tort of interference with the performance of a contract. Harris v. Perl, 41 N.J. 455 (1964); C.B. Snyder Realty Co. v. National Newark & Essex Banking Co., 14 N.J. 146 (1953); C.B. Snyder Realty Co. v. BMW of N. Am., Inc., 233 N.J. Super. 65 (App.Div.1989); Van Horn v. Van Horn, 52 N.J.L. 284 (Sup.Ct.1890). Not only does New Jersey law protect a party's interest in a contract already made, "[t]he law protects also a [person's] interest in reasonable expectations of economic advantage." Harris v. Perl, supra, 41 N.J. at 462. The reason for protecting prospective interests in contractual or other economic interests was identified long ago as follows:

In a civilized community which recognizes the right of private property among its institutions, the notion is intolerable that a man should be protected by the law in the enjoyment of property once it is acquired, but left unprotected by the law in his efforts to acquire it. The cup of Tantalus would be a fitting symbol for such mockery.

[ Brennan v. United Hatters of N.Am. Local 17, 73 N.J.L. 729, 742-43 (E. & A.1906).]

Our courts continue to find actionable interference even when there is no enforceable contract. In Mayflower Industries v. Thor Corp., 15 N.J. Super. 337, 339 (Ch.Div.1951), aff'd, 9 N.J. 605 (1952), the court found interference with a prospective

home-appliance-distributorship agreement in defendant's groundless threats of litigation. In Longo v. Reilly, 35 N.J. Super. 405, 412 (App.Div.1955), certif. denied, 25 N.J. 45 (1957), the Appellate Division recognized an action for tortious interference with prospective economic relations when defendants altered votes to halt plaintiff's election bid for the office of union secretary. The trial court's statement in this case that there must be an enforceable contract in existence before an action for intentional interference with a prospective economic relationship can lie does not represent the current law.

A complaint based on tortious interference must allege facts that show some protectable right -- a prospective economic or contractual relationship. Although the right need not equate with that found in an enforceable contract, there must be allegations of fact giving rise to some "reasonable expectation of economic advantage." Harris v. Perl, supra, 41 N.J. at 462. A complaint must demonstrate that a plaintiff was in "pursuit" of business. Second, the complaint must allege facts claiming that the interference was done intentionally and with "malice." Louis Kamm, Inc. v. Flink, supra, 113 N.J.L. at 588; Kopp, Inc. v. United Technologies, Inc., 223 N.J. Super. 548, 559 (App.Div.1988); Levin v. Kuhn Loeb & Co., 174 N.J. Super. 560, 573 (App.Div.1980) (applies New York law). For purposes of this tort, "[t]he term malice is not used in the literal sense requiring ill will toward the plaintiff." Restatement (Second) of Torts Chapter 37 at 5 (introductory note) (1979). Rather, malice is defined to mean that the harm was inflicted intentionally and without justification or excuse. Rainier's Dairies v. Raritan Valley Farms, Inc., 19 N.J. 552, 563 (1955). Third, the complaint must allege facts leading to the conclusion that the interference caused the loss of the prospective gain. A plaintiff must show that "if there had been no interference[,] there was a reasonable probability that the victim of the interference would have received the anticipated economic benefits." Leslie Blau Co. v. Alfieri, 157 N.J. Super. 173, 185-86 (App.Div.), certif. denied sub nom. Leslie Blau Co.

v. Reitman, 77 N.J. 510 (1978). Fourth, the complaint must allege that the injury caused damage. Norwood Easthill Assocs. v. Norwood Easthill Watch, 222 N.J. Super. 378, 384 (App.Div.1988).

The Restatement (Second) of Torts ยง 766B (1979) contains the following slightly different definition of a prima facie case of intentional interference with a prospective contractual relation:

One who intentionally and improperly interferes with another's prospective contractual relation (except a contract to marry) is subject to liability to the other for the pecuniary harm resulting from loss of the ...


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