The Prince George’s Circuit Court recently reviewed a demurrer in the case of Joint Logistics Managers, Inc. v. Slater, et al. to decide whether the Defendants’ counterclaims could move forward. Joint Logistics Managers Inc., (“JMIL”) is a Virginia corporation that provides management and administrative support services to government contractors. JMIL hired one of the Defendants, Mr. Slater, in January 2016, and promoted him to Director of Logistics Support shortly after. Mr. Slater signed a Conflict-of-Interest Agreement when he began working at JMIL.
About a year later, Mr. Slater started his own corporation on the side called PAALS, which performed work similar to JMIL. Subsequently, Mr. Slater submitted a bid on behalf of JMIL to the U.S. Government for a contract opportunity. Mr. Slater also submitted a bid on behalf of PAALS and another Defendant, Alliance Group Global (“AGG”), for the same contract opportunity. AGG was awarded the contract, and JMIL terminated Mr. Slater for his actions and breach of the employment contract. JMIL sued Mr. Slater, and he and Defendant AGG filed counterclaims against JMIL in response.
The Prince George’s Circuit Court considered Slater and AGG’s counterclaims that alleged tortious interference with a contract and tortious interference with a business expectancy. When courts review a demurrer, the court must accept the factual allegations as true to determine whether a complaint properly states a cause of action. The elements required to show tortious interference with a contract are (1) the existence of a valid contractual relationship; (2) knowledge of the relationship; (3) intentional interference or causing breach or termination of the contract; and (4) resulting damage.
AGG has properly pled facts to show an existing contract, and it has shown that JMIL knew of the contract. However, as consistently held by the Virginia Supreme Court, to prove element 3, AGG had to show interference by a third party that caused a party to the contract not to perform the contract. AGG needed to plead that JMIL intentionally interfered with the contract between AGG and Slater/PAALS, which caused Slater/PAALS to not perform the contract. AGG admitted that the non-performance of the contract was due to mutual termination of the contract, not a breach by either party caused by third-party interference. AGG responded to this argument that JMIL induced the parties not to perform the contract, but the Court found that AGG failed to meet its burden to correctly plead this claim.
AGG further pled that JMIL tortiously interfered with a business expectancy. The elements required to show tortious interference with a business expectancy are similar to those required for tortious interference with a contract. AGG did not assert any future business expectancy, other than the contract it had with Slater/PAALS. AGG also did not plead a future business relationship or other future contracts that would arise from the relationship. Additionally, since the Court found that the actual contract was mutually relinquished by both parties, there cannot be a business expectancy retained in that same contract. For these reasons, the Court sustained JMIL’s demurrer on all counts and dismissed the Defendants’ counterclaims.
If you or your business think you may have a claim for tortious interference with a contract or business expectancy, it is important to note that there must be third-party interference involved in tortious interference with a contract. For tortious interference with a business expectancy, the defendant must have known about the contract and intentionally interfered with that contract. It will not be enough if both parties choose to relinquish a contract because of external factors. Courts will not allow a claim of tortious interference to proceed where two parties voluntarily choose to terminate a contract.
If you need more guidance or information, contact the business litigation attorneys at General Counsel, PC today at 703-556-0411, firstname.lastname@example.org or use this Contact Us Form. Attorneys at General Counsel, PC have experience drafting, negotiating, and litigating a wide range of agreements for business owners and employees throughout the Washington, D.C. Metro area (and beyond).