New Jersey Business Law Decision Examines Tortious Interference

New Jersey business law protects economic relationships, whether or not there is a contract in place.  However, a party suing for tortious interference must have competent evidence to prove every element of the claim.  A New Jersey appeals court recently issued an opinion exploring what is necessary to establish tortious interference, and providing a cautionary tale to anyone thinking about filing a lawsuit for tortious interference without competent evidence.

Background: A Meeting of the Eyes Goes South

In 2002, Dr. Corey Notis was a young ophthalmologist who opened a surgical practice in Union, New Jersey.  Allegedly he entered into an informal agreement with Alan Greenberg and Innovation Optics, Inc., in which they would refer him patients in need of ophthalmologic surgery.  Greenberg was a licensed optician who owned an optical store. Greenberg thereafter introduced Notis to two other ophthalmologists who then also referred their patients who needed ophthalmologic surgery to Notis.

In 2004, Notis then invited Greenberg and Innovation Optics to open a practice in his office, allegedly promising them that he would not abandon them and would refer all his patients to Innovation for optic care, and Innovation and Greenberg would refer their patients to Notis.  They alleged that while the practices were separate business entities, Notis held them out to patients as one combined business.

Notis opened a second office in Somerset in 2014, and became an approved provider under an insurance vision services plan.  Greenberg claimed that Notis invited him to open an office at the second location and that he had taken steps to do so.  Sometime thereafter, however, Notis told Greenberg that he was going in another direction.

In 2019, Greenberg was advised that Notis was in negotiations to sell his practice and building for $10,000,000 to NJ Retina.  The negotiations reached the point of a letter of intent being drafted, but they went nowhere and Dr. Notis did not sign the letter.

The Litigation                                       

Greenberg and Innovation Optics sued NJ Retina, in the Law Division of the Superior Court of New Jersey for tortious interference with contractual relations and tortious interference with prospective economic advantage (they also sued Notis and related entities, although they were not the focus of the appellate opinion).  NJ Retina’s attorneys sent a letter to Greenberg’s and Innovation Optics’ attorneys warning that the complaint was frivolous because all NJ Retina had done was to engage in preliminary discussions about possibly purchasing Notis’s practice, which went nowhere.  They advised that NJ Retina would seek sanctions if Greenberg did not do so.  Greenberg and Innovation Optics continued the litigation.

The Court dismissed the tortious interference claims against NJ Retina on summary judgment.  It also found the case to be frivolous and imposed sanctions on Greenberg and Innovation Optics which requites them to pay NJ Retina’s attorneys fees incurred in defending the matter.

The Appellate Decision Examines Tortious Interference

Greenberg and Innovation Optics appealed to the Appellate Division of the Superior Court of New Jersey.  The Appellate Division affirmed the judge’s decision to dismiss the tortious interference claims.

There are two types of tortious interference: Tortious interference with contractual relations; and tortious interference with prospective economic advantage.  The elements are similar.  The Appellate Division explained that under New Jersey business law to prove tortious interference with contractual relations, the plaintiff, or suing party, must prove:

 (1) an existing contract…; (2) intentional and malicious interference with that relationship; (3) the loss of the contract or prospective gain as a result of the interference (causation); and (4) damages resulting from that interference.

To prevail in a lawsuit for tortious interference with prospective economic advantage, the plaintiff must prove the same, except that instead of a contract it must prove “that it had a reasonable expectation of economic advantage that was lost as a direct result of defendant’s malicious interference, and that it suffered losses thereby.”

Thus, the elements are similar.  They both require a beneficial economic relationship.  As the Appellate Division explained:

Whether the tort [civil wrong] is denominated as an intentional interference with contractual advantage, or future economic advantage, the import is the same.  In any action based on tortious interference . . . the interference must be malicious.  Although these torts are separate causes of action, both have as their focus the means of interference.

To put it simply, Party A must have an economic relationship with Party B, which a third party, Party C, wrongfully and maliciously interferes with and harms.

Here the relationship was between Greenberg and Innovation Optics (A) and Notis and his practice (B).  Greenberg and Innovation Optics alleged that NJ Retina (C) wrongfully interfered with that relationship.  However, the Appellate Division rejected this argument.  It found that there was no actual interference.  The relationship between Notis and NJ Retina never went past the exploration phase.  Thus:

it would be impossible to intentionally and maliciously interfere with plaintiffs’ and Dr. Notis’s “de facto contract” or prospective contract without actual interference. At bottom, NJ Retina could not have intentionally or maliciously interfered with the purported de facto contract because there was no evidence of actual interference by NJ Retina. Because there was no transaction, there was no resulting interference.

Moreover, since there was no interference shown, NJ Retina could not have acted with malice as required to prove a tortious interference claim.

The Appellate Division also upheld the sanctions.  Greenberg and Innovation Optics presented no evidence that there was actual interference by NJ Retina, that it was malicious, or that it caused them any damages.  Therefore, it was “frivolous” under New Jersey business law because it had no basis in law or fact.  And because they had been warned and refused to withdraw their suit against NJ Retina but didn’t, the court therefore found that sanctions were appropriate.

The Takeaway

In order to prevail on a claim of tortious interference under New Jersey business law, a plaintiff must prove by competent evidence that there was an actual relationship, whether contractual or otherwise, that there was actual interference, that the interference was malicious, and that the interference caused the plaintiff damages.

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