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Volume XII, Number 22

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Breaching A Contract May Be Wrong But It Isn't Independently Wrongful

In 1995, the California Supreme Court held that a plaintiff pursuing a claim for interference with a prospective contractual or economic relationship had to plead that the defendant's conduct was wrongful.  Della Penna v. Toyota Motor Sales U.S.A., Inc., 11 Cal. 4th 376 (1995).   In an opinion issued yesterday, the California Court of Appeal held that a claim for intentional interference with a prospective economic advantage cannot be premised solely on the  theory that the defendant had engaged in independently wrongful conduct by breaching a non-disclosure agreement.  Drink Tank Ventures LLC v. Real Soda in Real Bottles, 2021 Cal. App. LEXIS 948.   

The Court of Appeal explained that to prevail on a claim for intentional interference with a prospective economic advantage, a plaintiff must prove the following:

  • An economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff;

  • The defendant's knowledge of the relationship;

  •  The defendant engaged in conduct that interfered with that relationship and the defendant's conduct was "independently wrongful" - that is, wrongful by some measure beyond the fact of the interference itself;

  • The defendant either intended to interfere with the relationship or knew that the interference was certain or substantially certain to occur as a result of its conduct; and

  • the defendant's acts proximately caused economic harm to the plaintiff.

According to the court, the requirement that the defendant's conduct be "independently wrongful" is the "element that cause the interference to be a tort".   Because a "bare breach of contract, without more, is not tortious, such a breach cannot constitute independently wrongful conduct capable of giving rise to the tort of intentional interference with prospective economic advantage".  

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 315
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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