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Volume X, Number 304

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A Not So Strange Stranger In A Strange Land: Holder Of An Economic Interest May Be Liable For Tortious Interference

Out of Exodus?

The California Supreme Court has held  that a contracting party cannot be held liable in tort for conspiracy to interfere with its own contract. Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503 (1994).  At the same time, the Court observed that "noncontracting parties" or "a stranger to a contract" can be liable in tort for intentionally interfering with the performance of a contract. 

Does this mean that a landowner that hires a contractor cannot be liable for interfering with the contractor's contract with a subcontractor?  Yesterday, the Fourth District Court of Appeal answered "no".  Caliber Paving Company, Inc. v. Rexford Industrial Realty & Management, Inc. (Cal. Ct. Appeal Case No. G058406, Aug. 31, 2020).  Writing for the panel, Justice Richard D. Fybel found that a claimed economic or social interest in the contract does not confer immunity:

"A contractual relationship is no less disrupted, and the contracting party’s interest in receiving performance of the contract no less impaired, when the noncontracting stranger claims a social or economic interest in the contractual relationship"

The Court of Appeal's opinion mentions two other decisions that I've written about previously: Asahi Kasei Pharma Corp. v. Actelion Ltd. 222 Cal.App.4th 945 (2013) and Redfearn v. Trader Joe’s Co. 20 Cal.App.5th 989 (2018).  See Asahi's Morning Sun - Court Holds Parent And Its Managers May Be Liable For Interfering With Subsidiary's Contract and Court Finds Trader Joe's To Be A Stranger.

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 246
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Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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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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