Leigh Furniture and Carpet Co. v. Isom
1982 Utah LEXIS 1130, 657 P.2d 293 (1982)
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Rule of Law:
A party is liable for the tort of intentional interference with prospective economic relations if they intentionally interfere with another's existing or potential economic relations for an improper purpose or by improper means, causing injury to the other party.
Facts:
- In 1970, Leigh Furniture and Carpet Co. sold a furniture business to T. Richard Isom under a contract that also included a long-term lease and an option for Isom to purchase the building.
- Beginning in 1971, W.S. Leigh, the principal of Leigh Corp., began a pattern of harassing Isom at his store, disrupting business, verbally attacking him in front of customers, and stating he wanted to sell the building free of Isom's lease.
- Leigh Corp. interfered with Isom's attempts to bring in business partners, vetoing one potential partner (Hayes Hunter) and refusing to approve another (Brent Talbot) unless Isom terminated his contract and lease.
- In 1972, the parties signed a supplemental agreement where Isom prepaid $20,000 of the contract price to resolve disputes.
- Despite the supplemental agreement, Leigh Corp. continued to pursue two groundless lawsuits against Isom, forcing him to incur legal expenses.
- In 1974 and 1975, Isom attempted to pay off the remaining $27,000 contract balance and exercise his purchase option.
- Leigh Corp. refused Isom's tender of payment and refused to appoint an appraiser as required by the contract, preventing Isom from buying the property.
- As a result of Leigh Corp.'s continuous interference, threats, and breaches of contract, Isom's business failed, and he ultimately declared bankruptcy after being served with another lawsuit.
Procedural Posture:
- Leigh Furniture and Carpet Co. sued T. Richard Isom in district court (trial court) to repossess a business sold on contract.
- Isom filed a counterclaim against Leigh Corp. for tortious interference with his business, seeking compensatory and punitive damages.
- The jury returned a verdict in favor of Isom on his counterclaim, awarding $65,000 in compensatory damages and $35,000 in punitive damages.
- Leigh Corp. moved for a judgment notwithstanding the verdict, which the district court denied.
- The district court granted a remittitur, reducing the punitive damages award to $13,000, which Isom accepted.
- Leigh Corp. (appellant) appealed the judgment on the counterclaim to the Utah Supreme Court, and Isom (cross-appellant) cross-appealed the reduction in punitive damages.
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Issue:
Does a party's sustained course of conduct, including filing groundless lawsuits and deliberately breaching a contract with the intent to harm, constitute the tort of intentional interference with prospective economic relations?
Opinions:
Majority - Oaks, Justice
Yes. A party's sustained course of conduct, including the use of improper means such as groundless litigation and malicious breaches of contract, constitutes the tort of intentional interference with prospective economic relations. This court formally recognizes this cause of action, adopting the standard that a plaintiff must prove the defendant (1) intentionally interfered with their economic relations, (2) for an improper purpose or by improper means, (3) causing injury. Here, Leigh Corp.'s actions were not merely aggressive business tactics; they were improper means. The corporation pursued two groundless lawsuits and deliberately breached multiple contract provisions—such as unreasonably withholding consent for partners, refusing tender of payment, and blocking the purchase option—with the immediate purpose of injuring Isom's business to reacquire the property. The cumulative effect of this multi-year campaign of harassment crossed the threshold from a contract dispute into tortious conduct.
Concurring - Howe, Justice
Yes. While concurring in the judgment, this opinion expresses reservation about the majority's adoption of the 'two issue rule,' which allows affirming a general verdict if any one of multiple theories submitted to the jury is valid. The justice argues that adopting this rule was unnecessary because the jury instruction, while mentioning two torts, effectively described only the tort of interference with prospective economic relations. Therefore, the jury was not truly presented with alternative theories, and the court should reserve judgment on the 'two issue rule' until a case squarely presents the question.
Analysis:
This is a landmark case in Utah law as it formally recognized the tort of intentional interference with prospective economic relations. By adopting the Oregon model of requiring proof of 'improper purpose or improper means,' the court established a clear standard that balances the protection of legitimate business competition against the need to deter malicious conduct. The decision clarifies that a series of actions, including contract breaches committed with an intent to injure, can cumulatively rise to the level of a tort, exposing the defendant to broader damages than a simple breach of contract claim would allow. This precedent significantly impacts commercial litigation by providing a remedy for parties whose businesses are destroyed by a competitor's or contracting partner's wrongful, predatory behavior.
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