Machinery Hauling, Inc. v. Steel of West Virginia
384 S.E.2d 139 (1989)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A threat to sever a business relationship, which a party has a legal right to do, does not constitute actionable economic duress, even if it is used to induce a payment or other concession from the other party.
Facts:
- In January 1988, Steel of West Virginia (Steel) contracted with Machinery Hauling, Inc. (Machinery) to transport seventeen loads of steel product to a customer in Kentucky.
- After most of the delivery was completed, Steel informed Machinery that the steel was not of merchantable quality and had been rejected by the customer.
- Steel instructed Machinery to return the last three loads to its plant in Huntington, West Virginia.
- Subsequently, Robert Bunting, an agent of Steel, demanded that Machinery pay Steel $31,000, the price of the undelivered loads.
- Bunting threatened that if Machinery did not pay the $31,000, Steel would cease to do business with Machinery.
- Machinery asserted that the potential loss of business from Steel was in excess of $1,000,000 per year.
- There was no continuing, long-term contract obligating Steel to provide business to Machinery.
Procedural Posture:
- Machinery Hauling, Inc. filed suit against Steel of West Virginia and its employee, Robert Bunting, in the Circuit Court of Cabell County, seeking monetary damages for 'extortionate demands'.
- The circuit court concluded that the threats made by the defendants were not actionable.
- The Circuit Court of Cabell County certified questions of law to the Supreme Court of Appeals of West Virginia for determination.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a party's threat to cease doing business with another party unless a payment is made constitute actionable economic duress when there is no continuing contractual relationship between them?
Opinions:
Majority - Justice Miller
No. A threat to do what one has a legal right to do does not constitute actionable economic duress. The court recognized the doctrine of economic duress, which allows a party to void a transaction if it was forced into it by a wrongful or unlawful threat that left it no reasonable alternative. However, a key element of duress is that the threat must be 'wrongful' or 'unlawful.' Here, there was no continuing contract between Steel and Machinery, which meant Steel was legally free to place its business with whomever it chose. Therefore, Steel's threat to cease doing business with Machinery was a threat to do something it was legally entitled to do. Such a threat is not unlawful and cannot support a claim for economic duress. The plaintiff's claim was based on a future expectancy of business, which is not a legally protected right in this context.
Analysis:
This decision clarifies the boundaries of the economic duress doctrine by reinforcing the principle that a threat is only 'wrongful' if it involves an act the threatening party is not legally entitled to perform. It distinguishes between leveraging a pre-existing contractual duty and leveraging the freedom to engage in future business. The case establishes that using the prospect of future, at-will business as a bargaining chip, while potentially coercive in a practical sense, does not rise to the level of legally actionable duress. This holding protects the freedom of commercial entities to choose their business partners and to use that freedom as leverage in negotiations, provided they do not breach an existing legal duty.
Unlock the full brief for Machinery Hauling, Inc. v. Steel of West Virginia