- Truth is Absolute Defense against Claims for Intentional Interference with Contractual Relationships
- February 23, 2010
- Law Firm: Meyer, Unkovic + Scott llp - Pittsburgh Office
Applying the old adage often cited in connection with defamation matters, that “truth is an absolute defense,” the Pennsylvania Superior Court has held that true statements may not form the basis for a claim of intentional interference with contractual relationships.
In Walnut Street Assocs., Inc. v. Brokerage Concepts, Inc., (September 22, 2009), the Court predicted that the Pennsylvania Supreme Court would adopt Section 772(a) of the Restatement (Second) of Torts which provides that a party who intentionally causes a third person not to perform a contract with another is not liable for interference where it gave the third party truthful information.
In that case, an insurance broker filed suit against a third-party administrator (“TPA”) of self-funded employee benefit plans arising from a letter issued by an employee of the TPA to the broker’s client, in which the broker’s amount of commissions were disclosed, and which purportedly caused the broker to lose its status as broker of record with the client. Among other claims, the broker asserted a claim for intentional interference with contractual relations. After a jury trial before the lower court, the broker was awarded $330,000 in damages.
On appeal, the TPA argued that a judgment should have been entered in its favor regardless of the jury verdict because the letter issued to the broker’s client contained truthful statements and could not serve as a ground for an intentional interference claim. The Superior Court agreed.
The tort of intentional interference with existing contractual relationships requires proof of: (1) the existence of a contractual relationship between the plaintiff and a third party; (2) an intent on the part of the defendant to harm the plaintiff by interfering with that contractual relationship; (3) the absence of privilege or justification on the part of the defendant; and (4) actual damages to the plaintiff. The Court focused on the third element of the claim and ruled that because there was no dispute that the statements in the letter concerning the broker’s commission contained only truthful information, the jury verdict should have been overturned. The Court held that under § 772(a) the broker was entitled to a judgment in its favor because truthful statements cannot form the basis for a tortious interference with contract claim.
Of course, similar to defamation actions, litigation on intentional interference claims will center around the actual truthfulness of the statements that led to the alleged interference with a party’s contract with a third party.