Tort/Negligence — Interference with Prospective Economic Advantage – No Contact – Inducement – Civil Practice – Motion to Amend – Fraudulent Transfers Act

KRG New Hill Place, LLC v. Springs Investors, LLC (Lawyers Weekly No. 15-15-0210, 14 pp.) (Gregory McGuire, J.) 2015 NCBC 19

Holding: Defendants’ counterclaim merely alleges that plaintiffs’ contract breach caused defendants to lose out on a separate deal with a third party – with no allegation that plaintiffs had any contact with the third party. Defendants have failed to allege inducement, so they have not stated a claim for interference with prospective economic advantage.

Plaintiffs’ motion to amend is granted in part and denied in part. The court grants plaintiffs’ motion to dismiss defendants’ counterclaim for tortious interference with prospective economic advantage. The court denies defendants’ motion to dismiss.

The parties own adjacent tracts of land and contracted to develop the tracts’ infrastructure. Their plans were stalled during the economic downturn.

Motion to Amend

Plaintiffs’ original claim under the Uniform Fraudulent Transfers Act (UFTA) was based on the transfer of defendants’ tract of land from the LLC defendant to the individual defendants. Because defendants resisted discovery, it was not until December 2014 that plaintiffs received the records that revealed the transactions upon which plaintiffs now base their broader allegations of violation of the UFTA. The court concludes that plaintiffs did not unduly delay in seeking these amendments and that justice requires that plaintiffs be permitted to amend their complaint to add the allegations regarding additional transactions.

However, plaintiffs also propose new allegations as to the reason for the stalling of the parties’ project. Plaintiffs contend that their new explanation came to light when plaintiffs’ own Rule 30(b)(6) witness testified in a deposition conducted by defendants. Plaintiffs offer no explanation as to why this information, provided by their own witness, would not have been available to them at the time they commenced this lawsuit. Plaintiffs unduly delayed in bringing forward these amendments.

Interference with Prospective Economic Advantage

Defendants allege that, because plaintiffs failed to timely complete infrastructure work pursuant to the parties’ contract, third party Kaplan Communities backed out of a joint venture to develop a residential apartment complex on defendants’ tract. Defendants have not alleged that plaintiffs had any contact with or directed any actions towards Kaplan.

The court concludes that the inducement required to establish a claim for intentional interference with prospective economic advantage requires purposeful conduct intended to influence a third party not to enter into a contract with the claimant.

To equate “induced” with “caused” would mean that any type of conduct by a party that caused a third party to refrain from entering into a contract with a claimant would be grounds for asserting the claim. This would have broad implications as it would make every contracting party potentially liable for the types of damages available for intentional torts whenever the failure to fulfill a contract for any reason caused the other party to the contract to lose a prospective business opportunity.

Furthermore, plaintiffs allegedly breached the parties’ contract in 2010, but defendants began negotiations with Kaplan in 2012. Thus, plaintiffs could not have intended for their alleged breach of contract to influence Kaplan.

Defendants’ motion to dismiss plaintiffs’ UFTA claim was based on the original complaint. Even though the individual defendants have conveyed the real property back to the LLC defendant, there are other remedies available to plaintiffs under the UFTA.

Motions granted in part and denied in part.