Resubmitted In Banc December 8, 1993.
Plaintiffs appeal the dismissal for failure to state claims of their action for contractual and tortious breach of the duty of good faith and fair dealing and for wrongful interference with contractual and business relationships. ORCP 21A(8). We affirm in part and reverse in part.
We take the facts as alleged by plaintiffs, together with the reasonable inferences that may be drawn from them. In June, 1989, plaintiffs entered into a multimillion dollar construction loan agreement with defendant Seafirst Corporation (Seafirst), a Washington bank holding company.
Seafirst solicited plaintiffs' business for the financing of Uptown. The loan was secured by a deed of trust on the land and buildings at the apartment project. As part of the loan process, plaintiffs obtained an appraisal of $10,250,000 from a third-party appraiser recommended and approved by Seafirst. Seafirst also independently evaluated the project and updated the appraisal during construction to $10,400,000. The principal amount of the loan was due January 1, 1991, with a provision for two six-month extensions until January, 1992.
Shortly after construction of the apartments was completed, the market for their rental changed considerably from the pre-construction forecast. Plaintiffs recognized in the early fall of 1990 that there would be short-term cash flow problems in paying the required monthly interest payments on the loan. They discussed that problem with Seafirst personnel. Plaintiffs stayed current with the loan payments, and in October, 1990, Seafirst granted plaintiffs the first six-month extension. Seafirst told plaintiffs that it would continue to work with them on loan extensions.
In April, 1991, plaintiffs were unable to make their full interest payment. Plaintiffs and Seafirst continued to negotiate about how to resolve the situation. Plaintiffs had already relinquished their developer's fee of approximately $350,000 and further invested $450,000 of additional funds. Seafirst ordered an additional appraisal, which was $8,850,000 or approximately $1 million over the outstanding loan balance of $7.8 million.
Plaintiffs' business had always been conducted through Seafirst's "Private Banking" department for preferred, large customers and, after a bank reorganization, through the real estate department. Plaintiffs were continually assured by personnel in these departments that Seafirst would work with them to solve any problems on the Uptown project. Nevertheless, in June, 1991, Seafirst did not grant the second six-month loan extension. It transferred the Uptown loan and all of plaintiffs' other business to its problem department, "Special Credits," even though no other accounts were in trouble or at risk. It also refused to loan money for an unrelated joint venture project unless plaintiffs
Due to the pressure from Seafirst and concerns about their business reputation, plaintiffs decided to find a buyer for Uptown. Plaintiffs asked Seafirst not to bring a foreclosure action before a sale, because it would endanger the sale and plaintiffs' additional investment. Plaintiffs explained that they were concerned that the buyer would wait to buy the property at a bargain price after the foreclosure. Two days after plaintiffs notified Seafirst of an offer, Seafirst initiated a foreclosure action and filed a complaint for the appointment of a receiver. Before the hearing on the receivership, plaintiffs provided Seafirst with details of the purchase offer for Uptown. Seafirst refused to postpone the hearing to permit further negotiations with the buyer. The buyer withdrew the offer.
Subsequently, plaintiffs received another offer for $8.6 million. They notified Seafirst of that offer and asked it not to proceed with the foreclosure. However, Seafirst continued with the foreclosure sale. It purchased the property for the amount of the loan due, $7.8 million, and immediately resold it for the same amount. Plaintiffs received nothing for the sale and lost all their equity. They brought this action against Seafirst, which was dismissed for failure to state facts sufficient to constitute a claim.
Plaintiffs first assign error to the dismissal of their claim against Seafirst for breach of the implied contractual duty of good faith and fair dealing by foreclosing before plaintiffs could sell Uptown. Seafirst argues that plaintiffs have no right to claim breach of the implied duty, because plaintiffs defaulted on the interest payment, and the remedies that Seafirst pursued are specifically permitted by the parties' contract in the event of such a default.
Plaintiffs respond that Seafirst had discretion as to whether it would pursue the foreclosure remedy provided by the contract and, therefore, it was required to act in good faith in exercising that discretion. Plaintiffs rely on Best v. U.S. National Bank, 303 Or. 557, 563, 739 P.2d 554, 558 (1987), where the court said:
Seafirst answers that its right to foreclose was an express term of the contract and, as such, the implied duty of good faith and fair dealing has no application to its exercise. Seafirst relies principally on Badgett v. Security State Bank, 116 Wn.2d 563, 807 P.2d 356 (1991), where the Washington court so reasoned in rejecting the contention that the implied duty arose in connection with loan extension negotiations between a bank and its customer.
"[t]he foundation of the at-will employment agreement is the express or implied understanding that either party may terminate the contract for any reason, even for a bad cause. A duty of good faith and fair dealing is appropriate in matters pertaining
The court, therefore, concluded that an express unilateral right to terminate is not subject to the implied duty of good faith.
The same reasoning applies equally to a lender's invocation of remedies that the parties' contract expressly allows in the event of a borrower's default.
The underlying flaw in plaintiffs' argument is their supposition that Seafirst's act was "discretionary," in the sense that that word is used in Best v. U.S. National Bank, supra, and similar cases. As used there, the word refers to the establishment of conditions in the performance of ongoing contracts by a party on whom the contract confers the unilateral authority to specify those conditions in accordance with the interests or expectations of both parties. As Sheets and Harris make clear, neither "discretion" specifically nor the rationale for the implied good faith doctrine generally has any relevance to a party's election to pursue a remedy that the contract expressly gives that party for the party's sole benefit, and the pursuit of which effectively ends the contractual relationship. It is true that Seafirst had discretion, in the sense that the contract did not require it to foreclose. However, that is not the kind of discretion that Best and its progeny envision, and it does not alter the fact that Seafirst had the contractual right to do what it did and breached no implied contractual duty by doing so. The contract claim was properly dismissed.
Plaintiffs next assign error to the dismissal of their tort claim based on a breach of the duty of good faith. They note that they pleaded the existence of a "special relationship" between Seafirst and themselves, as borrower and lender. Assuming that that can constitute a special relationship, for purposes of the tort claim, see Georgetown Realty v. The Home Ins. Co., 313 Or. 97, 831 P.2d 7 (1992), the pleaded facts show no breach of the duty as a matter of law. Plaintiffs rely on Harper v. Interstate Brewery Co., 168 Or. 26, 120 P.2d 757 (1942), which they characterize as standing for the proposition that "a secured lender/borrower relationship can impose an extra contractual standard of duty upon a lender in choosing its remedies." However, we read Harper as stating a much narrower proposition. In Cascade Steel Fabricators v. Citizens Bank of Oregon, 46 Or.App. 573, 612 P.2d 332, rev. den. 289 Or. 741 (1980), we explained Harper and discussed the availability of the tort theory that plaintiffs seek to allege. The plaintiff in Cascade brought a tort action for bad faith, asserting that the defendant bank's conduct in demanding payment of a loan and foreclosing on the collateral was tortious, in the light of the parties' long history of dealing and the alleged prediction by a bank representative "that further financing would be forthcoming." We said:
"Plaintiff cites two cases to support its tort theory of bad faith: Harper v. Interstate Brewery Co., 168 Or. 26, 120 P.2d 757 (1942), and Skeels v. Universal C.I.T.
In this case, similarly, plaintiffs' allegations, viewed as favorably as possible to them, show nothing approximating the willful misconduct that the court described in Skeels v. Universal C.I.T. Credit Corporation, supra. As in Cascade Steel Fabricators, to hold that Seafirst's conduct was tortious or violated an implied good faith duty here would make any default remedies unavailable to a lender that had offered assistance or expressed encouragement to the borrower before pursuing the contractual remedies.
We do not suggest that we condone the course of dealing in which plaintiffs allege that Seafirst engaged. If the issue were whether Seafirst's conduct estops it from pursuing the contractual remedy, we might agree that there is enough alleged here to get plaintiffs past the pleading stage. However, that is not the argument that plaintiffs make. Rather, they contend that the express remedy under the contract is subject to the implied duty. That contention is at odds with Sheets v. Knight, supra, and Harris v. Griffin, supra. Both the contract and tort good faith claims were correctly dismissed.
In their remaining assignments, plaintiffs contend that the court erred by dismissing their third, fourth and fifth claims, in which they alleged that Seafirst interfered with their business and contractual relationships with the prospective buyer of Uptown and the prospective participant in the unrelated joint venture. We agree that it was error to dismiss those claims. Interference with contractual relations or future business relations is actionable if the defendant acts with the improper objective of harming the plaintiff or uses wrongful means that in fact cause injury to the plaintiff's contractual or business relationships. Top Service Body Shop v. Allstate Ins. Co., 283 Or. 201, 205, 582 P.2d 1365 (1978). Moreover, as we explained in Hickman Construction v. South Umpqua State Bank, 109 Or.App. 527, 532, 820 P.2d 838 (1991):
The intent element of an interference claim is either an actual intent to cause the harm or acting with knowledge that the "interference is substantially certain to occur from [the] action or is a necessary consequence thereof." Straube v. Larson, 287 Or. 357, 361, 600 P.2d 371 (1979). The plaintiff must allege some injury, and the interference must be wrongful beyond the fact of the interference.
Here, plaintiffs pleaded that they informed Seafirst of the offer that they received to buy Uptown for between $300,000 to $800,000 more than the outstanding debt, which would have allowed them to recoup a substantial portion of their investment. They asked Seafirst not to appoint a receiver or foreclose in order to allow the sale of Uptown to proceed. Because Seafirst went forward with the receivership and foreclosure, plaintiffs lost the sale and, subsequently, all their equity in Uptown. Plaintiffs have alleged sufficient facts to support an inference that Seafirst acted without a proper business purpose and with the improper objective of harming plaintiffs. Plaintiffs also pleaded that, acting with an intent to injure them, Seafirst made funding on the unrelated project contingent on plaintiffs being removed as partners. Their pleadings of the three interference claims meet the minimum requirements necessary to survive a motion to dismiss.
Some response to Judge Edmonds' dissent is necessary. He would hold that the third, fourth and fifth claims were properly dismissed. The critical step in his reasoning is that liability for intentional interference by one acting with a privilege—which he postulates Seafirst was—may arise if the defendant employed improper means, but not if the theory of liability is that the defendant acted with an improper motive. We do not agree that the pertinent Oregon case law permits that distinction or permits the conclusion that a defendant's improper motive cannot result in liability for an intentional interference tort arising out of privileged conduct.
In Ramirez v. Selles, 308 Or. 609, 784 P.2d 433 (1989), the Supreme Court reversed our holding that an intentional interference claim had been properly dismissed under ORCP 21A(8). See 96 Or.App. 340, 772 P.2d 952 (1989). The Supreme Court said:
"The Court of Appeals then continued with this statement:
"`Because plaintiff alleges facts showing that defendants are business competitors of plaintiff, plaintiff must also allege facts showing that they were not privileged to interfere with the relationship between plaintiff and his clients.'
"The Court of Appeals cited North Pacific Lbr. v. Moore, 275 Or. 359, 369, 551 P.2d 431 (1976), where this court stated that the plaintiff "was required to prove that [defendant] purposely caused a third person not to continue a business relation with plaintiff and that [defendant] was not privileged to do so.' Subsequently, this court held that once the complaint alleges an intentional interference with a contractual relationship for an improper motive or by improper means, a defendant's privilege is a matter of defense and the absence of privilege is not a part of plaintiff's affirmative case. `No question of privilege arises unless the interference would be wrongful but for the privilege; it becomes an issue only if the acts charged would be tortious on the part of an unprivileged defendant.' Top Service Body Shop v. Allstate Ins. Co., 283 Or. 201, 582 P.2d 1365 (1978). A defendant therefore can obtain dismissal of a complaint that does not allege the necessary factual elements
Judge Edmonds appears to read the second emphasized passage in the quotation as either leaving open or resolving negatively the question of whether an improper motive, like the improper means mentioned in the passage, can overcome a privilege. For two reasons, we disagree. First, his reading is not consistent with the first of the emphasized passages. That passage says that an allegation of an improper motive or improper means by the plaintiff suffices to state the claim and to make the question of privilege one of defense. It follows, when the two passages are read together and as being consistent with each other, that improper motives and improper means bear the same relationship to the issue of privilege, i.e., either can overcome a privilege.
Second, the later passage in Ramirez is a quotation from Top Service Body Shop v. Allstate Ins. Co., supra. Although the passage itself does not refer to "improper motives," the five pages of the Top Service Body Shop opinion that follow the passage are devoted to the questions of whether there was evidence that the privileged defendant had acted with an improper motive, and whether the defendant acted only within its privilege. Having answered the first question in the negative and the second affirmatively, the court went on to summarily reject the plaintiff's "alternative theory of tortious interference by improper means," 283 Or. at 215, 582 P.2d 1365, because that theory had not been submitted to the jury and the plaintiff did not assign error to the trial court's refusal to instruct the jury on it. We do not think that it is reasonable to read a brief selective passage from Top Service Body Shop as suggesting that only improper means can overcome a privilege, or that improper motives cannot, when the intentional interference issue in the case that the court discussed at length was an improper motive theory and when no question of improper means had been preserved.
Moreover, in Top Service Body Shop and the subsequent intentional interference cases decided by the Supreme Court and this court, the phrases "improper motives" and "improper means" are uniformly used in tandem in the general descriptions of the law. There is no basis in the case law for concluding that the two play a different role, or that the role of only one of them changes, when the context changes from unprivileged to privileged conduct. Especially noteworthy in that regard is Welch v. Bancorp Management Services, 296 Or. 208, 675 P.2d 172 (1983), modified 296 Or. 713, 679 P.2d 866 (1984). There, in discussing the privilege of advisors, employees and agents acting on behalf of their principals, which is possibly the most protected of all of the privileges in the law of intentional interference torts, the court made clear that both improper motives and improper means could serve as grounds for the intentional interference claim, see 296 Or. at 715-16, 679 P.2d 866, and it expressly defined the nature of the improper motive that could overcome that particular privilege ("acts against the best interests of the principal or acts solely for [the agent's] own benefit"). 296 Or. at 216-19, 679 P.2d 866. There would have been no occasion to discuss or define the improper motive if it could have had no legal effect on the defense of privilege that was undisputably present in Welch.
Because we read the Supreme Court's decisions to have decided the question differently from the way Judge Edmonds would, it is not necessary to say a great deal about the rationale that leads him to conclude that
The other issues in Judge Edmonds' dissent that call for comment are his alternative arguments that the dismissal of the intentional interference claims should be sustained because the pleadings are conclusory or otherwise technically defective. We do not agree that the trial court's rulings can be upheld on those grounds. See Hendgen v. Forest Grove Community Hospital, 98 Or.App. 675, 678, 780 P.2d 779 (1989). We also do not agree that this case is analogous to Conklin v. Karban Rock, Inc., 94 Or.App. 593, 767 P.2d 444 (1989). The decisive principle in the part of that opinion on which Judge Edmonds relies was that, as pleaded, the purported improper motive was incidental to and a part of conduct that was itself properly motivated. Here, the claims allege that Seafirst's motives were to injure plaintiffs and their interests, quite apart from the alleged conduct itself.
Reversed and remanded on third, fourth and fifth claims; otherwise affirmed.
RIGGS, Judge, concurring in part; dissenting in part.
I agree with the majority's reasoning and conclusion that it was error for the trial court to grant the motions to dismiss the interference with contractual and business relationship claims. However, I would hold that the contractual and tortious good faith and fair dealing claims were improperly dismissed, and I dissent from the part of the majority opinion that affirms those rulings.
For its conclusion that the duty of good faith and fair dealing does not apply to a lender's right to invoke a contractual default remedy, the majority opinion relies on two opinions which expressly declined to address the issue for which they are now cited. Furthermore, the majority opinion conflicts with Best v. U.S. National Bank, 303 Or. 557, 564, 739 P.2d 554 (1987).
Best stands for the proposition that "there is an obligation of good faith in the performance and enforcement of every contract." 303 Or. at 561, 739 P.2d 554. "Enforcement" refers to the enforcement of both promises and rights, including the right to foreclose.
For several reasons, the majority's reliance on Sheets and Harris v. Griffin, 109 Or.App. 253,
The termination clauses of at-will employment contracts are commonly understood as sui generis, and nothing in Sheets suggests otherwise.
Even if we import "at-will" employment contract law into the area of business contract law, as the majority does, Sheets leaves open the possibility that a party who terminates an at-will contract for an improper purpose (as opposed to "bad cause," which has a specialized meaning in the context of employment law) might have breached the implied duty of good faith.
In other words, where there is a reasonable expectation of continued employment, the doctrine of good faith might apply to termination. Here, plaintiffs have pleaded enough facts to support a reasonable expectation that defendant would not intentionally and maliciously endanger plaintiff's investment, and, if we follow Sheets, the question of whether the doctrine of good faith applies remains open.
The majority's reliance on Harris v. Griffin, supra, is also misplaced. That decision explicitly refused to decide whether the doctrine of good faith applies to a real property seller's right to declare a default and accelerate. 109 Or.App. at 258, 818 P.2d 1289. Harris is distinguishable from this case because the plaintiffs in Harris never alleged that the seller had an improper motive.
It bears repeating that this is a review of a trial court's dismissal pursuant to a Rule 21 motion, and that we must accept the plaintiff's allegations as true. Under Best, plaintiffs have adequately pleaded a breach of the duty of good faith and fair dealing. Therefore, their contract claim was improperly dismissed. For the same reason, their tort claim for breach of the duty of good faith was also improperly dismissed.
I disagree with the majority's statement that holding Seafirst's conduct tortious would
For these reasons, I concur in part and dissent in part.
EDMONDS, Judge, concurring in part, dissenting in part.
In this appeal from a judgment of dismissal under ORCP 21A(8), plaintiffs argue that the trial court erred when it dismissed their claims for tortious breach of the duty of good faith and fair dealing (first claim for relief), breach of the contractual duty of good faith and fair dealing (second claim for relief), tortious interference with a contractual relationship (third claim for relief), and tortious interference with an economic relationship (fourth and fifth claims for relief). The majority affirms the trial court's ruling on the first two claims. I would affirm the trial court's ruling on all claims.
The gravamen of the first claim is the allegation that there was a "special relationship of trust and confidence" among the parties that imposed a duty on defendants "not to harm plaintiffs' interests by its conduct," and that defendants breached that duty by initiating a foreclosure action and seeking a court ordered receivership regarding a loan made by defendants to plaintiff. Although the complaint is not explicit, it appears from the tenor of the allegations that plaintiffs concede that they were in default and that the loan agreement confers the right to defendants to seek a receiver and foreclose in the event of a default. The claim is predicated on the argument that the nature of the relationship among the parties imposed a standard of care on defendants that was independent of the terms of the contract. The majority holds that the allegations do not allege a breach of duty as a matter of law, because plaintiffs do not allege sufficient facts to constitute an estoppel or to imply a good faith duty under the circumstances. It reasons that to imply such a duty would be inconsistent with the express terms of the agreement that gives defendants the right to foreclose on default.
An example in which a party might rely on both theories would be when a tenant suffers personal injury as the result of basement steps that were left in a dangerous condition by the landlord. Under the lease, the condition of the steps would be a breach of the landlord's covenant to maintain the premises in good repair. Alternatively, the law imposes an independent duty on the landlord to maintain the premises in an habitable conditions. See ORS 90.320. Another example occurred in Georgetown Realty Inc., v. The Home Ins. Co., supra. There, an insured brought a claim against an insurer alleging that the insured was negligent when it failed to settle a claim against the insured for the limits of the coverage under the policy. The court held that, when the liability insurer undertook to defend, the law imposed a duty independent of the policy to use reasonable care, and the failure to exercise that standard gave rise to a claim for negligence.
The second claim alleges a breach of a contractual implied duty of good faith not to seek a receivership or foreclose when defendants knew that the foreclosure would "destroy plaintiffs' ability to recover their investment." The majority holds that an implied duty of good faith does not exist if it is inconsistent with an express right under the agreement. It reasons that because the agreement gives defendant the absolute or unqualified right to foreclose on default, it is immaterial what defendant's motive was. I agree and comment only to point out that the majority's reasoning is consistent with the court's opinion in U.S. National Bank v. Boge, 311 Or. 550, 814 P.2d 1082 (1991). In that case, the borrower counterclaimed against a bank that had sued him on several delinquent promissory notes. He asserted that the bank had breached its duty of good faith by, in part, foreclosing on his loan. The court said:
The third claim for relief is for tortious interference with a contractual relationship in that "Defendants intentionally interfered with plaintiffs' contractual relations with a buyer for the Uptown Heights Apartments * * *." A necessary predicate for an action for interference with a contractual relationship is an existing contract. Luisi v. Bank of Commerce, 252 Or. 271, 449 P.2d 441 (1969). According to plaintiffs' complaint, defendants initiated a foreclosure action and requested appointment of a receiver on August 2, 1991. A sale was scheduled for December 20, 1991. It was not until after November 7, 1991, that plaintiffs entered into a binding sales agreement with a purchaser. Any claim for tortious interference with a contractual relationship must necessarily have arisen from defendants' actions after the sales agreement was signed.
Plaintiffs make only one allegation of interference against defendants that pertains to that time period. "Seafirst refused to allow any extension of the foreclosure time period and continued to demand that it be paid in full prior to the foreclosure sale." In Top Service Body Shop v. Allstate Ins. Co., 283 Or. 201, 582 P.2d 1365 (1978), the court said:
A defendant is entitled to a dismissal of a claim that does not allege the necessary factual elements of the tort. If the facts giving rise to a recognized privilege appear on the face of the pleading, then the pleader must plead facts that demonstrate that the means used by the defendant are not justified by the reason for recognizing the privilege. Ramirez v. Selles, 308 Or. 609, 612, 784 P.2d 433 (1989).
There is no allegation in the third claim that defendants breached their loan agreement
So far as I can determine, that precise question has not been expressly answered by the Oregon appellate courts. The majority believes the issue has been answered in Ramirez v. Selles, supra. However, there the court concluded that the allegations about the defendant's actions "do not on their face show that [his] acts would be privileged as those of a competitor." 308 Or. at 614, 784 P.2d 433. Consequently, the allegations about improper motive sufficed to state a claim. This case is inapposite to Ramirez because as alleged, defendants' conduct was authorized by the parties' agreement. Therefore, the privilege does exist here and the question becomes whether defendants' motive is material in light of the nature of the privilege. Moreover, the majority appears to believe that I support a general rule that whenever a privilege exists, the actor's motive will always be immaterial. That is incorrect, because I understand the court in Top Service Body Shop v. Allstate Ins. Co., supra, to say that a purpose to harm the injured party is but one factor that could make the interference improper. 283 Or. at 207, 582 P.2d 1365. The materiality of an improper motive will depend on the particular privilege involved.
Because of our standard of review in this case, any ruling must be confined to the facts that appear on the face of the complaint and the inferences that can be drawn therefrom. The analysis begins with a basic legal proposition: "Not all interferences with economic relationships are tortious." For instance, the allegation in this claim that defendants "made the sale for their own benefit" could hardly be characterized as an improper interference by defendants in the absence of allegations that suggest that the procurement of a foreclosure judgment under the circumstances was improper. The loan agreement was in default, and defendants were entitled to be paid. Moreover, the claim does not allege that defendants received at sale more than what was owed to them including principal, interest and the cost of the foreclosure proceeding.
The second legal proposition that is pertinent to the analysis is that a distinction exists between situations in which the actor's conduct is privileged and in which it is unprivileged. See Top Service Body Shop v. Allstate Ins. Co., supra, 283 at 210, 582 P.2d 1365. When the conduct is unprivileged, then the interference may be improper because the actor had an improper motive or employed improper means to effect the interference. When the conduct is privileged but the actor employed improper means to carry out the interference, the privilege is lost. See Ramirez v. Selles, supra, 308 Or. at 612, 784 P.2d 433. There is no public policy reason to provide a defendant with tort immunity when he acts with improper means. However, different policy concerns come into play when the defendant's conduct is privileged, and he acts within the law or as authorized by a consensual arrangement such as a contract. If a party to a contract does what the law and the agreement permit him to do, should he be guilty of a tort because of his motivation? To answer that query, it is important to look at the underlying purpose for providing a tort remedy for an interference with a contractual relationship.
In Oregon, the tort of interference with a contractual relationship finds its origin in section 766 and section 766A of Restatement (Second) Torts. Although the comments to those sections might be read as suggesting that the presence of an improper motive can create liability despite the privileged nature of the conduct, to promulgate such a rule under the circumstances of this case would be contrary to public policy. The justification for tort liability depends on an "improper"
A contrary holding in this case sends a message that promotes instability of contractual obligations, litigious interference with traditional legal and contractual remedies of creditors, and havoc with how commercial and private lenders do business. See Perlman, "Interference with Contract and Other Economic Expectancies," 49 Chi. L.Rev. 61 (1982). "The result becomes even more incongruous in view of the fact that punitive damages could also attach." Circo v. Spanish Gardens Food Mfg. Co., Inc., 643 F.Supp. 51, 56 (W.D.Mo.1985).
There is another defect in the pleading of the third claim that exists because of the conclusory nature of plaintiffs' allegations. In Conklin v. Karban Rock, Inc., 94 Or.App. 593, 767 P.2d 444, rev. den. 307 Or. 719, 773 P.2d 774 (1989), the defendant alleged that it had entered into a written lease with a third party (Jenkins) which allowed the defendant to apply for a conditional land use permit to quarry rock on land owned by Jenkins. Thereafter, the defendant and Jenkins entered into an oral modification of the lease to include additional land that was adjacent to that covered by the written lease. Jenkins also agreed to aid the defendant when it applied for a permit to quarry rock on the additional land. After the oral agreement was reached, the defendant pursued an application for a conditional use permit for the enlarged site. The plaintiff led the opposition to the application. Before the oral agreement could be memorialized, Jenkins notified the defendant that she considered the initial lease terminated because of the defendant's failure to make minimum monthly royalty payments. Jenkins then sold the land to the plaintiff.
The plaintiff filed an action for a declaration that the lease was terminated. He alleged that the defendant was in breach of the lease because of the failure, among other things, to make royalty payments. The defendant denied that the lease was terminated and counterclaimed against the plaintiff alleging that he had intentionally interfered with its economic relationship with Jenkins. The gravamen of the claim was that the plaintiff knew of the lease and the alleged oral modification, that he induced Jenkins not to perform her agreement by offering to buy the property from her for more than she would get from the defendant, and that he agreed to indemnify, defend and hold Jenkins harmless from the defendant's claims that Jenkins had breached the lease. The counterclaim was dismissed under ORCP
On appeal, we held that there were insufficient allegations that the plaintiff had acted by improper means.
The allegations about defendants' motive are conclusory just as they were in Conklin. There, the allegation was that the plaintiff's motive was to injure the defendant. Here, plaintiffs allege that defendants' motive was to injure plaintiffs' contractual relations and make the sale for their own benefit. How defendants benefitted beyond what they were entitled to as a result of the legal remedies available to them is not alleged. It is impossible to discern from the pleading what facts plaintiffs claim demonstrate that defendants' motives were "legally improper." We should affirm the trial court on either basis.
The fourth claim is for tortious interference with the "existing and future business relationship" between plaintiffs and their buyers because defendants sought a receiver and foreclosed on plaintiffs' loan. It alleges that:
The same analysis applies here. The Restatement recognizes that prospective economic relationships are afforded less protection than existing contractual relationships. Restatement (Second) Torts § 766B, commente (1979). Based on the facts alleged by plaintiffs, the pursuit of a foreclosure judgment after default and the requesting of the appointment of a receiver are not improper interferences because those acts are permitted by the loan agreement. Plaintiffs plead no facts that allow the reader to infer that the interference that resulted from defendants' exercise of their rights was improper. Plaintiffs' economic self-interest in developing prospective business relations must yield to their established contractual obligations. See Ramirez v. Selles, supra, 308 Or. at 613, 784 P.2d 433. Moreover, the fourth claim does not state a cause of action because of the conclusory nature of the allegation about defendants' purported improper motive and the absence of any supporting factual allegations. I would hold that the trial court did not err in dismissing it.
The fifth claim alleges that defendants interfered with an economic relationship between one of the plaintiffs and a third party who was negotiating with defendants for a loan. It claims that defendants refused to loan monies to the third party unless the third party removed plaintiff as "its joint venture partner." The claim asserts that
Again, our ruling depends on the facts alleged in the claim. The general rule is that the mere refusal to make a loan to a third party is not tortious conduct. See Restatement (Second) Torts § 766, comment b at 8 (1979). In that sense, defendants conduct was privileged. Because it appears on the face of the claim that defendants' conduct was privileged, plaintiffs must allege facts which show that their privilege should not be recognized under the circumstances. Ramirez v. Selles, supra, 308 Or. at 612, 784 P.2d 433. The Restatement also recognizes that economic pressure is a common means of inducing one person not to deal with another and that not all economic pressure is an "improper interference." The question of whether the interference is improper is
The issue is whether plaintiffs have alleged enough facts to plead a required element of the tort; that defendants' privilege to make the loan to the third party conditional was forfeited by improper economic pressure. To supply that requirement, plaintiffs rely on the allegation that defendants imposed the condition "to injure the business relations" of the plaintiffs and that they "acted in bad faith." The latter allegation is a bald conclusion. The former alleges an improper motive, not improper means. I cannot discern from the pleading how the privilege was forfeited when it is not alleged how defendants used an improper means of economic pressure. Even if defendants' motive was to injure the plaintiffs' business relationship, their motive is immaterial because of the nature of the interference. Again, I would conclude that the plaintiffs have failed to allege sufficient facts to state a claim in its fifth claim.
For these reasons, I disagree with the majority's holdings regarding the third, fourth and fifth claims.
LANDAU, J., joins in this concurring and dissenting opinion.
"Improper means are those which are independently wrongful, notwithstanding the injury caused by the interference. They may be wrongful by reason of statutory or common law and included violence, threats, intimidation, deceit, misrepresentation, bribery, unfounded litigation, defamation and disparaging falsehood." 94 Or.App. at 601, 767 P.2d 444. (Citation omitted.)