The plaintiff, a borrower pursuant to a lending agreement entered into by various participating banks, sought to negotiate a discounted payoff of the loan, but was frustrated in its effort by the actions of the defendant, a member of the bank consortium. The plaintiff commenced an action in several counts.
The plaintiff asserts that, given the evidence, it was error for the judge not to conclude that the defendant's c. 93A violation was wilful or knowing. On its part, the defendant argues that the jury could not permissibly find that the defendant had tortiously interfered with the plaintiff's advantageous business relationship and that, therefore, the defendant's motion for judgment notwithstanding the verdict on that count should have been allowed. The defendant contends also that the judge's finding in favor of the plaintiff on the c. 93A count was error. We conclude that the evidence was insufficient to support either a finding of tortious interference or a finding of a violation of G. L. c. 93A on the part of the defendant and accordingly reverse the judgment.
1. Background. The jury could permissibly have found the following material facts. In 1991, the plaintiff became obligated as borrower on a restructured, secured loan in the principal amount of $2 million. The lender was a consortium of nine banks headed by Southstate Bank. The banks entered into a "participation agreement" among themselves regarding the syndication and management of the loan. Pursuant to that agreement, Southstate Bank, which had provided 32.71 percent of the loan amount, was designated the "Lender." The participation agreement expressly provides that the borrower shall deal only with the lender (i.e., Southstate Bank) with respect to the loan.
By 1997, the Federal Deposit Insurance Corporation (FDIC) had succeeded to Southstate Bank's interest with respect both to its percentage of the loan and its position as lender under the participation agreement. The plaintiff, having obtained a commitment for more favorable financing from another bank, approached the FDIC in an attempt to negotiate a discounted
Apparently unwilling to await that development, the plaintiff contacted other members of the consortium and was able to convince members holding more than fifty-one percent of the interests in the loan to accept a payoff $170,000 less than the total amount owed. The participation agreement authorizes members holding such a fraction of the loan interests to bind the remainder with respect to such a negotiated settlement; accordingly, these members notified the FDIC as lender that there was an agreement on the part of more than fifty-one percent of the participating interests to accept the discounted amount and directed the FDIC to implement the understanding.
Unaware of the pending arrangement to accept a discounted payment, the defendant acquired from the FDIC the interests in the loan previously held by Southstate Bank and another member of the consortium. Consequently, the defendant succeeded the FDIC as the lender for purposes of implementation of the participation agreement. Upon reviewing the status of the loan and the decision to accept less than full payment, the defendant determined that the loan was both performing and fully secured and that there was no reason to agree to a payoff of less than what was owed. The defendant forthwith sent written notice to counsel for the other loan participants that it did not consent to the discounted payoff, citing a policy "not [to] accept discounted payoffs on loans which we deem to be fully collectable."
Shortly thereafter, the defendant wrote again to the loan participants. At this time, the defendant stated that it had assumed the position of lender under the participation agreement
Pursuant to this offer, the defendant purchased the interests of certain other members, eventually owning approximately eighty percent of the loan. Neither the defendant nor the remaining participants altered their view that the loan should be paid in full. The plaintiff did so upon the closing of its refinancing, thereby paying $170,000 more than it would have paid had its earlier agreement with the holders of a majority of the loan interests been consummated.
The plaintiff thereupon filed in the Superior Court a five-count complaint alleging breach of contract (count I); breach of the implied covenant of good faith and fair dealing (count II); tortious interference with a contractual relationship (count III); estoppel and unjust enrichment (count IV); and violation of G. L. c. 93A (count V). The trial judge directed verdicts in favor of the defendant on counts I, II, and IV on the ground that the evidence demonstrated conclusively that the plaintiff was not a party to any agreement or understanding.
The jury returned verdicts in favor of the plaintiff on the tortious
2. Discussion. The elements of a case of tortious interference with an advantageous business relationship
The evidence establishes neither the existence of an improper purpose nor the employment of improper means on the part of
Likewise, we discern no evidentiary basis for a finding that the defendant employed improper means to achieve its objective of obtaining full payment of the loan. The plaintiff challenges the defendant's actions in several respects, and we address the contentions individually. The plaintiff argues first that the defendant got its own way by breaching the provision of the participation agreement that bound it as lender to proceed in accordance with a course of action agreed on by fifty-one percent or more of the loan interests. Thus, the argument continues, the breach of the participation agreement constitutes the improper means which support a case of tortious interference.
We need not decide on this record whether breach of a contract by itself makes out the "improper means" element of tortious interference because there was no evidence that the defendant in fact breached this particular agreement. We find nothing either in the purpose or the language of the participation agreement that precludes the lender from attempting to persuade other members to abandon a proposed settlement. That the defendant used financial incentives to induce cooperation by certain of the members is not, in these circumstances, evidence of a breach of the agreement. Had the holders of fifty-one percent or more of the interests held fast to their intention to settle with the plaintiff, the defendant would have had no choice but to comply. The evidence, however, is otherwise. Some members who had previously indicated their assent to a settlement
We are not persuaded by various objections of the plaintiff to specific actions taken by the defendant in the course of attempting to recover the full amount of its loan. The defendant's reference to its policy not to grant discounts on loans that were performing and fully secured was accurate; it could not reasonably have misled others that a bank would have such a policy. That the defendant did not refer to a particular provision of the participation agreement, or seek further guidance regarding the meaning of that agreement, is of no consequence in the light of our conclusion that the defendant committed no breach.
We also see no tortious interference arising from the defendant's cease and desist letter to the members of the consortium. Having succeeded to the position of lender, the defendant was entitled by the terms of the participation agreement to be the only consortium member to negotiate with the plaintiff. The defendant's letter demanding that members cease further negotiations was a permissible means of enforcing that provision. The assertion by a party of its legal rights is not "improper means" for purposes of a tortious interference claim. The plaintiff suggests that the letter contained an implied "threat," and was improper for that reason. We suppose that implicit in any demand to cease and desist is a message that a refusal to comply voluntarily may be countered by litigation. Given that such litigation would be in the service of that party's legal rights, we see nothing improper in such a communication.
With respect to the plaintiff's claim under G. L. c. 93A, § 11, we conclude that it is wholly derivative of the tortious interference
3. Disposition. The judgments on counts III and V of the complaint are reversed. Judgments for the defendant shall enter thereon. The remaining judgments are affirmed.