A Not So Strange Stranger In A Strange Land: Holder Of An Economic Interest May Be Liable For Tortious Interference

Allen Matkins
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The California Supreme Court has held  that a contracting party cannot be held liable in tort for conspiracy to interfere with its own contract. Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503 (1994).  At the same time, the Court observed that "noncontracting parties" or "a stranger to a contract" can be liable in tort for intentionally interfering with the
performance of a contract. 

Does this mean that a landowner that hires a contractor cannot be liable for interfering with the contractor's contract with a subcontractor?  Yesterday, the Fourth District Court of Appeal answered "no".  Caliber Paving Company, Inc. v. Rexford Industrial Realty & Management, Inc. (Cal. Ct. Appeal Case No. G058406, Aug. 31, 2020).  Writing for the panel, Justice Richard D. Fybel found that a claimed economic or social interest in the contract does not confer immunity:

"A contractual relationship is no less disrupted, and the contracting party’s interest in receiving performance of the contract no less impaired, when the noncontracting stranger claims a social or economic interest in the contractual relationship"

The Court of Appeal's opinion mentions two other decisions that I've written about previously: Asahi Kasei Pharma Corp. v. Actelion Ltd. 222 Cal.App.4th 945 (2013) and Redfearn v. Trader Joe’s Co. 20 Cal.App.5th 989 (2018).  See Asahi's Morning Sun - Court Holds Parent And Its Managers May Be Liable For Interfering With Subsidiary's Contract and Court Finds Trader Joe's To Be A Stranger.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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