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UNDER THE FACTS, PLAINTIFF CAN ASSERT A CLAIM FOR TORTIOUS INTERFERENCE WITH CONTRACT AGAINST DEFENDANT, EVEN THOUGH BOTH ARE SIGNATORIES TO THE MULTILATERAL CONTRACTS; THE PARTIES HAVE DIFFERENT RIGHTS AND DUTIES UNDER THE CONTRACTS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Singh, determined that, under the facts, plaintiffs should be allowed to state a claim for tortious interference with contract against another signatory to the multilateral agreements:

We are asked to decide whether a party to multilateral contracts may be sued by its contracting counterparty for inducing a breach of those contracts. Here, we answer that question in the affirmative. The rights and duties of defendants are separate from those of the breaching party. Plaintiffs also lack a contractual remedy against defendants. Under this narrow set of circumstances, plaintiffs should be permitted to assert a cause of action for tortious interference with contract, despite defendants being signatories to the multilateral agreements. * * *

The general principle that only a nonparty to a contract can be liable for tortious interference derives from cases involving either bilateral contracts or contracts under which all defendants had the same or similar contractual obligations … . * * *

This reasoning does not apply, however, if the inducing party is subject to duties that are different from those it allegedly encouraged another party to the contract to breach. Given such facts, the plaintiff cannot assert that the offending defendant breached a contractual obligation to it. “[T]he fact that one may derive rights under the same agreement as two other contracting parties does not excuse interference with their contractual rights” … . When breaching and inducing parties have different rights and duties, if the plaintiff is unable to recover fully from the breaching party, a tortious interference claim against the inducing party may be necessary for the plaintiff to be made whole. Arena Invs., L.P. v DCK Worldwide Holding Inc., 2023 NY Slip Op 02476, First Dept 5-9-23

Practice Point: Usually only a nonparty to a contract can be liable for tortious interference. Here plaintiff and defendant were both signatories to multilateral contracts. Because both had different rights and duties under the contracts, plaintiff was allowed to assert a claim  for tortious interference with contract against defendant.

 

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