Virginia Lawyers Weekly VA Lawyers Weekly
Where two parties modified their own real estate contract, allegedly to the detriment of a non-party, the lower court erred by ruling in favor of the non-party on its tortious interference claim because parties cannot tortiously interfere with their own contract.
Background
In 2002, Richard Read, a commercial real estate broker with Coldwell Banker Commercial Forehand & Co., assisted in negotiating a lease agreement between Creekside Development Company Inc., as lessor, and Delta Educational Systems Inc., as lessee.
The lease agreement required payment of a monthly leasing fee to Forehand. Pursuant to the terms of the lease agreement, Forehand received a monthly leasing fee through December 2010, when Read Properties purchased Forehand’s commercial real estate division. On Dec. 22, 2010, Read Properties and Forehand entered into an asset purchase agreement under which Forehand’s rights and obligations with regard to certain contracts were assigned to Read Properties. The Creekside property was listed as one of the contracts included in the assignment. Beginning in January 2011, Read Properties received the monthly leasing fee provided for in the lease of the Creekside property.
In 2013, Creekside entered into a real estate purchase agreement with Francis Hospitality for the sale of the property under lease to Delta. The real estate purchase agreement was made subject to the lease agreement and its amendments, which were attached as exhibits to the real estate purchase agreement. On March 19, 2014, the sale of the Creekside property closed and Creekside assigned the lease agreement to Francis Hospitality. Read Properties did not receive a leasing fee in April 2014 or thereafter.
Read Properties filed a warrant in debt against Francis Hospitality and Delta in the Lynchburg General District Court in June 2014, seeking damages for breach of the lease agreement. On Aug. 27, 2014, Francis Hospitality and Delta executed a third amendment to the lease agreement, in which the provision for payment of the leasing fee was eliminated.
Read Properties nonsuited the general district court action and filed an action in the circuit court, asserting claims for breach of contract, tortious interference and conspiracy. After a bench trial, the circuit court issued a letter opinion in which found for Read Properties on all three causes of action.
Analysis
Francis Hospitality and Delta contend the circuit court “erred in finding the defendants liable for tortious interference with a contractual right” and “in finding the defendants liable for business conspiracy” in violation of Code §§ 18.2-499 and -500.2 Among other grounds, the appellants argue that they cannot tortiously interfere with their own contract. We find this ground dispositive of their appeal.
To support its claims of tortious interference against Francis Hospitality and Delta, Read Properties alleges that Francis Hospitality and Delta intentionally interfered with Read Properties’ right to receive the leasing fees under this same agreement by entering into the third amendment to the lease agreement terminating the payment of leasing fees to Read Properties. An action for tortious interference with a contract or business expectancy, however, does not lie against parties to the contract, but only lies against those outside the contractual relationship. Accordingly, Francis Hospitality and Delta cannot be held liable for tortious interference with the lease agreement and the circuit court erred by ruling in favor of Read Properties on count 2 asserting these claims.
Because Read Properties’ underlying claims of tortious interference with contract against Francis Hospitality and Delta fail, its claims of statutory business conspiracy under Code §§ 18.2-499 and -500 also must fail. Accordingly, the circuit court erred in ruling that appellants were liable under count 3 of the complaint and in awarding Read Properties three-fold damages and attorney’s fees pursuant to Code § 18.2-500.
The circuit court’s ruling that Francis Hospitality and Delta are jointly liable for the remaining leasing fees of $34,020 due under the lease agreement remains undisturbed. Therefore, we will enter final judgment for Read Properties in the amount of $34,020.
Reversed.
Francis Hospitality Inc. v. Read Properties LLC, Record No. 170894, Nov. 21, 2018. SCV (McClanahan) from Lynchburg Cir. Ct. (Cook). VLW No. 018-6-029, 8 pp.
