What is Tortious Interference Under Texas Law?
A recent opinion by the Dallas Court of Appeals demonstrates that merely inducing a party to a contract to do something that it is permitted to do under the contract generally cannot, standing alone, constitute tortious interference.
In that case, a bank held a piece of real property in trust. A partnership executed a contract with the bank to purchase the property. In the contract, the bank agreed that for the term of the contract, it would not market the property nor accept other offers to purchase the property. The contract gave the partnership a certain amount of time to pay for the property or withdraw from the contract. The contract required the partnership to deposit a sum of money in escrow.
The contract also provided for an initial inspection period and three options to extend the inspection. In order to extend the inspection period, the partnership would have to direct that $75,000 be taken out of escrow and paid to the bank. That money could not be used to pay any of the purchase price of the property.
After the initial inspection period had passed, a representative from the bank approached a group of entities to inquire whether they would be willing to work with the bank to purchase the property. The bank representative expressed concern regarding paying the extension fees. A representative of the entities said that he understood the cost of extending the contract and could “help out” if it became an issue. The bank and the entities eventually entered an agreement where the entities could offer to purchase the property despite the provision in the original contract that precluded such offers.
Later, the entities terminated the contract and the bank sued the entities for tortious interference, breach of contract, and other claims.
One of the issues on appeal was whether the trial court erred in granting summary judgment on the bank’s claim for tortious interference. The bank argued that the entities intentionally interfered with the bank’s performance of the original contract by making performance more burdensome and expensive, eventually causing the bank to discontinue its option under the original contract.
The court noted that actionable tortious conduct does not require the conduct to result in a breach. If the tortious conduct makes performance more burdensome or difficult, that is sufficient to prevail on a claim for tortious interference. However, merely inducing a party to a contract to do something which it already has the right to do under the contract does not amount to tortious interference.
The court explained that the bank already had a right to extend the inspection period by paying the extension fee. Therefore, the fact that a representative of the entities said they could “help out” with the extension fees only encouraged the bank to do that which it already had the right to do. The offer to pay part or all of the extension fees did not make the bank’s performance more difficult or burdensome. Therefore, the court held that summary judgment was properly granted in the bank’s tortious interference claim.
As this opinion demonstrates, conduct that may seem to constitute tortious interference may not be actionable if the conduct is permitted in the contract.