A competitor of mine out bid and stated it performed better work than my company to obtain a prospective client, do I have an interference with an advantageous relationship claim?
9 April 2019
Answer: Although the fact that your company only had the prospect of financial gain and business is enough to meet one of the elements, still, probably not.
The elements of the tort of Interference with Advantageous Relationship are the following:
- A business relationship of contemplated contract of economic benefit;
- The defendant’s knowledge of such relationship;
- The defendant’s interference with it through improper motive and means; and
- The loss of advantage directly resulting from the defendant’s conduct.
American Private Line Services, Inc. v. Eastern Microwave, Inc., 980 F. 2d 33, 36 (1992). Under the brief scenario above, there is enough of a probable future business relationship to meet the first element here; a reasonable expectancy of financial benefit suffices. Powers v. Leno, 24 Mass. App. Ct. 38 (1987). With respect to the second element, the facts seem to indicate the competitor knew your company was bidding on the job so that is met.
The third element is where the real question is; did the competitor go over the line in using “improper” means to obtain the client? It is not enough to simply “interfere,” it must be improper interference. Engaging in lawful conduct usual and expected in business negotiations, even if it is to your financial detriment, does not suffice. American Private Line Services, Inc. v. Eastern Microwave, Inc., 980 F. 2d 33, 36-37 (1992). Without evidence of misrepresentation, defamation, or other improper means, there likely is not enough to meet this element. Id. Stating one company does better work is likely to be deemed an opinion or puffing in the author’s opinion. It also weights against your company since, as the hypothetical seems to suggest, that it did not have an existing contract with the client, but both companies were seeking the account. United Truck Leasing Corp. v. Geltman, 406 Mass. 881 (1990). However, if you know the competitor made statements about doing better quality work, it might be worth poking around to find out if something more aggressive was stated to see if it went over the line.
The fourth element is likely met as your company lost the client and/or the business. It is likely a pecuniary (monetary) value can be ascertained, but if not, in the event actual damages can be shown, a nominal value can still be awarded. Morochnick v. Quigley, 17 Mass. App. Ct. 1035 (1984).
In any event, if you think that you might have such a type of claim, feel free to give us a call.
As a side note, in 1970 the Massachusetts Supreme Judicial Court changed the substance of the third element by eliminating a “malicious intent” to just “unjustifiable conduct.” Pino v. Trans Atlantic Marine, Inc., 358 Mass. 498 (1970). In 1990 it formally changed the name of the tort from “malicious interference with an advantageous relationship” to “improper interference with an advantageous relationship.” United Truck Leasing Corp. v. Geltman, 406 Mass. 811 (1990).