On December 15, 2022, Justice Cohen of the New York County Commercial Division issued a decision in 111 W. 57th Inv. LLC v. 111 W57 Mezz Inv. LLC, 2022 NY Slip Op 34258(U), recognizing the existence of (although dismissing) a claim for tortious interference with the covenant of good faith and fair dealing, explaining:
Plaintiff next claims that these Defendants are liable for tortious interference with Sponsor’s alleged breach of the JV A’s implied covenant of good faith and fair dealing (the “Amended Tortious Interference Claim”).
As an initial matter, the parties dispute whether such a claim is cognizable under New York law. Several appellate decisions appear to accept the potential viability of such claims, albeit without addressing the question expressly. The court in RCGLV Maspeth LLC v Maspeth Properties L.L.C., 26 Misc 3d 1241(A) [Sup Ct, King’s County 2010] did address the question directly and rejected the argument that no cause of action exists for tortious interference of an implied duty of good faith and fair dealing. In response, Defendants cite Schinella v Sayer (19-CV-8931 (NSR), 2021 WL 4255055, at *6 [SDNY 2021] [applying New York law]), in which the court noted that it was not aware of any cause of action for tortious interference with the implied covenant of good faith and fair dealing but went on to say, in any event, Plaintiff did not assert any breach of the implied covenant of good faith and fair dealing in her Complaint, and accordingly such a hypothetical claim is not properly before the Court.
Although the New York case law is sparse, the Court agrees with Plaintiff that such a claim could be viable, assuming all other elements of the cause of action are adequately pleaded and proven. The implied covenant is as much a part of the contract as any other term. That said, the fact that the alleged underlying breach in such a case cannot be tied to specific language in the agreement could present difficult problems of pleading and proving, among other things, defendant’s knowledge of the contract and the specific terms of the contract and defendant’s intentional and improper procuring of a breach of that contract.
Nevertheless, the Court finds that Plaintiff fails to state a viable claim for relief in this case. Here, Spruce, Apollo, and AIG are all creditors who have a right to protect its own legal or financial stake in the breaching party’s business. The imposition of liability in spite of a defense of economic interest requires a showing of either malice on the one hand, or fraudulent or illegal means on the other. Although economic interest is cast as a defense, courts routinely dismiss tortious interference claims at the pleading stage when it is evident, on the face of the complaint, that the doctrine applies.
Contrary to Plaintiffs argument, malice, fraud, or illegal means go beyond allegations of intentional, bad faith acts. Indeed, the economic interest defense acknowledges that procuring the breach of a contract in the exercise of an equal or superior right is acting with just cause or excuse, and is justification for what would otherwise be an actionable wrong. Although Plaintiff cites NY Penal Law § 180.03 for the proposition that commercial bribery is illegal, Plaintiff has not brought any causes of action alleging commercial bribery, nor has Plaintiff attempted to demonstrate the elements of such a claim. Thus, while Spruce, AIG, and Apollo may have acted to the detriment of Plaintiff or the company, Plaintiff has failed to allege that such actions were motivated by malice, fraud, or illegal means. Accordingly, Plaintiffs claim against Spruce, AIG, and Apollo for tortious interference with the Sponsor’s alleged breach of the implied covenant is dismissed.
(Internal quotations and citations omitted).