New ERA Article June, 1995

Don't Interfere!

      In a dusty old English casebook, there is the report of the
case  of Lumley vs. Gye.  Miss Wagner, a celebrated opera  singer
of  the time, circa 1853, had agreed to sing exclusively for  Mr.
Lumley.   Mr.  Gye,  however, with knowledge of  the  contractual
arrangement,  persuaded  her to refuse  to  perform.   The  court
determined  that  Mr. Lumley was entitled  to  sue  Mr.  Gye  for
willfully inducing the breach of contract.

      Since  that  time,  the principle of  this  case  has  been
gradually extended to permit lawsuits for inducing the breach  of
any type of contract, and, in fact, even for inducing the refusal
to do business where no specific contractual agreement exists.

      Actions  can thus presently be maintained for intentionally
diverting business from another under circumstances that are  not
within the privilege of fair competition.

      In  one interesting situation, a defendant published credit
reports with items pirated from a recognized publisher of  credit
material.   The  court noted that the defendants  "took  material
acquired  by  plaintiff  as  a result  of  organization  and  the
expenditure of labor, skill and money and appropriated it without
expense on their part, offering it to their subscribers as  their
own,  and  diverting customers from plaintiff to themselves."   A
judgment for the plaintiff was upheld on appeal. [108 Cal.App.2nd
394]

      In  another  situation, a CPA discharged from a  nationally
recognized  firm  attempted to discredit  his  former  employer's
handling  of  a  tax  client  because  he  differed  in   certain
accounting  decisions  made  by the  firm.   A  California  court
enjoined   the   interference  with   what   was   described   as
"advantageous contractual relations of the firm". [247 Cal.App.2d
128]

       An  action  for  interference  with  prospective  business
advantage  was held to exist against an individual  who  unfairly
induced unrelated creditors to demand immediate payment,  and  to
refuse  to  extend  further credit to the  debtor,  in  order  to
destroy the debtor's business. [119 Cal.App.2d 738]

      In  another  matter, a significant customer of  a  delivery
service   informed  prospective  purchasers  that  its   delivery
contract,  which  was oral, would be terminated if  the  delivery
service  was  sold.   One  of  the offers  the  delivery  service
received  was for approximately $200,000, but was conditioned  on
the continued business of the customer.






      The court determined that the customer's statement was made
solely for the purpose of frustrating the proposed sale so as  to
allow   the  customer  to  purchase  the  business  for  a  small
percentage  of the originally proposed price.  The  court  stated
that the customer "succeeded it its scheme.  The company was sold
to  [the  customer] for about $17,400 instead of its true  market
value  of  $200,000, and as a result [the owner of  the  delivery
service]  suffered damages in the sum of $183,000."  A California
court  held  that  a cause of action was stated for  interference
with  prospective  economic advantage against the  customer.  [79
Cal.App.3d 13]

     As one court in California has observed: "Simply stated, the
marketplace  should not be immune from ethics."  [116  Cal.App.3d
111]


[This column is intended to provide general information only  and
is  not intended to provide specific legal advice; if you have  a
specific  question  regarding the  law,  you  should  contact  an
attorney  of your choice.  Suggestions for topics to be discussed
in this column are welcome.]


Reprinted from New Era Magazine
Myles M. Mattenson © 1995-2002

	Myles M. Mattenson ATTORNEY AT LAW 5550 Topanga Canyon Blvd. Suite 200 Woodland Hills, California 91367 Telephone (818) 313-9060 Facsimile (818) 313-9260 *Email:* MMM@MattensonLaw.com *Web:* http://www.MattensonLaw.com	Don't Interfere!
Myles M. Mattenson engages in a general civil and trial practice including litigation and transactional services relating to the coin laundry and dry cleaning industries, franchising, business, purchase and sale of real estate, easements, landlord-tenant, partnership, corporate, insurance bad faith, personal injury, and probate legal matters. In providing services to the coin laundry and dry cleaning industries, Mr. Mattenson has represented equipment distributors, coin laundry and dry cleaning business owners confronted with landlord-tenant issues, lease negotiations, sale documentation including agreements, escrow instructions, and security instruments, as well as fraud or misrepresentation controversies between buyers and sellers of such businesses. Mr. Mattenson serves as an Arbitrator for the Los Angeles County Superior Court. He is also past chair of the Law Office Management Section of the Los Angeles County Bar Association. Mr. Mattenson received his Bachelor of Science degree (Accounting) in 1964 and his Juris Doctorate degree from Loyola University School of Law in 1967. Bi-monthly articles by Mr. Mattenson on legal matters of interest to the business community appear in alternate months in The Journal, a leading coin laundry industry publication of the Coin Laundry Association, and Fabricare, a leading dry cleaning industry publication of the International Fabricare Institute. During the period of May 1995 through September 2002, Mr. Mattenson contributed similar articles to New Era Magazine, a coin laundry and dry cleaning industry publication which ceased publication with the September 2002 issue. This website contains copies of Mr. Mattenson's New Era Magazine articles which can be retrieved through a subject or chronological index. The website also contains copies of Mr. Mattenson's Journal and Fabricare articles, which can be retrieved through a chronological index. In addition to Mr. Mattenson's trial practice, he has successfully prosecuted and defended appeals on behalf of his clients in various areas of the law. Some of these appellate decisions are contained within his website.