This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C5-01-851

 

 

Norwest Lighting, Inc., et al.,

Appellants,

 

 

vs.

 

 

Viking Electric Supply, Inc.,

Respondent.

 

 

Filed January 22, 2002

Affirmed

Mulally, Judge*

 

Hennepin County District Court

File No. CT00000627

 

 

Edwin L. Sisam, Tammy P. Friederichs, Sisam & Watje, P.A., 7230 Metro Boulevard, Minneapolis, MN 55439-2128 (for appellants)

 

 

Richard A. Beens, Michael R. Schechter, Felhaber, Larson, Fenlon & Vogt, P.A., 601 Second Avenue South, Suite 4200, Minneapolis, MN 55402 (for respondent)

 

 

            Considered and decided by Toussaint, Chief Judge, Anderson, Judge, and Mulally, Judge.

U N P U B L I S H E D  O P I N I O N

 

MULALLY, Judge

 

Appellants, Norwest Lighting, Inc., et. al, sued respondent, Viking Electric Supply Inc., for tortious interference with contractual relations. The district court granted Viking’s motion for partial summary judgment on the tortious interference claim and Norwest’s motion to dismiss Viking’s counterclaims.  Norwest then moved to amend the complaint to add claims of defamation per se, business disparagement per se, and for punitive damages. The district court denied Norwest’s motion to amend the complaint to add claims of defamation and punitive damages.  Norwest appeals from the denial of its motion to amend its complaint, its motion to add punitive damages, and the district court’s entry of partial summary judgment.  We affirm. 

             FACTS

 

The appellant, Norwest Lighting, Inc. et. al., is a manufacturer’s representative for suppliers in the electrical and lighting business, including the respondent, Viking Electric Supply, Inc.  Viking is a distributor of electrical and lighting products.  Norwest promoted and sold Viking’s products in addition to the products of Cooper Lighting, Lutron Lighting, and Wattstopper.  In exchange for the sales and promotions, manufacturer’s representatives like Norwest are paid commissions.  Manufacturer’s representatives, including Norwest, also provide additional services in connection with certain projects.  The payments made by distributors to the representatives for the additional services are commonly referred to as “agency billings.”

A former Viking employee, Dave Osborne, engaged in a price-fixing scheme with various manufacturers’ representatives, including Norwest.  When Viking discovered the scheme, it terminated the employee and contacted authorities, who pursued civil and criminal penalties.  Although there was an investigation against Norwest, authorities eventually abandoned claims against Norwest.  Viking paid $500,000 to the state, as part of a settlement.

Following the price-fixing investigation, Viking acknowledged the role of its former employee to three suppliers, Cooper Lighting, Lutron Lighting, and Wattstopper, all of whom had been represented by Norwest.  Viking also told the suppliers that (a) Norwest had been involved in the price fixing and (b) Viking would no longer be doing business with Norwest.  Subsequently, Norwest lost its contracts with Cooper and Lutron Lighting and then sued Viking for tortious interference with contractual relations.  The district court concluded that there was no evidence that Viking caused the loss of Norwest’s contracts, Viking had a legitimate business interest in cutting off manufacturer’s representatives who had been involved with the former employee’s scheme, and that Viking did not tortiously interfere with Norwest’s contracts when it informed other manufacturers of its decision to distance itself from Norwest. 

The district court denied Norwest’s motion to amend its complaint and add punitive damages.  Norwest appeals from the summary judgment and denial of its motion to amend and add punitive damages. We affirm.  

I.

 

            “On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law.” State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990) (citation omitted).  The reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).  However, summary judgment is mandatory against a party who fails to establish an essential element of [the] claim, if that party has the burden of proof, because this failure renders all other facts immaterial.”  Lloyd v. In Home Health, Inc., 523 N.W.2d 2, 3 (Minn. App. 1994).  Once the moving party has made a prima facie case entitling it to summary judgment, the burden shifts to the nonmoving party to raise genuine issues for trial.  Minn. R. Civ. P. 56.05; Bebo v. Delander, 632 N.W. 2d 732, 737 (Minn. App. 2001), review denied (Oct. 16, 2001). 

            Norwest contends that the district court erred by granting summary judgment because there was inconsistent testimony relating to the justification and causation of Cooper Lighting’s termination of Norwest. Viking argues that no material issue of fact remained after Cooper agents admitted that Viking was not the cause of its termination of the Norwest contract. Norwest asserts that Viking “intentionally” acted to interfere with the Cooper and Lutron contracts and the truth of alleged statements made by Viking are a material issue that cannot be resolved in a summary judgment.

            The district court concluded that there was no evidence that Viking caused Norwest to lose the Cooper or Lutron contracts, that Viking’s conduct was justified because they had a legitimate business interest in ceasing to do business with those representatives who had dealt improperly with Osborne, and informing the manufacturers of their decision to terminate did not constitute tortious interference. 

A.         Tortious Interference of Contractual Relations

            In order to establish a claim of tortious interference with contractual relations, the plaintiff must show (1) the existence of a contract; (2) the alleged wrongdoer’s knowledge of the contract; (3) intentional procurement of its breach; (4) without justification; and (5) damages.  Furlev Sales & Assocs., Inc. v. N. Amer. Auto. Warehouse, Inc., 325 N.W. 2d 20, 25 (Minn. 1982). 

            The parties agree that Norwest had contracts with Lutron Lighting and Cooper Lighting. The record lacks evidence that Viking acted intentionally to interfere with the contract between Cooper or Lutron and Norwest.  Norwest asserts that Cooper’s timing of its termination of Norwest’s contract indicates Viking’s fault; but there is no evidence supporting the assertion.  The record contains Norwest’s admission that Norwest resigned from the Lutron contract and a Cooper principal’s testimony that Norwest’s termination was a result of Norwest’s agency billing.  Because there is no evidence that Viking intentionally procured a breach of the Norwest-Lutron or Norwest-Cooper contracts, the district court did not err in granting summary judgment for Viking on the claim.  

B.         Intentional Interference with Prospective Contractual Relations

 

Intentional interference with prospective contractual relations is “intentionally and

improperly” interfering with another’s prospective contractual relation by inducement to avoid the contract or prohibition to enter the contract.  United Wild Rice, Inc., v. Nelson, 313 N.W.2d 628, 633 (Minn. 1982) (citingRestatement (Second) of Torts § 766B (1979)).  Norwest asserts that alleged statements made by Viking induced or forced Cooper and Lutron to cancel their contracts with Norwest.

            The evidence does not support Norwest’s claim. Cooper and Lutron principals independently made decisions regarding their contracts with Norwest.  Viking told Cooper and Lutron that it no longer wished to do business with Norwest or any company associated with Norwest in an effort to distance itself from the price-fixing investigation, but Viking did not prevent Cooper or Lutron from continuing its contract with Norwest.  Because Norwest failed to establish the elements of intentional interference with prospective contractual relations, the district court did not err in granting summary judgment for Viking on the claim. 

II.

 

            The district court has broad discretion to grant or deny leave to amend a complaint, and its ruling will not be reversed absence a clear abuse of discretion.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).  Whether the district court has abused its discretion in ruling on a motion to amend may turn on whether it was correct in an underlying legal ruling.  Id. at 761-62. 

Norwest contends that it presented prima facie evidence of defamation, and, therefore the district court abused its discretion by not allowing Norwest to amend the complaint to add it as a claim. 

The district court concluded that there was no evidence regarding the exact language Viking used with Cooper, Lutron, and Wattstopper. The statement that Norwest paid Osborne was truthful and thus did not present a legally viable claim for defamation or business disparagement. 

            A statement constitutes defamation if (1) it is communicated to someone other than the plaintiff; (2) it is false; and (3) it tends to harm the plaintiff’s reputation and lower him in the estimation of the community.  See Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 256 (Minn. 1980).  Defamation per se may arise from false accusations of committing a crime. Becker v. Alloy Hardfacing & Eng’g Co., 401 N.W.2d 655, 661 (Minn. 1987). 

            The record lacks any evidence that Viking principals made specific statements about Norwest engaging in criminal activity.  The only support for Norwest’s assertion that Viking called them “crooks” is contained in Viking’s motion papers, not in any testimony or evidence.  Although it is evident that Viking met with both Cooper and Lutron principals, Norwest has only produced evidence that Viking thought Osborne’s agency billings improper business practice.  Even if statements were made, there is an element of truth regarding payments to Osborne by Norwest which would foreclose a defamation claim.  The record supports the district court’s denial of Norwest’s motion to amend the complaint because Norwest failed to present evidence supporting the elements of defamation.

III.

 

            “We will not reverse the trial court’s decision to grant or deny a motion to add a claim for punitive damages absent an abuse of discretion.” LeDoux v. Northwest Pub., Inc.,521 N.W.2d 59, 69 (Minn. App. 1994) (citation omitted), review denied (Minn. Nov. 16, 1994).  “A claim for punitive damages may be allowed, however, ‘only upon clear and convincing evidence that the acts of the defendant showed deliberate disregard for the rights or safety of others.’” Id. at 70 (citing Minn. Stat. § 549.28, subd. 1(a) (1992)). 

            Norwest argues that it complied with the statutory requirements for claiming punitive damages and that the district court disregarded evidence that Viking acted deliberately to cause Cooper and Lutron to terminate their relationships with Norwest.  The district court concluded that the reason that Cooper and Lutron would not continue their business with Norwest was a result of Norwest’s payments to Osborne, not any act of Viking. 

            Norwest offered no direct evidence that established a deliberate disregard for Norwest’s rights entitling them to punitive damages.  The record supports that both Lutron and Cooper made decisions about continuing their contracts with Norwest based upon information other than what they received from Viking.  Norwest has failed to produce clear and convincing evidence that Viking showed deliberate disregard for the rights of Norwest because there was no evidence in the record of any specific language or intentional act of Viking that interfered with the rights of Norwest.  Therefore, the district court did not err in denying Norwest’s motion to add punitive damages.

            Affirmed.

 

 

                                     

 

 



* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn.Const. art. VI, § 10.