STATE OF MINNESOTA
IN COURT OF APPEALS
J.N.R. Enterprises, Inc.,
a/k/a JNR Enterprises, Inc.,
June 1, 1999
Reversed and remanded
Hennepin County District Court
File No. 97-14306
David Sasseville, Lindquist & Vennum, P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402-2205 (for respondents)
Considered and decided by Shumaker, Presiding Judge, Randall, Judge, and Huspeni, Judge.[*]
Appellant JNR Enterprises, Inc. challenges the district court's dismissal of its tortious interference with contractual relations claim and its defamation claim, arguing that material issues of fact exist with regard to both claims. We reverse and remand.
Appellant JNR Enterprises, Inc. was incorporated in Minnesota in 1991. That year, JNR began to purchase Frigidaire appliances and distribute them to builders, remodeling contractors and other commercial users. Until September 1996, respondent Frigidaire Company allowed JNR to distribute products from a small office with no showroom, no loading dock and no inventory.
Around September 1996, Frigidaire informed JNR that it could not distribute Frigidaire appliance products unless it opened a showroom and stocked inventory by December 31, 1996. By mutual agreement, Frigidaire extended the deadline to March 1997. On February 18, 1997, JNR and Frigidaire executed a Builder Distributor Sales Agreement that obligated JNR to "[m]aintain * * * an adequate sales and service staff" and to "[m]aintain at its expense suitable offices and warehousing facilities." Either party, with or without cause, could terminate the agreement with 60 days prior written notice.
On March 31, 1997, JNR moved into a new 1,000-sq. ft. space. However, JNR still had one employee, Roger Pittman, its sole officer and director. On June 2, 1997, Frigidaire terminated the distributor agreement, stating that it would honor all contract obligations through August 15, 1997. Because of some confusion, Frigidaire sent another termination letter indicating that all contract agreements would be honored through September 15, 1997.
According to JNR, respondent ALL, Inc., a business competitor, caused Frigidaire to terminate the distributor agreement. Specifically, JNR alleges that ALL repeatedly complained to Frigidaire about the fact that (1) JNR was destroying ALL's market, (2) JNR was undercutting ALL's prices, and (3) JNR was not meeting the obligations of its agreement with Frigidaire. JNR also alleges that ALL investigated JNR's premises and reported to Frigidaire employee Dan Trbovich that JNR did not meet Frigidaire's requirements. According to JNR, on or about May 19, 1997, ALL informed Frigidaire that it would double its business with Frigidaire if Frigidaire terminated its agreement with JNR.
On September 8, 1997, JNR commenced an action against Frigidaire and ALL, alleging fraud, tortious interference with contractual relations, and breach of the implied covenant of good faith. JNR also sought to enjoin the termination of JNR's agreement with Frigidaire. On December 22, 1997, the district court denied JNR's motion for injunctive relief, dismissed the tortious interference claim under Minn. R. Civ. P. 12 and granted JNR leave to amend its complaint. On January 19, 1998, JNR amended its complaint to include a defamation count against ALL. In an order dated October 5, 1998, the district court granted ALL's motion for summary judgment and dismissed the defamation count. JNR appeals only the dismissal of its tortious interference and defamation claims against ALL.
On appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the district court's application of the law was erroneous. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). In addition, we must view the evidence in the light most favorable to the party resisting summary judgment. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Under Minn. R. Civ. P. 12.03, a motion for judgment on the pleadings will be treated as a motion for summary judgment if matters outside the pleadings are considered by the district court. Carlson v. Lilyerd, 449 N.W.2d 185, 187 (Minn. App. 1989), review denied (Minn. Mar. 8, 1990).
it must be communicated to someone other than the plaintiff, it must be false, and it must tend to harm the plaintiff's reputation and to lower him in the estimation of the community.
Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn. 1980). Statements that do not contain facts or factual connotations that can be proven false cannot support a defamation action. Geraci v. Eckankar, 526 N.W.2d 391, 397 (Minn. App. 1995), review denied (Minn. Mar. 14, 1995). The verifiability and the specificity of a statement relate closely to whether the statement can be proven false. Hunt v. University of Minnesota, 465 N.W.2d 88, 93 (Minn. App. 1991). Whether a statement can be proven false is a legal question. Erven v. Provost, 413 N.W.2d 861, 863 (Minn. App. 1987), review denied (Minn. Nov. 24, 1987).
In this case, the district court correctly determined that many of the statements that JNR cites do not support its defamation claim. For example, JNR alleges that ALL informed Frigidaire, its customers and other persons in the appliance business that JNR was destroying ALL's market by undercutting ALL's prices. JNR has not alleged that Frigidaire had a pricing policy that restricted JNR's ability to undercut ALL's prices. Additionally, nothing in the record indicates that Frigidaire would be displeased with JNR's efforts to acquire a larger market share through low prices. Simply put, nothing in the record supports JNR's claim that its reputation could be damaged by a claim that JNR's prices were lower than those of its competition. Accordingly, ALL's alleged statements that JNR was undercutting ALL's prices do not support JNR's defamation claim.
In support of its defamation claim, JNR also cites ALL's statement that it would be putting JNR out of business shortly. This statement was merely a threat, a boast and a prediction. In making that statement, ALL did not state facts that can be proved or disproved. For this reason, the district court properly determined that this statement does not provide the basis for a defamation claim.
With regard to the statements allegedly made by ALL personnel that JNR was not fulfilling its contractual obligation with Frigidaire, we find that the district court improperly dismissed JNR's defamation claim. According to Frigidaire employee Julie Johnson, ALL employee Mark Rutznick told her that JNR was "not abiding by Frigidaire's contract." According to JNR, Mark Rutznick also informed Frigidaire employee Dan Trbovich that JNR was not abiding by the distributor agreement. Apparently, these statements were made in regard to the state of JNR's showroom, its sales staff, and its ability to meet customers' demands. Unlike the other statements cited above, these statements made to Johnson and Trbovich may support JNR's defamation claim. ALL's allegations were communicated to a third party, they may have been false, and they may have lowered JNR's reputation in the estimation of Frigidaire. Stuempges, 297 N.W.2d at 255.
In response, ALL argues that these statements were opinion and could not form the basis for a defamation claim. However, an alleged breach of contract is exactly the type of factual allegation that may be proved at trial. Because there appears to be a genuine issue of material fact regarding the truthfulness of ALL's claim that JNR was in breach of the distributor agreement, the district court erroneously granted summary judgment dismissing JNR's defamation claim.
In this case, the only element of the claim at issue is whether ALL interfered with JNR's contractual relations under the distributor agreement with Frigidaire. ALL argues that summary judgment was proper because the distributor agreement was terminable at will and was properly terminated by Frigidaire. According to ALL, it may not be liable for tortious interference if the contract at issue is not breached. The relevant caselaw does not support ALL's position. This court has held that interference with a binding contract terminable at will is actionable, even if the contract is not breached. Oak Park Dev. Co. v. Snyder Bros., 499 N.W.2d 500, 505-06 (Minn. App. 1993) (holding that claim may lie for tortious interference with a binding lease that is terminable at will). Accordingly, ALL may be liable for tortious interference with contractual relations if ALL intentionally committed an independent tort that led to the termination of the distributor agreement. Prosser § 129, at 992. See also Mason v. Funderburk, 446 S.W.2d 543, 546 (Ark. 1969) (recovery allowed from party whose defamatory comments cause a third party to cease an employment relationship that was terminable at will).
Because JNR alleged no other independent tort, the only tort upon which JNR can base its tortious interference claim is defamation. As explained in the preceding analysis, JNR's defamation claim was not properly dismissed on summary judgment. Accordingly, the defamation claim may properly serve as a basis for JNR's tortious interference with contractual relations claim. If Mark Rutznick's comments to Julie Johnson and Dan Trbovich were defamatory, and if those defamatory statements actually interfered with JNR's contractual relations, JNR may establish the elements of the tortious interference claim. For the foregoing reasons, the district court erred in granting summary judgment dismissing JNR's tortious interference claim.
While we reverse the district court's summary judgment dismissing JNR's claims, we note that JNR cannot establish its tortious interference claim merely by proving that ALL procured the termination of JNR's contract by promising Frigidaire that it would double its business if Frigidaire terminated its agreement with JNR. As the supreme court has stated, one who causes a third party "not to continue an existing contract terminable at will does not interfere improperly with the other's relation if:" (1) the matter involves competition between the actor and the plaintiff, (2) the actor does not employ wrongful means, (3) the action does not constitute an unlawful restraint of trade and (4) the action is taken to advance a competitive interest. United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628, 633 (Minn. 1982). Because the record shows that ALL's promise to double its business with Frigidaire was protected by the competitor's privilege, the promise alone cannot support JNR's tortious interference with contractual relations claim.
Reversed and remanded.
[*] Retired judge of the Minnesota Court of Appeals, serving by apointment pursuant to Minn. Const. art. VI, § 10.