Where Personal Meets Professional:  The Difficulties of Proving Tortious Interference by Clients in the Firm Environment

Author: Bradley Dunkle, Associate Member, University of Cincinnati Law Review

Carol Sparks Drake, an Indiana attorney, recently saw her home and work lives collide in a most unfortunate manner.  For more than twenty years, Drake worked as a partner in the law firm of Parr Richey Obremskey & Morton (“Parr Richey”).  However, in 2006, the partners reconstituted the partnership, electing to leave Drake out.[i] Why did the partners of Parr Richey choose to cut out this long term partner despite Drake’s impression that “none of the partners had indicated in any way that [her] future with the firm was in any jeopardy?”[ii] Drake’s dispute with Duke Realty, a Parr Richey client, over land use near her family residence, a forty-six acre farm in Boone County, Indiana, appears to be the answer.[iii] Although Drake’s contract with Parr Richey could be terminated at-will, she claims that Duke Realty impermissibly interfered with her employment contract and influenced Parr Richey to terminate her.[iv] The Indiana Supreme Court’s determination in Drake v. Dickey that a third party can tortuously interfere with an employment contract could prove important in determining how much influence clients have on businesses.[v]

Drake and Duke Realty’s Agreement

In 2003, Duke Realty announced its intention to create a mixed-use development in Boone County, Indiana, known as Anson.  Anson would be, essentially, a new town, planned and developed by Duke Realty, complete with houses, apartments, medical and office complexes, retail providers, and restaurants.[vi] Drake’s farm happened to be located next to the planned development area, and Duke Realty offered to purchase the land in order to incorporate it into the development.  Drake declined.  Realizing the apparent conflict of interest, Parr Richey suspended its representation of Duke Realty until a resolution could be formed between Drake and Duke Realty regarding the Anson Project.[vii]

The solution came in 2004 in the form of a land use agreement that limited how the land surrounding Drake’s farm could be developed. Soon after, Parr Richey resumed its representation of Duke Realty.  However, the dispute between Drake and Duke Realty was far from over, and soon Drake was in court again, alleging a number of Duke Realty violations and seeking to enforce the terms of the land use agreement.[viii]

As a result of Drake’s actions, Duke Realty approached Parr Richey.  Duke informed the law firm that if Drake did not back off and stop filing complaints against the realty company, Duke would be forced to terminate its relationship with Parr Richey.  Two years later, Parr Richey removed Drake from her position in the firm.[ix]

Drake Takes Action

In August of 2009, Drake filed suit against Duke Realty, claiming Duke tortiously interfered in her partnership agreement with Parr Richey. In order to bring a successful tortious interference claim, Drake must prove: (1) she had a valid contract with Parr Richey, (2) Duke Realty knew of the contract, (3) Duke Realty intentionally interfered with the contract, (4) Duke Realty’s interference was unjustified, and (5) that she was harmed by Duke Realty’s actions.[x] Duke Realty moved for and was granted summary judgment.  The trial court found Duke Realty lacked the intent to pressure Parr Richey to terminate Drake, even if it intended to pressure Drake for a settlement.[xi] Without this intent, the court held, Duke Realty could not be held liable for tortious interference.[xii] The appellate court found there were genuine issues of material fact and therefore remanded the case to determine whether Duke Realty intended to pressure Parr Richey to terminate Drake.[xiii] The remand gives Drake the opportunity to present her case to a fact finder.[xiv]

Drake’s Difficult Elements

Ultimately, for Drake to succeed, she will have to show that Duke Realty intentionally and without a valid business justification induced Parr Richey to remove her from the partnership.  Although this does not mean that Duke Realty had to specifically intend to remove Drake from the partnership, Drake will have to show that Duke Realty knew with some certainty that its actions would lead to Drake’s termination.[xv] It is not enough for Drake to simply show that Duke Realty’s actions could foreseeably affect Drake’s employment.[xvi]

Drake also must show that Duke Realty induced Parr Richey to terminate her partnership agreement without a valid business reason.[xvii] As the trial court noted, Duke Realty influenced Parr Richey, but the intent of this interference is unclear.[xviii] Drake will have to show that Duke Realty had no valid business reason for terminating its relationship with Parr Richey.  Drake will have to show that Duke Realty’s sole purpose was to interfere with her employment agreement. Duke Realty will argue that its purpose was simply to inform Parr Richey of its intention to seek other counsel, that it was dissatisfied with the representation that it was receiving from Parr Richey, and, as a client, it has a right to terminate representation at any time.  Any communication of that intent to Parr Richey partners was just to put the firm on notice of this dissatisfaction.  Drake’s challenge will be finding evidence that shows a history of good relations between Duke Realty and Parr Richey and that there were no signs that Duke Realty might end that relationship before her legal disputes arose.

What Evidence Drake Needs

Drake’s case may very well hinge on the testimonies of her former partners at Parr Richey. Drake’s arguments will likely continue to be based around the idea that Duke Realty knew that it could force action through its position as a large client for the small law firm and that it communications were threats and ultimatums.  Therefore, the impressions of the Parr Richey partners following their communications with Duke Realty could weigh strongest with the jurors. If the Parr Richey partners believed Duke Realty was trying to bully them into removing Drake, Drake may be able to get enough traction to build a successful case against Duke Realty. More specifically, the impression Parr Richey partners received from a Duke Realty letter sent a few days before Drake was terminated, which one partner said amounted to a ”CYA letter” and another partner noted was meant “to avoid claims of tortious interference,” could prove to me important.[xix] Therefore, the partners’ testimony will likely decide whether Duke Realty had a legitimate business purpose for terminating Parr Richey.

Can Clients Control Firm Employment?

The struggles of the legal market in recent years have left many firms susceptible to economic pressure from large clients.  Just as Parr Richey was forced to decide whether to maintain a twenty-year partner relationship or retain a large client, other firms could find themselves in a similar position.  The threat of termination is especially looming in at-will employment states, like Indiana.[xx] With her case going before a fact finder now, Drake’s case could prove important in determining the influence clients have on the law firms that represent them.  If no tortious interference is found, clients may feel they can act as Duke Realty did and many managing partners will be left to decide who wields the decision-making power in the law firm.

 

[i] Appellant’s Brief at 3, Drake v. Dickey, 2013 Ind. App. LEXIS 608 (Ind. Ct. App. Dec. 11, 2013).

[ii] Drake v. Dickey, 2013 Ind. App. LEXIS 608 (Ind. Ct. App. Dec. 11, 2013).

[iii] Id. at 3-4.

[iv] Appellant’s Brief at 12, Drake v. Dickey, 2013 Ind. App. LEXIS 608 (Ind. Ct. App. Dec. 11, 2013).

[v] Drake, 2013 Ind. App. LEXIS 608 (Ind. Ct. App. Dec. 11, 2013)at *23-24 citing Restatement (Second) of Torts §766 cmt. j (1979).

[vi] Tim Evans, Attorney loses job, but battle remains vs. Anson development, Duke Realty, Indy Star, January 20, 2014, http://www.indystar.com/story/money/2014/01/20/attorney-loses-job-but-battle-remains-vs-anson-development-duke-realty-/4657597/.

[vii] Drake v. Dickey, 2013 Ind. App. LEXIS 608 *4 (Ind. Ct. App. Dec. 11, 2013).

[viii] Id.

[ix] Jennifer Nelson, Jury should decide whether Duke Realty intended to get law partner fired, The Indiana Lawyer, December 11, 2013, http://www.theindianalawyer.com/jury-should-decide-whether-duke-realty-intended-to-get-law-partner-fired/PARAMS/article/33008.

[x] Restatement (Second) of Torts §766 (1979).

[xi] Drake v. Dickey, 2013 Ind. App. LEXIS 608 *6-7 (Ind. Ct. App. Dec. 11, 2013).

[xii] Id.

[xiii] See Id.

[xiv] The Court of Appeals saw the case as analogous to Bochnowski v. Peoples Fed. Sav. & Loan, which revolved around a dispute between Peoples Federal and their former employee, in which Peoples Federal pressured Bochnowski’s employer to keep Bochnowski away from any projects involving materials from Peoples Federal.  In fact, Peoples Federal’s pressure continued increasing until eventually Bochnowski was fired. Drake, 2013 Ind. App. LEXIS 608 at *17-18 citing Bochnowski v. Peoples Fed. Sav. & Loan Ass’n, 571 N.E.2d at 283-285 (Ind. 1991).  Duke Realty also argued, that interference was justified by a legitimate business reason, stating the Indiana Rules of Professional Conduct allowed it to terminate its attorney-client relationship, especially when a personal conflict has an adverse effect on representation. However, while the court agreed that Duke Realty had a right to terminate its attorney-client relationship, Duke Realty did not have the right to give Parr Richey an ultimatum or threaten the firm regarding the employment of Drake.  Id. at *27.

[xv] Tim Evans, Attorney loses job, but battle remains vs. Anson development, Duke Realty, Indy Star, January 20, 2014, http://www.indystar.com/story/money/2014/01/20/attorney-loses-job-but-battle-remains-vs-anson-development-duke-realty-/4657597/.

[xvi] Brief for Appellee at 12, Drake v. Dickey, 2013 Ind. App. WL 5574717 (Ind. Ct. App.)(Aug. 23, 2013).

[xvii] See Charles B. Vincent, The Handling of a Claim for Tortious Interference with an At-will Employment Contract in the Delaware State Courts versus the Delaware District Court, 12 Del. L. Rev. 121 (2011).

[xviii]See Drake, 2013 Ind. App. LEXIS 608 *6-7 (Ind. Ct. App. Dec. 11, 2013).

[xix] Tim Evans, Attorney loses job, but battle remains vs. Anson development, Duke Realty, Indy Star, January 20, 2014, http://www.indystar.com/story/money/2014/01/20/attorney-loses-job-but-battle-remains-vs-anson-development-duke-realty-/4657597/.

[xx] Id.

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