gray yarn ballKey Business Court Decisions

Playing “Hard Ball” Might Waive Qualified Immunity

Where a business’ agent acknowledged a debt was owed but still refused to allow payment in order to strengthen the business’ negotiating position, any qualified immunity from inducing the business to breach its contract could be lost.  Kapur v. IMW EMR, LLC, 2020 NCBC 92 (J. Gale).  As a result, the former employee could maintain his tortious interference with contract claim against the business’ officers, who allegedly refused to allow the business to pay an acknowledged debt in order to “string him along” until he accepted a lesser offer.

Plaintiff worked for iMedicware, Inc. (“Company”), a computer software company geared toward eye-care physicians.  As a salesman, Plaintiff had an agreement with the Company that provided him commissions for any software agreement he sold to a physician clinic.  In June 2017, defendant Eye Care Leaders (“ECL”) purchased and took control of the Company, agreeing to keep Plaintiff on as a sales representative.  At the time of acquisition, the Company allegedly owed Plaintiff thousands of dollars in commissions from prior, pre-acquisition sales contracts.  Plaintiff continued to work for ECL, but a dispute eventually arose between Plaintiff and ECL over the total commissions he was owed, including the pre-acquisition commissions owed by the Company.  In early 2020, ECL’s vice president allegedly admitted that Plaintiff was entitled to the amount of commissions he claimed from pre-acquisition sales, but then told Plaintiff that ECL’s officers would never allow the payment so as to “string” Plaintiff along with the hope of wearing him down into accepting a lower figure.  Plaintiff filed suit and asserted numerous claims against ECL, its owner and various officers including, inter alia, a claim for tortious interference with his pre-acquisition commissions contract with the Company.  Defendants all moved to dismiss, contending that because Plaintiff admitted in his complaint that all of the defendants had an ownership interest in the Company, each was justified in inducing the Company not to pay Plaintiff’s pre-acquisition commissions contract.

The Business Court disagreed. Although it recognized that under North Carolina law parties who have a legitimate interest in a business enjoy qualified immunity for directing the business to breach its contract, the Business Court held that such immunity is lost if the direction/inducement is not done for a legitimate purpose.  Defendants’ alleged acknowledgement that Plaintiff was owed the money but that ECL and its officers refused to allow the Company to pay the pre-acquisition commissions in order to “string him along” until he accepted a lesser offer would, the Business Court held, negate any “legitimate purpose” defendants might otherwise claim. Such facts would result in a waiver of any qualified immunity for the defendants.  (Opinion, ¶ 68-69).  Plaintiff’s tortious interference with contract claim therefore survived.

Based upon this decision, a business in a dispute over money owed pursuant to a contract should understand that its agents are protected from personal liability for directing the business not to make the payment so long as the dispute is legitimate. 

Additional Legal Points from This Opinion:

  • To maintain for a claim for quantum meruit, a party need not specifically allege that other compensation received is too low and/or unjust if the party’s claim is for benefits in addition to—and not in place of—sums received.  (Opinion, ¶ 39).
  • Where a plaintiff admits that the defendant has disputed the amounts owed under a contract, no claim for an account stated exists.  (Id., ¶¶ 43-44).
  • Failure to pay commissions owed by contract is the loss of an “intangible interest” and therefore cannot be the basis of a conversion claim.  (Id., ¶ 59).

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