No Tortious Interference Claim Unless Expectancy is Real

Virginia recognizes claims for both tortious interference with existing contracts and tortious interference with prospective, anticipated contracts, known as business expectancies. If your business is counting on winning a major contract but then the work suddenly goes to a competitor instead, it may be natural to wonder whether the competitor won the business fairly or through unfair competition or other improper methods. The success of a tortious interference claim based on some unrealized economic benefit anticipated in the future depends heavily on the certainty with which that benefit was expected. There is no claim for tortiously interfering with one’s dreams and aspirations.

The first element of a tortious interference claim is showing “the existence of a business relationship or expectancy, with a probability of future economic benefit to plaintiff.” (See Am. Chiropractic v. Trigon Healthcare, 367 F.3d 212, 228 (4th Cir. 2004)). A mere possibility of future economic benefit is insufficient. A recent case out of the Norfolk Division of the Eastern District of Virginia provides a good example.

The plaintiff in GMS Industrial Supply, Inc. v. G&S Supply, LLC sells industrial products to various branches of the military. It claimed that G&S Supply was unlawfully competing against GMS by selling cage code part number (“CCPN”) items, thereby interfering with GMS’ expectancy. CCPN items are industrial products awarded through the U.S. Army using the Defense Logistics Agency. G&S was not selling them directly to customers but, according to the allegations in the complaint, proceeding through a solicitation and award procurement process. GMS argued the defendants used improper means to gain an advantage in the bidding process, thereby enabling them to divert sales from GMS. GMS alleged that “65% to 90% of the customer requests” to GMS are for CCPN items and argued that G&S was “unlawfully competing with GMS in selling CCPN items, specifically to the U.S Army at various Army bases.” GMS did not claim to be the only company raptor-1040097_1280-300x199authorized to sell CCPNs, so the question in the ensuing litigation became whether GMS should be afforded protection for its claimed business expectancy interest in receiving future CCPN orders.

The magistrate judge dismissed the tortious interference count for failure to state a claim. GMS objected, but the district court judge overruled the objection, finding the magistrate judge was correct in dismissing the claim. The reason had to do with the lack of certainty that GMS would actually realize the economic benefit it claimed to be entitled to:

The Complaint fails, however, to plead any specific facts regarding ongoing contracts or business relationships with which G&S has interfered by selling CCPN items. GMS’s prior sales do not demonstrate ongoing contracts or a business relationship, because a military solicitation “is a request for offers” and “not a contract.” Mobile Shelter Sys. USA, Inc. v. Grate Pallet Sols., LLC, 845 F. Supp. 2d 1241, 1259 (M.D. Fla. 2012), aff’d in part, 505 F. App’x 928 (11th Cir. 2013). See id. (“[The] testimony evinces only the fact that Plaintiff had, in the past, sold goods to the U.S. military. Such testimony does not demonstrate an agreement to purchase goods in the future.”).

The court found that just because G&S had sold products to the military did not necessarily mean that G&S had interfered in an unspecified business expectancy or unidentified contract that GMS had with the military. Considering that GMS sales were made as a result of a government-sponsored bid-solicitation process conducted under full and open competition, it would be particularly difficult for it to argue that it had anything beyond a mere hope of future contract awards, which is insufficient to state a claim for tortious interference.