A common scenario in employment law involves Company B hiring a key employee away from its main competitor, Company A. In order to protect against such “poaching,” Company A requires all of its critical employees to sign a non-compete agreement, which restricts their ability to work for any competitor for a certain period of time after leaving Company A. If an employee violates the non-compete agreement, then Company A can sue that employee for damages.
The Elements of Tortious Interference With an Existing Contract
But what about Company B? Can it be sued by Company A even though it was not a party to the non-compete agreement? Depending on the facts and circumstances, Company A may in fact have grounds for a lawsuit based on tortious interference with contract. As the term suggests, this is a tort–a personal injury claim–arising from a third party’s interference with a contract between the plaintiff and someone else.
Tortious interference is not just about employment contracts. It may arise in any business contract. In some cases Texas courts have even said an unenforceable contract may form the basis for a tortious interference claim, so long as the contract is not void. It is also possible to sue a party for tortious interference with a prospective contract, although that can be much more difficult to prove.
So how exactly does a plaintiff prove tortious interference with a contract? The Texas Supreme Court has identified four necessary elements:
- The plaintiff entered into an existing contract that is “subject to interference”;
- The defendant engaged in a “willful or intentional act of interference” with the contract;
- The defendant’s act was the proximate cause of some injury to the plaintiff; and
- That injury resulted in “actual damage or loss” to the plaintiff.
A defendant, in turn, can argue “justification” as an affirmative defense to tortious interference. For example, the defendant might claim it acted to enforce its own legal rights, which were superior to those of the plaintiff. Alternatively, the defendant can argue it acted in “good faith” to exercise its rights, which may have mistakenly infringed on the plaintiff’s contract.
In the hypothetical non-compete agreement described above, for instance, Company B could argue that it genuinely had no knowledge that the employee was under a restrictive covenant not to work for any competitor of Company A. A jury could therefore find that Company B acted in “good faith” and is not liable for tortious interference.
How Long Do I Have to File a Tortious Interference Lawsuit?
Like all civil lawsuits, there is a strict time limit to file a claim for tortious interference with contract. According to the Texas Supreme Court, the statute of limitations in these type of cases is two years. The clock starts from the date of “accrual,” that is when the alleged act of interference occurred.
While two years may sound like a lot of time, tortious interference cases often require a good deal of time to investigate and pursue. This is why if you suspect another company or firm has interfered with your contractual rights, you need to speak with a qualified Dallas business litigation attorney to assist you in figuring out the best course of action. Contact Lindquist Wood Edwards LLP at 214-382-9789 to speak with a lawyer today.