Business Law: Funeral home Sues Archdiocese of Louisville

Can a business sue a religious organization for interfering with its business? That is the question I get from The Courier-Journal's Funeral home director suing Archdiocese of Louisville for business interference:

"A Nelson County funeral home director is suing the Archdiocese of Louisville and a Roman Catholic priest, whom he accuses of undercutting his business by implementing new rules on conducting funerals at his parish.
Advertisement

The Rev. Jeffrey Leger, pastor of St. Catherine Church in New Haven, put a new policy into effect last month, stipulating that funeral directors can no longer solely plan funerals. Instead, they must now plan them with Leger, who has final say.

The new policy, which Leger outlined in a 10-page letter to funeral directors, strictly enforces church law and liturgical practices that limit such things as the types of readings, music and eulogies at funeral Masses."

Ron Rust, owner of the William R. Rust Funeral Home in New Haven, said the policy will interfere with his longstanding business of coordinating funerals that are held at St. Catherine.

The policy marks "an intentional and wrongful interference" in the dealings between the funeral home and its customers and will cost Rust funerals and income, according to his suit filed Aug. 7 in Nelson Circuit Court.

***

Rust claims a "right to direct funerals in accordance with the wishes of the family of deceased individuals without the constraints" of Leger's policy, it says.

***

Anything that could distract from that should be avoided, he wrote, adding that eulogies, recorded music and nonbiblical readings such as poetry and letters are forbidden except under limited circumstances.

Such personalized features should take place at the vigil service, typically held the evening before the Mass at either the church or the funeral home, he said.

A Third Party Interference Case In Anderson, Indiana

The Anderson Herald Bulletin's reports on a slightly different sort of third party interference with contract. However, after reading Pepelea wants $75K from city, I am have some major questions.

On the face of it this is a good case of third-party interference with a contract except for one thing. Was there a contract between the city and Anthem which gave Pepelea any rights?

After the contract was approved, it was sent to Anthem officials for them to sign. An unknown city employee contacted Anthem officials and told them to put the contract on hold until Jan. 1, when Ockomon, a Democrat, took office, according to the notice.

That paragraph contributes only massive confusion. I have written about third party interference here. If you read that article, you can see that at least two elements are at the least questionable: a valid, existing contract and who did the interfering.

Not that Pepelea is out of luck entirely. Without a contract, Pepelea would have a case for intentional interference with a business relationship and/or interference with a prospective advantage. If his attorney remembered to add these claims to the tort claims notice.

Indiana Appellate Cases: Third Party Interfering With Contracts

On March 20th, the Indiana Court of Appeals handed down its opinion in Allison v. Union Hospital (PDF format) that dealt with tortious interference with contractual relationship against Union Hospital and Wabash Valley Anesthesia, P.C. (the other appellee) and constructive fraud and breach of the duty of good faith and fair dealing against Union.

Allison (and Safford, the other appellant) lost on both claims at the trial court level and had a split decision with the Court of Appeals. The Court of Appeals reversed the trial court on the tortious interference claim but upheld the other claims.

The opinion contains a refresher on the tort's elements:

A plaintiff alleging tortious interference with a contractual relationship must establish five elements: (I) the existence of a valid and enforceable contract: (2) the defendant's knowledge of the existence of the contract; (3) the defendant's intentional inducement of the breach of the contract; (4) the absence of justification; and (5) damages resulting from the defendant's wrongful inducement of the breach. (citation omitted).

This case focuses on the justification element. The Indiana Supreme Court has set out the following factors for judging whether or not the defendant acted with justification:

(a) the nature of the defendant's conduct;
(b) the defendant's motive;
(c) the interests of the plaintiff with which the defendant's conduct interferes;
(d) the interests sought to be advanced by the defendant;
(e) the social interests in protecting the freedom of action of the defendant and the contractual interests of the plaintiff;
(f) the proximate or remoteness of the defendant's conduct to the interference: and
(g) the relations between the parties.

The Indiana Court of Appeals proceeded to evaluate the facts of the case against these guidelines. It then made the following decision:

In weighing all of these factors, we find this to be a very close call. And as noted above, the ultimate question relating to the justification of the defendant's conduct is whether that conduct has been fair and reasonable under the circurnstances. We find this inquiry to he so highly- fact sensitive that we conclude it is best answered by a factfinder. Although it is possible that under certain circumstances this question may lie answered as a matter of law-and, indeed, we make just such a finding with respect to WVA below- we do not find that to be the case with respect to Union, based primarily on its conduct with respect to the without cause termination provision....

I must say this case has some unusual features - Union Hospital admitted entering into a contract it had no intention of honoring - which probably helped lead to the decision for a remand for trial rather a decision as a matter of law.

Having confronted several of these tortious interference cases, my thought is that the lack of justification element is generally the make or break element. If the case is a good tortious interference case, then the other elements ought to be readily apparent with an appropriate support of the evidence. (For example, last week a client wrote me about what would appear a good tortious interference case except there was no interference - the clients were not impressed by the attempted interference.) With this opinion, Indiana has a very a good explanation of when a third party lacks justification for its interference.

Business contracts: What to do when a third party interferes with your contract?

X contracts with Y but before completing the contract Y starts doing business with Z. Can X do anything about this?

Under Indiana law, X may have a lawsuit for tortious interference with contract. Indiana law has five things that must be proven for a tortious interference with contract claim.

(1) the existence of a valid and enforceable contract;
(2) defendant's knowledge of the existence of the contract;
(3) defendant's intentional inducement of breach of the contract;
(4) the absence of justification; and
(5) resulting damages.

I assume for this post that X has a valid and enforceable contract, and I assume that Z knew of the contract between X and Y, and also assumed is X can show the financial harm satisfying the fifth requirement.

For inducement, think causation. That Z did something that which acted as the moving force that lead to Y breaching the contract with X. However, inducing is more than mere negligence.

Does this mean that competitors cannot compete? No. While the issue can be a close one in some cases, the lack of justification protects the idea of business competition. For justification the courts will look to the following: (a) the nature of the defendant's conduct; (b) the defendant's motive; (c) the interests of the plaintiff with which the defendant's conduct interferes; (d) the interests sought to be advanced by the defendant; (e) the social interests in protecting the freedom of action of the defendant and the contractual interests of the plaintiff; (f) the proximity or remoteness of the defendant's conduct to the interference; and (g) the relations between the parties. See Winkler v. V.G. Reed & Sons, 638 N.E.2d 1228, 1235 (Ind. 1994).

Related to this type of are the tort of intentional interference with a business relationship and interference with a prospective advantage. The principal difference between these kind of cases and tortious interference with contract is that the other types do not require a contract. I will write about these kind of cases another day.

If you have a possible tortious interference with contract case from Indiana and need to consult with an attorney, please feel free to contact me.

For those interested in reading more of my posts related to this post, you just need to click the links below and next to the word label for business law, consumer protection, and/or contracts.

Bad review? Yes. Libel? Not likely.

The New York Times has an interesting article on libel suits for bad restaurant reviews. Amusing in many ways, the article nails the issue on the head here:

But American judges have apparently never punished even tough, mean and wrongheaded restaurant reviews. As the federal appeals court in Manhattan put it in 1985, “reviews, although they may be unkind, are not normally a breeding ground for successful libel actions.”

American juries feel the same way, said Charles L. Babcock, a Dallas lawyer who defended The Morning News in the suit brought by Il Mulino, a restaurant there that has since closed.

“Juries just are absolutely skeptical of claims about restaurant reviews,” Mr. Babcock said. “They believe it’s just classic opinion.”

Not something I would want to try with an Indiana jury.Publish