Florian Greenhouse, Inc. v. Cardinal IG Corporation

11 F. Supp.2d 521 (D. N.J. 1998)
  • Opinion Date: June 26, 1998

CONTRACTS; TORTIOUS INTERFERENCE—A supplier that is aware that its customer will not be able to meet its resale commitments if the supplier breaches its supply contract with its customer, may be liable for tortious interference with its customer’s resale contracts.

A distributor of greenhouses and related products informed a manufacturer that if an agreement was reached, the distributor would change its catalogs and marketing plans to feature the manufacturer’s glass. The parties reached a preliminary agreement on pricing. Representatives from both companies met to discuss numerous issues, including an exclusivity agreement the manufacturer had with another corporation. The distributor alleged that the manufacturer assured it that the exclusivity agreement was for the coating only and that it would not affect the specific kind of glass that it would be purchasing. On that basis, an agreement was entered into by the parties. Pursuant to this agreement the manufacturer ordered a specific product known as LoE2 glass and issued a revised catalog featuring the LoE2 glass which it distributed throughout the country. It also began to build new product lines around the LoE2 glass. Orders for these products began to arrive. The manufacturer filled the distributor’s orders for several months, then suddenly stopped. The manufacturer then informed the distributor in writing that it would make no further shipments because filling these shipments was improper under the manufacturer’s exclusivity agreement with the other company.

The distributor then filed suit, alleging that the manufacturer intentionally and maliciously interfered with its contractual and prospective economic relations with its customers. In response, the manufacturer asserted that the complaint was deficient because it failed to allege that the manufacturer knew of the distributor’s alleged contracts or prospective economic advantages. In denying the manufacturer’s motion to dismiss, the Court found that because the distributor informed the manufacturer that it intended to advertise products featuring the LoE2 glass, it was reasonable to infer that the distributor had formed contracts or was in the process of forming contracts to sell finished products to customers. The Court reasoned that termination of the supply of the LoE2 glass could interfere with the distributor’s obligations and deprive it of an economic benefit. The Court also rejected the manufacturer’s argument that the distributor should be limited to a contract remedy only. It also noted that there was no limitation as to the kinds of recovery that a party could obtain under the contract and that if the manufacturer was successful in proving that no contract existed, the distributor could still recover under common law fraud and consumer fraud.