Facts
- Andrew Greenberg, Inc. (AGI) created the computer game “Wizardry.”
- In 1981, AGI granted Sir-Tech Software, Inc. (Sir-Tech) an exclusive license to manufacture and market Wizardry, Wizardry-related products, and later Wizardry games and related products.
- The license agreement provided for graduated royalty payments to AGI and required that Wizardry games and related products carry copyright notices recognizing AGI as a co-owner.
- Sir-Tech marketed Wizardry and related products and, under the authorship of game designer David W. Bradley, marketed subsequent Wizardry games.
- Sir-Tech entered a contract with Bradley to develop a Wizardry game titled “Crusaders of the Dark Savant” (Crusaders), with an alleged delivery deadline of September 1, 1991.
- In June 1991, while Crusaders was in development, AGI commenced a federal action against Sir-Tech and Bradley alleging trademark and copyright infringement and seeking an accounting and damages for fraud-related claims.
- The federal court dismissed AGI’s trademark-related claim(s) with prejudice, dismissed the accounting and fraud claims without prejudice after declining supplemental jurisdiction, and denied Sir-Tech’s motion for sanctions.
- In February 1992, the federal action was dismissed against Bradley with prejudice by stipulation.
- Crusaders was not delivered until March 1, 1993—well after the contractual deadline and months after the federal case ended.
- In April 1992, AGI brought a state-court action seeking an accounting from Sir-Tech under the licensing agreement (Action No. 1).
- In August 1992, Sir-Tech filed a separate state action against AGI, Andrew Greenberg individually, and AGI’s attorneys (Orseck, Orseck, Greenberg & Gaiman), alleging tortious interference with Sir-Tech’s contract with Bradley (Action No. 2).
- Sir-Tech claimed Bradley had been on schedule, then stopped working after being named in the federal suit, causing delay and nearly $1 million in losses tied to sales expectations and marketing investments.
- On summary judgment, defendants relied on proof that Bradley continued working during the period in question and that Bradley’s communications with Sir-Tech did not identify the federal action as a cause of delay; Sir-Tech argued missing proof resulted from defendants’ resistance to discovery.
Issues
- Whether Sir-Tech raised a triable issue of fact that defendants knew of Sir-Tech’s development contract with Bradley and intentionally procured a breach or nonperformance.
- Whether commencing and prosecuting a nonfrivolous lawsuit to assert claimed intellectual-property and contract rights can constitute “without justification” interference absent proof it was brought solely to harm the contractual relationship.
- Whether Sir-Tech produced admissible evidence that defendants’ conduct was the “but for” cause of Bradley’s delayed delivery and Sir-Tech’s claimed damages, and whether speculation about further discovery could defeat summary judgment.
Decision
- The Appellate Division, Third Department, affirmed the order granting summary judgment to defendants and dismissing Sir-Tech’s complaint in Action No. 2.
- Sir-Tech failed to present admissible evidence that AGI, Greenberg, or the law firm knew the material terms of Bradley’s development contract when AGI commenced the federal action.
- Sir-Tech did not raise a triable issue that defendants acted with the required intent to procure a breach or that the federal litigation was initiated solely to harm Sir-Tech’s contractual relationship with Bradley.
- The record supported that Bradley continued work on Crusaders during the relevant period and that communications about scheduling did not attribute delay to the federal lawsuit, defeating causation.
- The denial of sanctions in the federal case and the nature of the federal court’s dispositions weighed against treating AGI’s federal suit as frivolous or brought in bad faith.
- Claims that discovery resistance might reveal supporting proof did not substitute for evidentiary proof of the elements required to avoid summary judgment.
Legal Principles
- Tortious interference with contract requires proof of: (1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of that contract; (3) intentional procurement of the third party’s breach; (4) breach; and (5) resulting damages.
- The plaintiff must show that the interference was “without justification,” and that defendant’s conduct was the “but for” cause of the breach or complained-of nonperformance/delay and resulting loss.
- Filing and maintaining litigation to assert one’s claimed rights is generally justified; it becomes actionable as interference only upon proof the suit was wholly without merit and brought solely to harm the contractual relationship.
- On summary judgment, once defendants make a prima facie showing of entitlement to judgment as a matter of law, the opposing party must produce evidentiary proof in admissible form showing material factual disputes; speculation that additional discovery may yield proof is not enough.
Conclusion
The court affirmed dismissal of Sir-Tech’s tortious-interference action because Sir-Tech did not produce admissible evidence that AGI and the other defendants knew the terms of Bradley’s development contract, acted solely to disrupt it, or caused the delay in delivering Crusaders; the record instead showed continued work on the game and no concrete link between the federal lawsuit and the alleged losses.