## Facts

- Becky Gruhlke worked for CU Mortgage Direct, LLC as a senior mortgage underwriter under an annually renewable employment contract beginning in January 2004.
- The contract renewed automatically for additional one-year terms unless either party gave timely written notice of termination; the contract was renewed for 2004 and 2005 but not for 2006.
- Gruhlke sued the corporate entities for wrongful discharge and breach of contract and sued David Bednar (CU Mortgage’s chief operating officer) individually for intentional interference with her employment relationship.
- Gruhlke alleged Bednar asked her to submit false and misleading information to investment mortgage companies to secure financing for certain home loans.
- She alleged that after she refused, Bednar advocated terminating her employment relationship and acted intentionally, unjustifiably, and out of personal interests.
- The asserted employment relationship was characterized in the pleadings as essentially a one-year, employment-at-will arrangement subject to nonrenewal.

## Issues

1. Whether South Dakota law permits a claim for intentional interference with contractual relations against a corporate officer involved in the employer’s relationship with an employee.
2. If so, whether the complaint alleged sufficient facts that the officer acted outside the scope of corporate authority or primarily from personal motives so as to be treated as a third party to the contract.

## Decision

- The Supreme Court of South Dakota held that, in limited circumstances, a corporate officer may be liable for intentional interference with an employee’s contract with the corporation.
- The Court affirmed dismissal because Gruhlke’s complaint did not plead specific facts showing Bednar acted outside the scope of his corporate role or primarily for personal benefit rather than the corporation’s interests.
- Conclusory assertions that Bednar acted from “personal interests” and was “unjustified” were insufficient to state a claim.

## Legal Principles

- A corporate officer ordinarily cannot be liable for interfering with the corporation’s own contract when acting within the scope of authority and in furtherance of corporate interests, because the officer is not a third party to the contract.
- A corporate officer may be treated as a third party, and thus potentially liable for intentional interference, only under limited circumstances—such as acting outside the scope of employment or predominantly from personal motives rather than corporate objectives.
- To survive a motion to dismiss, a plaintiff must plead nonconclusory facts that, if proven, would show improper interference and that the officer’s motive was primarily personal and distinct from the corporation’s interests.
- Where the employment relationship is effectively at-will or subject to nonrenewal, allegations must still plausibly show improper, primarily personal interference rather than participation in a corporate employment decision.

## Conclusion

South Dakota recognized a narrow path for tortious-interference claims against corporate officers in the employment setting, but affirmed dismissal because the complaint did not allege concrete facts showing the officer acted beyond corporate authority or mainly for personal gain.


Gruhlke v. Sioux Empire Fed. Credit Union, Inc., 756 N.W.2d 399 (S.D. 2008)