## Facts

- Ferd Nesler purchased and renovated a downtown Dubuque office building intending to lease space to commercial and governmental tenants, then syndicate the property and earn ongoing management fees.
- About twelve Dubuque County agencies tentatively committed to lease space in “Nesler Centre,” contingent on approval by the county board of supervisors; many agencies were then tenants in buildings owned by Fisher and Company, Inc., and Plastic Center, Inc.
- After learning the county was considering Nesler Centre, Louis Pfohl (president of the defendant corporations) reduced Fisher’s rent below Nesler’s proposal in an effort to retain the tenants.
- The county board approved relocation to Nesler Centre, and the agencies chose to lease from Nesler.
- Nesler presented evidence that, after the approval, Pfohl pursued a course of conduct intended to disrupt Nesler’s project, including:
  - causing the defendant corporations to sue the county board claiming it was legally required to accept Fisher’s lower rent (the suit was dismissed);
  - encouraging and financing a handicap-access lawsuit against Nesler Centre by another tenant;
  - pressuring city inspection authorities to find building violations.
- The disputes generated adverse publicity; Nesler presented evidence that his lender then declined additional funding needed to complete renovations and pay the remaining purchase price.
- Nesler alleged the loss of financing prevented or substantially burdened his performance under contracts and commitments tied to the project, and caused loss of anticipated syndication and management profits.

## Issues

1. Whether substantial evidence supported liability for intentional interference with existing contracts under Restatement (Second) of Torts § 766A by making the plaintiff’s performance impossible or more burdensome, even if third parties remained willing to perform.
2. Whether substantial evidence supported liability for intentional interference with prospective contractual relations under Restatement (Second) of Torts § 766B through intentional and improper conduct exceeding lawful competition.
3. Whether the district court properly granted judgment notwithstanding the verdict (JNOV) based on asserted insufficiency of evidence on elements of interference and causation.

## Decision

- The Iowa Supreme Court reversed the JNOV and remanded with directions to reinstate the jury verdict.
- Viewing the evidence most favorably to Nesler, the record generated jury questions on intentional and improper interference with both existing contracts (§ 766A) and prospective relations (§ 766B).
- The court rejected the district court’s view that § 766A requires proof that a third party refused to perform; interference may be shown by conduct that prevents or substantially burdens the plaintiff’s performance.
- The court held the jury could reasonably find defendants’ post-approval litigation and related actions were intended to derail the project and were a substantial factor in the financing collapse and resulting losses.
- Reinstatement included the jury’s awards of $576,476 compensatory damages and $100,000 punitive damages.

## Legal Principles

- Under Restatement (Second) of Torts § 766A, liability may arise when a defendant intentionally and improperly prevents the plaintiff from performing a contract or makes performance more expensive or burdensome, causing pecuniary loss; third-party refusal to perform is not required.
- Under Restatement (Second) of Torts § 766B, liability may arise for intentional and improper interference with prospective contractual relations or economic advantage causing loss of expected benefits.
- “Improper” interference is evaluated using Restatement § 767 factors, including the nature of the conduct, motive, the parties’ interests, and social interests in protecting competition and legal rights.
- Legitimate competition (such as lowering rents) is not actionable; a coordinated course of conduct, including litigation or regulatory pressure, may be improper when used primarily to sabotage a competitor rather than to pursue legitimate interests.
- On JNOV review, the court asks whether substantial evidence, viewed in the light most favorable to the verdict, supports each essential element; credibility and competing inferences are for the jury.

## Conclusion

The Iowa Supreme Court reinstated a jury verdict for Nesler, holding that substantial evidence permitted findings that defendants intentionally and improperly interfered with Nesler’s contractual performance and prospective business advantages by conduct that foreseeably undermined financing and derailed the redevelopment project, making JNOV improper.


Nesler v. Fisher & Co., 452 N.W.2d 191 (Iowa 1990)