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GEOFREEZE CORP. v. C. HANNAH CONSTR. CO.

July 24, 1984

GEOFREEZE CORP.
v.
C. HANNAH CONSTRUCTION CO.



The opinion of the court was delivered by: GILES

 GILES, J.

 After initiating an action against C. Hannah Construction Company (Hannah) for breach of a construction contract, Geofreeze Corporation (Geofreeze), filed a second amended complaint adding counts against Buckley & Company, Inc., the Conduit Foundation Corporation and Elliott-Lewis Corporation (the Joint Venture) for tortious interference with contract and tortious interference with business expectancies. The Joint Venture has filed a motion for partial summary judgment to dismiss the tortious interference counts. This motion shall be granted.

 FACTS

 The City of Philadelphia awarded the Joint Venture a contract for construction work on the Northeast Water Pollution Control Plant. The Joint Venture subsequently contacted Geofreeze to discuss the possibility of subcontracting. Under a subcontract, Geofreeze would employ its ground freezing technique to keep the ground from caving in during the construction work. In late April, 1982, an agreement was reached between the Joint Venture and Geofreeze. *fn1" To fulfill the City's minority contractor requirements, the Joint Venture contracted with Hannah as the minority subcontractor. Hannah, in turn, contracted with Geofreeze in accordance with the Joint Venture's agreement with Geofreeze. Hannah was responsible for paying Geofreeze. Hannah submitted invoices to the Joint Venture for expenses incurred, including bills from Geofreeze. Upon receiving these invoices, the Joint Venture made payments to Hannah. It, in turn, paid Geofreeze. It was understood by Geofreeze that the Joint Venture would guarantee payments to Geofreeze by or on behalf of Hannah in the event Hannah was unable to make the payments for any reason. Geofreeze contracted with a drilling subcontractor, the Nicholson Construction Company (Nicholson) to do the drilling necessary for the installation of the ground freezing system.

 To fulfill its bonding requirement with the City, the Joint Venture secured a labor and materialmen's bond from eight surety companies. Receipt of the payment bond was conditioned on the Joint Venture's agreeing to indemnify the sureties and to hold them harmless should any claim be asserted against the payment bond.

 A number of unexpected delays occurred putting the project behind schedule and causing cost over-runs. The contract between Geofreeze and Nicholson was a rental contract. Geofreeze had expected Nicholson's part of the job to cost between $40,000 to $60,000, but Nicholson's invoices totaled over $200,000. Disputes arose between Geofreeze and Nicholson over the amount Nicholson claimed Geofreeze owed in its July invoice. In September, Geofreeze acknowledged it owed at least $63,000 of the $84,000 billed. Despite this acknowledgment Geofreeze only paid Nicholson $30,000 with promises to pay the balance later. Nicholson had also submitted to Geofreeze its August and September bills in the amounts of $121,000 and $57,000. After it received only $30,000 for the July invoice in September, Nicholson, on September 30, 1982, contacted Buckley, as a member of the Joint Venture, and expressed its concern about Geofreeze's ability to pay. Nicholson also requested the name and address of the surety, indicating it planned to file a claim against the bond if other efforts to collect failed. Its collection efforts failed and neither Geofreeze nor Hannah paid Nicholson. After several fruitless attempts to obtain assistance from Buckley, Nicholson, on November 11, 1982, submitted a formal claim against the Joint Venture's bond through each of the sureties for the sum of $200,121.36. On November 23, 1982, Nicholson informed the Joint Venture that Geofreeze had "admitted an inability to pay." On November 24, 1982, Nicholson sent a letter to the Joint Venture via Buckley, notifying it that a formal claim had been filed against the bond through each of its sureties. Contemporaneously, Nicholson requested that the Joint Venture withhold funds from Geofreeze. Thereafter, the Joint Venture refused to pay Hannah for Geofreeze's invoices that had been submitted to Hannah for the weeks of November 22, 1982 through January 10, 1983. On December 17, 1982, Aetna Casualty & Surety Company wrote to Buckley requesting the Joint Venture to confirm in writing that Aetna's rights would "be 'protected at no cost, expense or obligation to Aetna Casualty. '"

 In early December, Geofreeze told the Joint Venture it would attempt to work out an arrangement with Nicholson to hold the Joint Venture harmless. This protection was never provided. Geofreeze was told on December 28th that the Joint Venture would look on the situation "more favorably" if Geofreeze provided a payment and performance bond. Such a bond was never produced. It appears from the record evidence that the Joint Venture never gave Geofreeze formal notice of its decision to withhold payments.

 SUMMARY JUDGMENT STANDARD

 Summary judgment may only be granted when the evidence "shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). Courts must "resolve any doubts as to the existence of genuine issues of fact against the moving parties." Continental Ins. Co. v. Bodie, 682 F.2d 436, 438 (3d Cir. 1982), citing, Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir. 1981); Ness v. Marshall, 660 F.2d 517, 519 (3d Cir. 1981); Tomalewski v. State Farm Life Ins. Co., 494 F.2d 882, 884 (3d Cir. 1974). Moreover, inferences drawn "from the underlying facts contained in the evidential sources submitted to the trial court must be viewed in the light most favorable to the party opposing the motion." Id., citing Hollinger v. Wagner Mining Equipment Co., 667 F.2d at 405; Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 50 L. Ed. 2d 748, 97 S. Ct. 732 (1977).

 DISCUSSION

 Geofreeze argues that certain inferences can be drawn from the material facts supporting its claims of intentional interference with contract and intentional interference with business expectancies which make the grant of summary judgment inappropriate in this case. Geofreeze contends that it can be inferred from the record evidence that the Joint Venture decided in late September 1982 "to drive Geofreeze off the job . . . but waited until installation of freeze pipes and freezing was near completion until taking direct steps in this regard." Plaintiff's Opposition to Defendants' Motion for Summary Judgment para. 16. In support of this contention, Geofreeze argues that the Joint Venture failed to issue notice of breach or notice to cure before withholding payments and failed to utilize its arbitration provision with Hannah to attempt to work out a less drastic remedy. The Joint Venture apparently knew in August, 1982 that the project would be significantly delayed and that the delays would necessitate retaining Geofreeze's services for an indeterminate period of time. Geofreeze had originally been scheduled to leave the job in January, 1983. Furthermore, the Joint Venture never turned over any of the funds withheld from Geofreeze over to Nicholson. Finally, the Joint Venture billed the City over $900,000 for the Geofreeze system but only paid Geofreeze $423,938.71. *fn2" After carefully considering the record, this court has determined that the inferences drawn by Geofreeze either are not supported by the record or do not raise material issues of fact.

 The Restatement (Second) of Torts ยง 766 defines intentional interference with contract:

 
One who intentionally and improperly interferes with the performance of a contract . . . between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to ...

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