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Walnut Street Associates, Inc. v. Brokerage Concepts

September 22, 2009

WALNUT STREET ASSOCIATES, INC.,
v.
BROKERAGE CONCEPTS, INC. AND KIMBERLY MACRONE,
APPEAL OF: BROKERAGE CONCEPTS, INC.



Appeal from the Order entered October 31, 2007, Court of Common Pleas, Philadelphia County, Civil Division at August Term, 2005 No. 002626.

The opinion of the court was delivered by: Donohue, J.

BEFORE: ORIE MELVIN, BOWES and DONOHUE, JJ.

OPINION

¶ 1 Appellant, Brokerage Concepts, Inc. ("BCI"), appeals from the October 31, 2007 order denying its post-trial motions for judgment notwithstanding the verdict or a new trial and entering judgment in favor of Appellee, Walnut Street Associates, Inc. ("Walnut Street"). After careful review, we conclude that in accordance with the Restatement (Second) of Torts § 772(a), true statements may not be the basis for a claim of intentional interference with contractual relationships. Accordingly, we reverse and remand for entry of judgment notwithstanding the verdict in favor of BCI.

¶ 2 The relevant facts and procedural history of this case are as follows. Walnut Street provides insurance brokerage services and assists employers in obtaining health insurance benefits for their employees. In the 1980's, Walnut Street was appointed broker of record for Procacci Brothers Sales Corp. ("Procacci"), a self-funded insurer with separate plans for its union and non-union employees. In 1994, at the recommendation of Walnut Street, Procacci retained BCI, a third-party administrator ("TPA") of self-funded employee benefit plans, as TPA for its two self-funded plans. BCI, in turn, paid Walnut Street commissions based on the premiums paid by the Procacci plans.

¶ 3 On March 1, 2005, after BCI refused to meet a proposal to lower its costs, Procacci notified BCI that as of March 16, 2005, it was moving its union plan from BCI to a new and less costly TPA, Loomis Company ("Loomis"). On March 2, 2005, Kimberly Macrone ("Macrone"), a sales representative employed by BCI, wrote a letter to Procacci asking that it reconsider its decision. Among other things, Macrone's letter informed Procacci of the amount of commission Walnut Street earned on the non-union plan. Shortly thereafter, Procacci terminated Walnut Street as its broker of record. On March 10, 2005, BCI stopped payment on a commission check to Walnut Street.

¶ 4 In August 2005, Walnut Street commenced the action underlying this appeal against BCI and Macrone. The complaint contained four counts. The first three sought recovery from BCI for unpaid commissions, while the fourth alleged tortious interference with contractual relations. In November 2006, after BCI paid the disputed commissions, plus interest, the trial court granted summary judgment on Counts I, II and III. Summary judgment on Count IV was denied. The parties proceeded to a jury trial on the tortious interference claim. At the close of evidence, Walnut Street entered a voluntary non-suit with respect to Macrone. On June 29, 2007, the jury entered a verdict in favor of Walnut Street and awarded it $330,000 in compensatory damages. BCI filed post-trial motions for judgment notwithstanding the verdict ("JNOV") or in the alternative, a new trial. The trial court denied both motions, and entered judgment in favor of Walnut Street and against BCI.

¶ 5 On appeal, BCI raises the following two issues and sub-issues:

I. Whether the trial court should have directed a judgment in [BCI's] favor because:

A. the statements in BCI's letter to Procacci causing [Walnut Street's] termination were true, and therefore could not serve as the basis for a tortious interference claim under Pennsylvania law, or, in the alternative, under the law of New Jersey, which has the most significant relationship to this issue;*fn1

B. the imposition of tortious interference liability for the making of truthful statements is unconstitutional under the First Amendment and the Pennsylvania Constitution, where no countervailing state interests have been identified;

C. BCI's conduct was privileged either under the competition privilege or under the business interest privilege; or

D. [Walnut Street] provided no evidence of lost profits but only of lost revenues, and the revenue evidence itself was so insufficient as to render the damages claim purely speculative, with the result that [Walnut Street] failed to prove an essential element of his claim?

II. Whether the trial court should have granted BCI's motion for a new trial because of prejudicial error with respect to one or more ...


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