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Smart Summary

Factual and Procedural Background

Ferguson Transportation, Inc. (formerly Murray Van Storage, Inc.), a Florida moving and storage company, entered an exclusive agency contract with North American Van Lines, Inc. appointing Ferguson as North American's exclusive agent in Broward County and in Boca Raton. Ferguson renewed its Broward County contract for ten years in 1983. In 1986 North American entered an agency contract with Advance Relocation Storage of Florida, Inc., appointing Advance Relocation as a nonexclusive agent in West Palm Beach. Ferguson objected, alleging Advance Relocation intruded into Ferguson's Broward County territory. These intrusions continued until Ferguson went out of business in 1989.

Ferguson sued North American, Advance Relocation, and several employees of Advance Relocation, asserting: (1) breach of an exclusive agency agreement; and (2) tortious interference with Ferguson's advantageous business relationships with its Broward County customers. At the close of Ferguson's case, North American moved for a directed verdict, arguing the damages Ferguson sought for the tort and contract claims were identical and that Ferguson had not established that the tort claim was independent of the contract breach. The trial court denied the motion. A jury returned verdicts for Ferguson on both counts, awarding $1,300,000 in compensatory damages for each count (one award later struck as duplicative) and assessing $13,000,000 in punitive damages against North American.

On appeal, the Fourth District Court of Appeal held that the trial court should have granted North American's motion for directed verdict because Ferguson did not present competent, substantial evidence of interference with an ongoing business relationship, finding that a relationship with the public at large was insufficient and that Ferguson needed to plead and prove a business relationship with an identifiable person. The district court reversed the punitive damages award and certified to the Supreme Court of Florida the following question of great public importance:

WHETHER UNDER FLORIDA LAW, A PLAINTIFF WHO HAS AN EXCLUSIVE CONTRACT WITHIN A GEOGRAPHICAL TERRITORY, IS AFFORDED A BUSINESS RELATIONSHIP WITH ALL PROSPECTIVE CUSTOMERS WITHIN THAT TERRITORY, WHICH IS PROTECTIBLE AGAINST TORTIOUS INTERFERENCE, OR MUST THE PLAINTIFF PROVE A BUSINESS RELATIONSHIP WITH IDENTIFIABLE CUSTOMERS?

The Supreme Court of Florida accepted jurisdiction and, consistent with its decision in Ethan Allen, answered that a plaintiff must prove a business relationship with identifiable customers to establish the tort of tortious interference with a business relationship, and approved the district court's decision.

Legal Issues Presented

  1. Whether an exclusive contract within a geographical territory affords a plaintiff a protectible business relationship with all prospective customers in that territory, or whether the plaintiff must prove a business relationship with identifiable customers to state a claim for tortious interference with a business relationship.

Arguments of the Parties

Ferguson's Position

  • Ferguson alleged two claims at trial: breach of an exclusive agency agreement and tortious interference with Ferguson's advantageous business relationships with its Broward County customers.
  • Ferguson presented evidence at trial that North American's appointment of Advance Relocation led to intrusions into Ferguson's territory and that these intrusions continued until Ferguson went out of business.

North American's Position

  • At the close of Ferguson's case North American moved for a directed verdict, arguing the damages sought for the tort and contract claims were identical and therefore Ferguson had not established that its claim for tortious interference amounted to an independent tort.
  • On appeal North American contended (as reflected in the district court's analysis) that Ferguson failed to present competent, substantial evidence of interference with any ongoing business relationship because Ferguson's dealings with the public at large were not the type of business relationship required to plead tortious interference.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
North American Van Lines, Inc. v. Ferguson Transportation, Inc., 639 So.2d 32 (Fla. 4th DCA 1994) The district court found that Ferguson did not prove tortious interference because it failed to establish an ongoing business relationship with identifiable customers. The Supreme Court approved the district court's conclusion that Ferguson's relationship with the public at large was insufficient to sustain a tortious-interference claim and affirmed the reversal of punitive damages.
Ethan Allen, Inc. v. Georgetown Manor, Inc., 647 So.2d 812 (Fla. 1994) As quoted: "As a general rule, an action for tortious interference with a business relationship requires a business relationship evidenced by an actual and identifiable understanding or agreement which in all probability would have been completed if the defendant had not interfered." The Court relied on Ethan Allen as controlling authority for the requirement that plaintiffs prove an identifiable business relationship to establish tortious interference and answered the certified question consistent with it.
Griffith v. Shamrock Village, Inc., 94 So.2d 854 (Fla. 1957) Establishes that punitive damages are not recoverable for breach of contract unless the conduct also constitutes an independent tort involving intentional wrong, insult, abuse, or gross negligence. The Court reiterated Griffith's rule to explain that punitive damages required proof of a tort independent from the contract breach and concluded that, because Ferguson failed to prove the requisite tort, punitive damages were not recoverable.
Southern Bell Tel. and Tel. Co. v. Hanft, 436 So.2d 40 (Fla. 1983) Cited as one of the cases reaffirming the Griffith rule that punitive damages require an independent tort beyond breach of contract. The Court cited Southern Bell as part of a line of cases reaffirming the rule from Griffith when explaining why punitive damages were improper without proof of an independent tort.
Lewis v. Guthartz, 428 So.2d 222 (Fla. 1982) Cited as reaffirming the principle that punitive damages are not recoverable for breach of contract absent an independent tort. Included among the authorities the Court relied on to support the requirement of an independent tort for punitive damages.
Grossman Holdings Ltd. v. Hourihan, 414 So.2d 1037 (Fla. 1982) Cited as reaffirming the Griffith rule regarding punitive damages and independent torts. Used by the Court to demonstrate consistency in Florida law that punitive damages require an independent tort.
Nicholas v. Miami Burglar Alarm Co., 339 So.2d 175 (Fla. 1976) Cited as reaffirming the rule that punitive damages are not recoverable for breach of contract absent an independent tort. The Court referenced Nicholas as part of the repeated reaffirmation of Griffith's principle.
Masciarelli v. Maco Supply Corp., 224 So.2d 329 (Fla. 1969) Cited as another case reaffirming that punitive damages require an independent tort beyond a contract breach. Included in the Court's citation list to show longstanding adherence to the Griffith rule.

Court's Reasoning and Analysis

The Court framed the central question as whether an exclusive territorial contract gives rise to a protectible business relationship with all prospective customers within that territory or whether the plaintiff must instead prove a business relationship with identifiable customers. The Court relied on its prior decision in Ethan Allen, which it quoted: tortious interference with a business relationship requires "a business relationship evidenced by an actual and identifiable understanding or agreement which in all probability would have been completed if the defendant had not interfered." Applying that rule, the Court agreed with the Fourth District that Ferguson's asserted relationship with the public at large did not meet the requirement of an identifiable business relationship or understanding with specific customers.

The Court further analyzed the punitive damages issue under longstanding Florida precedent beginning with Griffith v. Shamrock Village, Inc., which holds that punitive damages are not recoverable for mere breach of contract; punitive damages are recoverable only where the acts constituting the breach also constitute an independent tort involving intentional wrong, abuse, insult, or gross negligence. The Court cited several cases that reaffirmed this principle and concluded that, because Ferguson did not prove the requisite independent tort (i.e., it failed to prove interference with an identifiable business relationship), there was no basis for punitive damages.

Holding and Implications

Holding: The Supreme Court of Florida answered the certified question by holding that, to establish the tort of tortious interference with a business relationship, a plaintiff must prove a business relationship with identifiable customers. The Court approved the Fourth District's decision that Ferguson failed to prove such a relationship and affirmed the reversal of the punitive damages award.

Implications:

  • Direct effect on the parties: Ferguson's tortious-interference claim was held to be unsupported because Ferguson did not prove relationships with identifiable customers; accordingly, punitive damages lacked a proper basis and were reversed.
  • The Court's decision was expressly consistent with its prior ruling in Ethan Allen and with the established rule from Griffith and subsequent cases that punitive damages require an independent tort beyond breach of contract. The opinion does not announce a novel departure from those precedents but applies and reaffirms them.

FERGUSON TRANSPORTATION, INC., ETC., PETITIONER, v. NORTH AMERICAN VAN LINES, INC., A FOREIGN CORPORATION, RESPONDENT. NORTH AMERICAN VAN LINES, INC., A FOREIGN CORPORATION, PETITIONER,

PER CURIAM.

We have for review North American Van Lines, Inc. v. Ferguson Transportation, Inc., 639 So.2d 32 (Fla. 4th DCA 1994), in which the district court, in a separate order, certified the following question to be of great public importance:

WHETHER UNDER FLORIDA LAW, A PLAINTIFF WHO HAS AN EXCLUSIVE CONTRACT WITHIN A GEOGRAPHICAL TERRITORY, IS AFFORDED A BUSINESS RELATIONSHIP WITH ALL PROSPECTIVE CUSTOMERS WITHIN THAT TERRITORY, WHICH IS PROTECTIBLE AGAINST TORTIOUS INTERFERENCE, OR MUST THE PLAINTIFF PROVE A BUSINESS RELATIONSHIP WITH IDENTIFIABLE CUSTOMERS?

We have jurisdiction. Art. V, § 3(b)(4), Fla. Const. Consistent with our decision in Ethan Allen, Inc. v. Georgetown Manor, Inc., 647 So.2d 812, 815 (Fla. 1994), we answer that in order to establish the tort of tortious interference with a business relationship, the plaintiff must prove a business relationship with identifiable customers.

We note that the district court certified the question to us before our decision in Ethan Allen was issued.

In this case, Ferguson Transportation, Inc. (Ferguson), a Florida moving and storage company, entered an exclusive agency contract with North American Van Lines, Inc. (North American), an interstate carrier of household goods. The contract appointed Ferguson as North American's exclusive agent in Broward County and in Boca Raton. In 1983, Ferguson renewed its Broward County contract for ten years.

At the time the two parties entered the contract, Ferguson went by the name Murray Van Storage, Inc. To avoid unnecessary confusion, we refer to the petitioner as Ferguson throughout the opinion.

In 1986, North American entered an agency contract with Advance Relocation Storage of Florida, Inc. (Advance Relocation). In the contract, North American appointed Advance Relocation as its nonexclusive agent in West Palm Beach. Ferguson objected to the agreement because it feared that Advance Relocation would intrude into its territory in Broward County. Ferguson's predictions were correct. Advance Relocation's intrusions continued until 1989, when Ferguson finally went out of business.

Advance Relocation also goes by the name Wilkinson Moving and Storage Company.

Ferguson sued North American and Advance Relocation as well as a number of persons in Advanced Relocations's employ, alleging: (1) breach of an exclusive agency agreement; and (2) tortious interference with Ferguson's advantageous business relationships with its Broward County customers. At the close of Ferguson's case, North American moved for a directed verdict. North American alleged that the damages Ferguson sought for the tort and contract claims were identical and, consequently, that Ferguson had not established that its claim for tortious interference amounted to an independent tort. The trial judge denied the motion.

North American is the only defendant involved in this appeal.

The case went to trial, and the jury returned a verdict in Ferguson's favor on both counts. For each count the jury awarded $1,300,000 in compensatory damages. By stipulation entered prior to trial, the parties agreed to strike one of the awards as duplicative. North American and the other defendants were held jointly and severally liable for the award of compensatory damages, but the jury awarded punitive damages against each defendant individually. The jury assessed North American $13,000,000 in punitive damages.

On appeal, the district court found that the trial judge should have granted North American's motion for directed verdict because Ferguson did not present competent, substantial evidence that appellant interfered with any ongoing business relationship. North American, 639 So.2d at 34. Specifically, the court found that Ferguson's relationship with the public at large was not the type of business relationship required to allege tortious interference with a business relationship. Id. at 33-34. The court determined that the trial judge should have required Ferguson to allege and prove a business relationship with an identifiable person. Id. Because the court found that Ferguson did not prove tortious interference with a business relationship, it reversed the punitive damages award. Id. at 34. We agree with the court's decision.

The district court's decision is consistent with the rule we approved in Ethan Allen, 647 So.2d at 815:

As a general rule, an action for tortious interference with a business relationship requires a business relationship evidenced by an actual and identifiable understanding or agreement which in all probability would have been completed if the defendant had not interfered.

Without proof of this tort there was no basis for punitive damages.

Only if a party to a contract proves a tort independent from the acts that breach the contract is the party entitled to recover punitive damages. As we stated in Griffith v. Shamrock Village, Inc., 94 So.2d 854 (Fla. 1957):

The general rule is that punitive damages are not recoverable for breach of contract, irrespective of the motive of defendant. But where the acts constituting a breach of contract also amount to a cause of action in tort there may be a recovery of exemplary damages upon proper allegations and proof. In order to permit a recovery, however, the breach must be attended by some intentional wrong, insult, abuse or gross negligence which amounts to an independent tort.
Id. at 858. Since our decision in Griffith, we have repeatedly reaffirmed this rule. See Southern Bell Tel. and Tel. Co. v. Hanft, 436 So.2d 40 (Fla. 1983); Lewis v. Guthartz, 428 So.2d 222 (Fla. 1982); Grossman Holdings Ltd. v. Hourihan, 414 So.2d 1037, 1040 (Fla. 1982); Nicholas v. Miami Burglar Alarm Co., 339 So.2d 175 at 177-78 (Fla. 1976); Masciarelli v. Maco Supply Corp., 224 So.2d 329, 330 (Fla. 1969). We do so again here. Accordingly, we approve the district court's decision.

It is so ordered.

KOGAN, C.J., and OVERTON, SHAW, GRIMES, HARDING, WELLS and ANSTEAD, JJ., concur.

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FERGUSON TRANS. v. NORTH AMERICAN VAN LINES
(Feb 3, 1997)