concurring. The primary issue on appeal is the breadth of the term “business expectancy” for purposes of the tort of interference with a business expectancy. We first adopted the tort of interference with a business expectancy in the pivotal 1969 case of Mason v. Funderburk, 247 Ark. 521, 446 S.W.2d 543 (1969). In introducing this tort into our case law, we suggested that a broad definition of business expectancy, one that would not require a contract, would be used by this court. We stated, “An existing contract may be a basis for greater protection, but some protection is appropriate against unjustifiable interference with reasonable expectancies of commercial relations even where an existing contract is lacking.” Id. at 527, 446 S.W.2d at 547 (emphasis added) (quoting Downey v. United Weatherproofing, Inc., 363 Mo. 852, 253 S.W.2d 976 (1953)). The above quoted language reflects that a formal contract would not always be necessary for this tort.
In addition to looking at other jurisdictions for guidance on this new issue, we also looked to the first Restatement of Torts § 766 (1939) that states the basic elements for a prima facie case of the tort begin with “(1) the existence of a valid contractual relationship or business expectancy . .. .” Restatement of Torts § 766B (1939) (emphasis added.) Clearly, under the first Restatement, the tort could be based on either a contractual relationship, or a business expectancy. Unlike the first Restatement, the American Law Institute’s 1979 version of the Restatement describes the tort differently. See Restatement (Second) of Torts § 766B (1979). Instead of stating that a “contractual relationship or business expectancy” is necessary for a prima facie case, the Restatement (Second) of Torts states a “prospective contractual relation” is the necessary relationship for a tortious-interference claim. Id. While the new language might appear to effectively eliminate the tort for those parties without a contract, the language from the first Restatement can be found in the commentary to the 1979 version of the Restatement. See Restatement (Second) of Torts § 766B, cmt. c. (1979). Comment c describes the “type of relation” that must be established for this tort, stating, “The relations protected . . . include [] . . . interference with a continuing business or other customary relationship not amounting to a formal contract.” Id. (emphasis added.) Thus, even though we relied on the first Restatement in deciding the Mason case, comment c to the Restatement (Second) of Torts § 766B still supports a broad non-contractual relationship requirement in tortious-interference claims. For this reason, the controlling authority in Arkansas continues to be the Mason court’s broad reading of what constitutes a business expectancy. See Vowell v. Fairfield Bay Community Club, Inc., 346 Ark. 270, 58 S.W.3d 324 (2001); Cross v. Ark. Livestock and Poultry Comm’n, 328 Ark. 255, 943 S.W.2d 230 (1997); Mid-South Beverages, Inc. v. Forrest City Grocery Co., Inc., 300 Ark. 204, 778 S.W.2d 218 (1989); Kinco, Inc. v. Schueck Steel, Inc., 283 Ark. 72, 671 S.W.2d 178 (1984).
More recently, other jurisdictions have adopted differing approaches on how to define a business expectancy. Some jurisdictions take a narrow, “contract required” approach while others take a broader, “contract not required” approach. For example, the Seventh Circuit Court of Appeals in Shank v. Hague, Inc., 192 F.3d 675 (7th Cir. 1999), concluded that Wisconsin had adopted a narrow view of business expectancy, such that a plaintiff must show at least a “bargained for right” or at a bare minimum a “sufficiently certain, concrete and prospective relationship,” with a third party in order to bring a tortious-interference claim. Id. at 689. The federal appellate court noted that no Wisconsin court had extended the scope of the tort to cover “continuing economic relations” and “expectation rights in continuing . . . business relations.” Id. Consequently, the court held that the non-contractual relationship between a sales representative and members of a distribution network was not a sufficiently certain relationship to support a claim for tortious-interference with actual or prospective contracts against a product manufacturer under Wisconsin law.
Some jurisdictions take a broader view of what constitutes a business expectancy. For example, in Newton Ins. Agency, & Brokerage, Inc. v. Caledonian Ins. Group, Inc., 114 Wash. App. 151, 52 P.3d 30 (2002), the Washington Court of Appeals defined business expectancy as including “any prospective contractual or business relationship that would be of pecuniary value.” Id. (quoting Restatement (Second) of Torts § 766B, cmt. c). In this broad view of business expectancy, the Washington court held that an insurance agency had a valid business expectancy in all of its customers when its competitor improperly obtained customers through the agency’s former employee.
Additionally, the tort of interference with a business expectancy requires that a business expectancy exist and that the alleged interfering conduct be improper. Many courts approach the business-expectancy element and the improper-conduct element on a continuum, with the strength of one element being inversely related to the necessary strength of the other. A contractual business relationship, for example, would not require a high level of interference to establish tortious conduct, whereas a non-contractual business relationship would require more egregious interference. The type of market involved in each case will also be determinative of the strength of the business relationship required. For example, in Belden Co. v. InterNorth, Inc., 90 Ill. App. 3d 547, 413 N.E.2d 98 (1980), the court held that the possible merger between two companies was only a mere business expectancy because no contractual relationship existed between them. In the absence of a contractual relationship, interference by a third company would have to reach the level of unfair competition because “[wjhen a business relationship affords the parties no enforceable expectations, but only the hope of continued benefits, the parties must allow for the rights of others.” Id. at 552, 413 N.E.2d at 102. The court noted that “as the degree of enforceability of a business relationship decreases, the extent of permissible interference by an outsider increases,” suggesting that a non-contractual business relationship is still a valid business expectancy for purposes of the tort, but a more extensive interference is required when there is no contract in the relationship. Id.
Similarly, in Trepel v. Pontiac Osteopathic Hospital, 135 Mich. App. 361, 354 N.W.2d 341 (1984), the court held that the “social desirability of encouraging competition will justify some actions in an advantageous business relationship case which would be tortious if a contract existed,” indicating that a non-contractual relationship requires a higher level of improper interference to reach the level of tortious conduct. Id. at 375, 354 N.W.2d at 347. In Trepel, Trepel, a radiologist, contracted with a hospital and when the contract had expired, a competing radiologist was given the new contract. The court held that the competing radiologist’s behavior did not meet the requisite level of improper conduct to withstand a summary-judgment motion because Trepel had not shown the high level of improper interference required: illegal, unethical, or fraudulent conduct. Id. Because the relationship between Trepel and the hospital was not as strong, a higher level of improper conduct was required.
We have recognized this continuum in Arkansas. In Mason, this court stated, “The unjustifiable character of the alleged wrongdoer’s conduct and the harm caused thereby may be equally clear in both instances, but the differentiation between them relates to the scope of the privileges, or the kind and amount of interference that is justifiable in view of the differences in the facts.” Mason, 247 Ark. at 527, 446 S.W.2d at 547. According to the above quoted language, it is clear that we do not look at the existence of the business expectancy and the existence of improper conduct as separate elements; instead, we look at these two elements together. We look at the business-expectancy element and the improper-conduct element on a continuum, with the strength of one element being inversely related to the necessary strength of the other. Consequently, we do not analyze either of these elements independently. Additionally, the type of market must be considered. The nature of the profession and standards of the profession will also determine the type of relationship involved in each case.
In the instant case, the alleged business expectancy was based on long-term business relationships and not on a formal contract, although much evidence was presented at trial regarding the strength of this long-term relationship. Billy Roehrenbeck, a licensed title insurance agent and employee with American Abstract, testified that the relationships in the abstract and title business are “long, long, long term relationships.” Jim Pender, owner of First National Title Company, opined that “a title company is a relationship business” and it “takes a long time to build those relationships.” Mike MacKinder, a real estate broker at Rainey Realty, acknowledged that he knew Rainey Realty had a relationship with American Abstract “possibly up to thirty years.” Barbara Swesey, a real estate broker with Adkins, McNeill, Smith, and Associates, testified that this was a “very ongoing business relationship” and that she had worked with American Abstract for twenty-five years. Bob Adkins, chief executive officer of American Abstract, testified that he lost the business with people that he had worked with “for years and years.” Pie had enjoyed sixty to eighty percent of the business from Rainey Realty for twenty-five years. Finally, Dr. Charles Venus, the economic expert in the case, testified:
It’s a personal market, the people stay in place for a long time, the agents get to know the employees of the companies, companies build their reputation for good service, if they succeed and get a decent market share, then they’re providing good service, and you use the same companies over and over because of that good service.
There was ample evidence presented at trial to prove the existence of a long-term relationship between American Abstract and the real estate companies. There was also ample evidence presented to prove that the type of relationship between American Abstract and the real estate companies was the type of business relationship found in this market. In the abstract and title business, relationships are one of the most important aspects of the business. Therefore, the question of the existence of a business expectancy was properly submitted to the jury.
The strength of the business relationship, however, must be weighed against the strength of the alleged improper conduct. The improper-conduct element of this tort has been defined by the Supreme Court of Tennessee in Trau-Med of America, Inc. v. AllState Ins. Co., 71 S.W.3d 691 (Tenn. 2002). After acknowledging that the determination of whether there has been improper conduct would depend on the particular facts and circumstances of each case, the Tennessee court cited several examples of improper interference:
(1) those means that are illegal or independently tortious, such as violations of statutes, regulations, or recognized common law rules, (2) violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation or deceit, defamation, duress, undue influence, misuse of inside or confidential information, or breach of a fiduciary relationship, and (3) methods that violate an established standard of a trade or profession, or otherwise involve unethical conduct, such as sharp dealing, overreaching, or unfair competition.
Id. at 701. Interference for an improper purpose has also been defined by the Washington Court of Appeals as interference that is “wrongful by some measure beyond the interference itself, such as a statute, regulation, recognized rule of common law, or an established standard of trade or profession.” Newton Ins. Agency & Brokerage, Inc. v. Caledonian Ins. Group, Inc., 114 Wash. App. at 158, 52 P.3d at 34. Of course, mere interference for the purpose of competition is not enough to warrant a finding of improper conduct. Trepel v. Pontiac Osteopathic Hospital, supra.
The improper conduct alleged in this case involved Guaranty’s actions in creating the TitleMax programs, marketing agreements, and closing coordinators. From the trial testimony summarized in the majority’s opinion, the conduct in the instant case clearly meets the first category of improper conduct under the analysis adopted in Trau-Med of America, Inc. v. AllState Ins. Co., supra, and the definition of improper interference under Newton Ins. Agency & Brokerage, Inc. v. Caledonian Ins. Group, Inc., supra. Ample evidence was presented to show Guaranty’s actions were illegal due to violations of statutes or regulations. Testimony was presented that the TitleMax programs violated federal law under the Real Estate Settlement Procedures Act, codified at 12 U.S.C. § 2617(a) (1994), and that the referral kickbacks and paid referrals under the marketing agreements violated federal regulations promulgated by the Department of Housing and Urban Development. Thus, there was substantial evidence for the question of improper conduct to be submitted to the jury.
In viewing the instant case on the continuum, the business expectancy between American Abstract and the real estate companies was based on long-term business relationships and not on a formal contractual relationship. Therefore, the level of improper conduct must be higher than if the relationship had been based on a formal contract. The evidence presented at trial showed that the abstract and title business involves long-term relationships. It is the nature of the market. Improper interference with these long-term relationships may not be improper interference in another type of market. Because the relationship was not based on a formal contract, the alleged improper conduct must go beyond mere interference for the purpose of competition. When balancing the strength of the business relationship, the nature of the abstract and title market, and the level of improper conduct presented at trial, there was sufficient evidence for the questions of the existence of a business expectancy and the existence of improper conduct to be submitted to the jury and sufficient evidence for the jury to find that both of these elements existed.
For the above-stated reasons, I concur.