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Gruhlke v. Sioux Empire Fed. Credit Union, Inc. - 2008 S.D. 89, 756 N.W.2d 399

Rule:

In general, the tort of intentional interference with contractual relations serves as a remedy for contracting parties against interference from outside intermeddlers. To prevail on a claim of tortious interference, there must be a "triangle," a plaintiff, an identifiable third party who wished to deal with the plaintiff, and the defendant who interfered with the contractual relations. South Dakota has long recognized this tort.

Facts:

As part of her wrongful termination and breach of contract suit against her employer CU Mortgage, the employee, Becky Gruhlke also sued David Bednar, the chief operating officer at CU Mortgage. Gruhlke asserted that Bednar, to advance his own interests, tortiously interfered with her contractual relationship by advocating for the nonrenewal of her employment contract. Bednar moved to dismiss under SDCL 15-6-12(b)(5), arguing that South Dakota did not recognize a cause of action against a company officer for tortious interference with a business relationship or expectancy. The circuit court granted Bednar's motion to dismiss, concluding that South Dakota did not recognize the cause of action, regardless of whether the officer acted outside the scope of employment. Gruhlke appealed.

Issue:

  1. Under the laws of South Dakota, can an action for intentional interference with contractual relations against a corporate officer be maintained?
  2. Could the employers's COO be held liable for tortious interference?

Answer:

1) Yes. 2) No.

Conclusion:

On appeal, the Court concluded that in the employment context, under limited circumstances, an action for intentional interference with contractual relations against a corporate officer could be maintained in South Dakota. Gruhlke however, failed to plead a cause of action sufficient to meet the requirements for bringing the claim. Nowhere in her complaint did CU Mortgage allege that Bednar acted as a third party or that he acted beyond the scope of his employment. Bednar did not allege that the officer acted "solely" for his personal benefit when he advocated for her dismissal. Accordingly, the complaint failed to state a claim upon which relief could be granted.

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