Zemco Mfg., Inc. v. Navistar Int'l Transp. Corp - 186 F.3d 815 (7th Cir. 1999)

Rule:

For there to be a conspiracy to breach a contract, there must be an underlying claim for tortious interference with the contract at issue. Under Indiana law, a plaintiff must prove the following elements for such a claim: (i) existence of a valid and enforceable contract; (ii) defendant's knowledge of the existence of the contract; (iii) defendant's intentional inducement of breach of the contract; (iv) the absence of justification; and (v) damages resulting from defendant's wrongful inducement of the breach.

Facts:

Appellant, Zemco Manufacturing, Incorporated, had a requirements contract with appellee, Navistar International Transportation Corporation, that was renewable on a yearly basis. The shareholders of appellant had a falling out, and one partner split off and formed a new company. The new company began to supply parts to appellee corporation, and appellant was phased out. Appellant brought suit against appellee corporation for breach of contract and conspiracy to interfere with a contract. The lower court dismissed both claims, holding that there was no conspiracy and that the contract renewal violated the statute of frauds. Appellant sought relief on appeal.

Issue:

1. Under the circumstances, was there a showing that the appellee and the appellant’s old business partner conspired to interfere with the contract? 
2. Did the trial court err in dismissing appellant’s breach of contract claim on the ground of violation of statute of frauds? 

Answer:

1) No. 2) Yes.

Conclusion:

The court affirmed summary dismissal of appellant's claim of conspiracy, because appellant failed to allege sufficient facts indicating that his old business partner and appellee engaged in conduct that would constitute a conspiracy. The court reversed summary dismissal of the breach of contract claim, holding that the statute of frauds, Ind. Code § 26-1-2-201, did not bar the yearly contract renewals, as they were done by a series of faxes which constituted a writing. The court accordingly affirmed in part and reversed in part.