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Walnut Street Associates, Inc. v. Brokerage Concepts, Inc.

20 A.3d 468 (Pa. 2011)

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Walnut Street Associates, Inc. v. Brokerage Concepts, Inc.

Pennsylvania Supreme Court

20 A.3d 468 (Pa. 2011)

Facts

Walnut Street Associates, Inc. (Walnut Street) (plaintiff) was an insurance broker. Procacci Brothers Sales Corporation (Procacci) used Walnut Street as a broker for obtaining health insurance for Procacci’s employees. Walnut Street recommended that Procacci hire Brokerage Concepts, Inc. (BCI) (defendant) to administer Procacci’s employee benefit plans. Procacci hired BCI, and BCI paid commissions to Walnut Street out of the premiums that BCI received from Procacci. After several years, Procacci told BCI that BCI must lower the premiums it charged. BCI did not lower its premiums, and Procacci terminated its contract with BCI. BCI wrote a letter to Procacci, asking Procacci to reconsider its decision to use a different plan administrator. In that letter, BCI disclosed the amount that Walnut Street received in commissions from Procacci’s premiums. This amount was higher than Procacci had thought. Relying on this undisputedly true information, Procacci ended its contract with Walnut Street. Walnut Street sued BCI for tortious interference with contractual relations. BCI argued that it could not be held liable for tortious interference because the information that it gave Procacci was true. At trial, BCI requested that the jury be instructed that truthful statements could not form the basis of a claim for tortious interference. The court denied this request. The jury found in favor of Walnut Street, awarding it $330,000 in damages. BCI appealed. The appeals court reversed, and ordered that judgment notwithstanding the verdict be entered in favor of BCI. The court reasoned that under the Restatement (Second) of Torts § 772(a), a person does not interfere improperly with a contractual relationship by giving truthful information to a party to the contract. The supreme court granted allocator in part regarding the issue of whether truthful statements could form the basis of a claim for tortious interference with contractual relations.

Rule of Law

Issue

Holding and Reasoning (Castille, C.J.)

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