Windsor Securities, Inc. v. Hartford Life Insurance Co.
United States Court of Appeals for the Third Circuit
986 F.2d 655 (1993)
Hartford Life Insurance Co. (Hartford) (defendant) sold variable-annuity contracts and permitted contract owners to place premiums and earnings in different subaccounts invested in Hartford-sponsored mutual funds. Paul Prusky, the president of Windsor Securities, Inc. (Windsor) (plaintiffs) solicited Windsor clients to buy Hartford contracts, managed the contracts under investment-management agreements, and effected transfers among subaccounts to implement a market-timing investment strategy. Hartford sold nearly 19,000 contracts. Windsor managed contracts for 45 clients. Hartford saw that market-timing activity was adversely affecting its mutual funds’ performance. To protect all contract owners’ investments, Hartford started requiring third parties like Windsor to sign an agreement limiting daily transfers to $5 million and to obtain a power of attorney from each contract owner. Prusky refused to execute the agreement. Windsor and Prusky sued Hartford, alleging that Hartford’s restrictions tortiously interfered with Windsor’s management contracts. The district court granted Windsor summary judgment on its tortious-interference claim. The court held that Pennsylvania would apply Restatement (Second) of Torts § 766A, which makes a defendant liable for intentional interference with a plaintiff’s performance of its own contract by preventing performance or making performance more expensive or burdensome. The court found that Hartford’s restrictions intentionally and improperly made Windsor’s performance of services for its clients more expensive or burdensome. Hartford appealed.
Rule of Law
Holding and Reasoning (Scirica, J.)
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