The Colorado Court of Appeals issued its decision in Slater Numismatics, LLC v. Driving Force, LLC on June 21, 2012.
Summary Judgment—Intentional Interference With Contractual Relations—Unjust Enrichment.
The rulings in this case involved plaintiff’s claims for intentional interference with contractual relations and unjust enrichment. The trial court granted summary judgment on the claims and awarded defendants costs. The judgment was reversed and the case was remanded the case for further proceedings.
Plaintiff was in the business of purchase and sale of rare and modern coins. It had an ongoing relationship with Black Diamond Holding Company, doing business as Independent Coin Grading Company (ICG). After buying coins, plaintiff sent them to ICG to be graded and packaged for sale. ICG forwarded the coins to plaintiff’s customer, Cable Shopping Network (Cable), which purchased the coins from plaintiff and then sold them through television infomercials and call centers.
Ultimately, plaintiff and ICG entered into a referral agreement under which plaintiff would refer to ICG all of the coin grading and valuing work for Cable. In exchange, ICG would pay plaintiff each month a referral fee equal to 25% of the net grading fees derived from sales of grading services to Cable.
James Taylor was a founding member of ICG and worked for them from 1998 to 2005. He then left to work as CEO for Driving Force, LLC, doing business as ANACS (ANACS), a different coin-grading company. He then returned to ICG as CEO in 2007.
Brett Williams was ICG’s chief financial officer (CFO) for nine years. While he and Taylor were employed by ICG, they signed employment agreements that prohibited the disclosure of confidential information obtained during the course of their employment at ICG. Both knew of the referral agreement. Taylor knew how critical Cable was to ICG and referred to it as ICG’s “golden goose.”
When Taylor left ICG, he hired Williams to be the CFO of ANACS. ANACS then hired all but two of ICG’s employees, rendering ICG unable to compete in the coin-grading business. ANACS’s offices also were moved from Texas to Colorado, two miles from ICG’s offices. Taylor and Williams approached Cable and, with their knowledge of the referral agreement, were able to get Cable to transfer its modern coin-grading business from ICG to ANACS.
In its summary judgment order, the trial court stated: “the Court assumes that a reasonable jury could find that Mr. Taylor and Mr. Williams intentionally set out to take away ICG’s business with [Cable] by hiring away ICG’s employees and selling coins to [Cable] for less by avoiding the 25% Referral Fee, all in violation of their contractual and fiduciary duties to ICG.” The Court of Appeals agreed that this assumption was supported by the evidence when viewed in the light most favorable to plaintiff but disagreed with the conclusion that, notwithstanding that evidence, ANACS was entitled to summary judgment.
Given the evidence presented, the Court found that a reasonable jury could conclude that ANACS purposefully depleted the ranks of ICG, significantly impairing its ability to fulfill Cable’s coin grading needs. Given that, combined with ANACS’s use of plaintiff’s confidential information to make a play for Cable’s business while undercutting ICG’s pricing, the Court determined that a reasonable jury could conclude that ANACS caused ICG “not to perform” its contract with plaintiff; thus a triable claim for intentional interference with contractual relations existed.
The Court also agreed with plaintiff’s contention that it was error to grant summary judgment for ANACS on plaintiff’s claim for unjust enrichment. On such a claim, a plaintiff must show that (1) the defendant received a benefit (2) at the plaintiff’s expense (3) under circumstances that would make it unjust for the defendant to retain the benefit without commensurate compensation. The Court ruled that simply without the contractual relationship, a reasonable jury could determine that ANACS received a benefit at plaintiff’s expense under circumstances that would make it unjust for ANACS to receive the benefit without compensating plaintiff.
Summary and full case available here.
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