In this en banc opinion, the Delaware Supreme Court affirmed the Delaware Superior Court’s grant of summary judgment in favor of appellees with respect to tortious interference claims arising out of a terminated acquisition agreement.
The appeal arose out of an action commenced by WaveDivision Holdings, LLC (“Wave”) following the termination by Millennium Digital Media Services, LLC (“Millennium”) of certain purchase agreements and subsequent refinancing with Millennium’s note holders and senior lenders. In 2006, Millennium and Wave entered into an asset purchase agreement and unit purchase agreement (collectively, the “Purchase Agreements”), pursuant to which, among other things, Wave agreed to purchase certain assets from Millennium for an aggregate purchase price of $157 million. The consummation of the transactions contemplated by the Purchase Agreements was conditioned on the consent of Millennium’s note holders and senior lenders under Millennium’s credit facility, unless the parties to the Purchase Agreements reasonably believed that such consents were not necessary. The Purchase Agreements prohibited Millennium from engaging in discussions that would reasonably be expected to lead to certain alternative transactions. Millennium’s note holders engaged a consulting firm to prepare a recommendation with respect to whether the note holders should consent to the Purchase Agreements and to advise on potential alternatives. The consulting firm, Barrier Advisors (“Barrier”) concluded that the note holders would not recover their investment if the transactions contemplated by the Purchase Agreements were consummated. Simultaneously with the retention of Barrier, an affiliate of one note holder submitted a refinancing proposal to Millennium. Shortly thereafter, certain senior lenders, purporting to represent the interests of the lenders holding in excess of 50% of the outstanding aggregate loans, advised Millennium that they would not consent to the consummation of the Purchase Agreements. Millennium subsequently terminated the Purchase Agreements and accepted the refinancing proposal submitted by its note holders, which refinancing resulted in certain note holders and senior lenders acquiring significant equity in Millennium. Wave brought suit against the appellee note holders and senior lenders seeking damages for tortious interference. The Superior Court granted summary judgment in favor of appellees on the grounds that their actions were justified because they were protecting their investments in Millennium.
In the instant appeal, Wave alleged that the Superior Court erred in finding that any interference was justified in part because the Superior Court allegedly ignored evidence of improper conduct raising triable issues of fact. The Supreme Court began its de novo review by summarizing the elements of a tortious interference claim and the factors that Delaware courts may consider in determining if one of the elements, intentional interference with a third party’s contract is improper or without justification, has been satisfied. With respect to this element, Wave argued that courts must evaluate any improper motive, together with any proper motive, to determine which motive predominates. The Supreme Court rejected this argument, finding that the defense of justification does not require that a defendant’s proper motive be its sole or predominant motive in interfering with a contract. Rather, “only if the defendant’s sole motive was to interfere with the contract will this factor support a finding of improper interference.” Id. at *11. Because the Superior Court concluded that the appellees were motivated, at least in part, by a desire to protect their investment in Millennium, the Superior Court properly concluded that the motive factor weighed in favor of justification. Moreover, the Supreme Court could find no error in the Superior Court’s finding that four of the seven factors established in the Restatement (Second) of Torts § 767 weighed against a finding of improper interference. In addition to the foregoing, the Supreme Court rejected Wave’s arguments that the Superior Court improperly resolved certain factual disputes and ignored evidence supporting Wave’s factual contention, finding that the record supported the conclusions of the Superior Court.
The full opinion is available here.