ÿWPCô0 …# VUNa %¯ 0(µUHÝb% w@- 4m  0l 0Dü 0D@ 0J„ Î 0TÖ 0^* Bˆ 0h¥ D3 0r@ 0|² 0@. 0†n 0ô 1u„ 0dùU>]U*›aÅa&U6‡B)½DCæ AM)U*v A»éüå¹4»ÎïA½$v~þ'vÓ|) AOO/Æž/ 0Dd0 D/¨0 B×0˜HP LaserJet 4SiHPPCL5MS,ü,,,,,ü0nLHÎ(ÈhH  Z ‹6Times New Roman RegularX($¡¡<à09Z 0Courier (W1) Regular- ù- ­®D¯-°±À²À³À´UµÓ€ÁhRt#3|xÁ((3üÝ$¤¤Ý ƒ!ÝÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó(3¯$©©Ý ƒ!ÝÝ  Ý2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô d26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô 'ÿÿdxd2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô("ÿÿ$££Ò  ÒÒ  Ò2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô)+,./ ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(&Times New Roman< Œ 9p`(Times WÝ ƒ!ÝÑ  ÑÔ€8ÔÝ  ÝÝ ƒ)ÝÝ  ÝÌÌÌ WÝ ƒ!ÝÑ  ÑÔ€8ÔÝ  ÝÝ ƒ)ÝÝ  ÝÌÌÌ< Œ 9p`(Courier New% Line 7 d====7Border 1dd€->Cþÿ << Gÿÿ< Œ 9p`(Arial Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€8ÔÝ  ÝÔ€@ÔÔ€@ÔÓ  ÓÔ YYY ÔFILEDÔ€@XÔÌÌò òNovember€24,€1997ÌÌCecil€Crowson,€Jr.ÌÔ€@ôÔAppellate€Court€Clerkó ó 7Ý ƒ!ÝÑ#€d#ÑÔ€8ÔÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€<ÔÔ€<ôÔA€close€corporation€is€one€in€which:ÌÌà8 àà à(1)€there€are€few€shareholders,€(2)€the€shares€are€notÏtraded€on€the€securities€market€(3)€the€shareholders€live€in€theÏsame€geographical€area,€and€(4)€most€of€the€shareholders€serve€asÏdirectors,€officers€and€employees€of€the€business.ÌÌ€òòJohns€v.€Caldwellóó,€601€S.W.2d€37,€41€(Tenn.€App.€1980).Ìà àà àÌ ßÝ ƒ!ÝÑ#€d#ÑÔ€8ÔÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€<ÔÔ€<ôÔThis€issue€is€subject€to€the€same€analysis€made€below€regarding€theÏcharges€that€the€defendants€ð ðinducedðð€and€ð ðprocuredðð€the€termination€of€theÏplaintiffððs€employment€with€the€corporation.€€The€defendants,€acting€on€behalfÏof€the€corporation,€terminated€the€plaintiffððs€employment.€€There€was€noÏthree„party€relationship,€only€the€two„party€relationship€of€employer€andÏemployee.€€However,€since€the€issue€is€before€the€Court€on€the€motion€toÏdismiss€for€failure€to€state€a€cause€of€action,€it€will€be€considered€in€thatÏcontext.Ì Ý ƒ!ÝÑ#€d#ÑÔ€8ÔÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€8ôÔÔ€<ÔTheÔ€<XÔ€Ô€<ôÔCourt€in€òòQuality€Auto€Parts€v.€Bluff€City€Buickóó€set€out€theÏelements€which€generally€are€found€to€constitute€a€cause€of€action€forÏwrongful€interference€with€a€prospective€economic€advantage:ÌÌà8 àà8 à(1)€the€existence€of€a€business€relationship€orÏexpectancy€(an€existing€contract€is€not€required);€(2)Ïknowledge€by€the€interferer€of€the€relationship€orÏexpectancy;€(3)€an€intentional€act€of€interference;Ï(4)€proof€that€the€interference€caused€the€harmÏsustained;€and€(5)€damage€to€the€plaintiff.ÌÌÌÌòòÓÓIdóó.€at€823.€€Ì ¯Ý ƒ!ÝÑ#€d#ÑÔ€8ÔÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€<ÔÔ€<ôÔA€number€of€other€jurisdictions€have€cited€òòDonahueóó€and€òòWilkesóó€orÏotherwise€held€that€shareholders€in€a€close€corporation€have€a€heightenedÏfiduciary€obligation€to€other€shareholders.€€òòSeeóó€òòW&W€Equipment€Co.€v.€Minkóó,Ï568€N.E.2d€564,€570€(Ind.€Ct.€App.€1991);€òòCrosby€v.€Beamóó,€548€N.E.2d€217,€220Ï(Ohio€1989);€òòDaniels€v.€Thomas,€Dean€&€Hoskins,€Inc.óó,€804€P.2d€359,€366€(Mont.Ï1990);€òòsee€alsoóó€òòLong€v.€Atlantic€PBS,€Inc.óó,€681€A.2d€249,€256€n.€8€(R.I.Ï1996).Ì *Ý ƒ!ÝÑ#€d#ÑÔ€8ÔÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€<ÔÔ€<ôÔThe€òòWilkesóó€fiduciary€standard,€as€it€relates€to€employment€decisions,Ïis€not€universally€accepted.€€A€case€in€opposition€to€the€òòWilkesóó€approach€isÏòòIngle€v.€Glamore€Motor€Sales,€Inc.óó,€535€N.E.2d€1311,€1313„14€(N.Y.€1989);€òòseeóóÏòòalsoóó€òòSt.€Josephððs€Reg.€Health€Ctr.€v.€Munosóó,€934€S.W.2d€192,€198€(Ark.€1996)Ï(following€òòIngleóó).€Ì ÄÝ ƒ!ÝÑ#€d#ÑÔ€8ÔÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€<ÔÔ€<ôÔThe€bylaws€provide:ÌÌà8 àThe€President€shall€have€the€following€powers€and€duties:€€.€.€.ÏHe€shall€appoint€and,€at€his€discretion,€remove€or€suspendÏpermanently€or€temporarily,€as€he€may,€from€time€to€time€thinkÏfit,€the€agents,€€employees€or€servants€of€the€corporation€.€.€.ÌÌà à.€.€.ÌÌà8 àEach€Director€shall€serve€for€the€term€of€one€(1)€year,€and€untilÏhis€€successor€shall€have€been€duly€elected€and€qualified€subject,Ïhowever,€€to€the€right€of€removal€of€any€Director€at€any€time€byÏthe€affirmative€vote€€of€the€holders€of€the€majority€of€the€stockÏof€the€corporation€entitled€to€vote,€€such€removal€to€be€byÏresolution€adopted€at€any€meeting€of€Stockholders,€whether€regularÏor€special€meetingÌÌà à.€.€.€ÌÌà8 àThe€Officers€of€the€corporation€shall€hold€office€for€one€(1)Ïyear,€or€until€their€successors€are€chosen€and€qualified€in€theirÏstead.€€Any€Officer€€elected€or€appointed€by€the€Board€ofÏDirectors€may€be€removed€at€any€time€by€the€affirmative€vote€ofÏthe€majority€of€the€Directors.€€Ì 7Ý ƒ!ÝÑ#€d#ÑÔ€8ÔÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€<ÔÔ€<ôÔTenn.€Code€Ann.€ðð€48„18„403€provides:ÌÌà8 à(a)€An€officer€with€discretionary€authority€shall€discharge€allÏduties€under€that€authority:ÌÌà8 à€€€€€(1)€In€good€faith;ÌÌà8 à€€€€€.€.€.ÌÌà8 à€€€€€(3)€In€a€manner€the€officer€reasonably€believes€to€be€in€theÏbest€interest€of€the€corporation.ÌÌTenn.€Code€Ann.€ðð€48„18„301€states:ÌÌà8 à(a)€A€director€shall€discharge€all€duties€as€a€director,€includingÏduties€as€a€member€of€a€committee:ÌÌà8 à€€€€€(1)€In€good€faith;ÌÌà8 à€€€€€.€.€.ÌÌà8 à€€€€€(3)€In€a€manner€the€director€reasonably€believes€to€be€in€theÏbest€interests€of€the€corporation.ÌPtPtHHÚ(ÿáÿâùFG(üHHØ(d'`Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  ion-F Geneva ÒÒ  ion-F Geneva Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€8ÔÝ  Ý›Ñ  ÑÒ ° ÒÒ À ÒÑ\R AØ'\ÑÑ€ÑÑ  ÑØ ØÓ&€Ðd&ÓÓ&€99XÐd&ÓÖ€:ÖÖ€;ÖÑ\R AØ'\ÑÔ€<ÔÑ7€%"XXdìdÈ7ÑœÞ ÞÌà àà àà àà àà àà àà àà àà àNovember€24,€1997Ì›à àà àà àà àà àà àà àà àà àòòFOR€PUBLICATIONóó̜ـ€ÙßR€?A>A1-j|¬“` Å `€€@ÿRß›Ìà@ àIN€THE€SUPREME€COURT€OF€TENNESSEEÌÌà@ àAT€JACKSONÌÌÌÌÌCARL€NELSON,à àà àà àà à(Ìà àà àà àà àà àà à(Ìà àPlaintiff„Appellee,à àà à(Ìà àà àà àà àà àà à(€€Shelby€CircuitÌà àà àà àà àà àà à(Ìv.à àà àà àà àà àà à(€€Hon.€James€M.€Tharpe,€JudgeÌà àà àà àà àà àà à(Ìà àà àà àà àà àà à(€€S.€Ct.€No.€02S01„9604„CV„00036ÌHAROLD€EUGENE€MARTIN€ANDà àà à(ÌJACK€W.€GAMMON,à àà àà à(Ìà àà àà àà àà àà à(Ìà àDefendants„Appellants.à à(ÌÌÌÌòòFor€Plaintiff„Appelleeóó:à àà àà àòòFor€Defendants„Appellantsóó:ÌÌGavin€M.€Gentryà àà àà àà àJ.€Cecil€McWhirterÌMemphisà àà àà àà àà àà àSally€F.€BarronÌà àà àà àà àà àà àà à€€McWhirter€&€WyattÌOF€COUNSEL:à àà àà àà àà àMemphisÌÌArmstrong,€Allen,€Prewitt,à àà àLeo€Bearman,€Jr.Ì€€Gentry,€Johnson€&€Holmesà àà àElizabeth€E.€ChanceÌMemphisà àà àà àà àà àà à€€Baker,€Donelson,€BearmanÌà àà àà àà àà àà àà à€€&€CaldwellÌà àà àà àà àà àà àà àMemphisÌÌœ›ÌÌÌà@ àò òòòO€P€I€N€I€O€Nóóó óÌÌÌÌÌÌÌMOTION€TO€DISMISS€AND€MOTIONÌFOR€SUMMARY€JUDGMENT€SUSTAINED;ÌSUIT€DISMISSED;€CASE€REMANDED€TOÌTRIAL€COURT.€à àà àà àà àà àà àà àà àREID,€J.ÌÓÓÓ` Ü` ˜XÓÑ7€¯ XXdÈXXdì7Ñà àThis€is€a€suit€by€a€shareholder€in€a€close€corporation× ƒB ××  ×Ïagainst€the€two€remaining€shareholders€alleging€the€wrongfulÏtermination€of€his€employment€by€the€corporation€and€also€hisÏwrongful€removal€as€an€officer€and€a€director.€€The€case€is€beforeÏthe€Court€on€the€defendantsðð€motions€to€dismiss€and€their€motionsÏfor€summary€judgment.€€The€motions€are€sustained€on€all€counts.ÌÌà@ àò òIó óÌÌà àThe€facts€essential€to€consideration€of€the€motions€areÏnot€disputed.€€Prior€to€the€action€on€which€the€suit€is€based,€theÏplaintiff,€Carl€Nelson,€and€the€defendants,€Harold€E.€Martin€andÏJack€W.€Gammon,€were€the€only€and€equal€shareholders€in€B€&€MÏPrinting€Company.€€The€company,€which€was€organized€as€a€partnershipÏin€1968€but€subsequently€converted€into€a€corporation,€€was€engagedÍin€the€commercial€printing€business.€€Nelson,€Martin,€and€GammonÏwere€officers€and€directors€of€the€corporation€and€they€also€wereÏfull€time€employees.€€They€received€no€compensation€for€theirÏservices€as€officers€and€directors€but€were€paid€salaries,Ïcommissions,€and€bonuses€as€employees.€€The€parties€also€receivedÏrent€from€a€building€owned€by€them€equally€which€was€rented€to€theÏcorporation.€€Originally,€each€shareholder€served€as€president€ofÏthe€corporation€for€one€year€on€a€rotating€basis.€€Upon€the€adviceÏof€a€business€consultant,€that€practice€was€discontinued€and€MartinÏhad€served€as€president€for€several€years€prior€to€the€action€whichÏprompted€this€suit.€€ÌÌà àIn€March€1989,€Nelson€and€Martin€became€involved€in€anÏacrimonious€dispute€regarding€one€of€Nelsonððs€customer€accounts.€ÏMartin€expressed€concern€that€the€account€was€not€being€properlyÏserviced,€which€Nelson€denied.€€Nelson€admitted€that€he€used€highlyÏoffensive€language€towards€Martin€but€contended€that€was€not€unusualÏor€significant.€€As€the€result€of€the€dispute,€Martin,€as€presidentÏand€without€consultation€with€Gammon,€gave€Nelson€written€noticeÏthat€his€employment€with€the€corporation€was€terminated€immediately.€ÏShortly€thereafter,€the€board€of€directors€on€the€votes€of€MartinÏand€Gammon€confirmed€the€termination€of€Nelson€as€an€employee€andÏalso€removed€him€as€an€officer€and€director€of€the€corporation.€ÍThere€is€no€indication€in€the€record€that€Martin€and€GammonÏdiscussed€the€matter€prior€to€the€board€meeting,€which€was€attendedÏby€Nelsonððs€attorney€and€proxy.ÌÌà àNelsonððs€annual€compensation€at€the€time€his€employmentÏwas€terminated€was€in€excess€of€$250,000.€€ÌÌà àSubsequently,€Martin€and€Gammon€leased€a€separate€buildingÏowned€by€them€to€the€corporation.ÌÌà àDuring€the€pendency€of€the€suit,€the€parties€voluntarilyÏsold€their€shares€in€the€corporation€for€a€total€of€approximately€$6Ïmillion,€which€amount€they€all€agree€was€a€fair€price.ÌÌà@ àò òIIó óÌÌà àNelsonððs€suit€seeking€$6€million€in€compensatory€damagesÏand€$12€million€in€punitive€damages€asserts€four€theories€ofÏliability€„€the€defendants,€ð ðconspiring€together€and€acting€in€theirÏindividual€and€personal€capacities,ðð€maliciously€induced€theÏcorporation€to€terminate€his€employment;€the€defendants€interferedÏwith€the€ð ðplaintiffððs€prospective€[economic]€advantage;ðð€theÏdefendants€wrongfully€procured€the€breach€of€a€contract€ofÍemployment€with€the€corporation€in€violation€of€Tenn.€Code€Ann.€ððÏ47„50„109;€and€the€defendants€breached€a€fiduciary€duty€owed€theÏplaintiff.€€ÌÌà àOn€the€defendantsðð€motions€that€the€complaint€fails€toÏstate€a€cause€of€action,€the€trial€court€dismissed€the€claim€thatÏthe€defendants€wrongfully€interfered€with€a€prospective€economicÏadvantage,€and€on€the€defendantsðð€motions€that€the€case€presents€noÏgenuine€issue€of€material€fact,€the€trial€court€dismissed€theÏremaining€claims.ÌÌà àThe€Court€of€Appeals€affirmed€the€dismissal€of€the€firstÏthree€claims€but€reversed€summary€judgment€on€the€claim€that€theÏdefendants€violated€a€fiduciary€duty€owed€to€the€plaintiff.€€ÌÌà àAll€issues€are€before€the€Court€on€appeal.ÌÌà@ àò òIIIó óÌÌà àNelson€insists€that€the€trial€court€and€the€Court€ofÏAppeals€erred€in€dismissing€his€claim€for€wrongful€interference€withÏa€prospective€economic€advantage.€€This€claim€is€before€the€Court€onÏthe€defendantððs€motions€to€dismiss€for€failure€to€state€a€claim€onÍwhich€relief€can€be€granted.€€Tenn.€R.€Civ.€P.€œ12.02(6).›× ƒC ××  ×€€This€claimÏhas€been€asserted€in€this€Court€in€two€prior€cases.€€InÔ€8Ô€Ô€<Ô€theÔ€8Ô€Ô€<Ô€first,ÏòòQuality€Auto€Parts€v.€Bluff€City€Buickóó,€876€S.W.2d€818€(Tenn.€1994),Ïan€employee€accused€of€stealing€from€his€company€filed€a€counter„claim€of€intentional€interference€with€prospective€businessÏrelations€alleging€that€the€accusations€were€preventing€him€fromÏobtaining€employment.× ƒD ××  ×€€The€Court€noted€that€although€such€a€claimÏhas€been€recognized€as€a€cause€of€action€in€other€jurisdictions,€itÏhas€not€been€recognized€œnor€rejected€in›€Tennessee.€€The€Court€foundÏthat€it€was€unnecessary€to€decide€whether€the€claim€is€a€cause€ofÍaction€in€Tennessee€because€it,€nevertheless,€would€ð ðfail€becauseÏ[the]€complaint€does€not€allege€two€essential€elements€of€the€tort€„Ï(1)€the€existence€of€a€specific€prospective€employment€relationshipÏand€(2)€knowledge€by€[the€company]€of€such€a€relationship.ðð€€òòId.óó€atÏ823.€€In€the€second€case,€òòKultura,€Inc.€v.€Southern€Leasing€Corp.óó,Ï923€S.W.2d€536€(Tenn.€1996),€the€issue€concerned€the€liability€of€aÏcompany€which€had€filed€a€financing€statement€and€failed€to€timelyÏfile€a€termination€statement.€€The€Court€noted€that€ð ðintentionalÏÔ€<&Ôinterference€with€prospective€economic€advantage€has€not€beenÏrecognized€as€a€cause€of€action€in€this€stateðð€but,€again,€found€theÏissue€to€be€moot€because€the€plaintiff€had€failed€to€prove€anyÏdamages.€€òòId.óó€at€œ540.Ô€<XÔ›ÌÌà àSince€the€legislature€has€not€enacted€a€statutory€cause€ofÏaction€for€interference€with€a€prospective€economic€advantage,€theÏclaim€can€be€maintained€only€if€it€is€found€to€be€a€part€of€theÏcommon€law€in€this€State.€€The€tort€of€intentional€interference€withÏa€prospective€economic€advantage€is€an€extension€of€the€principlesÏestablishing€liability€for€interference€with€contract€beyond€theÏexisting€contractual€relation€to€those€relations€which€are€ð ðmerelyÏprospective€or€potential.ðð€€òòSeeóó€W.€Page€Keeton€et€al.,€òòProsser€andÏKeeton€on€the€Law€of€Tortsóó€ðð€130,€at€1005€(5th€ed.€1984).€€TheÏaction€for€interference€with€contract€is€based€on€societyððs€need€forÏstability€in€contractual€relations.€€ð ðThe€tort€protects€societyððsÍinterest€in€preserving€the€formal€integrity€of€contract€and€rests€onÏan€implicit€appreciation€of€the€fundamental,€structure„givingÏsignificance€of€contracts€in€a€market€economy.ðð€€John€Danforth,ÏòòTortious€Interference€with€Contract:€€A€Reassertion€of€SocietyððsÏInterest€in€Commercial€Stability€and€Contractual€Integrityóó,€81ÏColum.€L.€Rev.€1491,€1523€(1981).€€However,€the€policy€reasons€forÏthe€tort€prohibiting€interference€with€contracts,€do€not€support€aÏtort€designed€to€protect€prospective€contracts€and€relationships.€ÏIn€òòProsseróó,€the€tort€for€interference€with€a€prospective€economicÏadvantage€is€described€as€ð ða€rather€broad€and€undefined€tort€inÏwhich€no€specific€conduct€is€proscribed€and€in€which€liability€turnsÏon€the€purpose€for€which€the€defendant€acts,€with€the€indistinctÏnotion€that€the€purposes€must€be€considered€improper€in€someÏundefined€way.ðð€€òòProsseróó,€ðð€129€at€979.€€Danforth€makes€this€furtherÏcomparison:ÌÌÓÓà8 à[C]ontracts€not€only€embody€a€bargained„forÏexchange,€but€also€create€a€system€ofÏpredictability€in€the€commercial€realm.€€ByÏguaranteeing€future€performance,€a€contract€mayÏengender€reliance€and€facilitate€long„termÏplanning€by€parties€not€directly€involved€withÏthe€contract€itself.€€Whatever€social€valueÏunderlies€tortious€interference€liability,Ïtherefore,€is€contingent€upon€just€this:€ThatÏthe€relationship€disrupted€involved€an€agreementÏto€be€bound€to€future€performance.€€€.€.€.ÌÌà8 àà à...€Prospective€contracts,€eitherÏexisting€relationships€expected€to€mature€intoÍcontracts€or€expectations€of€future€advantageousÏrelationships,€do€not€involve€an€agreement€to€beÏbound€to€future€performance.€€Interference€withÏprospective€contracts,€therefore,€does€notÏthreaten€a€societal€interest€in€the€formalÏintegrity€of€contract,€and€should€not€be€treatedÏas€a€mere€variant€of€interference€with€existingÏcontracts.ÌÌÓÓÌòòTortious€Interference€with€Contractóó,€81€Colum.€L.€Rev.€at€1515.€Ïð ðExtending€the€tort€to€protect€prospective€contracts€[means]Ïdiffusing€societyððs€general€interest€in€contractual€stability€andÏequating€it€with€the€aggregate€self„interests€of€particularÏplaintiffs€in€the€stability€of€their€own€contracts.ðð€€òòIdóó.€at€1517.€ÏòòSeeóó€òòalsoóó€Francis€Bowes€Sayre,€òòInducing€Breach€of€Contractóó,€36€Harv.ÏL.€Rev.€663,€703€(1922„23).€€€Such€an€extension€is€inconsistent€withÏthe€principles€of€free€competition€in€business€relationships€foundÏin€this€state.€€As€one€South€Carolina€judge€noted,€such€a€cause€ofÏaction€would€ð ðgreatly€hamper€free€competition€in€the€marketplace.ðð€ÏòòCrandall€Corp.€v.€Navistar€œIntððl€Transp.€Corp.óó,›€395€S.E.2d€179,€181Ï(S.C.€1990)€(Littlejohn,€A.A.J.,€dissenting)€(ð ðI€see€the€choice€isÏclearly€for€that€which€promotes€freedom€of€negotiation€andÏcompetition€in€the€marketplace,€which€is€a€cornerstone€of€ourÏdemocratic€society.ðð)€€Other€general€criticisms€of€the€tort€ofÏinterference€with€contract€are€applicable€as€well:ÌÌÓÓà8 à[T]he€tort€has€a€highly€detrimental€effect€onÍcommerce€and€individual€liberty.€€The€tortÏhinders€market€efficiency,€produces€erroneousÏliability€rulings,€and€fosters€uncertainty€inÏthe€law.€€The€courtsðð€interest„balancingÏapproach€to€the€tort€is€unworkable.€€FundamentalÏconstitutional€rights,€including€freedom€ofÏspeech€and€due€process,€are€impaired.€€OtherÏrights€necessary€for€a€free€society,€such€asÏfreedom€of€thought,€are€also€detrimentallyÏimpacted.€€Moreover,€the€tort€...€places€anÏunnecessary€burden€on€an€already€strained€legalÏsystem.ÌÌÓÓÌGary€D.€Wexler,€òòIntentional€Interference€with€Contract:€MarketÏEfficiency€and€Individual€Liberty€Considerationsóó€27€Conn.€L.€Rev.Ï279,€281„82€(1994).€€The€trial€court€and€the€Court€of€AppealsÏcorrectly€found€that€the€claim€of€interference€with€a€prospectiveÏeconomic€advantage€does€not€state€a€cause€of€action€under€the€law€ofÏTennessee.à àÌà@ àò òIVÌó óÌà àThe€remaining€issues€are€before€the€Court€on€theÏdefendantsðð€motion€for€summary€judgment.€€In€òòBain€v.€Wellsóó,€936ÏS.W.2d€618,€622€(Tenn.€1997),€this€Court€set€forth€the€standardsÏgoverning€an€appellate€courtððs€review€of€a€motion€for€summaryÏjudgment:ÌÌÓÓà8 àSince€our€inquiry€involves€purely€a€question€ofÏlaw,€no€presumption€of€correctness€attaches€toÏthe€lower€courtððs€judgment,€and€our€task€isÍconfined€to€reviewing€the€record€to€determineÏwhether€the€requirements€of€Tenn.€R.€Civ.€P.€56Ïhave€been€met.€€òòCowden€v.€Sovran€Bank/CentralÏSouthóó,€816€S.W.2d€741,€744€(Tenn.€1991).€€Tenn.ÏR.€Civ.€P.€56.03€provides€that€summary€judgmentÏis€appropriate€where:€(1)€there€is€no€genuineÏissue€with€regard€to€the€material€facts€relevantÏto€the€claim€or€defense€contained€in€the€motion,ÏòòByrd€v.€Hallóó,€847€S.W.2d€208,€210€(Tenn.€1993);Ïand€(2)€the€moving€party€is€entitled€to€aÏjudgment€as€a€matter€of€law€on€the€undisputedÏfacts.€€òòAnderson€v.€StandardÌà àRegister€Co.óó,€857€S.W.2d€555,€559€(Tenn.€1993).€€The€Ìà8 àmoving€party€has€the€burden€of€proving€that€itsÏmotion€satisfies€these€requirements.€€òòDownen€v.ÏAllstate€Ins.€Co.óó,€811€S.W.2d€523,€524€(Tenn.Ï1991).€€When€the€party€seeking€summary€judgmentÏmakes€a€properly€supported€motion,€the€burdenÏshifts€to€theà ànonmoving€party€to€set€forthÏspecific€facts€establishing€the€existence€ofÏdisputed,€material€facts€which€must€be€resolvedÏby€the€trier€of€fact.€€òòByrdóó,€847€S.W.2d€at€215.ÌÌÌÌÓÓMartin€and€Gammon€assert€that€Nelson€has€not€presented€evidenceÏwhich€creates€a€disputed€issue€of€material€fact.€€€ÌÌ€à@ àò òVó óÌÌà àPlaintiffððs€counsel€admits€to€some€uncertainty€as€to€theÏcauses€of€action€presented€by€the€allegations.€€Counsel,€accordingÏto€the€brief,€set€forth€the€allegations€of€fact,€then€asserted€thatÏthe€allegations€support€the€several€causes€of€action€named.€€ThereÏis€however€a€fatal€inconsistency€between€the€facts€alleged€and€twoÏof€the€claims€asserted.€€Claims€that€the€defendants€wrongfullyÍð ðprocuredðð€or€ð ðinduced,ðð€the€termination€of€Nelsonððs€employmentÏcontemplate€a€three„party€relationship€„€the€plaintiff€as€employee,Ïthe€corporation€as€employer,€and€the€defendants€as€procurers€orÏinducers.€€The€facts€alleged€show€there€was€no€three„partyÏrelationship.€€The€defendant€Martin€was€the€president€and€chiefÏexecutive€officer€of€the€corporation€and€the€defendant€Gammon€was€aÏdirector.€€In€order€for€there€to€be€a€three„party€relationship,Ïthere€must€be€a€showing€that€the€defendants€were€acting€outside€theÏscope€of€their€duties€as€officers€of€the€corporation€rather€than€onÏbehalf€of€the€corporation.ÌÌà àThe€Court€addressed€this€issue€in€òòForrester€v.€Stockstillóó,Ï869€S.W.2d€328€(Tenn.€1994),€in€which€a€discharged€employee€sued€twoÏdirectors€of€the€employer€corporation€for€interfering€with€theÏemployment€relationship.€€The€Court€stated:ÌÌÓÓà8 à€€€€€€Since,€with€the€exceptions€noted,€theÏdischarge€from€employment€of€an€employee„at„willÏby€the€employer€is€not€actionable,€but€theÏwrongful€interference€with€at„will€employment€byÏthird€persons€is€actionable,€Forresterððs€suitÏagainst€Stockstill€and€Kisabeth€can€beÏmaintained€only€if€the€proof€establishes€thatÏthey€stood€as€third€parties€to€the€employmentÏrelationship€at€the€time€they€performed€the€actsÏfound€to€have€caused€Forresterððs€discharge.ÌÌÌÌòòÓÓId.óó€at€331.€€As€more€fully€discussed€below,€the€facts€alleged€do€notÍshow€that€the€defendants€acted€other€than€as€officers€of€theÏcorporation.€€The€plaintiff€charges€that€his€employment€wasÏterminated€by€the€defendants.€€His€essential€complaint€is€that€theÏdefendants€acted€wrongfully€in€terminating€his€employment.€ÏConsequently,€on€the€pleadings€and€proof,€there€could€be€no€findingÏthat€the€defendants€induced€or€procured€a€breach€of€contract.€ÏConsequently,€the€record€does€not€present€a€disputed€issue€ofÏmaterial€fact€on€the€claims€that€the€defendants€induced€or€procuredÏthe€termination€of€plaintiffððs€employment.€€The€trial€court€and€theÏCourt€of€Appeals€properly€dismissed€those€claims.€€€€ÌÌà àThe€claim€that€the€defendants€breached€a€fiduciaryÏrelationship,€however,€contemplates€a€two„party€relationship,€theÏplaintiff€and€the€defendants€as€shareholders.€€Whether€there€areÏdisputed€issues€of€material€fact€on€this€issue€must€be€determinedÏwithin€the€context€of€the€legal€duty€owed€the€plaintiff€by€theÏdefendants.€€In€making€that€determination,€the€most€significantÏlegal€issue€presented€is€whether€there€existed€a€fiduciaryÏrelationship€between€the€parties.€€ÌÌà àThis€Court€has€stated€that€majority€shareholders€owe€aÏfiduciary€duty€to€minority€shareholders.€€òòMike€v.€Po€Group,€Inc.óó,Ï937€S.W.2d€790,€793€(Tenn.€1996);€€òòNelms€v.€Weaveróó,€681€S.W.2d€547,Í549€(Tenn.€1984),€òòcert.óó€òòdeniedóó,€476€U.S.€1118€(1986);€€òòDale€v.ÏThomas€H.€Temple€Co.óó,€186€Tenn.€69,€208€S.W.2d€344,€352€(1948).€€TheÏCourt€of€Appeals€stated€in€òòJohns€v.€Caldwellóó,€601€S.W.2d€37€œ(Tenn.ÏApp.€1980),€ð ðOur€courts€are€prompt€to€redress€the€injuries€toÏminority€stockholders€caused€by€the€wrongdoings€of€majorityÏstockholders.ðð€€òòId.óó€at€41€(citing€òòMcCampbell€v.€Fountain€HeadÏRailroad€Co.óó,€111€Tenn.€55,€77€S.W.€1070€(1903)).€€Those€cases€didÏnot€consider€the€issues€presented€by€the€case€before€the€Court.€€InÏòòJohns€v.€Caldwellóó,€the€plaintiff€owned€45€percent€of€theÏcorporationððs€stock.€€He€brought€suit€against€the€other€twoÏshareholders,€Caldwell€who€owned€45€percent€and€Moore€who€owned€10Ïpercent€of€the€shares.€€Johns€sought€to€prevent€the€transfer€byÏMoore€of€his€shares€to€Caldwell€or€to€require€an€equal€division€ofÏMooreððs€stock€between€Johns€and€Caldwell.€€òòJohnsóó,€601€S.W.2d€at€39.€ÏThe€òòJohnsóó€Court€held€that€neither€Moore€nor€Caldwell€owed€aÏfiduciary€duty€to€Johns€regarding€the€sale€and€purchase€of€MooreððsÏshares€of€stock.€€òòId.óó€at€44,€45.€€The€basis€of€the€dispute€in€thatÏcase€was€not€action€taken€by€a€majority€shareholder€or€theÏcorporation€affecting€the€interest€of€another€shareholder€but€ratherÏthe€competing€efforts€of€two€shareholders€to€acquire€the€shares€ofÏthe€third€shareholder.€€In€òòIntertherm€v.€Olympia€Homes€Systemsóó,€569ÏS.W.2d€467€(Tenn.€App.€1978),€the€court€noted€that€the€transactionsÏof€majority€or€dominant€shareholders€will€be€closely€scrutinized€forÍgood€faith€and€fairness€if€challenged.€€€The€court€stated€that€itÏwould€ð ðapply€the€rule€of€close€scrutiny€and€place€the€burden€on€theÏshareholder€to€justify€a€transaction€with€his€corporation€only€whenÏthe€shareholder€owns€a€majority€of€stock,€or€is€shown€to€dominate€orÏcontrol€the€corporation€to€a€significant€degree€in€some€other€way.ðð€ÏòòId.óó€at€472.€€Again,€the€dispute€in€òòInterthermóó€was€not€based€onÏaction€taken€by€shareholders€in€a€close€corporation€affecting€theÏinterests€of€other€shareholders.€€The€dispute€was€betweenÏshareholders€claiming€a€security€interest€in€corporate€property€andÏnonshareholder€creditors€of€the€corporation.€€The€court€found€thatÏthere€was€no€fiduciary€relationship€between€the€shareholders€and€theÏcorporation€because€they€were€not€dominant€shareholders€andÏtherefore€their€loan€to€the€corporation€would€not€be€closelyÏscrutinized€for€good€faith.€€The€shareholdersðð€priority€over€theÏgeneral€creditors€was€accordingly€upheld.€€€ÌÌà àThe€Court€has€not€addressed€specifically€the€issuesÏpresented€in€this€case,€the€relationship€between€shareholders€in€aÏclose€corporation€where€there€is€no€majority€or€dominant€shareholderÏand€the€dispute€relates€to€the€shareholdersðð€interests€asÏshareholders.€€The€Court€of€Appeals€relied€upon€the€decision€inÏòòWilkes€v.€Springside€Nursing€Home,€Inc.óó,€353€N.E.2d€657€(Mass.Ï1976),€in€which€the€Massachusetts€court€held€there€is€a€fiduciaryÍrelationship€between€shareholders€of€a€close€corporation.€€InÏòòWilkesóó,€the€Court€stated€that€ð ðstockholders€in€the€close€corporationÏowe€one€another€substantially€the€same€fiduciary€duty€in€theÏoperation€of€the€enterprise€that€partners€owe€to€one€another.ðð€€òòId.óóÏat€661€(quoting€òòDonahue€v.€Rodd€Electrotype€Co.óó,€328€N.E.2d€505,€515Ï(1975)).€€That€standard€of€duty€is€one€of€ð ðutmost€good€faith€andÏloyalty.ðð€€òòId.óó€(quoting€òòCardullo€v.€Landauóó,€105€N.E.2d€843€(Mass.Ï1952));€òòsee€alsoóó€òòBlank€v.€Chelmsford€OB/GYN,€P.C.óó,€649€N.E.2d€1102,Ï1105€(Mass.€1995).× ƒE ××  ×€€The€rationale€for€the€òòWilkesóó€decision€has€beenÏstated€as€follows:€ÌÌÓÓà8 àIn€spite€of€the€traditional€adherence€toÏmajority€rule€and€the€business€judgmentÌà àrule,€many€courts€in€this€country€have€Ìà8 àmoved€steadily€toward€providing€a€remedyÌà àfor€oppressed€minority€shareholders.€€SomeÌà8 àcourts€have€made€clear€that€they€willÌà ànot€apply€the€business€judgment€rule€unlessÌà8 àthe€directors€not€only€have€acted€in€good€faith,Ïbut€also€have€exercised€properÌà àcare,€skill,€and€diligence.€€For€many€courts,€Ìà8 àthe€response€has€been€to€impose€a€Ìà àfiduciary€duty€on€the€controlling€shareholders€Ìà8 àfor€the€benefit€of€minority€interests.Ìà àCourts€increasingly€have€been€willing€toÌà8 àrecognize€an€enhanced€fiduciary€duty€Ìà àamong€shareholders€in€a€close€corporation.ÌÌÌÌÓÓF.€Hodge€OððNeal€and€Robert€Thompson,€òòOððNeals€Oppression€of€MinorityÏShareholdersóó€ðð€10:04,€at€16€(2d€ed.€1995).ÌÌà àThe€Court€in€òòWilkesóó€held:ÌÌÓÓà8 àTherefore,€when€minority€stockholders€in€a€closeÏcorporation€bring€suit€against€the€majorityÏalleging€a€breach€of€the€strict€good€faith€dutyÏowed€to€them€by€the€majority,€we€must€carefullyÏanalyze€the€action€taken€by€the€controllingÏstockholders€in€the€individual€case.€€It€must€beÏasked€whether€the€controlling€group€canÏdemonstrate€a€legitimate€business€purpose€forÏits€action.ÌÌòòÌÌÓÓWilkesóó,€353€N.E.2d€at€663.× ƒF ××  ×€€The€Court€in€òòWilkesóó€realized,€however,Ïthat€in€the€management€of€the€corporation,€the€Court€should€notÏsubstitute€its€judgment€for€the€good€faith€action€of€theÏshareholders.ÌÌÓÓà8 à[W]e€acknowledge€the€fact€that€the€controllingÏgroup€in€a€close€corporation€must€have€some€roomÏto€maneuver€in€establishing€the€business€policyÏof€the€corporation.€€It€must€have€a€largeÍmeasure€of€discretion,€for€example,€in€declaringÏor€withholding€dividends,€deciding€whether€toÏmerge€or€consolidate,€establishing€the€salariesÏof€corporate€officers,€dismissing€directors€withÏor€without€cause,€and€hiring€and€firingÏcorporate€employees.ÌÌòòÌÌId.óó€at€663.ÌÌÌÌÓÓà àBased€on€these€principles,€Martin€and€Gammon,€together€andÏseparately,€were€obligated€to€deal€fairly€and€honestly€with€NelsonÏand€could€not€act€out€of€avarice,€malice,€or€self„interest€inÏviolation€of€their€fiduciary€duty€to€him€as€a€shareholder.€€ÌÌà@ àò òVIó óÌÌà àNelson€asserts€essentially€that€Martin€and€GammonÏwrongfully€terminated€his€employment.€€The€question€is€whether€theÏrecord€contains€material€evidence€that€Martin€and/or€Gammon€violatedÏthe€fiduciary€duty€owed€to€Nelson€in€terminating€his€employment.ÏNelson€acknowledges€that€there€was€no€written€contract€of€employmentÏbetween€the€corporation€and€him,€but€asserts€there€was€a€generalÏagreement€among€the€shareholders€that€each€was€entitled€to€work€forÏthe€corporation€for€life.€€Even€if€the€deficiencies€in€the€proof€ofÏa€contract€should€be€disregarded,€Nelsonððs€employment€was€terminableÏat€will.€€There€is€no€evidence,€or€even€claim€by€Nelson,€that€heÍfurnished€any€consideration€for€his€employment€other€than€hisÏservices€as€an€employee.€€The€rule€has€been€well€stated€by€the€CourtÏof€Appeals.€€Ô€8Ôð ðÔ€<ÔOur€courts€have€long€held€that€an€oral€contract€forÏlife€time€employment€or€permanent€employment€amounts€to€anÏindefinite€hiring€terminable€at€the€will€of€either€party€where€theÏemployee€furnishes€no€consideration€other€than€the€services€requiredÏin€the€agreement.ðð€€òòPrice€v.€Mercury€Supply€Co.óó,€682€S.W.2d€924,€934Ï(Tenn.€App.€1984);€òòCombs€v.€Standard€Oil€Co.óó,€166€Tenn.€88,€90„92,Ï59€S.W.2d€525,€526„27€(Tenn.€1933).€€Consequently,€the€corporationððsÏprerogative€to€discharge€Nelson€as€an€employee€was€not€constrainedÏby€an€employment€contract.ÌÌà àThere€is€in€the€record€no€evidence€that€Martin€acted€otherÏthan€within€the€scope€of€his€duties€as€president€or€that€Martin€andÏGammon€acted€other€than€within€the€scope€of€their€duties€asÏdirectors.€€Consequently,€there€is€no€evidence€that€the€defendantsÏð ðprocuredðð€the€plaintiffððs€discharge.€€Pursuant€to€the€bylaws€of€theÏcorporation,€Martin,€as€president,€had€the€authority€to€dischargeÏemployees€of€the€corporation,€including€Nelson,€and€Martin€andÏGammon,€as€directors,€had€the€authority€to€confirm€the€employmentÏaction€taken€by€the€president€and€to€remove€Nelson€as€a€director.× ƒG ××  ×€ÍIn€the€exercise€of€those€powers€and€duties€on€behalf€of€theÏcorporation,€Martin€and€Gammon€owed€a€duty€of€good€faith€andÏfairness€to€Nelson.€€However,€they€also€owed€a€duty€of€good€faithÏand€fairness€to€the€corporation€which€they€served€as€officers.€€òòSeeóóÏTenn.€Code€Ann.€ðððð€48„18„403(a)(1),€(3)€(1995),€48„18„301(a)(1),€(3)Ï(1995);× ƒH ××  ×€òòKnox„Tenn€Rental€Co.€v.€Jenkins€Ins.,€Inc.óó,€755€S.W.2d€33,Í36„37€(Tenn.€1988).€€If€Martin€and€Gammon€were€protecting€legitimateÏinterests€of€the€corporation,€the€presence€of€spite€or€ill€willÏwould€not€render€them€or€the€corporation€liable.€€òòSeeóó€òòForrester€v.ÏStockstillóó,€869€S.W.2d€328,€333€(Tenn.€1994).€€ÌÌà àConsequently,€the€first€question€is€whether€Martin€andÏGammon€were€performing€the€duties€as€officers€of€the€corporation€inÏgood€faith€and€in€furtherance€of€the€perceived€best€interest€of€theÏcorporation.€€€The€burden€was€on€Nelson€to€produce€evidence€thatÏthey€were€not€acting€in€good€faith€in€furtherance€of€theÏcorporationððs€best€interest.€€The€Court€stated€in€òòForrester€v.ÏStockstillóó€that€the€critical€factors€in€determining€if€action€takenÏby€directors€of€a€corporation€was€in€good€faith€are€ð ðintent,€motiveÏor€purpose,€and€means.ðð€€€òòId.óó€at€333.€€The€only€evidence€relating€toÏMartinððs€intent€or€motive€in€terminating€Nelsonððs€employment€is€theÏcause€and€circumstances€of€his€and€Martinððs€dispute.€€The€onlyÏevidence€relating€to€Gammonððs€intent€or€motive€are€his€votes€as€aÍdirector.€€There€is€no€evidence€that€the€termination€of€NelsonððsÏemployment€or€his€discharge€as€an€officer€and€a€director€wereÏprejudicial€to€the€corporationððs€best€interest.€€The€fact€thatÏNelson€sustained€the€loss€of€employment€with€the€accompanyingÏcompensation€is€not€evidence€that€the€corporation€was€prejudiced€orÏthat€Martin€and€Gammon€acted€with€malice,€avarice,€or€self„interest.€ÏThe€evidence€does€not€create€a€disputed€issue€of€material€factÏregarding€the€good€faith€performance€of€the€defendants.€€òòByrd€v.ÏHallóó,€847€S.W.2d€at€215.ÌÌà àAn€important€public€policy€is€at€stake.€€Although€directedÏtoward€a€slightly€different€issue,€the€following€statement€made€byÏthe€Court€in€òòForresteróó,€is€relevant€and€appropriate:ÌÌÓÓà8 à€€€€€A€corporation€can€act€only€upon€the€adviceÏof€its€officers€and€agents,€and€its€officers€andÏdirectors€have€a€duty€to€serve€the€corporation.€ÏImportant€societal€interests€are€served€byÏcorporations€having€the€clear€and€candid€adviceÏof€their€officers€and€agents.€€Fear€of€personalÏliability€would€tend€to€limit€such€advice.€ÏConsequently,€when€an€officer,€director,€orÏemployee€of€a€corporation€acts€within€theÏgeneral€range€of€his€authority,€and€his€actionsÏare€substantially€motivated€by€an€intent€toÏfurther€the€interest€of€the€corporation,€inÏclaims€of€intentional€interference€withÏemployment,€the€action€of€the€officer,€director,Ïor€employee€is€considered€to€be€the€action€ofÏthe€corporation€and€is€entitled€to€the€sameÏimmunity€from€liability.ÌÌÌÌòòId.óó€at€334„35.ÌÌÌÌà@ àò òVIIó óÌÌÌÌÓÓà àThe€shareholders€of€a€close€corporation€share€a€fiduciaryÏrelationship€which€imposes€upon€all€shareholders€the€duty€to€act€inÏgood€faith€and€fairness€with€regard€to€their€respective€interests€asÏshareholders.€€Officers€and€directors€of€a€corporation€owe€a€similarÏduty€to€the€corporation.€€In€order€to€withstand€a€motion€for€summaryÏjudgment,€allegations€that€the€fiduciary€duty€has€been€violated€mustÏbe€supported€by€material€evidence€that€the€action€was€not€in€theÏperceived€best€interests€of€the€corporation€and€further€that€it€wasÏmotivated€by€malice,€avarice,€or€self„interest.€€The€evidence€in€theÏrecord€does€not€present€a€disputed€issue€of€material€fact.€ÏConsequently,€the€motions€are€sustained€and€the€suit€is€dismissed.ÌÌÌÌà àThe€case€is€remanded€to€the€trial€court€for€any€furtherÏproceedings€consistent€with€this€opinion.ÌÌà àCosts€are€assessed€against€Nelson.ÌÌÓÓà àà àà àà àà àà à______________________________Ìà àà àà àà àà àà àReid,€J.ÌÌÌConcur:ÌÌAnderson,€C.J.,€Drowota,€Birch,Ì€€and€Holder,€JJ.