United Propane Gas, Inc. v. Ngl Energy Partners, Lp

RENDERED: DECEMBER 11, 2020; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2019-CA-0816-MR
UNITED PROPANE GAS, INC., AND STC, INC. APPELLANTS
APPEAL FROM MCCRACKEN CIRCUIT COURT
v. HONORABLE TIMOTHY KALTENBACH, JUDGE
ACTION NO. 15-CI-00643
NGL ENERGY PARTNERS, LP APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: CALDWELL, JONES, AND KRAMER, JUDGES.
JONES, JUDGE: Appellants United Propane Gas, Inc. (“UPG”) and STC, Inc.
(“STC”) appeal the judgment of the McCracken Circuit Court granting summary
judgment to NGL Energy Partners, LP (“NGL Energy”) on a claim for tortious
interference. Following review of the record and applicable law, we AFFIRM for
the reasons more fully explained below.
I. BACKGROUND AND PROCEDURAL HISTORY
NGL Supply Terminal Company, LLC (“NGL Supply”), a wholly-
owned subsidiary of Appellant NGL Energy, is a wholesale marketer of natural gas
and crude oil. NGL Supply markets its natural gas liquids to wholesalers and
retailers using its fleet of leased railcars and its owned and leased terminals located
throughout the United States. Customers of NGL Supply may obtain propane,
among other products, at NGL Supply’s many terminals.
Appellants UPG and STC (collectively referred to as “UPG”) are
Kentucky corporations in the business of selling propane and propane products.
UPG is a retailer selling propane to residential customers across the eastern United
States, while STC is a shipping and trucking company affiliated with UPG. On
February 20, 2015, UPG entered into a Terminal Access Agreement with NGL
Supply granting UPG access to NGL Supply’s terminals nationwide to obtain
certain propane products from UPG’s supplier, CHS, Inc.
NGL Supply routinely requires customers seeking to obtain propane
at NGL Supply’s terminals to sign terminal access agreements. NGL’s terminal
access agreement specifies that it is to be interpreted consistently with Oklahoma
law, requires customers to comply with local terminal rules and follow federal
safety regulations, and otherwise sets terms and conditions relating to the future
sale of oil and gas products. It does not entitle the customer to purchase any
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product and does not provide any continued right of access to the terminals.
Instead, it merely sets forth the terms upon which a customer may access NGL
Supply’s terminals to make a purchase. NGL Supply’s Terminal Access
Agreement with UPG further provided:
4. Revocation, Term and Termination
(a) Revocation. User [UPG] agrees that NGL’s grant of
permission hereunder to User to enter Terminals is
nonexclusive and nonassignable and may be revoked by
NGL at any time, in its sole discretion, without prior
notice. Upon revocation, User shall immediately cease
using all Devices issued hereunder and shall promptly
return all such Devices to NGL.
Record (“R.”) at 199.
That same day, NGL Supply verified that UPG met all conditions
imposed to access the terminal, and UPG obtained written confirmation from NGL
Supply that it could access the NGL Supply terminals in West Memphis, Arkansas,
and Dexter, Missouri. UPG then picked up three loads of propane from NGL
Supply’s Dexter terminal without incident.
Upon learning of the agreement between NGL Supply and UPG, NGL
Energy immediately instructed its subsidiary to revoke UPG’s access. Four days
later, on February 24, 2015, NGL Supply terminated the agreement and revoked
UPG’s access without explanation. NGL Supply prohibited Appellants from
having any further access to the terminals.
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UPG claims NGL Supply and NGL Energy have since offered
conflicting rationales as to why UPG’s access was revoked. R. at 231. According
to a February 24, 2015, email, NGL Supply initially informed UPG that UPG was
not “set up” in NGL Supply’s system. Melissa Roberts, an NGL Energy
employee, testified that UPG was considered “not set up” only after access was
revoked following UPG’s first pickup. That same day, Roberts emailed the
Dexter, Missouri, and West Memphis, Arkansas, NGL Supply terminal managers
on behalf of NGL Energy, stating: “Please lockout carrier STC. We didn’t realize
at the time they were setup [sic] that they operated as United Propane Gas, which
we do not do business with . . . .” Melissa Roberts explained in her deposition that
NGL Energy does not currently sell propane directly to UPG.
However, Roberts and two other NGL Energy employees, Aaron
Reece and Bryan Lehman, later testified during deposition that UPG was denied
access to NGL Supply’s terminals due to safety concerns following a report that a
bumper had fallen off a UPG truck inside the terminal. Reece, a senior vice
president of NGL Liquids,1 testified that he decided to revoke UPG’s access
because he felt that UPG was an unsafe operator and that he had a duty to keep
everyone in the terminal safe.
1
NGL Energy, NGL Supply’s parent company, is made up of five subdivisions, one of which is
NGL Liquids, LLC. According to corporate documentation, NGL Liquids, LLC, is the sole
member of NGL Supply.
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On August 14, 2015, UPG filed suit against NGL Supply and NGL
Energy in McCracken Circuit Court, claiming: (1) NGL Supply breached its
contract with UPG; (2) in the alternative, the contract was enforceable through
promissory estoppel; and (3) NGL Energy tortiously interfered with the contract
between NGL Supply and UPG. On November 12, 2015, UPG obtained leave of
court to file an amended complaint adding STC as a co-plaintiff, which was
granted on November 20, 2015.
On June 9, 2016, the McCracken Circuit Court granted summary
judgment in favor of NGL Supply and NGL Energy on all counts. The McCracken
Circuit Court held that (1) there had been no breach of contract because the
contract was expressly terminable at will; (2) any detrimental reliance on UPG’s
part could not create greater rights than the contract itself created; and (3) NGL
Energy did not tortiously interfere with the contract between its subsidiary and
UPG because the contract in question had not been breached. UPG and STC
appealed to this court in appellate action No. 2016-CA-000994-MR.
On March 16, 2018, this Court affirmed the McCracken Circuit
Court’s decision on the breach of contract and promissory estoppel claims but
remanded for further proof on the tort claim. United Propane Gas, Inc. v. NGL
Supply Terminal Co., LLC, Nos. 2016-CA-000994-MR and 2016-CA-001621-MR,
2018 WL 1357480, at *4 (Ky. App. Mar. 16, 2018). We specifically held that the
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contract in question was indeed terminable at will, and, accordingly, had no
implied covenant of good faith and fair dealing. However, we reversed regarding
UPG’s tortious interference claim against NGL Energy, holding that such a tort
may be predicated on causing a third person party “not to continue an existing
contract terminable at will[.]” Id. (internal citations omitted). In doing so, our
Court noted that the circuit court’s sole basis for dismissing this claim, and NGL
Energy’s sole appellate argument for affirmation, was that no breach occurred
when NGL Supply terminated the contract. Our Court further noted that while the
pleadings and exhibits filed of record indicated that NGL Supply was a subsidiary
of NGL Energy, “that issue played no role in the circuit court’s judgment and has
not been raised on appeal.” Id. at *6 n.6.
On May 1, 2019, the McCracken Circuit Court granted NGL Energy’s
renewed motion for summary judgment under both Kentucky and Oklahoma law2
on the tortious interference claim. The circuit court concluded that UPG had failed
to create a genuine issue of material fact regarding whether NGL Energy was
privileged to interfere with the contractual relations of its wholly-owned
2
At no point has either the circuit court or this Court determined whether to apply Kentucky or
Oklahoma law, as both courts agree that both states’ laws are substantially the same regarding
tortious interference. United Propane Gas, Inc., 2018 WL 1357480, at *4 n.4 (“The parties seem
to disagree over whether Kentucky or Oklahoma law applies to this tort claim, but it makes little
difference for our purposes. This provision of the Restatement has been adopted as law in
Kentucky and Oklahoma.”); May 1, 2019, Opinion Granting Renewed Motion for Summary
Judgment at 2 (“As an initial matter, the parties apparently disagree as to whether Kentucky or
Oklahoma law govern this claim; however, the result is the same under either state’s law.”).
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subsidiary, NGL Supply, or used wrongful means to do so. The court determined
that, given the nature of the contract and the parent-subsidiary relationship between
NGL Energy and NGL Supply, NGL Energy was privileged to interfere with the
contract of its subsidiary under Oklahoma law. In its analysis under Kentucky law,
the circuit court concluded that NGL had a privilege to interfere in the contractual
relations of its wholly-owned subsidiary and UPG had failed to create an issue of
material fact as to whether NGL Energy had acted detrimentally to UPG’s interests
or with wrongful means. The circuit court additionally noted that although UPG
requested additional time to investigate NGL Energy’s corporate structure, it had
been over a year since the remand giving UPG “ample time to take discovery.”
This appeal followed.
II. STANDARD OF REVIEW
“[S]ummary judgment is to be cautiously applied and should not be
used as a substitute for trial” unless “there is no legitimate claim under the law and
it would be impossible to assert one given the facts.” Steelvest, Inc. v. Scansteel
Serv. Ctr., Inc., 807 S.W.2d 476, 483 (Ky. 1991); Shelton v. Kentucky Easter Seals
Soc., Inc., 413 S.W.3d 901, 916 (Ky. 2013). A motion for summary judgment
should only be granted “when it appears impossible for the nonmoving party to
produce evidence at trial warranting a judgment in his favor” even when the
evidence is viewed in the light most favorable to him. Steelvest, 807 S.W.2d at
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482; Shelton, 413 S.W.3d at 905. To survive a properly supported summary
judgment motion, the opposing party must have presented at least some affirmative
evidence showing that there is a genuine issue of material fact for trial. Steelvest,
807 S.W.2d at 482.
Designed to be narrow and exacting so as to preserve
one’s right to trial by jury, summary judgment is
nevertheless appropriate in cases where the nonmoving
party relies on little more than “speculation and
supposition” to support his claims. O’Bryan v. Cave, 202
S.W.3d 585, 588 (Ky. 2006). “The party opposing
summary judgment cannot rely on their own claims or
arguments without significant evidence in order to
prevent a summary judgment.” Wymer v. JH Properties,
Inc., 50 S.W.3d 195, 199 (Ky. 2001).
Blackstone Mining Company v. Travelers Insurance Company, 351 S.W.3d 193,
201 (Ky. 2010); Patton v. Bickford, 529 S.W.3d 717, 736 (Ky. 2016).
The standard of review on appeal from summary judgment is
“whether the trial court correctly found that there were no genuine issues as to any
material fact and that the moving party was entitled to judgment as a matter of
law.” Lewis v. B & R Corp., 56 S.W.3d 432, 436 (Ky. App. 2001) (citing Scifres v.
Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996); Palmer v. International Ass’n of
Machinists & Aerospace Workers, 882 S.W.2d 117, 120 (Ky. 1994); CR3 56.03).
Because there are no factual findings at issue, the appellate court may review that
3
Kentucky Rules of Civil Procedure.
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trial court’s decision de novo. Shelton, 413 S.W.3d at 905; Barnette v. Hosp. of
Louisa, Inc., 64 S.W.3d 828, 829 (Ky. App. 2002). On appeal, the record must be
viewed in a light most favorable to the party who opposed the motion for summary
judgment, and all doubts are to be resolved in his favor. Malone v. Kentucky Farm
Bureau Mut. Ins. Co., 287 S.W.3d 656, 658 (Ky. 2009).
III. ANALYSIS
On appeal, UPG asserts the following counts of error: (1) the circuit
court erred in failing to conduct a veil-piercing analysis under Kentucky law; (2)
the circuit court “failed to address the exception to the parent company’s privilege
based on its own wrongful conduct”; and (3) the circuit court erred in failing to
find an issue of material fact as to whether NGL Energy acted with an improper
purpose when interfering with its subsidiary’s contract with UPG. Appellants’ Br.
at 4. UPG contends that NGL Energy was not privileged to interfere in NGL
Supply’s contract with UPG, and, even if it was, NGL Energy’s various reasons for
terminating the Terminal Access Agreement are evidence of wrongful means, as
UPG believes these reasons are “later-conceived” and therefore “shams to hide
NGL Energy’s improper conduct.” Appellants’ Br. at 2.
As a preliminary matter, the parties disagree over whether Kentucky
or Oklahoma law applies to this tort claim, and neither our Court nor the circuit
court made a determination. For the purpose of this appeal, it makes little
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difference, as the result is the same under both Kentucky and Oklahoma state law.
As such, we will apply both, even though it is more likely that Kentucky law
would govern the case before us.4
Both the Kentucky and Oklahoma courts have adopted the
Restatement (Second) of Torts § 769 governing intentional interference with
contractual or business relations:
One who, having a financial interest in the business of a
third person intentionally causes that person not to enter
into a prospective contractual relation with another, does
not interfere improperly with the other’s relation if he
(a) does not employ wrongful means and
4
Kentucky applies the “significant contacts” test in tort cases. Foster v. Leggett, 484 S.W.2d
827, 829 (Ky. 1972). “Kentucky has a strong preference for applying its own law, and we have
noted previously this ‘provincial tendency in Kentucky choice-of-law rules.’” Hackney v.
Lincoln Nat’l Fire Ins. Co., 657 F. App’x 563, 571 (6th Cir. 2016) (quoting Asher v. Unarco
Material Handling, Inc., 737 F. Supp. 2d 662, 667 (E.D. Ky. 2010) (internal citations omitted).
“Importantly, Kentucky’s tort and products liability laws are intended to protect Kentucky
residents and provide compensation when they are the injured party.” Custom Prod., Inc. v.
Fluor Daniel Canada, Inc., 262 F. Supp. 2d 767, 773 (W.D. Ky. 2003). Accordingly, Oklahoma
law would apply in this case only upon demonstrating “overwhelming interests to the contrary.”
Although NGL Supply included a choice of law provision in its contract with UPG, this
provision serves to govern contractual disputes rather than tort claims. UPG argues that
Oklahoma law ought to control because the alleged injury – the termination of the contract with
NGL Supply – was terminated in Tulsa, Oklahoma, where the offices of both NGL Supply and
NGL Energy are located. UPG points out that STC’s truck was denied access to a particular fuel
terminal in Arkansas, that UPG has seventy-three plants spanning ten states, and that NGL
Supply had no terminals in Kentucky. This is to no avail. While there are certainly significant
contacts with Oklahoma, perhaps even the most significant contacts, Kentucky has a strong
interest in governing tort claims brought in Kentucky by Kentucky plaintiffs. See Foster, 484
S.W.2d at 829 (“[I]f there are significant contacts–not necessarily the most significant contacts–
with Kentucky, the Kentucky law should be applied.”). Ultimately, however, choice of law is
not outcome-determinative in the case before us.
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(b) acts to protect his interest from being prejudiced by
the relation.
RESTATEMENT (SECOND) OF TORTS § 769 (1979).
Kentucky case law further provides that “a parent corporation has a
privilege to interfere in the contractual relations of its wholly-owned subsidiary,
unless it employs wrongful means or acts contrary to its subsidiary’s interests.”
Sparkman v. CONSOL Energy, Inc., 571 S.W.3d 569, 572 (Ky. 2019). Our
Supreme Court only recently addressed this issue in 2019 in the case Sparkman v.
CONSOL Energy, Inc. Sparkman, the sole proprietor of a janitorial company, had
entered into several contracts with CONSOL of Kentucky, Inc. (“CKI”), the
wholly-owned subsidiary of CONSOL Energy, Inc. (“Energy”). Id. at 570. A year
after Sparkman hired Amy Little as part of his cleaning crew, CKI prematurely
cancelled two of those contracts without explanation and hired Little to take over
janitorial duties. Id. Sparkman brought suit, alleging in part that Energy had
interfered with the contractual relationship between CKI and Sparkman by
terminating the contracts and giving them to Little, who was having an extramarital
affair with one of Energy’s employees. Id.
In evaluating Sparkman’s tortious interference claim, our Supreme
Court noted its adherence to the Restatement (Second) of Torts approach to claims
of tortious interference. Nat’l Collegiate Athletic Ass’n By & Through Bellarmine
Coll. v. Hornung, 754 S.W.2d 855, 857 (Ky. 1988); RESTATEMENT (SECOND) OF
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TORTS § 769 (1979). The Sparkman Court was additionally persuaded by
Tennessee law to place the burden of proving wrongful means upon the plaintiff.
571 S.W.3d at 572 (citing Waste Conversion Sys., Inc. v. Greenstone Indus. Inc.,
33 S.W.3d 779, 780 (Tenn. 2000)). Our Supreme Court further adopted the
Tennessee definition of wrongful means and determined that Energy’s terminating
CKI’s contract to Sparkman in favor of Little was not wrongful, even if motivated
by the affair. Id. The Court explained that wrongful means were limited to “acts
which are wrongful in and of themselves, such as misrepresentations of facts,
threats, violence, defamation, trespass, restraint of trade, or any other wrongful act
recognized by statute or common law.” Id.
UPG contends that the circuit court erred in failing to undertake a
piercing-the-veil analysis as allegedly required by Kentucky tortious interference
law. UPG argues that “the trial court jumped to the conclusion that NGL Supply,
as a wholly-owned subsidiary, was identical to NGL Energy without performing
any analysis related to whether equity supported veil piercing.” Appellants’ Br. at
6. This is incorrect for a number of reasons, not least of which is that UPG has
raised this argument for the first time before our court. “It is axiomatic that a party
may not raise an issue for the first time on appeal.” Sunrise Children’s Servs., Inc.
v. Kentucky Unemployment Ins. Comm’n, 515 S.W.3d 186, 192 (Ky. App. 2016).
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Even if it had been properly raised before the circuit court, Kentucky
law clearly does not require veil-piercing in a tortious interference claim. Our
Supreme Court definitively set out the legal analysis for a tortious interference
claim in Sparkman, which provides parent companies privilege to interfere with
their wholly-owned subsidiaries’ contracts. However, UPG argues that because
our Supreme Court based its Sparkman analysis in part upon the Eighth Circuit’s
Phil Crowley Steel Corp. v. Sharon Steel Corp., 782 F.2d 781 (8th Cir. 1986)
(“Crowley II”), we should also find the associated appeal, Phil Crowley Steel Corp.
v. Sharon Steel Corp., 702 F.2d 719 (8th Cir. 1983) (“Crowley I”), persuasive in
requiring a piercing-the-veil analysis.
According to UPG, Crowley I demonstrates that a veil-piercing
analysis is necessary to afford a parent corporation privilege in interfering with its
subsidiary’s contractual and business relations. Appellants’ Br. at 5. This is not
the case. Crowley I did not hold that a parent corporation’s subsidiary must be its
alter ego to establish privilege in a tortious interference claim. Crowley I, 702 F.2d
at 722. Indeed, the Eighth Circuit applied Missouri law in Crowley I, which, like
Kentucky, abides by Restatement (Second) of Torts § 769 in claims of tortious
interference. Id. Crowley I held that a parent corporation could not be deemed “in
privity” with its subsidiary for the purposes of avoiding paying a successful
plaintiff’s attorneys’ fees in its subsidiary’s collateral litigation. Id. The court
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observed that “[i]n cases where a creditor seeks to recover from a parent
corporation for its subsidiary’s debts, . . . full ownership is not enough to find a
parent corporation identical to its subsidiary.” Id. As such, the holding of Crowley
I is irrelevant to the appeal before us.
Finally, neither the plain text of the Restatement (Second) of Torts §
769 nor any holding or dicta provided by the Sparkman Court suggests that a
parent corporation may only avoid liability for interference with its subsidiary’s
contractual relationships if it is identical to its subsidiary. Instead, a parent
corporation must only prove that it “wholly owns” its subsidiary,5 as NGL Energy
has done.
5
Our Supreme Court laid out the analysis for piercing the corporate veil in Inter-Tel
Technologies, Inc. v. Linn Station Properties, LLC, explaining:
A Kentucky trial court may proceed under the traditional alter ego
formulation or the instrumentality theory because the tests are
essentially interchangeable. Each resolves to two dispositive
elements: (1) domination of the corporation resulting in a loss of
corporate separateness and (2) circumstances under which
continued recognition of the corporation would sanction fraud or
promote injustice. In assessing the first element, the courts should
look beyond the five factors enumerated in White to the more
expansive lists of factors . . . .
....
In any event, where the parent is the wholly-owned
subsidiary of the grandparent; the grandparent has provided 100%
of the funds for the parent’s purchase of the subsidiary; the parent
itself has failed to follow corporate formalities; the grandparent
pays the subsidiary’s employees; the grandparent acts
interchangeably with the parent in filing tax returns regarding what
is supposedly the subsidiary’s business; and the officers of the
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Therefore, it is sufficient that NGL Energy has shown by affidavit that
it wholly owns NGL Supply.6 Thus, the burden fell on UPG to show that NGL
Energy acted detrimentally to NGL Supply’s interests or with wrongful means.
We agree with the circuit court that UPG failed to provide evidence
that NGL Energy acted detrimentally to NGL Supply’s interests. In its response to
NGL Energy’s motion for summary judgment, UPG merely asserts: “it is certainly
hard to envision that such termination served the economic interest of its
subsidiary.” R. at 232. Aaron Reece, Bryan Lehman, and Melissa Roberts, all
NGL Energy employees, testified that UPG was denied access to NGL Supply’s
terminals due to safety concerns following a report that a bumper had fallen off a
UPG truck inside the terminal. Reece testified that he revoked UPG’s access
subsidiary and parent are also officers of the grandparent it is
apparent that little, if any, effort has been exerted in maintaining
separate corporate identities . . . .
360 S.W.3d 152, 165, 166 (Ky. 2012). The Inter-Tel Court held that the first factor of the alter
ego test could be met in part by showing complete ownership of the subsidiary by the parent as
well as complete unity of interest and control. Id. at 166. Accordingly, showing that a
subsidiary is wholly-owned is only one small facet of the more rigorous alter ego test. Compare
with Sparkman, 571 S.W.3d at 572 (emphasis added) (“Based on the weight of authority in other
jurisdictions and this Court’s adherence to the Restatement (Second) of Torts on this issue, we
hold, as a matter of law, that a parent corporation has a privilege to interfere in the contractual
relations of its wholly-owned subsidiary, unless it employs wrongful means or acts contrary to its
subsidiary’s interests.”).
6
Although UPG contends that it ought to be given additional time for discovery into NGL
Energy’s corporate structure, we agree with the circuit court that UPG has had ample time to
take discovery. Over a year passed after our Court’s remand of this case back to the circuit court
before the circuit court’s second summary judgment, and UPG did not attempt to undertake any
further discovery during that time.
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because he thought they were an unsafe operator and that he had a duty to keep
everyone in the terminal safe. “[A] third party who has a financial interest in the
business of another may interfere with the contractual relations of that business if
he . . . acts to protect his interest from being prejudiced by the relation.”
Sparkman, 571 S.W.3d at 571 (citing RESTATEMENT (SECOND) OF TORTS § 769).
Protecting NGL Supply and NGL Energy’s employees, reputations, and economic
interests from lawsuits due to accidents is in the interest of both companies.
Nevertheless, NGL Energy might still be held liable if there is
evidence NGL Energy used wrongful means to interfere with NGL Supply’s
contract with UPG. “The issue [with wrongful means] is not simply whether the
actor is justified in causing the harm, but rather whether he is justified in causing it
in the manner in which he does cause it.” RESTATEMENT (SECOND) OF TORTS § 767
cmt. c (1979). According to the Sparkman Court:
Wrongful means is “defined to include acts which are
wrongful in and of themselves, such as
misrepresentations of facts, threats, violence, defamation,
trespass, restraint of trade, or any other wrongful act
recognized by statute or common law.” Id. at 784
(citations omitted); see also Restatement (Second) of
Torts § 769 cmt. d (referring back to wrongful means
stated in § 767 cmt. c, which include physical violence,
misrepresentation, prosecution of civil suits, criminal
suits, violations of recognized ethical codes, and other
unlawful conduct).
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Sparkman, 571 S.W.3d at 572. According to Crowley II, wrongful means may be
shown through misrepresentation. Crowley II, 782 F.2d at 783-84. “Fraudulent
misrepresentations are also ordinarily a wrongful means of interference and make
an interference improper.” RESTATEMENT (SECOND) OF TORTS § 767 cmt. c (1979).
“A representation is fraudulent when, to the knowledge or belief of its utterer, it is
false in the sense in which it is intended to be understood by its recipient.”
RESTATEMENT (SECOND) OF TORTS § 767 cmt. c (1979); Yung v. Grant Thornton,
LLP, 563 S.W.3d 22, 45 (Ky. 2018) (explaining that negligent misrepresentation
requires “that the declarant knew the representation was false or made it
recklessly”). “The misrepresentations that usually represent wrongful means are
those directed at the party ultimately breaching its contract with another.” Crowley
II, 782 F.2d at 783-84 (emphasis added).
UPG argues NGL Energy and NGL Supply’s “numerous and
conflicting” reasons as to why it terminated UPG’s access to its terminal constitute
misrepresentations. Additionally, UPG asserts that NGL Energy and Supply’s
explanations for termination, including UPG no longer being “set up” in NGL
Supply’s system and safety concerns, are false.7 In support of this argument, UPG
7
UPG claims without citation that these concerns were later proven false. Appellants’ Reply Br.
at 5.
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posed a series of questions to our Court.8 However, as the circuit court
summarized, there is no affirmative evidence to support UPG’s speculative
contentions:
The only statements from NGL Energy to NGL Supply,
the breaching party, are the ones from Melissa Roberts to
the Dexter, Missouri and West Memphis, Arkansas
terminal managers. An email sent on February 24,
2015[,] at 2:23 p.m. states: “Please lockout carrier STC.
We didn’t realize at the time they were setup [sic] that
they operated as United Propane Gas, which we do not
do business with . . . .” Melissa Roberts explained in her
deposition that NGL does not currently sell propane
directly to UPG. UPG has provided no evidence that this
is a misrepresentation of fact.
Further, UPG alleges that it was falsely told its terminal
access was denied because it was not “set up” in NGL’s
system. In two emails, NGL Supply’s terminal
manager[,] Eddie Malone[,] told UPG: “My home office
called to let me know that you are not setup [sic] to load
at West Memphis, AR or Dexter, MO. Do not send
anymore [sic] trucks to these locations for loads. We
cannot load them” and “All I know is I was told that you
were not setup [sic] and we could not load your trucks at
Dexter or West Memphis.” However, Melissa Roberts
8
UPG queried, again without citation:
If safety were the reason for termination, why would the NGL
entities give other opposing and unrelated rationales including the
false representations that it was related to technology problems or
payment concerns? How could Bryan Lehman make the decision
to terminate the agreement based on safety concerns if he was not
aware of any issues with an alleged malfunctioning truck? If it
were truly a policy of NGL to exclude carriers for safety concerns,
how had the company failed to turn away any other carrier or
implement any other safety-related exclusion in the past?
Appellants’ Reply Br. at 5.
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testified in her deposition about the conversation with
Eddie Malone, clarifying: “[W]henever we made the
decision to lock out the carrier we, I notified the terminal
[because] we had, you know, told them that they were
cleared, so we were then going back and telling them that
they were not cleared, so don’t load them.” These
statements were not misrepresentations of fact
constituting “wrongful means.”
R. at 278-79.
“[A] party opposing a properly supported summary judgment motion
cannot defeat it without presenting at least some affirmative evidence showing that
there is a genuine issue of material fact for trial.” Patton, 529 S.W.3d at 723
(citation omitted). “In order for circumstantial evidence to be sufficient to prove a
civil claim it must do more than suggest a possibility, and a recovery is not
authorized if liability is a matter of conjecture, surmise or speculation; if a [fact-
finder] is required to speculate, the party must lose upon whom the burden of proof
ultimately rests.” Gross v. Barrett, 350 S.W.2d 457, 459 (Ky. 1961).
Accordingly, we agree with the circuit court.
UPG additionally argues that there exists an issue of material fact as
to whether NGL Energy acted with “improper purpose” in causing NGL Supply to
terminate its Terminal Access Agreement under Hornung, 754 S.W.2d 855.9 In
9
UPG incorrectly maintains that cases interpreting § 769 of the Restatement (Second) of Torts
use the terms “wrongful means” and “improper purpose” interchangeably as a “defining
limitation of parent company privilege to interfere with subsidiaries’ contracts.” To support this
claim, UPG cites to cases applying Arkansas and Missouri law. See Crowley II, 782 F.2d at 783
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that case, our Supreme Court concluded that Section 767 of the Restatement “fairly
reflect[s] the prevailing law of Kentucky” regarding improper interference with
contractual relations. Id. at 857. Thirty-one years later, our Supreme Court relied
upon Hornung in choosing to apply the Restatement (Second) of Torts § 769 to
claims of intentional interference by parent corporations in contracts of their
wholly-owned subsidiaries. Sparkman, 571 S.W.3d at 571. Thus, Hornung
supplies a general rule for claims that “the opposing party ‘improperly interfered’
with [a party’s] prospective contractual relation[,]” whereas Sparkman applies to
specific situations in which a parent corporation has already been shown to wholly
own its subsidiary. Hornung, 754 S.W.2d at 859; Sparkman, 571 S.W.3d at 571;
see also RESTATEMENT (SECOND) OF TORTS § 767 cmt. b (1979).
Even if the “improper purpose” analysis were deemed to apply, UPG
has not presented the Court with a genuine issue of material fact as to whether
NGL Energy improperly interfered with NGL Supply’s access agreement with
UPG. Under Hornung, “Section 767 sets forth seven factors to be considered by
(holding that a parent company could be liable for interfering with its subsidiary’s contracts “to
the extent that they did not employ wrongful means or act for an improper purpose when
interfering”); T.P. Leasing Corp. v. Baker Leasing Corp., 293 Ark. 166, 171, 732 S.W.2d 480,
483 (1987) (“[A] parent corporation’s privilege permits it to interfere with another’s contractual
relations when the contract threatens a present economic interest of its wholly owned subsidiary,
absent clear evidence that the parent employed wrongful means or acted with an improper
purpose.”). The Sparkman majority cited both of these opinions and chose to exclude “improper
purpose” from its legal analysis; only the Sparkman dissent chose to impose this additional
element on parent corporations. Sparkman, 571 S.W.3d at 571-72, 574.
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the court . . .”; however, “[u]nless there is evidence of improper interference, after
due consideration of the factors provided for determining such, the case should not
be submitted to the jury.” Hornung, 754 S.W.2d at 858. In that case, Hornung
was denied a college football broadcast announcer position due to past gambling
activity, his playboy persona in a beer commercial, and his close association with
professional football. Id. at 859. Hornung alleged that those reasons were mere
subterfuge and he was in fact rejected so that another contender would get the job.
Id. Our Supreme Court held that, while improper means may “be inferred in an
interference action by proof of lack of justification,” something more than
speculation must be “presented to contradict the reasons given.” Id.
UPG again argues that “[t]he varied and conflicting reasons offered by
NGL Supply and NGL energy [are] certainly evidence sufficient to infer an
improper purpose for the underlying decision to cause the contract to be
terminated.” Appellants’ Br. at 11. UPG further alleges that NGL Energy’s safety
concern was frivolous because UPG’s tank was allowed to exit NGL Supply’s
terminal carrying propane, questioning: “If safety was the real reason for
termination, wouldn’t NGL Supply and NGL Energy maintain an incident report or
other evidence to record such a significant event? Would the same safety standard
be applied to other entities accessing the terminal?” Id.
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 From this argument, it is unclear what, if any, improper purpose the
fact-finder is intended to infer. UPG has failed to offer any evidence other than
conjecture to suggest that NGL Energy was not justified in its interference in its
subsidiary’s contract. “‘[C]onclusory allegations based on suspicion and
conjecture’ are not sufficient to create an issue of fact to defeat summary
judgment.” Henninger v. Brewster, 357 S.W.3d 920, 929 (Ky. App. 2012)
(quoting Harstad v. Whiteman, 338 S.W.3d 804, 812 (Ky. App. 2011)).
Summary judgment is also appropriate under Oklahoma law. To
establish a claim of tortious interference under Oklahoma law, a plaintiff must
prove: “(1) the interference was with an existing contractual or business right; (2)
such interference was malicious and wrongful; (3) the interference was neither
justified, privileged nor excusable; and (4) the interference proximately caused
damage.” Wilspec Techs., Inc. v. DunAn Holding Grp., Co., Ltd., 2009 OK 12, ¶
15, 204 P.3d 69, 74 (Okla. 2009). “Additionally, the claim is viable only if the
interferor is not a party to the contract or business relationship.” Id. “[T]he
determination of whether a parent corporation can be liable for tortious
interference with the contracts of a subsidiary is a question that must be determined
on a case by case basis, analyzing the factors provided in the Restatement
[(Second) of Torts § 767.]” Hawk Enterprises, Inc. v. Cash Am. Int’l, Inc., 2012
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OK CIV APP 66, ¶ 19, 282 P.3d 786, 794 (Okla. 2012). The Restatement
(Second) of Torts § 767 provides:
In determining whether an actor’s conduct in
intentionally interfering with a contract or a prospective
contractual relation of another is improper or not,
consideration is given to the following factors:
(a) the nature of the actor’s conduct,
(b) the actor’s motive,
(c) the interests of the other with which the actor’s
conduct interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of action
of the actor and the contractual interests of the other,
(f) the proximity or remoteness of the actor’s conduct to
the interference and
(g) the relations between the parties.
In Hawk, the court concluded that the exact relationship between the
defendant corporation and its subsidiary was not developed sufficiently to make a
determination as to their relationship. Hawk, 282 P.3d at 796. In that case, the
evidence did not establish whether the subsidiary was wholly or partially-owned,
nor did it disclose the extend of the decision-making authority of any shared
employees. The Hawk court held that the majority of the § 767 analysis was
informed by the relationship between the parties. Id. at 794.
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 This view was adopted by the Western District of Oklahoma in Davis
v. PMA Companies, Inc., although that court provided the following distinction:
Focusing on the last of § 767’s seven factors, the
relationship between the parties, the Hawk court reversed
summary judgment and remanded the case for additional
proceedings. In analyzing whether the parent-defendant
was a stranger to the contract between its subsidiary and
the plaintiff, the court looked both at the nature of the
underlying agreement—a franchise contract between the
plaintiff and the subsidiary, for which the parent had
signed a guaranty—and the relationship of the parent and
subsidiary. Emphasizing that “the exact relationship
between [the subsidiary] and the [parent-defendant]
[was] not fully developed in this record,” meaning it was
unclear whether the parent wholly or only partially
owned the subsidiary and the extent of the decision-
making authority and control of the parent over the
subsidiary, the court directed the parties to address those
“material” issues on remand. Id. ¶ ¶ 20–22, 292 P.3d at
795.
Unlike in Hawk, the relationship between the parties in
this case is clear. Not only does PMA wholly own
MMC, the SPA expressly gave PMA control over MMC
by granting PMA three of the five positions on MMC’s
Board of Directors. Moreover, the contracts involved in
this matter are different than those at issue in Hawk.
PMA is not just a guarantor of one party’s obligations to
another agreement. In contrast, the Employment
Agreement between MMC and Davis came about as a
result of the SPA between PMA and Davis. Given the
nature of the contracts and PMA’s control over MMC,
PMA is a party to the Employment Agreement. Thus,
since the alleged interferor—PMA—is not a stranger or
third-party, Davis cannot maintain a cause of action for
tortious interference.
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Davis v. PMA Companies, Inc., No. CIV-11-359-C, 2013 WL 866893, at *5 (W.D.
Okla. Mar. 7, 2013).
Similar to the case in Davis, the record in this case establishes that
NGL Energy was not a third party to the contract between NGL Supply and UPG.
Instead, NGL Energy wholly owns and exercises control over NGL Supply.
Reece, the Senior Vice President of NGL Liquids, a division of NGL Energy,
established that he directed, controlled, and signed the agreement between NGL
Supply and UPG. Reece further testified that “because we are [NGL Supply’s]
sole customer . . . we would be the ones that are kind of in charge of the terminal
access agreements . . . . We’re involved in the contract between NGL Supply and
UPG.” In this case, NGL Energy and NGL Supply were acting as and through
one, single person – Reece. This evidence is uncontroverted.
Given the nature of the contract and the relationship between NGL
Energy and NGL Supply, NGL Energy is not a stranger or third-party to the
terminal access agreement and is therefore privileged to interfere with the contract.
Under Oklahoma law, UPG cannot maintain a claim of tortious interference.
IV. CONCLUSION
In light of the foregoing, we affirm the judgment of the McCracken
Circuit Court.
ALL CONCUR.
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BRIEFS FOR APPELLANTS: BRIEF FOR APPELLEE:
David L. Kelly C. Thomas Miller
Paducah, Kentucky Matthew S. Eddy
Paducah, Kentucky
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