Jessica Maclean v. Kate Chase Ryan

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
JESSICA MACLEAN, a married No. 69548-7-1
individual,
Appellant,
v.
KATE CHASE RYAN, a married
individual, and ADVANCED
EDUCATORS, LLC, a Washington
limited liability company, UNPUBLISHED OPINION
Respondents. FILED: December 16, 2013
Verellen, J. — Jessica MacLean prevailed against Advanced Educators, LLC at
trial on her breach of oral contract claim. She now appeals the trial court's summary
judgment dismissing her claims against Advanced Educators and Kate Chase Ryan, the
sole member of Advanced Educators, for intentional interference with business
expectancies. MacLean alleged that Advanced Educators tortiously interfered with her
business expectancies by contacting the National Certification Board for Therapeutic
Massage and Bodywork (National Certification Board) alleging MacLean had misused
Advanced Educators' approved provider number. Even assuming prima facie evidence
of tortious interference, Advanced Educators' decision to notify the National Certification
Board was privileged. A written contract between the parties expressly provided that
any misuse ofAdvanced Educators' provider number by MacLean entitled Advanced
No. 69548-7-1/2
Educators to notify the National Certification Board. MacLean's additional arguments
regarding individual liability of Ryan are not persuasive. We affirm.
FACTS
Jessica MacLean conducts trainings for massage and bodywork therapists, and
does business under the names of EarthSpa Health Traditions and International
Cupping Therapy Association. MacLean's courses are designed to meet state licensing
requirements and count toward certification through the National Certification Board.
In July 2008, Kate Ryan, the sole member of Advanced Educators, approached
MacLean to ask for her help in developing Advanced Educators' marketing materials.
MacLean orally agreed to provide marketing services, including graphic design, to
Advanced Educators in exchange for Advanced Educators' agreement to market
MacLean's courses through 2009.
MacLean also suggested to Ryan that Advanced Educators should obtain
approved provider status directly from the National Certification Board. By the end of
2008, Advanced Educators had obtained its own approved provider number from the
National Certification Board.1
The parties then entered into a written contract that defined the terms by which
MacLean would apply for certification of her courses to the National Certification Board
using Advanced Educators' approved provider number, and the terms by which
MacLean could advertise her courses using that number. The contract specifically
provided:
1MacLean's courses were initially approved for continuing education credit in
2006 by the National Certification Board, using the approved provider number of the
Northwest Coalition of Massage Educators.
No. 69548-7-1/3
• Instructors agree to use very specific terminology to denote that only
theirCLASSES are [National Certification Board] approved. Advanced
Educators will be the "Approved Provider" and at no time may an
Instructor imply that they are the "Approved Provider."
• Inappropriately representing [Advanced Educators], the [National
Certification Board,] or your status as a provider will result in
immediate discontinuation of your relationship with [Advanced
Educators] as well as termination of your relationship with [the National
Certification Board] via Advanced Educators.121
According to MacLean, she fulfilled her obligation to provide marketing consulting
services, but Ryan failed to list and market MacLean's classes on the Advanced
Educators' website and in other Advanced Educators' marketing materials. Ryan sent
an e-mail to her website editor in November 2008 directing him not to devote time to
MacLean's course materials because Ryan was going to "fire" MacLean anyway.
According to MacLean, she properly submitted her class schedule for inclusion on
Advanced Educators' website, but Ryan failed to list and market it.
On July 14, 2009, Ryan wrote to MacLean, informing her that due to McLean's
misuse of Advanced Educators' approved provider number in an Oregon periodical
called Massage Monthly, Ryan was terminating MacLean from the Advanced Educators
National Certification Board program. She also informed MacLean that she sent letters
to the National Certification Board informing them of MacLean's misuse of the
Advanced Educators' approved provider number.3 As a result, MacLean's courses
were no longer credentialed through Advanced Educators, and any certificates
MacLean had issued from the beginning of 2009 through July 14, 2009 were invalid.
2Clerk's Papers at 39.
3 These letters are not included in the record.
No. 69548-7-1/4
Because attendees of MacLean's courses need the approved provider status to obtain
continuing education credit, MacLean's classes were cancelled.
On July 29, 2010, MacLean received a letter from the National Certification
Board informing her that her application for her own approved provider number had
been denied due to MacLean's alleged ongoing misuse of the National Certification
Board trademark from as early as April 2008.4
On November 11, 2009, Ryan sent a letter to the National Certification Board to
inform itthat MacLean had been publishing her own certificates for course completion,
contrary to the provision in the parties' contract, stating, "While an Instructor may
distribute a proprietary certificate of some sort, the official [National Certification Board]
certification will be e-mailed only by [Advanced Educators]."5 The November letter also
repeated that MacLean had misused Advanced Educators' provider number. By
December 2010, MacLean resolved the "misunderstanding" with the National
Certification Board and obtained her own approved provider number.
MacLean filed suit against Advanced Educators and Ryan individually on
August 26, 2010 for breach of oral contract, quantum meruit/unjust enrichment, violation
of the Consumer Protection Act, and intentional interference with business
expectancies. Advanced Educators and Ryan moved for summary judgment dismissal
of all of MacLean's claims.6 The trial court dismissed with prejudice the claims for
tortious inference and emotional distress. The court dismissed without prejudice the
4According to MacLean, the only error in using Advanced Educators' approved
provider number occurred because of a typographical error in the Massage Monthly
newsletter, which advertised that MacLean was the actual approved provider.
5Clerk's Papers at 40.
6 MacLean also requested emotional distress damages.
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Consumer Protection Act claim.7 Finally, the court dismissed with prejudice all ofthe
claims against Ryan individually.
The breach of oral contract claim went to trial and MacLean prevailed, obtaining
a judgment against Advanced Educators for $49,223. MacLean appeals the trial court's
dismissal of her claims for intentional interference with business expectancies against
Advanced Educators and the dismissal of her claims against Ryan individually.8
DISCUSSION
We review de novo a trial court's decision on summary judgment, performing the
same inquiry as the trial court.9 We may affirm an order granting summary judgment on
any basis supported by the record.10,11
a. Tortious Interference Against Advanced Educators
The elements of a claim for tortious interference with a business expectancy are:
(1) a valid contractual relationship or business expectancy; (2) the defendant's
7The orders dismissing the claims do not address the status of the unjust
enrichment claim.
8 MacLean has not appealed the dismissal of her claims against Advanced
Educators for the Consumer Protection Act violation and emotional distress.
9 Lvbbert v. Grant County. 141 Wn.2d 29, 34, 1 P.3d 1124 (2000). We view all
facts and reasonable inferences therefrom most favorably toward the nonmoving party,
jd. Summary judgment is proper if the pleadings, affidavits, and depositions establish
that there is no genuine issue as to any material fact and the moving party is entitled to
judgment as a matter of law. kL; CR 56(c). Ifthe nonmoving party fails to controvert
material facts supporting the summary judgment motion, those facts are considered to
be established. Cent. Wash. Bank v. Mendelson-Zeller, Inc.. 113 Wn.2d 346, 354, 779
P.2d 697 (1989).
10 LaMon v. Butler, 112 Wn.2d 193, 200-01, 770 P.2d 1027(1989).
11 Ryan has moved to strike the four exhibits MacLean designated for inclusion in
the appellate record. Consistent with RAP 9.12, we consider only the evidence
presented to the court on summary judgment. Therefore, we do not consider Exhibits
85 and 86. We do consider Exhibits 75 and 89 because those are duplicates of exhibits
presented on summary judgment.
No. 69548-7-1/6
knowledge of the relationship or expectancy; (3) an intentional interference inducing a
breach or termination of that relationship; (4) interference by an improper purpose or
improper means; and (5) damages.12 Even if a plaintiff has prima facie evidence ofall
five elements, the defendant may refute the claim by showing the actions were
privileged.13
MacLean contends the record definitively establishes the first three elements and
that there are genuine issues of material fact as to the fourth and fifth elements.
Advanced Educators concedes it had knowledge of MacLean's business expectancies,
but argues MacLean lacks prima facie evidence of all other elements. Further,
Advanced Educators argues that Ryan's decision to contact the National Certification
Board was contractually privileged. We agree, and therefore decline to analyze whether
MacLean presented prima facie evidence of all five elements.
Under Washington law, an "interferor" may assert a defense to intentional
interference based on privilege:
The basic issue raised by the assertion of the defense is whether, under
the circumstances of the particular case, the interferor's conduct is
justifiable, bearing in mind such factors as the nature of the interferor's
conduct, the character of the expectancy with which the conduct
interferes, the relationship between the various parties, the interest sought
to be advanced by the interferor, and the social desirability of protecting
the expectancy or the interferor's freedom of action.[14]
12 Leinqang v. Pierce County Med. Bureau. Inc.. 131 Wn.2d 133, 157, 930 P.2d
288(1997).
13 Pleas v. City of Seattle. 112 Wn.2d 794, 800, 774 P.2d 1158 (1989).
14 Calbom v. Knudtzon. 65 Wn.2d 157, 163, 396 P.2d 148 (1964).
No. 69548-7-1/7
Therefore, "[e]ven if a prima facie case is made out, one who in good faith asserts a
legally protected interest of his own that he believes may be impaired ... is not guilty of
tortious interference."15
MacLean relies on two instances of alleged interference: (1) the reference in the
July 14, 2009 letter from Advanced Educators to MacLean that Ryan had already
contacted the National Certification Board to report MacLean's misuse of Advanced
Educators' approved provider number,16 and (2) Ryan's November 11, 2009 e-mail to
the National Certification Board to repeat that MacLean had misused Advanced
Educators' approved provider number.
Based on the written contract, Advanced Educators had the right to immediately
discontinue MacLean's relationship with Advanced Educators and terminate the
relationship with the National Certification Board via Advanced Educators in the event
MacLean "[inappropriately represented] [her] status as a provider."17 The contract
15 Dauphin v. Smith. 42 Wn. App. 491, 495, 713 P.2d 116 (1986); Quadra
Enters.. Inc. v. R.A. Hanson Co.. Inc.. 35 Wn. App. 523, 526-27, 667 P.2d 1120 (1983);
Restatement (Second) of Torts § 773, at 52 (1977) (exercising in good faith one's
legal interests is not improper interference); see, e.g., Eicon Const.. Inc. v. E. Wash.
Univ.. 174 Wn.2d 157, 168-69, 273 P.3d 965 (2012) (university sent a copy of the
termination for cause letter to a drilling contractor's surety; court reasoned that the
university had an interest in notifying the contractor's surety of its potential claim,
therefore the university had not intentionally interfered with contractor's business
interests).
16 The June 2009 letter also stated that Advanced Educators would withdraw
certification of all MacLean's classes dating back to January 2009 due to the allegation
that MacLean had provided certificates to course attendees that were not issued by
Advanced Educators. We do not address this claim of interference, as these actions
related to past course participants, not to prospective course participants. A valid
business expectancy includes any prospective contractual or business relationship that
would be of pecuniary value. Newton Ins. Agency & Brokerage. Inc. v. Caledonian Ins.
Group. Inc.. 114Wn. App. 151, 158, 52 P.3d 30 (2002).
17 Clerk's Papers at 39.
No. 69548-7-1/8
explicitly identified the consequences of misuse of the approved provider number.
When Advanced Educators learned that the advertisement placed by MacLean in the
Massage Monthly newsletter misrepresented that MacLean was the approved provider,
Ryan notified the National Certification Board that MacLean had misused Advanced
Educators' approved provider number. The written contract expressly provided for such
notice to the National Certification Board. Advanced Educators had a legitimate interest
in ensuring it would not lose its certification due to MacLean's alleged misuse of the
number.18 Finally, Ryan's communication with the National Certification Board does not
reveal a bad faith attempt to interfere with MacLean's then-pending application for her
own provider number.
Because the action taken by Advanced Educators/Ryan in notifying the National
Certification Board was specifically allowed by the contract between the parties, we hold
that dismissal of the intentional interference claim against Advanced Educators was
proper.19
b. Individual Claims Against Ryan
MacLean named Ryan individually as an additional defendant in her intentional
interference and Consumer Protection Act claims. She argues the trial court improperly
18 Ryan stated in her declaration, "The purpose of my communication to [the
National Certification Board] was to ensure that Advanced Educators, LLC's certification
would not be impacted by Plaintiff's improper actions." Clerk's Papers at 69. In
MacLean's reply brief, she argues the minor typographical error in the Massage Monthly
newsletter that incorrectly implied she was a preferred provider should not trigger the
contract provision allowing for termination of her use of Advance Educators' provider
number. Advanced Educators had the right under the plain language of the contract to
report the misuse, however insignificant, to the National Certification Board.
19 Advanced Educators argues MacLean's intentional interference claim is
precluded by the independent duty doctrine, butthe Washington Supreme Court
specifically has held the independent duty rule does not bar a claim for tortious
interference. Eicon. 174 Wn.2d at 165-66.
8
No. 69548-7-1/9
dismissed the individual claims against Ryan on summary judgment because
RCW 25.15.125(1) provides that members or managers of a limited liability company
are personally liable for their own torts. But MacLean misunderstands the rest of
RCW 25.15.125(1), which specifically provides that the liability of a limited liability
company, "whether arising in contract, tort or otherwise, shall be solely the .. . liabilities
of the limited liability company." She also fails to recognize that the privilege held by
Advanced Educators also extends to Ryan, who legitimately acted on behalf of the
limited liability company.
Notwithstanding the liability shield set forth in RCW 25.15.125(1), "[a]n ... agent
is personally liable to a third party injured by his or her tortious conduct, even ifthat
conduct occurs within the scope ofemployment or agency."20 "But '[a]n agent is subject
to tort liability to a third party harmed by the agent's conduct only when the agent's
conduct breaches a duty that the agent owes to the third party.'"21
MacLean argues that because "no one but [Ryan] made the decision to
intentionally and wrongfully interfere with plaintiff's business expectancies," Ryan is not
protected by RCW 25.15.125(1).22
While MacLean is correct that Ryan could theoretically be individually liable for
tortious conduct, the intentional interference claim against Ryan fails as a matter of law
because both Advanced Educators' and Ryan's actions were privileged. An agent of a
corporation is shielded from individual liability for intentional interference with a business
expectancy so long as the actions of the agent are done on behalf of the corporate
20 Annechino v. Worthy. 175 Wn.2d 630, 638, 290 P.3d 126 (2012).
21 \^ (quoting Restatement (Third) of Agency § 7.02 (2006)).
22 App. Br. at 22.
No. 69548-7-1/10
principle in good faith, which "in this context means nothing more than an intent to
benefit the corporation."23 "The good faith test merely prevents corporate officers from
pursuing purely personal goals with no intent to benefit the corporation."24 This defense
to a claim of intentional interference is sometimes analyzed as a matter of privilege.25
We have concluded that Advanced Educators' conduct in enforcing its contract
right to protect its own account provider number was a privileged act. Advanced
Educators acted through its agent, Ryan. There is no showing that Ryan was pursuing
a purely personal goal. Ryan is not subject to personal liability for asserting the
legitimate privilege on behalf of Advanced Educators.
Additionally, to the extent MacLean's arguments suggest she can reach Ryan by
"piercing the corporate veil" of the limited liability company, she provides no persuasive
argument. RCW 25.15.06026 permits a court to pierce the veil of a limited liability
company and hold a member personally liable if respecting the limited liability company
form would work injustice. To pierce the corporate veil, a plaintiff must show (1) the
corporate form was used to violate or evade a duty, and (2) the corporate veil must be
disregarded to prevent loss to an innocent party.27 MacLean presents no evidence or
23
Olympic Fish Prods. Inc. v. Lloyd. 93 Wn.2d 596, 599, 611 P.2d 737 (1980).
24 Id, at 600.
25 See, e.g.. Deep Water Brewing LLC v. Fairway Resources Ltd.. 152 Wn. App.
229, 263, 215 P.3d 990 (2009) ("The issue does appear to be treated as a matter of
privilege or justification.").
26 "Members of a limited liability company shall be personally liable for any act,
debt, obligation, or liability of the limited liability company to the extent that shareholders
of a Washington business corporation would be liable in analogous circumstances."
27 Wash. Water Jet Workers Ass'n v. Yarbrough. 151 Wn.2d 470, 503, 90 P.3d
42 (2004).
10
No. 69548-7-1/11
argument to demonstrate either that the corporate form was used to violate or evade a
duty or that the corporate veil must be disregarded to prevent loss to an innocent party.
Finally, MacLean contends that the Consumer Protection Act claim applies to
Ryan individually. But MacLean provides only a general summary of the elements and
a citation to a single case where the unfair act or practice extended to an individual
owner of a business. MacLean has not even discussed how the evidence might satisfy
the Hangman Ridge requirements for Consumer Protection Act claims.28 MacLean has
not provided adequate briefing to support her theory that Ryan could be individually
liable under the Consumer Protection Act.
Affirmed.
WE CONCUR:
(A^h^, ^ z
28 Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co.. 105 Wn.2d 778,
785-86, 719 P.2d 531 (1986).
11