Cyber-Theft Libel/Slander Tortious Interference

From Dale Whitman -- Dirt Blog

Recent Development Close It! Title Services, Inc. v. Nadel, 248 A.3d 132 (D.C. 2021). Attorney’s criticism of title company can comprise the tort of interference with business relationship Prepared by Barlow Burke and Dale Whitman

The purchasers of a house were victimized by a typical wire transfer scam. They received an email, purportedly from the title company, giving them a different routing and account number than the title company had previously given them. The email was a scam, but the purchasers wired $1.57 million to the false account and the money was lost to the cybercriminals.

They hired Nadel to represent them in a suit against the title company. Shortly after the suit was filed, Nadel stated in an interview with a local radio station that the title company “either caused our money to be stolen or stole it,” and that “if they weren't responsible for helping steal the money, it certainly seems like they knew well in advance of that closing that the money was gone.” He further stated that the title company did not have “any evidence that it happened because of hackers other than [the company’s] say so.” These statements were repeated on Nadel’s law firm’s web site. The title company demanded a retraction, but Nadel refused.

The house purchasers’ suit against the title company, after mediation, was dismissed with prejudice. The title company then sued Nadel, the buyers’ attorney, for both defamation and the tort of interference with a business relationship, on account of his public statements. The D.C. Court of Appeals rejected the defamation claim; it held that, to be defamatory, the statements must make the plaintiff “appear odious, infamous, or ridiculous.” In context, “it would have been clear to the audience that, considered objectively, Nadel was speaking as an attorney, espousing a theory of liability to serve his clients’ interests, not making a personal accusation that appellants were ‘odious, infamous, or ridiculous.’”

However, the court found that the title company’s complaint stated a valid claim for the tort of interference with a business relationship. This tort requires proof of four elements: (1) a valid business relationship, (2) of which the defendant has knowledge, and (3) with which the defendant intentionally interfered, and (4) resulting in damages.

The first element of the tort was, the court said, adequately pled with the allegation that the plaintiff title company had established business relations with brokers, lenders, insurers, and buyers and sellers. The second element was adequately pled with an allegation that the defendant knew of these relationships. The third element was pled with an allegation that the defendant’s statements caused harm, but were not retracted when defendant was informed of the harm. The four and final element of the tort was adequately pled when the company’s revenues from business referred by brokers and lenders decreased after years of increase.

Comments:

1. As to the elements of the tort, the court did not require that specific business relationships be pled with particularity, and defendant’s knowledge of those relationships was shown when the title company was chosen because it was known to the defendant to be “the largest independently owned and operated title company” in the jurisdiction. Nor, the court said, need the intentional interference be malicious.

2. The court refused to apply the D.C. anti-SLAPP Act. Such statutes give a defendant an opportunity to get an early dismissal of a case, but only if the claim arises from an act – here, attorney Nadel's statements – “in furtherance of the right of advocacy on issues of public interest” Nadel argued that his public statements addressed the issue of cybercrime. However, the court was unconvinced; it found that Nadel was primarily advocating his client’s interests in a private lawsuit, not staking out a position on a matter of public interest.

3. The prospective buyers whose money was stolen noticed that the false wire instructions they received were different from those previously established by the title company for their closing – but that fact was irrelevant to the tort successfully pled here.

4. The scam here occurred in 2017. These days, title companies are much more apt to warn their buyers sternly about purported changes in wire transfer instructions, and to caution them to verify by phone call the routing and account numbers they are given, as well as verifying any purported changes. Emails are notoriously easy to spoof.

5. Attorneys need to consider the tortious side-effects of transactions going sour! They should be very cautious about publicly painting opposing parties in a bad light or accusing them of illegal conduct. It’s one thing to state your theory of the case, but quite another to defame your opponent or make statements than will cause businesses losses.