Business Torts in Georgia
A business tort is a wrongful injury to a business other than a breach of contract.
Generally, when someone refers to a business tort, they mean a tort other than negligence.
There are two common types of business torts: (1) intentional interference with contractual relations; and (2) intentional interference with business relations.
To be liable for tortious interference, the wrongdoer must be a stranger to the contract or business. Generally, this means that the person at fault should not be a party to the contract, a member of the business, or in any way involved with either. But this does not generally include competitors; a business competitor is often the party committing the business tort.
The elements of tortious interference with contractual relations, business relations, or potential business relations are: (1) improper action or wrongful conduct by the defendant without privilege; (2) the defendant acted purposely and with malice with the intent to injure; (3) the defendant induced a breach of contractual obligations or caused a party or third parties to discontinue or fail to enter into an anticipated business relationship with the plaintiff; and (4) the defendant’s tortious conduct proximately caused damage to the plaintiff. Dalton Diversified, Inc. v. AmSouth Bank, 270 Ga. App. 203, 208-09 (2004).
For specific questions and more examples of what constitutes a tortious interference, contact us today for a free consultation.
Breach of Fiduciary Duty
Another common business tort is a breach of fiduciary duty. These torts usually occur when a corporate officer or manager enters into transactions with a conflict of interest, making it difficult for the offending party to remain loyal to one of the businesses. A manager, officer, director, or business partner should act in a manner they believe to be in good faith to be in the best interests of their business.
Some fiduciary duties can be altered, added, or eliminated by adoption into corporate by-laws or by operating agreement. When managing the affairs of a limited liability company (LLC), a member must act in good faith in the best interests of the LLC. If a member is not managing the affairs of the LLC, then no duty exists. ULQ, LLC v. Meder, 293 Ga. App. 176, 176, 666 S.E.2d 713, 715 (2008).
A former employee’s solicitation of their employer’s customers is a major cause of business lawsuits. But an employee is permitted to solicit his former customers on behalf of a new employer. Fair competition is always legal, and absent a valid noncompete agreement or a non-solicit covenant, a former employee may go to customers whom he procured for the old employer and endeavor to try to persuade them to change their trade to his advantage. Hilb, Rogal & Hamilton Co. of Atlanta, Inc. v. Holley, 284 Ga. App. 591, 591, 644 S.E.2d 862, 864 (2007).
Another common breach of fiduciary duty is a wrongful appropriation of a business opportunity. There is a two-step process for determining when liability for wrongful appropriation of a business opportunity is imposed. First, a court must determine whether the appropriated opportunity was in fact a business opportunity rightfully belonging to the corporation. If a court finds that the business opportunity was not a corporate opportunity, the directors or officers who pursued the opportunity for personal benefit are immune from liability. However, if the court finds that the business opportunity was a bona fide corporate opportunity, the court must determine whether the corporate official violated a fiduciary duty in appropriating that opportunity. Regarding the second step, liability should not be imposed upon the acquiring officer if the evidence establishes that his acquisition did not violate his fiduciary duties of loyalty, good faith, and fair dealing toward the corporation. Bob Davidson & Assocs. v. Norm Webster & Assocs., 251 Ga. App. 56, 56, 553 S.E.2d 365, 366 (2001).
Business Tort Lawyer in Augusta, GA
The law surrounding business torts can be very complicated. That is why it’s important to find a lawyer who is well-versed in business torts. To talk to a business tort lawyer in Augusta, GA, contact us today.