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Sparkman v. Consol Energy, Inc.

Supreme Court of Kentucky

April 18, 2019

KEITH RANDALL SPARKMAN, D/B/A IN-DEPTH SANITARY SERVICE GROUP APPELLANT
v.
CONSOL ENERGY, INC. AND CONSOL OF KENTUCKY, INC. APPELLEES

          ON REVIEW FROM COURT OF APPEALS CASE NOS. 2009-CA-001926-MR AND 2009-CA-002123-MR KNOTT CIRCUIT COURT NO. 06-CI-00060

          COUNSEL FOR APPELLANT: Adam Peter Collins COLLINS, COLLINS & CONLEY, PSC Nicholas C. A. Vaughn LAW OFFICE OF NICK VAUGHN, P.A.

          COUNSEL FOR APPELLEES: Virginia Hamilton Snell Thomas Travis WYATT, TARRANT & COMBS, LLP

          OPINION

          VANMETER JUSTICE.

         For a party to be liable for tortiously interfering with a contractual relationship, said party must intentionally and improperly interfere with another's existing or prospective contractual relation. The issue before this Court today is whether a parent company may be held liable for tortious interference with a contractual relationship between its wholly-owned subsidiary and a third party. By following our adherence to the Restatement (Second) of Torts (1979) on this issue, we hold that a parent company has a qualified privilege to interfere with the contractual relations of its wholly-owned subsidiary unless it employs wrongful means, or its interference is not in the economic interest of the subsidiary. Accordingly, we affirm.

         I. Factual and Procedural Background.

         Keith Sparkman, doing business as the sole proprietor of In-Depth Sanitary Services Group ("Sparkman"), entered into several business arrangements to provide janitorial services at the "Jones Fork," "Mill Creek," and "Slope Mine" mining operations of CONSOL of Kentucky, Inc. ("CKI"). CKI is the wholly-owned subsidiary of CONSOL Energy, Inc. ("Energy"). In late 2004, Sparkman hired Amy Little on to his cleaning crew. In February 2005, two of Sparkman's contracts were cancelled prior to their natural expiration. The original termination letter did not give a reason for the termination of the contracts. On March 1, 2005, a day after the termination of two of Sparkman's contracts, Little was hired to take over the janitorial duties at both operations. Sparkman's final contract was terminated in June 2005, after he was deemed a security risk for attempting to record multiple conversations with CKI and Energy employees. In the final termination letter, Craig Campbell, a human resources supervisor, stated that the initial two contracts were terminated due to Sparkman's "failure to satisfactorily perform his work and failure to correct the deficiencies after notice of the same."

         In 2006, Sparkman brought suit against CKI, Energy, three employees at the operations where Sparkman had contracts, and Little. The case was tried in 2009 on three separate claims. First, Sparkman had two year-to-year contracts and one month-to-month contract, and Sparkman alleged that CKI breached the contracts by terminating them early without cause. The jury decided for Sparkman on this claim and awarded him $34, 500. The second claim was that CKI interfered with the contractual relation between Little and Sparkman. CKI received a directed verdict on this issue at trial.[1]

         Lastly, Sparkman claimed that Energy interfered with the contractual relationship between Sparkman and CKI by terminating his contracts and giving them to Little at the request of Clell Scarberry, a mine foreman, who was having an extramarital affair with Little.[2] This claim survived a directed verdict motion at trial, and the jury found for Sparkman on the issue, awarding him $678, 000 for tortious interference, pain and suffering, and punitive damages. The trial court denied Energy's JNOV motion, and after an initial appeal resulted in a reversal on a procedural issue, this Court remanded to have the Court of Appeals review the issues on the merits. On remand, the Court of Appeals opined that a parent company cannot tortiously interfere with a wholly-owned subsidiary unless it employs wrongful means when interfering. Further, the Court of Appeals held that the affair between Little and Scarberry, and Scarberry's request to move the contract from Sparkman to Little did not amount to wrongful means, and therefore, Energy was privileged to interfere.[3]This appeal followed.

         II. Standard of Review.

         When a denial of a JNOV motion is appealed,

we are to affirm unless there is a complete absence of proof on a material issue in the action, or if no disputed issue of fact exists upon which reasonable men could differ. Likewise, the trial court is vested with a broad discretion in granting or refusing a new trial, and this Court will not interfere unless it appears that there has been an abuse of discretion.

Storm v. Martin, 540 S.W.3d 795, 800 (Ky. 2017) (citation omitted).

         III. ...


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