Counterclaim Alleging Tortious Interference With Business Relationships Dismissed

On September 4, 2024, Justice Margaret A. Chan dismissed a counterclaim by defendant Brookline, LLC d/b/a Lilogy (Lilogy) for tortious interference with business relations. The case is BT Supplies West, Inc. v. Brookline, LLC, Index No. 651364/2023. Schlam Stone & Dolan LLP represented plaintiff BT Supplies West, Inc. (BT Supplies) in the matter.

BT Supplies and Lilogy were parties to a contract (the “Supply Agreement”) under which BT Supplies agreed to provide certain Covid-related personal protection equipment further to purchase orders obtained by Lilogy or by Cardinal Sourcing Solutions (Cardinal). Cardinal, which was a supplier for WB Mason, was also a party to the Supply Agreement but not to the current action, and WB Mason was party to neither the Supply Agreement nor the lawsuit.

Claims between BT Supplies and Lilogy arising from BT Supplies’ inability to fulfil a purchase order that had been issued by Cardinal for W.B. Mason (the “First Purchase Order”) were resolved in arbitration, as called for by the Supply Agreement.

There was a subsequent purchase order (the “Second Purchase Order”), issued by Lilogy as a substitute for the First Purchase Order. The Second Purchase Order “required BT Supplies to deliver the same 5.5 million of alcohol wipes [called for by the First Purchase Order] to non-party Far From Boring, Inc. (FFB), a company that sources goods for non-party Home Depot.” Slip op., p. 2. BT Supplies attempted to assert a claim in the arbitration against Lilogy under the Second Purchase Order, but the arbitrator found that claim was not arbitrable “since the Supply Agreement . . . did not involve FFB or Home Depot.” Id., p. 4 (quoting arbitral decision.) When BT Supplies sued Lilogy for breach of the Second Purchase Order, Lilogy counterclaimed for tortious interference with its business relationship with FFB. Justice Chan granted BT Supplies’ motion to dismiss the counterclaim.

Lilogy’s allegations that BT Supplies interfered with its relationship with FFB, and that BT Supplies acted with the sole purpose of harming Lilogy, were based on arbitration testimony from BT Supplies “that doing business with Lilogy had left a ‘bad taste’ in its mouth and that it felt it had gotten ‘screwed’ by Lilogy”, from which Lilogy alleged that “BT Supplies must have therefore made similar statements to FFB in private communications to tortiously interfere with Lilogy and FFB's business relationship.” Id., p. 6.

Justice Chan found that Lilogy’s claim based on these contention sounded in defamation and, whether regarded as a claim for tortious interference with business relations, as pleaded, or for fraud or misrepresentation, as it attempted to recast it on briefing, “Lilogy cannot circumvent the one·year statute of limitations for defamation pursuant to CPLR 215(3) . . ..”

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning tortious interference with business relationships, defamation or statutes of limitation.