The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
International Administrators, Inc. ("IAI") and its president, Sheldon
Harrison ("Harrison") sue Life Insurance Company of North America
("LINA") in 12 counts claiming interference with IAI's contractual
relationships, interference with prospective advantage, breach of
contract and defamation. LINA has moved to dismiss the Complaint for
failure to state a cause of action. For the reasons contained in this
memorandum opinion and order, LINA's motion is granted as to Count VIII
and Counts X-XII and is denied as to all other Counts.*fn1
Complaint Counts I-V assert claims of interference with IAI's
contractual relations with the Iowa Department of the American Legion
(the "Iowa Legion"). Beginning in 1971 IAI was broker and administrator
for various group insurance programs of the Iowa Legion and its Ladies'
Auxiliary. In that capacity it placed a substantial part of that coverage
with LINA beginning in 1976.
Then the Complaint alleges that in March 1981 (Ct. I, ¶ 12; Ct.
II, ¶ 6; Ct. III, ¶ 4; Ct. IV, ¶ 4; Ct. V, ¶ 3 state
slightly different variants):
LINA communicated with [the Iowa Legion] and
intentionally acted in a way calculated to cause
damage to [IAI] by use of intimidation, force,
coercion and misrepresentation and threats to [the
Iowa Legion] with the malicious intent of preventing
[IAI] from fulfilling its contract with [the Iowa
Legion] and with the intent to induce [the Iowa
Legion] not to continue a valuable business
relationship with [IAI].
Two letters (Ex. D and E) from LINA to the Iowa Legion are attached to
the Complaint as evidence of LINA's illegal interference. Those identical
letters, written to two Iowa Legion officials, state that:
(1) LINA "ha(s) not received certain premiums on
policies . . . that were due as far back as
September, 1980," although the premiums had been
"collected by your broker, Mr. Sheldon Harrison . . .
but have not been remitted to" LINA.
(2) Because Harrison was the Iowa Legion's
"appointed broker, we are in a position that forces us
to terminate our relationship with your organization
as long as he is your representative."
(3) LINA meant the letters as "an intent to cancel"
the hospital indemnity coverage as of May 1, 1981.
As a direct result of such actions by LINA, the Complaint concludes,
the Iowa Legion cancelled its broker contract with IAI. This action
In this diversity action, Illinois law provides the substantive rule of
decision. LINA invokes Connaughton v. Gertz, 94 Ill. App.3d 265, 269, 49
Ill.Dec. 838, 841, 418 N.E.2d 858, 861 (1st Dist. 1981) to claim its
interference with IAI's contract was "privileged." Because a defendant's
intentional and unjustified inducement must be part of plaintiff's prima
facie case (id. at 269, 49 Ill.Dec. at 841, 418 N.E.2d at 861) LINA seeks
dismissal of Counts I to V.
Connaughton teaches the existence of a "privilege to interfere" rests
on two factors (id. at 270, 49 Ill.Dec. at 841, 418 N.E.2d at 861):
(1) Defendant must have brought about the breach of
plaintiff's contract by acting to protect a
conflicting interest considered under the law to be of
a value ...