MARK FOSTER ET AL., APPELLANTS, v. RICHARD H. CHURCHILL, JR., ET AL.,
RESPONDENTS, ET AL., DEFENDANTS.
87 N.Y.2d 744, 665 N.E.2d 153, 642 N.Y.S.2d 583 (1996).
March 26, 1996
1 No. 41(1996 NY Int. 50)
Decided March 26, 1996
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This opinion is uncorrected and subject to revision before publication
in the New York Reports.
Joel M. Miller, for Appellants.
T. Barry Kingham, for Respondents.
SMITH, J.:
The issues presented by this appeal are (1) whether the Appellate
Division erred in concluding that appellants had not established a
claim of tortious interference and (2) whether the Appellate Division
erred in affirming the dismissal of appellants' defamation claim.
Appellants Mark Foster and Don Franco are the founders and former
chief executive officers of defendant Microband Companies Incorporated
("Microband").(n 1) Microband, incorporated in Delaware, with
offices in New York, Washington, D.C. and Detroit, was engaged in the
wireless multi-channel cable television business. Respondents,
collectively referred to as the TA defendants, are a group of venture
capital firms and their principals, Richard H. Churchill, Jr. and
David D. Croll. Respondents Churchill and Croll were also directors of
Microband. Though appellants founded Microband, at some point
appellants sold Microband and in 1985 sought to repurchase the
company. Respondents provided substantial financing for appellants'
repurchase of Microband, resulting in respondents' owning a 75% equity
interest in the company and appellants' together owning the remaining
25%.
In 1987, Microband was refinanced with a loan of approximately $25
million from defendants New York Life Insurance Company and New York
Life Insurance and Annuity Corporation (the New York Life defendants).
This loan resulted in the New York Life defendants obtaining nearly
13% of Microband's outstanding stock. Microband was refinanced again
in 1989, receiving funds from both the New York Life defendants and
respondents TA defendants. At the time of the 1989 refinancing,
appellants amended their employment agreements with Microband,
SNIPPETS:
Joel M. Miller, for Appellants.
T. Barry Kingham, for Respondents.
The issues presented by this appeal are whether the Appellate Division erred in concluding
Appellants Mark Foster and Don Franco are the founders and former chief executive officers of
Respondents, collectively referred to as the TA defendants, are a group of venture capital
Microband was refinanced with a loan of approximately $25 million from defendants New York
At the time of the 1989 refinancing, appellants amended their employment agreements with
Termination for cause, however, was authorized and would result in appellants receiving no
In January 1989, the New York Life defendants conditioned an additional $10 million in
At a meeting of Microband's board of directors, the decision was made to hire outside
respondents Churchill and Croll circulated a "Schedule of Actions Constituting Cause"
Appellants also asserted claims against the New York Life defendants for breach of contract,
Although initially noting that Microband could have fired appellants for no reason, Supreme
Prior to dismissing the claims against the TA defendants, the court considered two defenses
Supreme Court concluded that the business judgment rule provided no protection to respondents
As to the claim of tortious interference, the court concluded that respondents were protected
Corp. (24 NY2d 682), it concluded that the respondents had established the defense of
Appellants appeal to this Court contending that the Appellate Division erred by requiring
Thus the Appellate Division did not establish a new standard for claims of tortious
that economic interest is a defense to an action for tortious interference with a contract
Even though a statement is defamatory, there exists a qualified privilege where the
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