Case IH Magnum 340 V 1.1

Before engaging in a detailed recitation of the specific facts alleged in HPI's complaint, we find it appropriate to first briefly summarize the factual background in this case. Mt. Vernon operated a hospital in Jefferson County, Illinois. Centerre is a trust company which acted as the trustee for a series of municipal bonds which had been issued to finance the facility used by Mt. Vernon as its hospital, and to whom Mt. Vernon made rental payments for its use of the hospital facility. Hospital Management and National Medical are hospital management companies which had been hired by Mt. Vernon to manage the hospital and, in particular, to collect payments owed to Mt. Vernon. From these collected funds, the management companies were to pay Mt. Vernon's creditors. HPI is a company that had a contract with Mt. Vernon to provide pharmaceutical goods and services for *152 the hospital. This action was initiated by HPI because Mt. Vernon failed to pay HPI for HPI's provision of these pharmaceutical goods and services.

Case IH Magnum 340 v 1.1

Whether it is a plaintiff's burden to plead lack of justification in an action for intentional interference with contract, or a defendant's burden to plead that its conduct was justified, is a question which has divided the courts in this country. (Compare Alyeska Pipeline Service Co. v. Aurora Air Service, Inc. (Alaska 1979), 604 P.2d 1090, 1095; Barlow v. International Harvester Co. (1974), 95 Idaho 881, 893, 522 P.2d 1102, 1114 (defendant has burden of proving justification), with Top Service Body Shop, Inc. v. Allstate Insurance Co. (1978), 283 Or. 201, 209-10, 582 P.2d 1365, 1371; Glenn v. Point Park College (1971), 441 Pa. 474, 479-82, 272 A.2d 895, 898-900 (plaintiff has burden of proving lack of justification).) In Illinois, this court has repeatedly stated that where the conduct of a defendant in an interference with contract action was privileged, it is the plaintiff's burden to plead and prove that the defendant's conduct was unjustified or malicious. (See Swager v. Couri (1979), 77 Ill.2d 173, 185; H.F. Philipsborn & Co. v. Suson (1974), 59 Ill.2d 465, 474; Arlington Heights National Bank v. Arlington Heights Federal Savings & Loan Association (1967), 37 Ill.2d 546, 551; Loewenthal Securities Co. v. White Paving Co. (1932), 351 Ill. 285, 299.) The term "malicious," in the context of interference with contractual *157 relations cases, simply means that the interference must have been intentional and without justification. (Belden Corp. v. InterNorth, Inc. (1980), 90 Ill. App.3d 547, 552 n. 1.) Therefore, before we can determine who has the burden of pleading justification (or a lack thereof), we must first decide whether the defendants' conduct here was protected by a privilege.

Courts will recognize a privilege in intentional interference with contract cases where the defendant was acting to protect an interest which the law deems to be of equal or greater value than the plaintiff's contractual rights. (See Swager, 77 Ill.2d at 190-91; Certified Mechanical Contractors, Inc. v. Wight & Co. (1987), 162 Ill. App.3d 391, 400 (and cases cited therein).) In Swager, 77 Ill.2d at 189-91, Philipsborn, 59 Ill.2d at 474, and Loewenthal Securities, 351 Ill. at 300, this court recognized a privilege for corporate officers and directors to use their business judgment and discretion on behalf of their corporations. The existence of the privilege was based upon this court's recognition that the duty of corporate officers and directors to their corporations' shareholders outweighs any duty they might owe to the corporations' contract creditors. See Swager, 77 Ill.2d at 191.

The defendants in this case are hospital management companies. Hospital management companies play a role that is analogous to that played by corporate officers and directors in the management of their corporations. Like corporate officers and directors, hospital management companies owe a duty to their hospitals to exercise business judgment in managing their hospitals' affairs. In particular, hospital management companies must exercise their discretion for the benefit of their hospitals in choosing when, and to which creditors, payments should be made to satisfy the hospitals' debts. As with corporate officers' and directors' duty to their shareholders, we deem that the duty owed by hospital management *158 companies to their hospitals should take precedence over their duty to the hospitals' contract creditors. We therefore find that Hospital Management's and National Medical's conduct in this case was privileged.

Many unjust-enrichment cases involve "situations in which the benefit the plaintiff is seeking to recover proceeded directly from him to the defendant." (4 G. Palmer, The Law of Restitution 21.1, at 291 (1978).) The situation in this case, however, is different in that the plaintiff is seeking recovery of a benefit that was transferred to the defendant by a third party. In such situations, courts have found that retention of the benefit would be unjust where (1) the benefit should have been given to the plaintiff, but the third party mistakenly gave it to the defendant instead (see, e.g., Hamilton Glass Co. v. Shaffer (1957), 12 Ill. App.2d 407, 409), (2) the defendant procured the benefit from the third party through some type of wrongful conduct (see, e.g., *162 Harper v. Adametz (1955), 142 Conn. 218, 225-26, 113 A.2d 136, 139), or (3) the plaintiff for some other reason had a better claim to the benefit than the defendant (see, e.g., Board of Highway Commissioners v. City of Bloomington (1911), 253 Ill. 164, 176-77). See generally 4 G. Palmer, The Law of Restitution 21.2, 21.4, 21.5, at 292-93, 298-99, 316-18 (1978).

Centerre argues that count VII fails to state a cause of action because the allegations regarding Alexander's agency status, and Centerre's wrongful conduct, are merely conclusory. Count VII's allegations regarding Centerre's conduct in this case are: that Centerre "requested" that Mt. Vernon pay Centerre rather than HPI and "requested" that Michael Alexander become president of and trustee on Mt. Vernon's board of trustees; that "Centerre, through its agent Michael A. Alexander, caused Mt. Vernon Hospital to stay open"; and that "Centerre controlled directly and indirectly all payments made to creditors by * * * Mt. Vernon Hospital and prevented payments to [HPI]." Thus, HPI alleges that Centerre, both through its agent and on its own, engaged in wrongful conduct in procuring payment from Mt. Vernon.

HPI in this case has failed to provide any specific allegations of fact that would give rise to an inference that Alexander was Centerre's agent. The only specific factual allegation regarding Alexander's alleged agency status in count VII is that Centerre requested that Alexander become president of and trustee on Mt. Vernon's board of trustees. However, as the appellate court correctly noted, this allegation alone is insufficient to support the conclusion that Alexander was Centerre's agent. (172 Ill. App.3d at 732.) All of the other allegations *164 in count VII regarding Centerre's conduct (that Centerre "caused" Mt. Vernon to stay open and "controlled" Mt. Vernon's payments to creditors and "prevented" any payments from being made to HPI) are merely conclusory and do not pertain to Centerre's relationship with Alexander. There are no allegations in the complaint concerning how Centerre "caused," "controlled," or "prevented" Mt. Vernon's actions. We therefore find that HPI's complaint fails to allege sufficient specific facts to support the conclusion that Alexander acted as Centerre's agent. We also find that since HPI failed to make any specific factual allegations regarding Centerre's conduct, HPI has failed to sufficiently allege that Centerre's conduct was wrongful.

As is apparent from the above-quoted excerpts of HPI's complaint, count VIII sets forth a number of specific factual allegations in support of its conclusion that *169 defendants "employed a scheme of repeated and numerous knowingly false promises and representations." The scheme alleged in count VIII of the complaint consisted of repeatedly making false promises of future payment in order to induce HPI to continue provision of pharmaceutical goods and services. We find that these allegations present a case "where the false promise[s] or representation[s] of intention or of future conduct [were] the scheme or device to accomplish the [alleged] fraud." (Roda, 401 Ill. at 340.) We therefore conclude that count VIII of HPI's complaint falls within the exception recognized by this court in Steinberg and Roda. See Steinberg, 69 Ill.2d at 334; Roda, 401 Ill. at 340. 041b061a72