Background
Galactic Ventures and Michael Monsalve dispute ownership of a 1958 Ferrari GT LWB Berlinetta. Monsalve claims he purchased the vehicle from Eric Edenholm (doing business as Zoey Air, LLC) in March 2016 for $1,000,000, with a buy-back agreement, and obtained California title in December 2017. Galactic claims Monsalve only loaned $1,000,000 with the Ferrari as collateral, and that Galactic purchased the vehicle from the Original Owner in August 2017, retitling it in Arizona. The Original Owner allegedly allowed the car to be taken to Arizona in August 2019 to show potential buyers, but never returned it.
Galactic entered a contract in August 2021 to sell the Ferrari to buyer Steve Berkowitz. In August 2021, Galactic learned Monsalve had reported the vehicle as stolen to California police and had obtained a California title. When the Potential Buyer learned of Monsalve’s competing title, he cancelled his purchase agreement. Galactic sued Monsalve for intentional interference with contract and intentional interference with business expectancy, claiming Monsalve’s wrongful title recording and refusal to remove it caused the sale to fail.
Monsalve moved for summary judgment, arguing he was privileged to protect his asserted legal interest in the vehicle through police reports and litigation against the Original Owner. The superior court granted Monsalve’s motion, finding Galactic failed to show Monsalve knew of the Berkowitz contract or that Monsalve’s actions caused the cancellation. The court also found Monsalve’s conduct was privileged.
The Court’s Holding
The Arizona Court of Appeals vacated the summary judgment and remanded for trial, holding that Galactic established genuine disputes of material fact on all elements of both tort claims. On the element of Monsalve’s knowledge, Galactic presented evidence that it communicated directly with Monsalve about the potential sale on August 13, 2021, and informed Monsalve’s counsel about the Berkowitz contract on August 20, 2021—sufficient evidence that a jury could resolve in Galactic’s favor.
On intentional interference, the court held that Galactic presented two material issues for a jury: (1) whether Monsalve should have known that Galactic’s buyer would not complete the purchase with a competing title in place, and (2) whether Monsalve’s decision to maintain and rely on the California title after learning of the sale was intended to thwart it. The court rejected Monsalve’s argument that recording the title in 2017 (before the Berkowitz contract) precluded liability, noting that Galactic’s claim rested on Monsalve’s subsequent refusal to remove the wrongful title even after being told of the pending sale.
On improper conduct, the court acknowledged Monsalve could defend by showing he acted in good faith to protect a legally protected interest through proper means—a three-part test requiring: (1) a good-faith belief in a legal interest, (2) assertion of that interest in good faith, and (3) assertion by proper means. However, Galactic presented controverting evidence that Monsalve’s title was forged and wrongfully recorded, creating a jury question on whether Monsalve acted in subjective good faith. The court noted that a contract being terminable at will does not shield a defendant from tortious interference liability; the issue is the reason for termination, not the contract’s flexibility.
Key Takeaways
- A defendant may assert a legal defense based on protecting its own legal interest, but only if it does so through proper means; improper means (such as forging documents or wrongfully recording title) expose the defendant to tortious interference liability.
- Knowledge of a contract can be established through direct communications about the transaction, and a jury may infer an interferer knew their conduct would cause cancellation based on the specific circumstances.
- The fact that a contract is terminable at will does not provide a shield against tortious interference claims—the focus is whether the defendant improperly caused the termination, not whether the other party had the contractual right to walk away.
- Summary judgment is inappropriate when the defendant’s good faith, intent, and propriety of means are disputed; these are questions for the jury, not the court.
Why It Matters
This decision clarifies that while Arizona law protects parties who take reasonable steps to defend their asserted legal interests, they cannot use wrongful or improper methods to do so. A defendant cannot hide behind a privilege to protect legal interests when the means of protection themselves are unlawful—such as forging documents or maintaining a false title. This creates practical exposure for parties in ownership disputes: continuing to assert a challenged claim of ownership, particularly after learning it will cause economic harm to another party, can constitute evidence of intentional interference.
The ruling also reinforces that tortious interference liability is not defeated by a contract’s flexibility or the victim’s ability to exit at will. What matters is the defendant’s role in causing the exit. Parties should be cautious about the collateral consequences of title disputes and ownership claims, particularly when they know the assertion is likely to interfere with another’s business transaction. The case will proceed to trial on Monsalve’s good faith, the propriety of his means, and whether his post-2021 refusal to remove the title constituted intentional interference.