Assignments: Paying Agent Not Liable to Assignee

Nationwide is a finance company that purchases freight invoices from carriers or truckers who assign their payments under those invoices directly to Nationwide, a typical factoring arrangement. The account debtors are shippers or manufacturers who utilize the carriers to transport their goods across the country. The shippers contract with Cass Information Systems to handle the processing and payment of their freight invoices. The shipper pays Cass the funds needed to pay the invoices, and Cass, in turn, forwards these funds to Nationwide. The business relationship between Nationwide and Cass worked well for more than 17 years until one day Cass erroneously misdirected a payment to a carrier. Although Nationwide eventually got paid, Cass asserted its rights under a hold harmless agreement. This induced Nationwide to terminate the agreement. As a result, Cass refused to pay any future invoices to Nationwide.

Nationwide filed an action in the U.S. District Court for the District of Nevada alleging various Nevada state law causes of action, including intentional interference with contractual relationship and intentional interference with prospective economic advantage, based on the theory that Cass was motivated by an intent to get Nationwide's customers to use Cass' expedited payment service, which Nationwide alleged was a competitor. One of the elements of the tort claims was that Cass' conduct was “improper.” Conduct specifically in violation of statutory provisions or contrary to established public policy may make interference improper. Accordingly, Nationwide set out to prove that Cass' conduct was improper because it violated or was contrary to Nevada Uniform Commercial Code '9406.