Freese v. Candler et al

Filing 15

ORDER: The bankruptcy court's order of "Final Summary Judgment in Favor of Defendants Asa Candler and Steve Ostermann," entered on December 21, 2016, is AFFIRMED. The Clerk is directed to transmit a copy of this Order to the bankruptcy court and CLOSE this case. Signed by Judge Virginia M. Hernandez Covington on 6/13/2017. (DRW)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
IN RE:
ENVIRONMENTAL TECHNOLOGIES
INTERNATIONAL, INC.,
Debtor.
_____________________________/
MATTHEW J. FREESE,
Appellant,
v.

Case No. 8:17-cv-74-T-33
Bankr. No. 8:15-bk-6910-KRM
Adversary No. 8:15-ap-786-KRM

ASA W. CANDLER, III, et al.,
Appellees.
_____________________________/
ORDER
This

appeal

arises

from

a

Chapter

7

adversary

proceeding. Appellant Matthew J. Freese filed his initial
brief on March 29, 2017. (Doc. # 10). Appellees Asa W.
Candler, III and Steve Ostermann filed their response brief
on May 15, 2017. (Doc. # 13). Freese filed his reply brief on
May 30, 2017. (Doc. # 14). After careful review, this Court
affirms.
I.

Background
Environmental

Technologies

International,

Inc.,

was

founded by David Barnhardt and David S. Gordon in 2000. (Doc.

# 2-16 at 1). In 2005-2006, Tommy Hale introduced Barnhardt
to

the

idea

of

using

magnets

to

clean

oil

wells,

thus

beginning ETI’s venture into the oil and gas industry. (Id.
at 2). ETI produced a device known as the “Radial Flux
Generator,” which was meant to “condition in-well crude oil
fluids by assisting these fluids to flow with less resistance
thus enabling more production.” (Doc. # 2-16 at 2; Doc. # 219 at 2).
Barnhardt was diagnosed with cancer and, “[d]uring the
last months of his life, Barnhardt attempted to locate a
successor to serve as the CEO of ETI.” (Doc. # 2-16 at 2).
Having

been

approached

by

Barnhardt

to

see

if

he

was

interested in becoming CEO, Freese became president and CEO
of ETI on March 11, 2010. (Id.; Doc. # 2-10; Doc. # 2-16 at
2; Doc. # 2-19 at 2).
The terms and conditions of Freese’s employment with ETI
were memorialized in an Employment and Management Agreement.
(Doc. # 2-10). In relevant part, the Employment and Management
Agreement stated:
2. Term. This Agreement . . . shall terminate as of
. . .:
. . .
(c) sixty (60) days after notice is given by
one party to the other after a material breach of

2 

this Agreement . . . and the breach is not cured.
A material breach by Freese of this Agreement is
any significant failure on his part to comply with
his obligations under Sections 4, 5,6,7,8,9 [sic]
or 10 below. . . .
3. Compensation. During the term of this Agreement
. . ., Freese shall receive:
(a) Salary. [ETI] shall pay Freese, contingent
on his securing adequate funding for [ETI], a base
salary . . . .
. . . .
(f) Royalty.
(i) Freese . . . shall receive a two (2)
percent royalty on all gross sales . . . .
. . . .
(i) Freese acknowledges and agrees that as of
the date hereof, [ETI] has no funds with which to
pay salary, benefits or expenses, that [ETI] is
relying on him to raise the funding necessary for
the development and operation of [ETI], and that it
is his sole responsibility to develop adequate
capital, loans, grants and other sources of funding
whereby [ETI] may carry out its operations . . . .
. . . .
9. Inventions. Freese hereby sells, transfers, and
assigns to [ETI], all of the right, title, and
interest of Freese in and to all inventions, ideas,
disclosures, and improvements . . . made or
conceived by Freese, solely or jointly, or in whole
or in part, during the term hereof which:
(a) relate to methods, apparatus, designs,
products, processes, or devices sold, leased, used,
or under construction or development by [ETI] . .
.; or

3 

(b) otherwise relate to or pertain to the
business, functions, or operations of [ETI] . . .;
or
(c) arise in whole or in part from the efforts
of Freese during the term hereof.
Freese shall communicate promptly and disclose to
[ETI] . . . all information . . . pertaining to the
aforementioned inventions, ideas, disclosures, and
improvements; and . . . Freese shall execute and
deliver to [ETI] such formal transfers and
assignments and such other papers and documents as
may be required of him to permit [ETI] . . . to
file and prosecute the patent applications . . . .
(Doc. # 2-10) (bolding in original).
Before

Freese

signed

the

Employment

and

Management

Agreement, he had begun meeting with Candler and Ostermann in
an attempt to secure funding from Candler Capital Partners,
which “is in the business of providing start-up or venture
capital

to

businesses

or

developers”

and

also

“provides

management and operational services for . . . companies.”
(Doc. # 2-19 at 2; Doc. # 2-9 at ¶ 1(b)). After Freese signed
the Employment and Management Agreement he negotiated the
terms of Candler Capital’s investment in ETI. (Doc. # 2-16 at
2).
The relationship between ETI and Candler Capital was set
forth in the Letter Agreement. (Id.; Doc. # 2-9). The Letter
Agreement stated:

4 

(a) Exclusive Right to Fund. CCP shall
have the exclusive right to provide debt and equity
financing to ETI . . . .
. . . .
(e) Security. The Initial Loan shall be
secured by:
. . .
ii. All of ETI’s right, title and
interest in the Proprietary Technology.
. . . .
(f) Security.
i. Security for First Draw. The
First Draw shall be secured by (x) shares
representing, in the aggregate, fifty-one (51%) of
the total number of Authorized Shares . . .; and
(y) by all of ETI’s right, title and interest in
and to the Proprietary Technology.
ii. Security for Funding Balance.
The Funding Balance shall be secured by (x) shares
representing, in the aggregate, fifty-one (51%) of
the total number of Authorized Shares . . .; and
(y) by all of ETI’s right, title and interest in
and to the Proprietary Technology.
. . . .
(h) Board of Directors Representation.
Upon Funding of the First Draw, (x) CCP shall be
entitled to two (2) seats on ETI’s Board of
Directors . . . which two (2) seats shall be
occupied by Asa W. Candler and Stephen J. Ostermann
. . ., and (y) the Board of Directors shall be
comprised of no more than six (6) persons. Each
person serving on the Board of Directors shall be
entitled to one (1) vote, except for Asa W. Candler
and Stephen J. Ostermann, who shall each be
entitled to one and a half (1.5) votes until such

5 

time as that of all outstanding principal and
accrued interest on the Initial Loan and Project
Loan are repaid in full. . . . [A]s a condition
precedent for the Funding of the First Draw, ETI
shall amend its corporate bylaws to provide that
the number of directors constituting the Board of
Directors shall not exceed six (6) . . . .
. . . .
5. Due Diligence
. . . .
(c) Phase II Due Diligence. CCP’s “Phase
II
Due
Diligence”
shall
include,
without
limitation, a review of the results and performance
of the Proprietary Technology in three (3) well
tests conducted over the period of May 1, 2010
through August 31, 2010.
(Doc. # 2-9 at 1-7). The term Proprietary Technology is
defined as “the ETI Radial Flux Generator System (‘RFG’) and
associated and related intellectual property, trade secrets,
know-how, technologies and products . . . .” (Id. at ¶ 1(a)).
The

Letter

Agreement

also

set

forth

two

conditions

precedent, one of which amended the Employment and Management
Agreement. (Id. at ¶ 6). In particular,
until such time as that of all outstanding
principal and accrued interest on the Initial Loan
and Project Loan are repaid in full:
i. Freese shall be entitled to the
annual increase in base salary . . . only if ETI
performs in accordance with the Pro Forma attached
hereto . . .;

6 

ii. Section 3(e) . . . shall apply
only in the event of a Sale of ETI for an aggregate
purchase price in excess of ten million dollars
($10,000,000); and
iii. The two percent (2%) royalty to
Freese . . . shall accrue but not be paid until
such time as CCP is repaid all Financing principal
and interest . . . .
(Id.). Candler Capital was also “responsible for maintaining
the accounting books and records for” ETI with the start of
the Initial Loan. (Id. at ¶ 10).
Business proceeded and Freese secured the necessary
third-party

validation

for

ETI

to

complete

its

patent

application. (Doc. # 2-19 at 4). Freese also attended several
Candler Capital events in March and April of 2010. (Id.).
During one such event, Freese traveled to Connecticut with
Candler to meet Fred Mancheski, Don Whelley, and an unnamed
person, who were all potential investors. (Id.).
Tensions soon flared when, on July 26, 2010, Candler
sent a chastising email to Freese regarding a letter Freese
sent to the potential investors. The July 26, 2010, email
read, in part:
You came to Candler Capital because of our
experience in dealing and negotiating with outside
investors. . . . We threw down the gauntlet
yesterday with Fred and Don . . . . You may have
just handed control of negotiations back to them.

7 

We appreciate your enthusiasm for ETI’s product;
however, your letter delivered the wrong message.
We think that by reiterating, ad nauseam, all the
benefits of the product before you got to the point
of the message, you told them that you and Tommy
were desperate for their money.
We wanted them to firmly believe that ETI doesn’t
need them or their money, in order to get them to
invest without having control of the company. To
re-convince them of this fact will now be more
difficult. So please do not communicate with them
what-so-ever. . . .
Since we need your leadership and Tommy’s technical
expertise moving the company forward, and since we
do not in fact need Don or Fred’s money, please
totally devote your limited time to the business of
the company and let us handle the money end.
(Doc. # 2-19 at 30-31) (emphasis in original).
In early 2010, ETI did not have or know of a proven
housing design for its Radial Flux Generator. (Id. at 3). So,
ETI began testing its own housing designs. At first, ETI
attempted to use stainless steel, but that failed. (Id. at
5). ETI went back to the drawing board and decided to try “a
very expensive and very high performance high temperature
resistive epoxy resin over a high impact high wear Kevlar
wrap.” (Id.). In early 2011, the Radial Flux Generator with
the new epoxy coating was installed in a test well. (Id. at
6). The new epoxy housing “completely failed” and caused about
$35,000 of damage to the test well. (Id.).

8 

The Letter Agreement was amended in early 2011. (Doc. #
2-9 at 14-16). The 2011 amendment occurred, in part, because
ETI had not completed the well tests by the deadline set forth
in the original Letter Agreement and ETI needed more money,
which Candler Capital was willing to provide. (Id. at 14).
The Amended Agreement read:
3. Section 5(c) of the Letter Agreement is hereby
amended to read as follows in its entirety:
CCP’s “Phase II Due Diligence” shall include
. . . a review by CCP of the results and
performance of the Proprietary Technology in
three (3) well tests conducted by no later
than March 1, 2011. At least one (1) of the
three (3) well tests shall be performed on the
final commercial product.
4. Section 6(c) of the Letter Agreement is hereby
amended to read as follows in its entirety:
For Funding Balance of Project Loan. Funding
by CCP of the Funding Balance of the Project
Loan, or any portion or part thereof, shall be
at the sole discretion of CCP.
(Id. at 15-16).
Freese then turned to Robbins & Myers, an engineering
company, in an attempt to use “sucker rod guide” material as
a housing agent. (Doc. # 2-19 at 3). That venture led to
Freese and Hale meeting Jonathan Martin, then an “intern
engineer”

with

Robbins

&

Myers.

(Id.).

Robbins

&

Myers

successfully completed the coating process and the Radial

9 

Flux Generator was again put in a test well. (Id. at 6-7).
The test well failed “for mechanical reasons not related to
the” Radial Flux Generator, but ETI was able to gather enough
data to show that the Robbins & Myers material was a viable
housing agent. (Id. at 7). In light of this partial success,
Ostermann

insisted

that

Freese

move

forward

with

three

simultaneous in-well tests; Freese resisted but ultimately
went forward with one test, which was deemed a success in
“late summer[/]early fall 2011.” (Id.). After the first fullrun test was successful, Freese started two more test wells.
(Id.). All three tests were producing positive results, but
“it was very obvious the RFG rod guide coating was . . . not
a long-term marketable solution.” (Id.).
Then, on June 8, 2011, Freese and Hale meet Martin for
dinner. (Id.). Martin had left his job at Robbins & Myers
and, after dinner, showed Freese and Hale a “Box-Guide concept
he was working on.” (Id.). Thinking Martin’s material could
be used as a long-term housing agent for the Radial Flux
Generator, Freese lobbied ETI to hire Martin. (Id. at 8).
Those efforts were successful and sometime in September of
2011, Martin began working full-time for ETI, with ETI gaining
the exclusive rights to Martin’s polymer material. (Id.).

10 

The year wore on and “[l]ate in 2011, [Robbins & Myers]
was making claims that [it] was actually the inventor of the
[Radial Flux Generator] magnet covering.” (Id. at 16). These
“[Robbins & Myers] hiccups” led to resistance by Candler
Capital in funding Martin. (Id. at 49). “[S]everal weeks prior
to the December 19, 2011 Board of Director[s] meeting, Candler
and Ostermann informed [Freese] they wanted to tear up [his]
existing Employment and Management Agreement,” on the grounds
that the royalty obligation might prevent a future joint
venture; Freese refused. (Id. at 8). Freese, who had up to
this point been “deferring, on [his] own, [his] full contract
salary,” told Candler and Ostermann that beginning in 2012 he
would no longer be deferring his salary. (Id.).
During

the

December

19,

2011,

Board

of

Directors

meeting, Ostermann “expressed to the board his concerns about
the absence of any sales or revenue generating leases from
the

RFG’s.”

(Id.

at

9);

see

also

(Doc.

#

2-16

at

3).

“Ostermann further expressed his concerns about ETI’s cash
burn rate and the necessity to expedite a path toward sales
as timely as possible.” (Doc. # 2-19 at 9). For his part,
Freese showed the directors Radial Flux Generators that had
been removed from a test well due to excessive wear. (Id.).
According to Freese’s declaration, Ostermann unsuccessfully

11 

attempted to include within the minutes of the meeting false
information concerning the market readiness of the Radial
Flux Generator. (Id. at 9-10).
With no market-ready product, ETI turned to a newer
version of the Radial Flux Generator that was shorter in
length and would be coated in Martin’s polymer. (Id. at 910). Well past the March 1, 2011, amended Phase II Due
Diligence deadline set by the Amended Agreement (Doc. # 2-9
at 15), Freese was directed by Candler and Ostermann to do
everything

possible

to

have

the

shortened

Radial

Flux

Generator ready for testing within two months. (Doc. # 2-19
at 10).
A dispute then arose between Freese on the one hand and
Candler and Ostermann on the other as to Freese’s January of
2012 invoice. (Id. at 11). Even though Candler and Ostermann
refused to pay Freese, Freese nevertheless continued working
for ETI. (Id.).
A few months later, on April 3, 2012, Candler penned a
letter to Martin. (Id. at 41). In this letter, Candler relayed
his gratitude for all of Martin’s hard work and told Martin
that he and Ostermann considered Martin to be the key player
(Id.), because Martin was the inventor of the Box Guide
technology, which included the polymer material that served

12 

as the only successful long-term housing material for the
Radial Flux Generator (Doc. # 2-16 at 4). The letter further
stated Martin had the full “confidence, backing, and support”
of Candler and Ostermann. (Doc. # 2-19 at 41).
That same month, Candler and Ostermann set up a secret
meeting with Martin. (Id. at 12). Martin surreptitiously
recorded the meeting and shared the recording with Freese.
(Id.; Doc. # 2-16 at 4). During this meeting, Candler and
Ostermann expressed their opinion of Freese; in short, Freese
was “not the guy [Candler and Ostermann] want[ed] running a
billion dollar company.” (Doc. # 2-19 at 12). Five days after
the meeting, Martin sent an email to Candler and Ostermann
(Id. at 12, 47-49). In his April 25, 2012, email, Martin
expressed his opinion on a litany of topics, including: that
ETI “needed” Freese; that the attempt to “push [Freese] out
need[ed] to stop” as it was “stupid”; that Candler Capital
was holding up progress; and that Candler Capital was a
“common

denominator”

in

the

problems

facing

Freese

and

Martin. (Id. at 49).
On May 4, 2012, Martin and Freese pulled the results
from one of the test wells. (Id. at 13). The Radial Flux
Generators showed minimal wear and the Box Guides showed no
signs of wear; the “test was an overwhelming success.” (Id.).

13 

According to Freese, this success “entitled [Martin] to a
$100,000

progress

.

.

.

payment.”

(Id.).

Candler

and

Ostermann, however, attempted to delay payment and “[f]rom
that

date

forward,

[they]

consistently

paid

vendors

and

suppliers late[,] including Martin and [Freese].” (Id. at
14).
At the next month’s Board of Directors meeting, held on
June 29, 2012, Freese “opened up the meeting” by telling the
Board about the secret meeting between Martin, Candler, and
Ostermann. (Id. at 14). Freese even read some of his notes of
Martin’s secret recording to the Board. (Id. at 14-15, 59).
Hale and Freese attempted to have Freese’s notes entered into
the minutes for the meeting, but Candler, Ostermann, and
Gordon refused to add them. (Id. at 15).
Shortly thereafter, Candler Capital sent Freese, Hale,
Gordon, and Gerald Bertoldo (another director on ETI’s Board)
an email titled “Proposed Next Steps ETI – CCP.” (Doc. # 216 at 5). Candler Capital proposed a second amendment to the
Letter Agreement, which would have extended the deadline for
ETI to make its next installment payment and would have
advanced an extra $200,000 to ETI so ETI could close a deal.
(Id.).

Negotiations

on

the

proposed

second

amendment

continued from July 13, 2012, to August 31, 2012. (Id. at 6).

14 

Ultimately, however, the parties could not agree to terms and
ETI voted to reject the proposed second amendment. (Id.; Doc.
# 2-19 at 63-68; Doc. # 2-17 at 5).
While negotiations were still ongoing with respect to
the proposed second amendment, Martin “claimed for the first
time that the mold-on-rod-guide using the high performance
polymer was his idea” alone. (Doc. # 2-19 at 16, at 64-68).
Martin also indicated in his emails sent on August 6, 2012,
that he did not know, nor did he want to know, all the details
regarding ETI’s financing. (Id. at 64). Nevertheless, until
he was paid what he thought was due to him, Martin would be
holding onto all intellectual property he had. (Id. at 66).
Candler

Capital

declared

ETI

in

default

under

the

Amended Agreement on September 7, 2012. (Doc. # 2-16 at 6).
As a result, Candler Capital became the majority shareholder
of ETI. (Id.; Doc. 2-9). A special meeting of the Board of
Directors was called by Candler Capital, which was held on
September 25, 2012. (Doc. # 2-16 at 6). At this special
meeting, two resolutions were passed by ETI’s shareholders.
The first resolution, among other things, reduced the number
of directors from six to four, dismissed Bertoldo and Hale as
directors, named Candler chairman of the Board, and required
Freese to “execute and deliver to the Chairman of the Board

15 

of Directors and to the Shareholders, by no later than Friday,
September 28, 2012, an original, notarized copy of” the
Acknowledgment of Assignment. (Doc. # 2-17 at 1-3). The second
resolution

acknowledged

ETI’s

default

under

the

Amended

Agreement, and surrendered and transferred all of its right,
title, and interest in all of the pledged collateral to
Candler Capital. (Id. at 6).
Another special Board of Directors meeting was called on
October 2, 2012. This special meeting resulted in a resolution
that (1) listed out seven breaches by Freese; (2) provided
Freese with 60-days’ notice of his material breaches; (3)
removed Freese from the Board of Directors; and (4) offered
Freese a severance agreement. (Id. at 7-8). One of the seven
listed breaches included:
Matthew J. Freese, without authorization or consent
by [ETI], identified himself as an inventor of
technology belonging to [ETI], and has refused to
sign [the] Acknowledgment of Assignment as required
by [the] Special Meeting of Shareholders on
September 25, 2012, in material breach of Section
9 of the Employment and Management Agreement
between him and [ETI], dated as of March 11, 2010.
(Id. at 7). Freese was terminated as CEO and president of ETI
on October 10, 2012, for the reasons listed in the October 2,
2012, Board of Directors resolution and, additionally, on the
ground that he “transmitted . . . communications containing

16 

threats to injure the reputation of [ETI] . . . .” (Id. at
16). Freese claims he “did not threaten to harm the company
in any way.” (Doc. # 2-19 at 24). Rather, he “unexpectedly
came across new information about the origin of some of
Martin’s intellectual property that was transferred to ETI
and was fully prepared to exclusively share the document and
enlighten the ETI board members only.” (Id.).
In a state-court proceeding, Freese brought claims for
tortious interference against Candler, Ostermann, Tyler Korn
(Candler Capital’s attorney), Gordon, and Martin. (Doc. # 27). But prior to that state-court proceeding, ETI had filed
for bankruptcy. On September 2, 2015, Gordon, Candler, and
Ostermann

removed

that

state-court

proceeding

to

the

bankruptcy court under 28 U.S.C. § 1452. (Doc. # 2-6). So
began the underlying adversary proceeding.
Freese voluntarily dismissed the action against Korn and
Gordon on March 2, 2016. (Doc. # 2-5 at 12) (entries 41 and
42 on the bankruptcy court’s docket). The claim against Martin
was dismissed with prejudice on March 3, 2016. (Id.) (entry
43 on the bankruptcy court’s docket). Freese appealed, which
appeal was assigned case number 8:16-cv-694-T-27; that appeal
was dismissed for lack of jurisdiction on May 3, 2016. (Id.
at 13, 16) (entries 48, 62 on bankruptcy court’s docket). The

17 

adversary proceeding continued and on September 27, 2016,
Candler and Ostermann moved for summary judgment on the
grounds that they did not act solely with an ulterior purpose.
(Doc. # 2-15). Freese responded in opposition (Doc. # 2-18),
but the bankruptcy court granted the motion on December 21,
2016. (Doc. # 2-2).
In its order granting summary judgment, the bankruptcy
court stated that “the termination of Freese is not tortious
interference

with

his

Employment

Agreement

where

his

termination is by action of the Board based on valid reasons.”
(Id. at ¶ 10). The bankruptcy court further stated the Board
had two reasons for terminating Freese as CEO and president;
namely, an undisputed lack of sales and Freese’s violation of
the “unambiguous language of Section 9 of the Employment
Agreement.” (Id. at ¶¶ 11, 12). This appeal followed.
II.

Jurisdiction
Freese seeks appellate review of the bankruptcy court’s

order of “Final Summary Judgment in Favor of Defendants Asa
Candler and Steve Ostermann,” entered on December 21, 2016.
(Doc. # 2-1). This Court has jurisdiction pursuant to 28
U.S.C. § 158(a)(1).

18 

III. Standard of Review
A

bankruptcy

court’s

entry

of

summary

judgment

is

reviewed de novo. In re Optical Techs., Inc., 246 F.3d 1332,
1335 (11th Cir. 2001).
IV.

Analysis
A.

Summary Judgment Standard

“It is axiomatic that a bankruptcy court deciding a
summary judgment motion, just like a district court, must
determine whether there are any genuine issues of material
fact.” Id. at 1334. Summary judgment is appropriate “if the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.”

Fed. R. Civ. P. 56(a). A factual dispute

alone is not enough to defeat a properly pled motion for
summary judgment; only the existence of a genuine issue of
material fact will preclude a grant of summary judgment.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
An issue is genuine if the evidence is such that a
reasonable jury could return a verdict for the non-moving
party. Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742
(11th Cir. 1996). A fact is material if it may affect the
outcome of the suit under the governing law. Allen v. Tyson
Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997).

19 

The moving party bears the initial burden of showing the
court, by reference to materials on file, that there are no
genuine issues of material fact that should be decided at
trial. Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256,
1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986)). “When a moving party has discharged
its burden, the non-moving party must then ‘go beyond the
pleadings,’ and by its own affidavits, or by ‘depositions,
answers

to

interrogatories,

and

admissions

on

file,’

designate specific facts showing that there is a genuine issue
for trial.” Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590,
593-94 (11th Cir. 1995) (citing Celotex, 477 U.S. at 324).
If there is a conflict between the parties’ allegations
or evidence, the non-moving party’s evidence is presumed to
be true and all reasonable inferences must be drawn in the
non-moving party’s favor. Shotz v. City of Plantation, Fla.,
344 F.3d 1161, 1164 (11th Cir. 2003). If a reasonable fact
finder evaluating the evidence could draw more than one
inference from the facts, and if that inference introduces a
genuine issue of material fact, the court should not grant
summary judgment. Samples ex rel. Samples v. City of Atlanta,
846 F.2d 1328, 1330 (11th Cir. 1988). However, if the nonmovant’s response consists of nothing “more than a repetition

20 

of his conclusional allegations,” summary judgment is not
only proper, but required. Morris v. Ross, 663 F.2d 1032,
1034 (11th Cir. 1981).
B.

Tortious Interference

The

bankruptcy

court

granted

Appellees’

motion

for

summary judgment on two grounds: an undisputed lack of sales
and Freese’s violation of Section 9 of his Employment and
Management Agreement. (Doc. # 2-2 at ¶¶ 10-12). Freese’s sole
argument on appeal is that the bankruptcy court impermissibly
weighed the record evidence presented at summary judgment to
reach its conclusion. (Doc. # 10 at 6). The Court disagrees.
The parties agree Florida law governs. (Doc. # 10 at 26;
Doc. # 13 at 9). There are four elements to a claim for
tortious

interference:

relationship

that

“(1)

the

affords

the

existence
plaintiff

of

a

business

existing

or

prospective legal rights; (2) the defendant’s knowledge of
the business relationship; (3) the defendant’s intentional
and unjustified interference with the relationship; and (4)
damage to the plaintiff.” Int’l Sales & Serv., Inc. v. Austral
Insulated Prods., Inc., 262 F.3d 1152, 1154 (11th Cir. 2001).
Furthermore,

“[a]

tortious

interference

cause

of

action

exists only against third parties who are not parties to the
business

relationship.”

Clifton

21 

v.

Titusville

Ctr.

for

Surgical Excellence, LLC, No. 6:15-cv-1604-Orl-37KRS, 2016 WL
233879, at *2 (M.D. Fla. Jan. 20, 2016) (citations omitted).
Stated differently, “[g]iven that corporate entities . . .
must act through individuals, a tortious interference claim
will generally not lie against employees and representatives
of contracting entities.” Cox v. CSX Intermodal, Inc., 732
So. 2d 1092, 1099 (Fla. 1st DCA 1999) (citation omitted).
There is, however, an exception. In particular, a nonstranger’s privileged interference “is divested when the
defendant ‘acts solely with ulterior purposes and the advice
is not in the principal’s best interest.’” Alexis v. Ventura,
66 So. 3d 986, 988 (Fla. 3d DCA 2011) (quoting O.E. Smith’s,
Inc. v. George, 545 So. 2d 298, 299 (Fla. 1st DCA 1989)). The
phrase

“sole

Florida

ulterior

courts

to

purpose”

mean

“a

has

been

singular

interpreted

improper

by

purpose

detrimental to the employer’s interests.” Id.
Here,

it

is

undisputed

Candler

and

Ostermann

were

members of ETI’s Board of Directors (Doc. # 2-9 at ¶ 4(h))
and

are,

as

such,

not

considered

third-parties

to

the

Employment and Management Agreement, Cox, Inc., 732 So. 2d at
1099. Freese was therefore required to show Candler and
Ostermann acted with a singular improper purpose detrimental

22 

to ETI’s interests in order to prevail on his tortious
interference claim. Alexis, 66 So. 3d at 988.
The

record

contains

evidence

that

Freese

violated

Section 9 of his Employment and Management Agreement by
identifying himself as an inventor of technology belonging to
ETI. (Doc. # 2-17 at 7, ¶ 1). Moreover, evidence was presented
that Freese failed to comply with the Board’s resolution dated
September 25, 2012, requiring Freese to execute and deliver
to Candler and ETI’s shareholders the Acknowledgement of
Assignment. (Id.). By failing to comply with the September
25,

2012,

resolution,

Freese

violated

Section

9

of

his

Employment and Management Agreement. (Doc. # 2-10 at 6, 9)
(“Freese shall execute and deliver to [ETI] such formal
transfers and assignments and such other papers and documents
as may be required of him to permit [ETI] . . . to file and
prosecute the patent applications”). Freese failed to present
any evidence disputing the foregoing breaches.
These undisputed breaches provided Candler and Ostermann
as directors of ETI with a legitimate reason for terminating
Freese’s employment. The undisputed facts show Candler and
Ostermann
technology

sought
and

to

secure

terminated

ETI’s

Freese’s

rights

to

employment

valuable
with

ETI

because of his failure to comply with a Board directive.

23 

Therefore, Freese failed to carry his burden of showing a
genuine issue of material fact on the issue of whether Candler
and Osterman acted with a sole ulterior purpose.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

The bankruptcy court’s order of “Final Summary Judgment
in Favor of Defendants Asa Candler and Steve Ostermann,”
entered on December 21, 2016, is AFFIRMED.

(2)

The Clerk is directed to transmit a copy of this Order
to the bankruptcy court and CLOSE this case.
DONE and ORDERED in Chambers in Tampa, Florida, this

13th day of June, 2017.

24