READ v. PROFETA et al

Filing 55

OPINION AND ORDER granting in part and denying in part Plaintiff's 46 Motion to Dismiss: The motion is granted on consent as to Count 1 of the Amended Counterclaim, which is dismissed with prejudice; The motion is denied as to Counts 2 and 4 of the Amended Counterclaim. Signed by Judge Kevin McNulty on 07/31/2017. (ek)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
PHILIP READ,
•

No. 15-cv-2637 (KM)

.

Plaintiff,
V.

OPINION & ORDER

PAUL PROFETA; PAUL V. PROFETA
& ASSOCIATES; RADIUS: BRICK
CITY & BEYOND; STEVEN
COLEMAN; and WILLIAM KOHN,
Defendants.

This matter comes before the court on the motion (ECF no. 46) of the
plaintiff, Philip Read, to dismiss Counts 1, 2, and 4 of the Amended
Counterclaim (“ACC”, ECF no. 41) The motion is granted as to Count 1 and
denied as to Counts 2 and 4.
This state-law action arises out of the parties’ ill-fated plans to develop a
magazine focused on Newark, New Jersey. On April 15, 2016, this Court partly
granted the defendants’ motion to dismiss the complaint, without prejudice.
(ECF nos. 23, 24) Read filed an amended complaint (ECF no. 25), which the
defendants answered (ECF no. 30). On behalf of defendants Paul Profeta, Paul
V. Profeta and Associates, and Radius: Brick City & Beyond, the Answer
asserted a five-Count Counterclaim.’ By Opinion and Order, I granted Read’s
motion to dismiss Counts 1, 2, and 4 of that Counterclaim, without prejudice.
(ECP nos. 38, 39)

For simplicity, the defendants/counterclaim plaintiffs will be referred to
collectively as “Profeta.” Defendant Paul Profeta, the individual, will be referred to as
“Mr. Profeta.” Paul V. Profeta and Associates will be referred to as “Associates.”
Radius: Brick City & Beyond will be referred to as Radius.
1

Profeta responded by filing an Amended Counterclaim (ECF no. 41),
intended to remedy the deficiencies that led to the dismissal of Counts 1, 2,
and 4. Read now moves pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss Counts
1, 2, and 4 of the Amended Counterclaim for failure to state a claim. (ECF no.
46) Profeta has filed an opposition (ECF no. 49), and Read a response (ECF no.
50). The matter is thus fully briefed and ripe for decision.
I have summarized the background of this matter in two prior opinions
(ECF nos. 23, 38) Because I write for the parties, familiarity is assumed.
Legal Standard
Mr. Read has moved to dismiss three Counts of the Amended
Counterclaim for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6).
Rule 12(b)(6) provides for the dismissal of a counterclaim, in whole or in part, if
it fails to state a claim upon which relief can be granted. The plaintiff, as the
moving party, bears the burden of showing that no claim has been stated.
Animal Science Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n. 9
(3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the
pleading are accepted as true and all reasonable inferences are drawn in favor
of the party asserting the claim. New Jersey Carpenters & the Trustees Thereof
zc Tishman Const. Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014).
Federal Rule of Procedure 8(a) does not require that a pleading contain
detailed factual allegations. Nevertheless, “a [pleading party’s] obligation to
provide the ‘grounds’ of his ‘entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will
not do.” Bell Atl. Corp. u. Twombly, 550 U.S. 544, 555 (2007). Thus, a
counterclaim’s factual allegations must be sufficient to raise a defendant’s right
to relief above a speculative level, so that a claim is “plausible on its face.” Id.
at 570; see also West Run Student Housing Assocs., LLC v. Huntington Nat.
Bank, 712 F.3d 165, 169 (3d Cir. 2013). That facial-plausibility standard is met
“when the [party] pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
2

Ashcroft v. Iqbal, 556 U.S. 662, 678 (200) (citing Twombly, 550 U.S. at 556).
While “[t]he plausibility standard is not akin to a ‘probability requirement’.
it asks for more than a sheer possibility.” Iqbal, 556 U.S. at 678.
Analysis

1. The Amended Counterclaim
The facts section of the Amended Counterclaim alleges as follows:
Read and Profeta explored the launching of the “Downiowner,” a
magazine focused on the Military Park, Halsey, and Broad Street
neighborhoods. (ACC ¶116, 7) By January 2013, Profeta communicated to Read
that he did not think the business model was feasible; he proposed a freelance
model, but Read balked, saying that he and perhaps others needed to be on
salary. The two went their separate ways. (ACC

¶9

8—11)

In the fall of 2013, Profeta launched Radius. It embodied Profeta’s
rejected “freelance” approach, did not focus primarily on the downtown
neighborhoods, and was circulated to a more suburban audience. (ACC ¶3j 12—
14)
Read has communicated falsehoods to third parties in an effort to injure
the business of Radius and make room in the market for his own Downtowner
magazine concept. (ACC ¶17) More specifically, Read has contacted Radius’s
funding sources, including current and prospective advertisers. He has told
them that Profeta “stole” his business plan and concept, inhibiting Radius’s
ability to raise operating funds. (ACC

¶

20) But for Read’s interference, Radius

had a reasonable probability of raising funds from those sources, who now
have ceased dealing with, or opted not to deal with, Profeta and Radius. (ACC
21) Radius, although well received, has not been a commercial success. (ACC
15)
As before, the Counterclaim contains five counts. They are now clearly
labeled as Count 1 (abuse of process); Count 2 (tortious interference with
prospective economic advantage); Count 3 (defamation and slander); Count 4
(tortious interference with contractual relations); and Count 5 (false light). At
issue on this motion are Counts 1, 2, and 4.
3

¶
¶

1. Malicious abuse of process (Count 1)
Profeta’s brief in response to the motion to dismiss states that
“Defendants do not oppose that portion of plaintiffs motion seeking to dismiss
the First Count of the Amended Counterclaim asserting a cause of action for
abuse of process.” (ECF no. 49, Def. Brf. 1 n. 1) The concession is apt; as to
Count 1, the Amended Counterclaim does not appreciably differ from its
precedessor. The motion to dismiss Count 1 of the Amended Counterclaim is
therefore granted on consent, this time with prejudice.2
2. Tortious interference with prospective economic advantage and
with contractual relations (Counts 2 and 4)
Under New Jersey law, a claimant alleging tortious interference with
contractual relations must allege, in addition to an existing contract: “(1) that
plaintiff had a reasonable expectation of an economic benefit or advantage; (2)
that defendant knew of plaintiffs expectancy; (3) that defendant wrongfully and
intentionally interfered with this expectancy; (4) a reasonable probability that
but for defendant’s wrongful interference, plaintiff would have realized the
economic benefit; and (5) that plaintiff was injured as a result of defendant’s
conduct.” Carpet Grp. Int’l v. Oriental Rug Importers Ass’n, Inc., 256 F.Supp.2d
249, 288 (D.N.J. 2003) (citing Printing Mart—Morristown v. Sharp Elecs. Corp.,
116 N.J. 739, 563 A.2d 31(1989), and Fineman v. Armstrong World Industries,
Inc., 980 F.2d 171, 186 (3d Cir. 1992)); Carpet Grp. Int’l v. Oriental Rug
Importers Ass’n,

ma,

256 F. Supp. 2d 249, 288 (D.N.J. 2003). Where the

claimant alleges tortious interference with prospective economic relations, the
requirements are identical except that the claimant must demonstrate a
“reasonable probability” of a prospective, rather than actual, economic or
contractual relation. See Alvord—Polk, Inc. v. F. Schumacher & Co., 37 F.3d 996,
1015 (3d Cir. 1994).
The facts section of the Amended Complaint alleges that “[bjoth prior to and
after the issuance of process,” Read has circulated his falsehoods, and has “even filed
an Amended Complaint essentially asserting those false claims.” (ACC ¶ 19) It is
unclear whether this allegation is intended to relate solely to the now-dismissed
malicious prosecution claim.
2

4

I dismissed Counts 2 and 4 of the original Counterclaim because they
recited something like the legal elements of a claim, but did not contain the
necessary factual allegations. The only contract specifically identified was the
actual or potential contract between Read and Profeta themselves. As I pointed
out, however, “the rule of tortious interference was not meant to upset the
rules governing the contractual relationship itself. Where a person interferes
with the performance of his or her own contract, the liability is governed by
principles of contract law.” Printing Mad-Morristown, 116 N.J. at 753, 563 A.2d
at 38. As to other actual or potential contractual relations, the original
Counterclaim alleged only that Read had made statements intending to prevent
unidentified “others” from dealing or conducting unidentified business with
Profeta and Radius. This I found inadequate. The Counterclaim did not allege,
even generally, the nature of the expected economic benefit that Profeta
expected, or the contracts or dealings that Read allegedly interfered with.
The question, then, is whether the Amended Counterclaim has remedied
the deficiencies in Counts 2 and 4 that were identified in my earlier Opinion. I
think it has.
The claims no longer rely on contracts between the parties themselves,
i.e., Profeta and Read. As pointed out above, such a claim between contractual
parties is insufficient as a matter of law.
What is being alleged here is a whispering campaign involving third
parties. Profeta may not be in a position to identify specific conversations
between Read and advertisers or funding sources. The allegation is not
implausible, however. The whole point of the Complaint is that these two
magazines would compete for the same resources. It is natural that Read would
be speaking to the same funding sources as Profeta within the relatively small
Newark business community. Moreover, Read is anything but reticent about
attributing misconduct to Profeta in connection with their dealings. The
Amended Counterclaim states specifically—or specifically enough—that both
existing advertising contracts and prospective contracts and funding are
involved.
D

At this, the early, Rule 12(b)(6) stage, this district’s case law has trended
toward not requiring strictly that a plaintiff “identify specific lost business
opportunities in its pleading for tortious interference.” See N. Star Mgmt., Inc. v.
Ins. Professionals, Inc., No. 12-CV-3839 JAP, 2013 WL 5334412, at *4 (D.N.J.
Sept. 23, 2013)); Teva Pharm. Indus., Ltd. v. Apotex, Inc., No. CIV.07-5514 GEB
JJH, 2008 WL 3413862, at *9 (D.N.J. Aug. 8, 2008) (“This Court agrees with

those recent opinions from this District that conclude that Rule 8(a) does not
require a party to identify a specific prospective customer or contract.”); Slim
CD, Inc. v. Heartland Payment Sys., Inc., No. CIV. A. 06-2256, 2007 WL
2459349, at *3 (D.N.J. Aug. 24, 2007). The Amended Counterclaim, unlike its

predecessor, alleges at least the substance of the falsehoods (that the idea for
Radius was “stolen”) and the nature of the economic advantage that Profeta

enjoyed or expected (advertising and funding).
As pled, these claims are thin. Unless discovery reveals particulars, as
well as specific evidence of economic loss, they may not withstand summary
judgment. But for now, they are sufficient to go forward to the discovery phase.

ORDER

Accordingly, IT IS this 31st day of July, 2017
ORDERED that the plaintiff’s motion (ECF no. 46) to dismiss Counts 1,
2, and 4 of the Amended Counterclaim is GRANTED IN PART AND DENIED IN
PART, as follows:
1.

The motion is granted on consent as to Count 1 of the Amended

Counterclaim, which is dismissed with prejudice.
2.

The motion is denied as to Counts 2 and 4 of the Amended

Counterclaim.

KEVIN MCNUL,
United States District Judge

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