Martin v. Finley et al
MEMORANDUM OPINION (Order to follow as separate docket entry) re 111 MOTION for Summary Judgment filed by Thomas J. Finley, 108 MOTION for Summary Judgment filed by George Albanese, 116 MOTION for Summary Judgment filed by Amil Minora. Signed by Honorable Robert D. Mariani on 10/12/18. (jam)
THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
MICHAEL G. MARTIN,
THOMAS J. FINLEY, et al.,
I. INTRODUCTION AND PROCEDURAL HISTORY
This is an action for several causes under Pennsylvania state law arising from an
acrimonious business dispute between Plaintiff, Michael Martin ("Plaintiff' or "Martin"), and
two of his fellow business partners in a medical device company based in Scranton, MedDev Corporation ("Med-Dev"), Defendants Thomas Finley ("Finley") and George Albanese
("Albanese"), and the attorney retained purportedly on behalf of Med-Dev, Defendant Amil
Minora ("Minora") (collectively, "Defendants"). 1 Against Finley and Albanese, Martin alleges
tortious interference with existing contractual relations, abuse of process, defamation and
false light invasion of privacy, and intentional infliction of emotional distress ("llED"). Martin
also alleges abuse of process and llED against Minora. This Court has jurisdiction pursuant
to 28 U.S.C. § 1332(a)(1) because there is diversity of citizenship between Martin, a Virginia
action is subject to an automatic bankruptcy stay under 11 U.S.C. § 362 with respect to a fourth
individual, Defendant Michael Moore, M.D. ("Moore"), due to his Chapter 13 bankruptcy petition. (Docs. 78,
79, 82). Thus, Martin's case against Moore is not the subject of this Opinion and accompanying Order.
citizen, and the Defendants, who are either Pennsylvania or New Jersey citizens, and the
amount in controversy is more than $75,000. (Doc. 1 ~~ 1-6).
Minora filed a motion to dismiss Martin's Complaint on November 2, 2015. (Doc.
22). The Court referred this motion to Magistrate Judge Carlson for issuance of a Report
and Recommendation (''R&R"). After briefing from the parties, Magistrate Judge Carlson
issued an R&R in which he recommended denying Minora's motion with respect to Martin's
malicious prosecution, abuse of process, and llED claims, but granting it with respect to
Martin's defamation and negligent infliction of emotional distress claims. (Doc. 60). By
memorandum opinion and order dated February 15, 2017, the Court adopted in part and
rejected in part the Magistrate Judge's R&R, and in doing so dismissed Martin's claims
against Minora for malicious prosecution, defamation and false light, and negligent infliction
of emotional distress, leaving claims for abuse of process and llED. 2 (Docs. 64, 65).
Finley, Albanese, and Moore filed a motion for judgment on the pleadings on March
9, 2016. (Doc. 37). This motion was likewise referred to Magistrate Judge Carlson for
issuance of an R&R. Magistrate Judge Carlson issued an R&R in which he recommended
denying the motion with respect to Martin's tortious interference, unjust enrichment,
malicious prosecution, abuse of process, defamation, and llED claims, but granting it with
respect to his negligent infliction of emotional distress claim. (Doc. 63). The Court adopted
in part and rejected in part the Magistrate Judge's R&R, dismissing the malicious
his response to Defendant Minora's motion to dismiss, Plaintiff voluntarily dismissed the
defamation/false light claim against Defendant Minora. (Docs. 57 at 1, 60 at 12).
prosecution and negligent infliction of emotional distress claims, but retaining the remaining
claims as to those Defendants (tortious interference, abuse of process, defamation/false
light, and llED).3 (Doc. 66).
Defendants have filed separate motions for summary judgment with accompanying
briefs in support ("Motion(s)"). (Docs. 108, 122 (Albanese), 111, 125 (Finley), 116, 123
(Minora)). Martin has opposed these motions ("Opposition(s)"). (Docs. 129 (Opposition to
Albanese), 143 (Opposition to Minora), 145 (Opposition to Finley)). Only Albanese
submitted a reply to Martin's Opposition ("Reply"). (Doc. 137). Martin did not file a crossmotion for summary judgment against any Defendant. Accordingly, the Motions are ripe for
review. Because Defendants have submitted similar or nearly identical statements of
purportedly undisputed fact and raise the same arguments in their Motions, and Martin's
Opposition to each Motion is likewise mirrored, the Court will consolidate its analysis of the
Motions in this Opinion. For the reasons that follow, Defendants' Motions will be granted in
part and denied in part.
II. STATEMENT OF UNDISPUTED MATERIAL FACTS
The following facts are undisputed except where specifically noted as disputed.
In June 2012, Plaintiff was the sole incorporator of Med-Dev, a Delaware
corporation. (Docs. 108 ~ 1, 112 ~ 1, 117 ~ 1). At least part of the reason for the formation
of Med-Dev was to distribute "a novel intra-nasal clip that was intended to serve as a non3
Plaintiff later stipulated to dismiss his unjust enrichment claim against Defendants Finley, Albanese, and
Moore on December 1, 2017. (Docs. 99, 100).
antibiotic treatment for nasal methicillin-resistant infections." (Doc. 117 ~ 2). The initial
shareholders of Med-Dev included Plaintiff, Defendant Finley, Defendant Albanese, and
several others. (Docs. 1091[ 2, 112 ~ 2). Neither Plaintiff nor any of the Defendants
invested any money into Med-Dev, as separate investors provided the financial capital.
(Docs. 109 ~1f 3-5, 112 ~~ 3-5).
Plaintiff served as the initial Chairman of the Board of Directors of Med-Dev
("Board"), (Docs. 1091[ 9, 1121[ 9, 117 ~ 3), and was "a Director and Officer of Med-Dev,"
His duties "included attracting investors, distribution of
products, sales, testing of the products, and overall direction of the Company." (Docs. 109
1f 10, 1121[ 10, 1171[ 4). Plaintiff never had any other official title at Med-Dev, (Docs. 1091f
11, 1121[ 11 ), but he asserts he functionally served as the CEO of Med-Dev at times,
"rais[ing] money and organiz[ing] individuals to do what they needed to do to get things
done," (Docs. 1281[ 12,
Finley served as the President of Med-Dev, and "his
duties included taking care of the check books, paying the expenses, balancing the books
on a monthly basis, and the operations of the company." (Docs. 1091[ 13, 1121f 13, 117 ~
5). The members of the Board in 2013 were Plaintiff, Finley, Moore, and William Peters,
M.D. (Docs. 1091[ 14, 112 ~ 14). Albanese was appointed to the Board on January 16,
2014, (Docs. 1091[1[ 15-16, 1121f1f 15-16), although Plaintiff contends that Albanese
resigned from the Board shortly afterwards, (Docs. 1281f1f 15-16, 1441[1[ 15-16). Albanese
was later appointed Chairman of the Board on April 29, 2014-an appointment later
invalidated by the Delaware Chancery Court. (Id.)
Upon forming Med-Dev, Plaintiff adopted a set of bylaws for the company ("Bylaws"),
(Docs. 109 ~ 36, 112 ~ 32), although he asserts that they were never formally adopted by
the Board, (Docs. 128 ~ 36, 144 ~ 32). The Bylaws outline the rules governing the conduct
of the internal affairs of Med-Dev, although Plaintiff contends that Med-Dev rarely, if ever,
followed the Bylaws, stating that "Med-Dev operated informally and there were no Board
Resolutions for any of the actions taken by the Board." (Docs. 128 ~~ 39-42, 144 ~ 35-37).
The Bylaws state: "The business and affairs of the Corporation will be managed by or under
the direction of its Board who may exercise all such powers of the Corporation." (Docs. 109
37, 112 ~ 33). Authorized committees with designated power and authority can be
designated by the Board, upon Board resolution. (Docs. 109 ~ 39, 112 ~ 35). The Bylaws
further state that contracts or transactions between Med-Dev and its Directors or officers
''will not be void or voidable ... solely because the Director or Officer is present at or
participates in the meeting of the Board or committee thereof that authorizes the contract or
transaction ... , if' material facts regarding the Director or Officer's interest are known or
disclosed to the Board or authorized committee or shareholders and the contract or
transaction is approved by vote of the Board or shareholders, or the contract or transaction
is "fair" and is otherwise approved by the Board, authorized committee, or shareholders.
(Docs. 109 ~ 38, 112 ~ 34). The Bylaws also state that Board Directors can receive
compensation "for their services and reimbursement for their expenses" by Board
resolution, although a resolution is not needed for compensation paid to Directors "serving
the Corporation in any other capacity." (Docs. 109 ~ 41, 112 ~ 36).
"On December 10, 2012, [Plaintiff] executed a Consulting Agreement 'to render
services as Chairman of the Board of Directors' of Med-Dev in return for compensation of
$15,000 per month for a three year term commencing January 1, 2013." (Docs. 109 ~ 46,
112 ~ 41 ). Finley signed the Consulting Agreement as President of Med-Dev, and Plaintiff
signed it as Consultant. (Docs. 109 ~ 47, 112 ~ 42). Plaintiff's Consulting Agreement
prohibited the assignment of the Consultant's rights, duties, or obligations under the
Consulting Agreement "without the prior written consent of [Med-Dev]," and did not "provide
for any other payments or benefits such as health insurance to be paid to [Plaintiff]." (Docs.
109 ~~ 55, 58, 112 ~~ 49, 52). The Board never formally voted to approve Plaintiff's
Consulting Agreement or the payment of health benefits to Plaintiff. (Docs. 109 ~~ 48, 52,
59, 62, 112 ~~ 43, 53, 56). However, Plaintiff asserts that the Consulting Agreement was
valid because Finley, as Med-Dev's President, signed it, and it was further "ratified and
consented to by Med-Dev through the continued payments of compensation to [Plaintiff] in
accordance with the terms of the Agreement." (Docs. 128 ~ 48, 144 ~ 43). Finley and
Board Director Peters also were paid monthly compensation by Med-Dev under similar
agreements, and these also were not formally approved by the Board. (Docs. 109 ~ 64, 122
at 36, 125 at 4, 36, 128 ~~ 38, 43, 1441Mf 34, 38). The parties dispute whether Plaintiff was
paid under the Consulting Agreement solely as Chairman of Med-Dev, or in another role,
(Docs. 109 ~ 54, 112 ~ 48, 128 ~ 54 (Plaintiff asserting that compensation "was for the
services he provided for the operation of Med-Dev"), 144 ~ 48 (same)), but do not dispute
that "[t]he Consulting Agreement specifically states that [Plaintiff] is 'an independent
contractor and not an employee of the Company,"' (Docs. 109 ~ 60, 112 ~ 54).
Arguments about Plaintiff's use of Med-Dev funds began in earnest in late 2013 and
into early 2014. (Docs. 109 ~~ 85, 92, 112 mJ 77, 84, 117 ~~ 6, 12). The parties do not
dispute that Plaintiff improperly used $2,500 of Med-Dev funds in 2013 to pay a legal bill to
the Mauro Savo law firm that was unrelated to Med-Dev. (Docs. 109 ~~ 70-74, 112 ~~ 6266, 117 ~~ 7-11, 128 mJ 70-74, 142 ~~ 7-11, 144 mJ 62-66). However, Plaintiff contends
that this payment was an honest mistake arising out of confusion regarding the name of
what he mistakenly thought was a predecessor LLC to Med-Dev, and that he informed MedDev's corporate counsel, Attorney Joseph Tomasek, as soon as he learned of the purported
mistake. (Docs. 128 ~ 70, 142 ~ 7, 144 ~ 62). The parties also do not dispute that Plaintiff
used Med-Dev funds to pay $8,517 in expenses at a country club that were unrelated to
Med-Dev business. (Docs. 109 ~~ 75-76, 112 ~~ 67-68,
128 ~~ 75-76, 142
14-15, 144 ~~ 67-68). However, the parties dispute the propriety of Plaintiff charging his
health insurance premiums to his Med-Dev debit card. (Docs. 109 mJ 78-79, 112 ~~ 70-71,
128 ~~ 78-79, 142 ~~ 18-19, 144 ~~ 70-71). Finley and Albanese and
Plaintiff also disagree on the propriety of Plaintiff's directing his fees paid under his
Consulting Agreement to an LLC owned by Plaintiff, Scotland Yarns, LLC. (Docs. 109 ml
56-57, 112 ~~ 50-51, 128 ~~ 56-57, 144 ~~ 50-51). 4 The parties agree that Plaintiff did not
separately reimburse Med-Dev for the Mauro Savo legal fees or country club expenses, and
that Plaintiff offered to offset the $2,500 in legal fees paid to Mauro Savo against expenses
he had not yet turned in to Med-Dev. (Docs. 109 ~ 86-87, 112 ~ 78-79,
Plaintiff also claims he offset the $8,517 in country club expenses, and that Med-Dev owed
him $52,000 in unpaid consulting fees and unreimbursed expenses by early 2014. (Docs.
128 ~ 87,
144 ~ 79). In his portion of the record, Plaintiff includes a sworn
statement from Attorney Tomasek that states that Finley and Albanese did not communicate
with Martin about the alleged expenditure issues or discuss the issues at Board meetings
that the attended, and that he counseled them to speak with Martin "so he would have the
opportunity to rebut or explain the charges and ultimately resolve the issues." (Doc. 144-16
Finley closed Med-Dev's Wells Fargo bank account in January 2014 to prevent
Plaintiff from accessing Med-Dev funds, and told him he was closing the account "because
[Plaintiff] was taking consulting fees from it" and "because [Finley] thought [Plaintiff] was
misappropriating corporate funds." (Docs. 109 ~~ 91-93, 112 ml 83-85). Plaintiff asserts
that Albanese was involved in this decision as well. (Doc. 128 ~ 91). January 2014 was
not stated in their Statements of Fact, the record shows that Defendants appear to challenge
Plaintiffs issuance of a $10,000 loan from Med-Dev's funds to Attorney Tomasek for matters unrelated to
Med-Dev. (Doc. 109-2 at 35).
also the last month that Plaintiff received his monthly consulting fee from Med-Dev. (Docs.
109 ~ 66, 112 ~ 58). In addition to Finley's actions, Minora was also hired in March 2014 to
investigate Plaintiff's use of corporate funds. (Docs. 109 ~ 82, 112 ~ 74, 117 ~~ 21-22). At
the time of his hiring, Minora was a Scranton attorney in private practice, but the parties
dispute whether he was a former or current prosecutor for the Lackawanna County District
Attorney's Office ("LCDA"). (Docs. 117 ~ 23,
142 ~ 23,
asserts that Minora's hiring was not on behalf of Med-Dev, but was rather orchestrated by
Defendants Finley, Albanese, and Moore, as Board Director Peters was not aware of
Minora's hiring; Plaintiff further asserts that there was no written engagement letter between
Med-Dev and Defendant Minora. (Docs. 128 ~ 96, 142 ~ 21, 144 ~ 88).
Around this time, Plaintiff "offered to resign as Director and Chairman of the Board of
Med-Dev effective April 19, 2014 contingent on Edward Lipes ('Lipes') and Gregory Rainey
('Rainey') being appointed to the Board." (Docs. 109 ~ 21, 112 ~ 19). "At the time of his
resignation from Med-Dev on April 19, 2014, [Plaintiff] believed the company had 'gotten
dysfunctional,' it was 'heading off a cliff,' and Dr. Moore and Finley had 'gone rogue."'
(Docs. 109 ~ 26, 112 ~ 24). Defendants Finley and Albanese and Plaintiff dispute whether
the allegations surrounding Plaintiff's unauthorized expenditures were the driving force
behind Plaintiff's offer to resign, (Docs. 109 ~~ 21, 28, 112 ~~ 19, 26), although Plaintiff
acknowledges that the allegations were "distracting Med-Dev from its mission" and he
wanted "to end the distractions and allow Med-Dev to move forward," (Docs. 128 ~~ 21, 28,
26). "[Plaintiff] signed a written resignation letter April 19, 2014 prepared by
Attorney Tomasek that was unconditional." (Docs. 109 ~ 22, 112 ~ 20). Plaintiff later
informed Med-Dev he was retracting his resignation offer because Lipes and Rainey were
not appointed to the Board, and the Delaware Chancery Court officially reinstated Plaintiff
as a Director on the Med-Dev Board on October 27, 2015, ruling that Attorney Tomasek
should have disclosed to Plaintiff that Med-Dev viewed the resignation as unconditional and
that Med-Dev did not satisfy the terms of the resignation offer originally presented to
Plaintiff. (Docs. 109 ~~ 23, 25, 112 ~~ 21, 23). Plaintiff is emphatic that he was not "forced
to resign" from the Med-Dev Board, (Doc.
and also notes that he told Finley and
Albanese in December 2013, prior to the unauthorized expense issues being raised by
Finley, that he was planning to resign in the first half of 2014, (Docs. 128 ~ 33, 144 ~ 26).
Also around the time of Plaintiff's resignation from the Board and his subsequent
retraction of the resignation, Defendant Minora's "investigation" into Plaintiff's use of
corporate funds led to the initiation of a criminal complaint with the LCDA. (Docs. 109 ~ 99,
112 ~ 91, 117 ~ 30). Plaintiff contends that Defendant Minora filed the criminal incident
report with the LCDA on behalf of Defendants Finley, Albanese, and Moore, not on behalf of
Med-Dev, and that Defendant Minora "did not conduct any individual factual investigation
into [Plaintiff's] use of Med-Dev corporate funds." (Docs. 128 ~~ 97, 99, 142 ~~ 28, 30, 144
91 ). However, the parties agree that "[Defendant] Minora reviewed internal Med-Dev
documents, he spoke to an attorney at Mauro Savo, he spoke to Attorney Tomasek, and he
sent correspondence to the Mauro Savo firm." (Docs. 109 ~ 83, 112 ~ 75, 117 ~ 24). After
this review, Defendant Minora spoke with LCDA detectives. (Docs. 109 ~~ 97-98, 112 ~~
89-90, 117 ~~ 28-29). '"Based upon information [Defendant] Finley provided, [LCDA
Detective] Bauer obtained two search warrants. The first was to obtain [Plaintiffs] bank
records; the second sought Med-Dev's bank records in order to verify what [Defendant]
Finley and [Defendant] Minora had reported." (Doc. 117 ~ 31 ). LCDA Detective Bauer
found, from review of bank records, that Plaintiff had made the improper $2,500 payment to
the Mauro Savo law firm. (Doc. 117 ~ 32).
The parties vigorously dispute exactly what happened next. All agree that Plaintiffs
attorneys at the time contacted the LCDA and Defendant Minora on or about May 27, 2014
to suggest that the criminal investigation be halted to discuss a possible civil settlement
between Plaintiff and Med-Dev, and that "[Plaintiff] authorized his attorneys to try and settle
with Med-Dev to avoid possible criminal charges against him." (Docs. 109 ml 100-101, 112
ml 92-93, 117 ~~ 33, 35).
However, the parties disagree on how settlement negotiations
proceeded. Defendants state that [Plaintiffs] attorneys were the ones that proposed that
Plaintiff would agree to give up his Med-Dev stock and resign from Med-Dev. (Docs. 109 ~
102, 112 ~~ 94, 106-07, 117 ~~ 36-37, 41 ). Plaintiff contends that it was Defendants who
pursued this course:
To the contrary, it was [Defendant] Attorney Minora who indicated to Martin's
attorneys that his clients wanted [Plaintiff] out of the Company and if they
could achieve this by settlement, his clients would not continue to advocate
for [Plaintiffs] criminal prosecution ... [Defendant] Attorney Minora raised the
idea of a settlement agreement and volunteered to draft the settlement
(Docs. 142 ~~ 36-37, 144 ~~ 106-07). The parties also dispute whether [Defendant]
Minora's August 2014 communication with [Plaintiff's] lawyers constituted a threat that if
Plaintiff did not sign the settlement agreement, Defendants would seek criminal charges
against Plaintiff, and that Defendants had a corrupt purpose in filing the initial criminal
complaint with the LCDA. (Docs. 109 ~~ 104, 110, 128 ~~ 104, 110, 112 ~~ 96, 116, 117 ~~
42-44, 142 ~~ 42-44, 144 ~~ 96, 116). The LCDA terminated its criminal investigation in
September 2014, and Plaintiff asserts that Defendants tried to get the LCDA to reopen the
investigation by going to another assistant district attorney, but were unsuccessful. (Docs.
142 ~ 43).
The relationship between the parties continued to deteriorate. On August 20, 2014,
a newsletter (the "Newsletter") was sent to at least some of Med-Dev's shareholders,
investors, and partners, a portion of which included the following text:
On April 19, 2014, after an extensive internal Investigation into the alleged
mishandling/misappropriation of Med-Dev corporate funds, Michael G. Martin
was forced to resign as Chairman of the Board & Corporate Officer of MedDev. Mr. Martin is no longer associated with Med-Dev and accordingly
should not be communicated with to discuss any Med-Dev Corp. business
Also, William P. Peters, MD, PhD resigned as an Independent Board member
and as CEO. Dr. Peters continues to remain a founding member of Med-Dev.
(Doc. 112-4 at 61 ). Additionally, a lengthy document (the "Manifesto") was sent to MedDev's shareholders, investors, and partners in January 2015 that included the following text:
Subject: Michael G. Martin Unauthorized Use of Corporate Funds and
Abuse of his position as an Officer and Chairman of the Board of
In the near future, a conference call will be scheduled to discuss the
information contained in this document and answer any pertinent questions.
The following issues are directly related to the violation of Michael G.
Martins [sic] (MARTIN) fiduciary responsibility as an Officer & Chairman
of the Board of Med-Dev Corp., including:
1.) Unauthorized personal use by MARTIN of Med-Dev corporate
2.) The abuse of his position as the former Chairman of the Board to
execute NDA's, Master Service Agreements and Contracts for
personal and unrelated ventures.
3.) Reckless negotiation and attempt to commit Med-Dev to
contracts beyond its ability to fulfill.
(Doc. 109-2 at 129) (bold print in original). The Manifesto also contained reference to the
purported failure of Plaintiff "to disclose his indictment, arrest and arraignment for Theft by
Deception in Bergen County, NJ on Thursday May 7, 2009." (Id.) It also stated that "'[i]t is
understood that [Plaintiff] fully and intentionally entered into the Consulting Agreement
under false and deceptive pretenses ... [and that] [t]his assertion is confirmed by Joseph
Tomasek, Esq., former Med-Dev Corporate Counsel." (Id.) Plaintiff argues that Defendants
should have known he never pied guilty to the Bergen County charges, and attaches an
affidavit from Tomasek stating that: "At no time did I ever advise Mr. Finley, Mr. Albanese,
Dr. Moore, or Attorney Minora that when speaking to any investors about their investment in
Med-Dev they must advise the investors that [Plaintiff] committed a felony in New Jersey."
(Doc.144 ~ 82, 144-16 ~ 9).
Defendants Finley and Albanese also contend that Tomasek "directed Med-Dev to
notify the Med-Dev investors about [Plaintiffs] unauthorized expenditures," (Docs. 109 ~ 88,
120, 112 ~ 80, 98), but Plaintiff responds that Tomasek did not direct Med-Dev to send out
the Manifesto, because he had left the company in December 2014, and that Tomasek's
previous instruction to Med-Dev in April 2014 to update the shareholders and investors on
the expense issue did not entitle Defendants to disseminate false information, (Docs. 128
120, 144 ~~ 80, 98). The parties further dispute whether Defendant Finley acted
alone in preparing and sending the Newsletter and Manifesto. (Docs. 1091MJ 111-21, 128
With respect to Plaintiffs alleged emotional distress he suffered at the hands of
Defendants, the parties agree that Plaintiff "has not produced a medical expert report to
prove his emotional distress claim at trial," and that, at the least, he has not had specific
treatment solely for anxiety or counseling since January 1, 2013. (Docs. 109 ~~ 122-23,
112 ~~ 99-100, 117 ~~ 48-49,
142 ~~ 48-49, 1441MJ 99-100).
Ill. STANDARD OF REVIEW
Through summary adjudication, the court may dispose of those claims that do not
present a "genuine dispute as to any material fact." Fed. R. Civ. P. 56(a). "As to materiality,
... [o]nly disputes over facts that might affect the outcome of the suit under the governing
law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
The party moving for summary judgment bears the burden of showing the absence
of a genuine issue as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106
S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Once such a showing has been made, the nonmoving party must offer specific facts contradicting those averred by the movant to establish
a genuine issue of material fact. Lujan v. Nat'/ Wildlife Fed'n, 497 U.S. 871, 888, 110 S. Ct.
3177, 111 L. Ed. 2d 695 (1990). Therefore, the non-moving party may not oppose summary
judgment simply on the basis of the pleadings, or on conclusory statements that a factual
issue exists. Anderson, 477 U.S. at 248. "A party asserting that a fact cannot be or is
genuinely disputed must support the assertion by citing to particular parts of materials in the
record ... or showing that the materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce admissible evidence to support
the fact." Fed. R. Civ. P. 56(c)(1)(A)-(B). In evaluating whether summary judgment should
be granted, "[t]he court need consider only the cited materials, but it may consider other
materials in the record." Fed. R. Civ. P. 56(c)(3). "Inferences should be drawn in the light
most favorable to the non-moving party, and where the non-moving party's evidence
contradicts the movant's, then the non-movant's must be taken as true." Big Apple BMW,
Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992), cert. denied 507 U.S. 912,
113 S. Ct. 1262, 122 L. Ed. 2d 659 (1993).
However, "facts must be viewed in the light most favorable to the nonmoving party
only if there is a 'genuine' dispute as to those facts." Scott v. Harris, 550 U.S. 372, 380, 127
S. Ct. 1769, 167 L. Ed. 2d 686 (2007). If a party has carried its burden under the summary
its opponent must do more than simply show that there is some metaphysical
doubt as to the material facts. Where the record taken as a whole could not
lead a rational trier of fact to find for the nonmoving party, there is no genuine
issue for trial. The mere existence of some alleged factual dispute between
the parties will not defeat an otherwise properly supported motion for
summary judgment; the requirement is that there be no genuine issue of
material fact. When opposing parties tell two different stories, one of which is
blatantly contradicted by the record, so that no reasonable jury could believe
it, a court should not adopt that version of the facts for purposes of ruling on a
motion for summary judgment.
Id. (internal quotations, citations, and alterations omitted).
Defendants seek summary judgment on all of Plaintiffs remaining claims against
them. As previously discussed, although they submitted separate Motions, their arguments
and characterization of the facts are mostly the same. The Court will address each of
Plaintiffs remaining claims in turn and will note the few instances where there are
distinctions between Defendants' relative positions.
A. TORTIOUS INTERFERENCE WITH EXISTING CONTRACTUAL RELATIONS (COUNT/DEFENDANTS FINLEY AND ALBANESE)
In their Motions, Defendants Finley and Albanese first maintain that they are entitled
to summary judgment on Plaintiffs first claim, tortious interference with existing contractual
relations. Pennsylvania has adopted the Restatement (Second) of Torts standard for this
tort. Adler, Barish, Daniels, Levin and Creskoffv. Epstein, 393 A.2d 1175, 1181-84 (Pa.
1979); Restatement (Second) of Torts§ 766.5 To succeed on a claim for tortious
interference, Plaintiff must prove (1) the existence of a contractual relationship between
Plaintiff and a third party; (2) purposeful action on the part of Defendants, specifically
intended to harm the existing relationship; (3) the absence of privilege or justification on the
part of Defendants; and (4) actual legal damages resulting from Defendants' conduct. CGB
Occupational Therapy, Inc. v. RHA Health Servs. Inc., 357 F.3d 375, 384 (3d Cir. 2004). In
his Complaint, Plaintiff pleads that Defendants Finley and Albanese, without justification or
privilege, interfered with his Consulting Agreement with Med-Dev by closing the Med-Dev
Wells Fargo bank account and engaging in other conduct, which led to the loss of $180,000
in consulting fees to which he claims he was entitled. (Doc. 1 ~~ 109-114).
Defendants Finley and Albanese take a sweepingly broad approach in raising five
arguments in their Motions against this claim: (1) the Consulting Agreement between Finley
and Med-Dev was void from the start because it was never formally approved by Med-Dev's
Board; (2) there was no culpable conduct on the part of either Defendant Finley or
Section 766 explains the tort as:
One who intentionally and improperly interferes with the performance of a contract (except
a contract to marry) between another and a third person by inducing or otherwise causing
the third person not to perform the contract, is subject to liability to the other for the
pecuniary loss resulting to the other from the failure of the third person to perform the
Restatement (Second) of Torts§ 766.
Albanese, either because they were not involved in the decision to discipline Plaintiff or
because Plaintiff made the decision to resign from Med-Dev on his own; (3) there is no
third-party in Plaintiff's posited scenario, because Med-Dev and Defendants Finley and
Albanese, as Directors of Med-Dev, should be treated as the same party; (4) Plaintiff's claim
should be treated as arising from a claim for defamation, which has a one year statute of
limitations, and should be time-barred as such; and (5) Plaintiff's claim should be barred by
the Gist of the Action doctrine because Plaintiff's cause of action is essentially for breach of
the Consulting Agreement, and is not a tort. Each argument fails to convince the Court that
summary judgment should be granted.
VALIDITY OF THE CONSULTING AGREEMENT
Defendants Finley and Albanese challenge the first element of the tort, the existence
of a contract, by attacking the validity of the Consulting Agreement. They argue that the
undisputed facts establish that the Consulting Agreement is void as an unauthorized "backroom reciprocity deal" between Defendant Finley and Plaintiff, never approved by the MedDev Board in violation of the Med-Dev Bylaws. (Docs. 122 at 15-16, 125 at 15-16). Plaintiff
responds that the Consulting Agreement was signed by Defendant Finley, the President of
Med-Dev, on behalf of Med-Dev, and that under relevant Delaware corporate law,
Defendant Finley had the authority to enter Med-Dev into the contract with Plaintiff. (Docs.
129 at 4, 145 at 4). Plaintiff also contends that the Consulting Agreement was ratified
through conduct because Med-Dev paid Plaintiff for a year, and both parties were
performing their obligations under the Consulting Agreement until Defendant Finley and
Albanese's wrongful interference. (Docs. 129 at 4, 145 at 4-5). Plaintiff finally notes that
Defendant Finley's position is "completely disingenuous," because he was getting paid
under a nearly identical contract from Med-Dev. (Doc. 145 at 4-5).
Relying on the Bylaws, Defendant Finley and Albanese's position is essentially that
there was no proper offer and acceptance between Med-Dev and Martin with respect to the
Consulting Agreement. However, as Plaintiff points out, they cite to no legal authority in
support of their position that the apparent failure of the Med-Dev Board to formally approve
the Consulting Agreement, pursuant to the Bylaws, renders it void. Instead, the factual
record is replete with material disputes that make it impossible for the Court to conclude, as
a matter of law, that the Consulting Agreement was not properly offered or accepted by
either Med-Dev or Plaintiff.
For example, Plaintiff contends that "Med-Dev operated informally and there were no
Board Resolutions for any of the actions taken by the Board" such as setting up committees,
leasing office space, expenditures, and contracts. (Docs. 128 ~~ 39-42, 144 mf 35-37).
Indeed, Plaintiff, citing an email from Defendant Albanese, states that the Bylaws
themselves were never formally adopted by the Board.s (Docs. 128 ~ 36, 144 ~ 32).
email ascribed to Defendant Albanese also states that the "Bylaws [Plaintiff] references were taken
off the shelf and were for a public company." (Doc. 144-10 at 1). While the use of boilerplate corporate
bylaws does not necessarily negate their force, it suggests, when combined with the other parts of the
factual record, that Med-Dev operated rather informally.
Thus, whether adherence by the parties and Med-Dev itself to the Bylaws was required is in
Additionally, the factual record is murky with respect to the exact nature of Plaintiff's
employment with Med-Dev. The Consulting Agreement itself is contradictory, stating that
Plaintiff, as "Consultant," is "an independent contractor and not an employee of [Med-Dev],"
(Docs. 109 ~ 60, 112 ~ 54), but also that Plaintiff is being retained to act as Chairman of
Med-Dev's Board, (Docs. 109 ~ 46, 112 ~ 41). The parties also dispute whether Plaintiff
was paid under the Consulting Agreement solely as Chairman of Med-Dev, or in another
role. (Docs. 109 ~ 54, 112 ~ 48, 128 ~ 54 (Plaintiff asserting that compensation "was for the
services he provided for the operation of Med-Dev"), 144 ~ 48 (same)). As the Bylaws only
require formal authorization for the approval of compensation agreements with corporate
directors being compensated in their role as directors, (Docs. 109 ~ 41, 112 ~ 36), it is
uncertain that the Bylaws, even if adopted and observed, would apply to Plaintiff and the
Finally, although tortious interference with contract requires a "contract," it is not
"necessary that the contract be legally enforceable against the third person ... [because] [a]
promise may be a valid and subsisting contract even though it is voidable." Restatement
(Second) of Torts§ 766 cmt. f. Thus, even if there are defenses that the third-party (in this
case, Med-Dev) could raise to enforcement of the Consulting Agreement, such as a lack of
mutuality in entering the contract, "until [the third party] does, the contract is a valid and
subsisting relation, with which the actor is not permitted to interfere improperly." See id.
The parties agree that Plaintiff was paid for months in exchange for his work under the
Consulting Agreement and then was not paid starting in January 2014. However, no party
asserts that the failure of Med-Dev to pay Plaintiff starting in January 2014 was due to MedDev contemporaneously declaring the Consulting Agreement to be void due to fatal errors in
its formation. Instead, the factual record contains references to a late April 2014 Special
Board meeting that may have included discussion of a retroactive termination of the
Consulting Agreement, but the basis for a possible retroactive termination is unclear.
(Docs. 109 ~ 35, 112 ~ 31, 112-4 at 14 ~ 70). Nor does Med-Dev itself advance the
argument now that the Consulting Agreement is void, because Med-Dev is not a party to
In sum, given the tangled web of factual disputes here, Defendant Finley and
Albanese have not established, as a matter of law, that the Consulting Agreement was void.
Hence, they are not entitled to summary judgment on this ground.7
Defendants Finley and Albanese also argue that they did not engage in any
"culpable conduct" to interfere with Martin's Consulting Agreement with Med-Dev. (Docs.
122at16-17, 125at17-18). Defendant Finley argues that "[t]here is no authority to support
Court notes the irony in Defendant Finley challenging the validity of the Consulting Agreement when
Defendant Finley himself had a nearly identical contract with Med-Dev that was never formally approved by
the Board. While not necessary to decide the Defendants' pending Motions, Finley's contract may be
relevant trial evidence as to the need for formal approval by the Board for such "consulting" agreements.
Martin's claim that the closure of the Wells Fargo account violated any legally cognizable
interest of Martin," and that "Finley's legitimate inquiries about Martin's wrongful
expenditures, which Martin has admitted of record, do not form a basis for relief against
Finley." (Doc. 125 at 17-18). Defendant Albanese contends that he was not involved in the
closure of the bank account, or the negotiations for Martin's resignation from the company
and termination of the Consulting Agreement. (Doc. 122 at 16-17). Both assert that Martin
decided to terminate his own contract by voluntarily deciding to resign as Med-Dev
Chairman because of the unauthorized expenses issue. (Docs. 122at16-17, 125at1718).
Martin responds that there is a clear dispute of material fact regarding Finley and
Albanese's involvement with the decision to close the Wells Fargo bank account, citing
emails and testimony from Finley indicating that he discussed closing the account with
Albanese and that Finley "did not act unilaterally in any of these capacities in dealing with
any of these issues."8 (Docs. 112-3 at 33:11-13, 128-20 at 3, 129 at 5, 145 at 5). Martin
further argues that his resignation from the Med-Dev Board in April 2014 is a "smoke
screen" raised by Finley and Albanese to avoid liability for their tortious interference
because the Consulting Agreement was effectively terminated four months earlier with the
closure of the Wells Fargo bank account. Further, Martin contends that his resignation was
On this factual dispute and others, Martin has cited in his Oppositions to portions of the trial transcript
from the Delaware Chancery Court matter, which are attached to the Defendants' Statement of Undisputed
Material Facts. (See, e.g., Doc. 109-1 at 90-104). However, Martin often cites to pages in the transcript
that were not included in the excerpt included in the record. As a result, the Court will not consider these
omitted pages in its evaluation of the factual record.
later deemed ineffective by the Delaware Chancery Court because a condition subsequent
to Martin's resignation was not fulfilled, i.e., the appointment to the Board of Lipes and
Rainey. (Docs. 109-1 at 121-22, 145 at 6).
Although they are not identified as such, Finley and Albanese's "culpable conduct"
arguments lump together the remaining elements of tortious interference-purposeful action
to interfere with a contract, taken without privilege or justification, that results in actual legal
damages. CGB Occupational Therapy, 357 F.3d at 384. These arguments fail to convince
the Court that the entry of summary judgment is appropriate.
First, the Court will not rule as a matter of law that the closing of the Wells Fargo
bank account, from which Martin withdrew his monthly fee under the Consulting Agreement,
is not an actionable interference with a contract. Tortious interference with contract does
not have "a technical requirement as to the kind of conduct that may result in interference ..
. fi]nterference with the third party's performance may be by prevention of the performance .
. . fsuch as] by depriving him of the means of performance." Restatement (Second) of Torts
§ 766 cmt. k. Preventing Med-Dev from paying Martin by closing the Wells Fargo account
is, on its face, "depriving [Med-Dev] of the means of performance." Id. Additionally, while
Albanese may not have been the individual who personally closed the Wells Fargo bank
account, Martin has pointed to material in the factual record that suggests that Albanese
was involved in the decision to close the account. (See Docs. 112-3 at 33: 11-13, 128-20 at
3, 129 at 5, 145 at 5). Martin has also pointed to portions of the factual record to support his
claim that Finley and Albanese had the aim of pushing him out of Med-Dev, and the Court
also takes notice of portions of the record that identify a factual dispute between the parties
on this issue. (See Docs. 109-2 at 40,
128-161f1f 6, 14-16, 128-34 at 2,
129 at 7, 144-34 at 23:24 to 24:2, 145 at 7-8). This is sufficient to preclude summary
judgment on the grounds that Finley and Albanese did not intend to interfere with the
Consulting Agreement. Restatement (Second) of Torts§ 766 cmt. j (describing that an
actor is liable if actions to interfere with contract are taken with the "primary purpose of
interfering with the performance of the contract," if the actor "desires to interfere, or if the
actor "knows that interference is certain or substantially certain to occur" even if it is not the
primary purpose of the action).
Further, while a court can rule as a matter of law that an actor is privileged to take an
action that would otherwise be unlawful interference with a contract, see Dempsey v.
Bucknell Univ., 76 F. Supp. 3d 565, 587 (M.D. Pa. 2015), Finley and Albanese only point to
the qualified privilege afforded to agents of a principal, as purported corporate officers of
Med-Dev. As subsequently discussed, infra Section IV.A.3, Martin raises factual disputes
regarding whether Finley and Albanese were acting within the scope of their authority when
they purportedly took actions to interfere with the Consulting Agreement. Evaluating other
potential justifications for interference with a contract, such as Finley's brief reference to his
"legitimate inquiries about Martin's wrongful expenditures," (Doc. 125 at 18), are better
resolved by a jury and are thus inappropriate for judicial resolution on summary judgment.
Restatement (Second) of Torts§ 767 cmt. I. ("[W]hen there is room for different views, the
determination of whether the interference was improper or not is ordinarily left to the jury, to
obtain its common feel for the state of community mores and for the manner in which they
would operate upon the facts in question.").
Finally, the parties agree that Martin ceased being paid under the Consulting
Agreement in January 2014. While they may dispute the importance of Martin's later
proffered resignation in April 2014, the failure of Martin to be paid under the Consulting
Agreement starting in January 2014 constitutes "actual legal damages" as required by the
tort. See Restatement (Second) of Torts§ 774A(1)(a) (liability for damages for "the
pecuniary loss of the benefits of the contract").
Accordingly, the Court will deny the entry of summary judgment on these grounds
asserted by Finley and Albanese.
EXISTENCE OF A THIRD·PARTY
Finley and Albanese next raise a legal defense against Martin's tortious interference
claim by arguing that they are not "third parties" that could have interfered with the
Consulting Agreement. 9 Instead, they contend that as corporate officers of Med-Dev, they
should be considered the same as Med-Dev. (Docs. 122 at 17-18, 125 at 18-19). They
further assert that there is "no evidence that [either] acted outside the course and scope of
his role as a director of Med-Dev." (Docs. 122 at 18, 125 at 19).
Court notes that it previously asked for briefing on this issue from the parties. (Doc. 66). Only Martin
complied. (Doc. 72).
With respect to Albanese, Martin responds that there is a dispute of fact regarding
whether "Albanese was a member of the Med-Dev Board of Directors at all times between
January 16, 2014 and April 19, 2014." (Doc. 128-3 at 2, 128-4 at 3,
129 at 5-
6). With respect to both Finley and Albanese, Martin further argues that there is a dispute of
fact regarding whether each was acting within the scope of his authority as a director of
Med-Dev when both took actions to allegedly interfere with Martin's Consulting Agreement.
(Docs. 129 at 6-8, 145 at 6-9). Martin points to portions of the factual record to support his
assertion that both Finley and Albanese "acted with personal animus" and "contrary to MedDev's interest" because they knew or should have known that Martin was paid his
consulting fees from the Wells Fargo account to Martin's company, Scotland Yarns, LLC,
and that Finley was aware that the payment to Mauro Savo was a mistake and that Martin
offered to rectify the situation by offsetting the payment against fees he was owed. (Docs.
109-2 at 40, 112-1 at 43:17-23,
128-16 ~~ 6, 14-16, 128-34 at 2, 129 at 7,
144-34 at 23:24 to 24:2, 145 at 7-8).
Despite reaching different conclusions, the parties correctly encapsulate the legal
standard in their argument. "Under Pennsylvania law, a claim for tortious interference will
survive only if a defendant is not a party to the contract alleged to have been tortiously
interfered with." See, e.g., Daniel Adams Assocs., Inc. v. Rimbach Publ'g., Inc., 519 A.2d
997, 1000 (Pa. Super. Ct. 1987). "The actions of a principal's agent are afforded a qualified
privilege from liability for tortious interference with the principal's contract." CGB
Occupational Therapy, 357 F.3d at 385. "The agent's privilege is qualified ... because it
applies only when the agent is acting within the scope of its authority." Id. Corporate
officers, as agents, are thus typically immune from a tortious interference claim brought by a
plaintiff who has a contract with the corporation that was allegedly interfered with by the
corporate officer. See, e.g., id. at 385-88; Labalokie v. Capital Area Intermediate Unit, 926
F. Supp. 503, 509 (M.D. Pa. 1996). However, in situations when the "'sole motive in
causing the corporation to breach the contract is actual malice toward the plaintiff, or if the
officer's conduct is against the corporation's interest,"' the "agent acts outside the scope of
his employment." Tisone v. Berardino, Civil Action No. 16-167, 2016 WL 7404556, at *8
(W.D. Pa. Dec. 22, 2016) (quoting Duran v. Cty. of Clinton, No. 4:14-CV-2047, 2015 WL
5675580, at *11 (M.D. Pa. Sept. 25, 2015)).
While it is a close call, the Court finds that the highly contested factual record leads it
to conclude that Finley and Albanese have not established, as a matter of law, that they
were acting within the scope of their employment. In other cases from the Third Circuit and
the Court's sister districts where courts have found that agents were acting in the scope of
their employment, the factual record has been much more definitive than the instant case.
For example, in CGB Occupational Therapy, 357 F.3d 375 (3d Cir. 2004), there was an
uncontested agreement between the defendant-appellant, a managing agent for two
Pennsylvania nursing home facilities, and the third party corporation which owned the
facilities that gave the managing agent the express authority to terminate contracts in the
third party corporation's name. Id. at 386. Thus, the Third Circuit found that the managing
agent was acting within the scope of its authority when it terminated its contract with the
plaintiff-appellee, a provider of therapy services to the nursing home facilities. Id. Similarly,
in Wagnerv. Tuscarora School District, No. Civ. A. 1:04-CV-1133, 2006 WL 167731, (M.D.
Pa. Jan. 20, 2006), in granting summary judgment to defendants in a tortious interference
case, the court found that the record did not contain any evidence suggesting malice on the
part of the defendants, employees or agents of a school district, against the plaintiff, a
teacher in the school district. Id. at *13.
As noted above, Martin has pointed to evidence in the record that at least raises a
dispute as to the motivations of Finley and Albanese in closing the Wells Fargo bank
account and taking other actions that allegedly led to the termination of the Consulting
Agreement. (Docs. 109-2 at 40, 112-1 at 43:17-23,
128-16 ~~ 6, 14-16,
128-34 at 2, 129 at 7, 144-34 at 23:24 to 24:2, 145 at 7-8). The disputed inner-workings of a
small, private corporation like Med-Dev creates a factual morass on this issue that must be
resolved by a jury rather than by this Court.
However, the Court also finds that the contested factual ground will not be unlimited
at trial. The Court rejects Martin's argument that there is a dispute of fact with respect to
whether Albanese was a member of the Board starting in January 2014, as this was an
issue previously decided in the Delaware Chancery Court matter. (Doc. 109-1 at 125, 12728). In that matter, Martin also argued that "at some point after his January 16 appointment,
Albanese resigned from the Board." (Id. at 125). Martin raised this issue as part of his
case-in-chief to invalidate Albanese's position on the Med-Dev Board in order to establish
his own entitlement to the Chairman position. (Id. at 109, 125). The Delaware Chancery
Court found that "the evidence does not support [Martin's] conclusion," and that "Albanese
validly was appointed to the Board on January 16, 2014 and did not resign afterwards." (Id.
Under the principles of issue preclusion, "once a court has decided an issue of fact
or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit
on a different cause of action involving a party to the first case." Allen v. Mccurry, 449 U.S.
90, 94, 101 S. Ct. 411, 66 L. Ed. 2d 308 (1980) (citing Montana v. U.S., 440 U.S. 147, 153,
99 S. Ct. 970, 59 L. Ed. 2d 210 (1979)). "To preclude parties from contesting matters that
they have had a full and fair opportunity to litigate protects their adversaries from the
expense and vexation attending multiple lawsuits, conserves judicial resources, and fosters
reliance on judicial action by minimizing the possibility of inconsistent decisions." Montana,
440 U.S. at 153-54. The Court will apply Delaware preclusion law regarding this issue, as it
was the state in which the previous judgment was entered. 10 Turner v. Crawford Square
Apartments Ill, L.P., 449 F.3d 542, 548 (3d Cir. 2006) (citing Lance v. Dennis, 546 U.S. 459,
is not the only instance in which the Delaware Chancery Court case touches on the instant matter.
Defendants raise an issue preclusion defense with respect to Martin's abuse of process claim based on the
Delaware proceedings. However, as the Court will later explain in denying Defendants' abuse of process
issue preclusion defense, infra Section IV.B.1, the issue considered by the Delaware Chancery Court with
respect to the LCDA investigation was not precisely the same as that considered here. There was also a
different evidentiary burden regarding the particular issue.
466 (2006) ("Congress has directed federal courts to look principally to state law in deciding
what effect to give state-court judgments.")); see also Ciarrocchi v. Kennedy Mem'I Hosp.,
378 F. App'x 239, 241 (3d Cir. 2010) (court may raise issue preclusion sua sponte) (citing
Arizona v. California, 530 U.S. 392, 412-13 (2000)).
Delaware courts utilize the widely-adopted four factor test to determine if issue
preclusion, also known as collateral estoppel, applies to bar relitigation of an issue: "(1) the
issue previously decided is identical with the one presented in the action in question, (2) the
prior action has been finally adjudicated on the merits, (3) the party against whom the
doctrine is invoked was a party or in privity with a party to the prior adjudication, and (4) the
party against whom the doctrine is raised had a full and fair opportunity to litigate the issue
in the prior action." Betts v. Townsends, Inc., 765 A.2d 531, 535 (Del. 2000) (quoting State
v. Machin, 642 A.2d 1235, 1239 (Del. Super. Ct. 1993)). All of the factors are present with
respect to the issue of Albanese's purported resignation: (1) it was an issue raised in the
previous action; (2) the Delaware Chancery Court produced a final judgment on the merits;
(3) the doctrine is being invoked against Martin, who was a party to the prior adjudication;
and (4) Martin had a full and fair opportunity to litigate the issue in the prior action, as he
raised the issue with the Chancery Court and engaged in discovery regarding the issue as
part of his case-in-chief. (Doc. 109-1 at 109, 125 (noting full trial and oral argument
conducted in Delaware Chancery Court)); see Restatement (Second) of Judgments § 29
cmt. d (difference in discovery procedures and "plenary as distinct from summary hearing"
may prevent issue preclusion in second action); Messick v. Star Enter., 655 A.2d 1209,
1213 (Del. 1995) (citing the Restatement with favorability). Thus, Martin will be precluded
from contesting this issue at trial.
STATUTE OF LIMITATIO NS DEFENSE
Finley and Albanese next argue that Martin's tortious interference claim should be
time-barred because "the gravamen of Martin's contractual interference claim is defamation.
Thus, the defamation statute of limitations applies." (Docs. 122 at 20-21, 125 at 21 ); see
Evans v. Phi/a. Newspapers, Inc., 601 A.2d 330, 333-34 (Pa. Super. Ct. 1991). They direct
the Court to disregard Martin's use of the term "interference" in his Complaint and instead
focus on paragraphs 41-46 of the Complaint, where, they state, "he claims Defendants
made false allegations against him causing him to voluntarily resign from the company."
(Docs. 122 at 20, 125 at 21) (emphasis in Finley and Albanese's brien. Because the statute
of limitations for defamation in Pennsylvania is one year, 42 Pa. Stat. and Cons. Stat. Ann.
§ 5523(1), and because "Martin waited over 17 months after his resignation from Med-Dev
in April 2014 before filing his lawsuit on August 20, 2015," Finley and Albanese contend that
Martin's claim is time-barred. (Docs. 122 at 20-21, 125 at 21).
Martin responds that the cases cited by Finley and Albanese in support of their
statute of limitations argument, including Evans, are inapposite because they all involved
factual allegations that made clear that the tortious interference claims were solely based on
defamatory conduct. (Docs. 129 at 8-9, 145 at 9-10). Martin states that his tortious
interference claim is based on "substantially different conduct [than his defamation claim],
conduct that is irrelevant to the defamation claim and that started prior to the defamation
and ended after the defamation." (Docs. 129 at 9, 145 at 10). Martin alludes to specific
It includes Finley's mission to expel Martin from the Company to hide his own
incompetence, Finley's recruitment of Albanese, Moore, and Minora, to assist
him in that pursuit, the Defendants' actions in closing the Med-Dev bank
account at Wells Fargo Bank-thereby ceasing all consulting payments owed
to Martin under the Agreement and effectively terminating his consulting
contract, and Defendants refusal to turn over operating and financial records
to the company after Martin's return to the Board in 2016.
(Docs. 129 at 9, 145at10).
The Court agrees with Martin that his tortious interference and defamation claims are
distinct, and, thus, his tortious interference claim is not time-barred. Federal courts in this
Circuit applying Pennsylvania law have indeed found that when a plaintiffs tortious
interference claim "exist[s] solely because of ... defamatory statements [and] [i]f the trial
court finds that there is no independent basis for the tortious interference claimO, absent
defamatory statements, the court must apply the one year statute of limitations to both
claims for relief." Rolite, Inc. v. Whee/abrator Envtl. Sys., Inc., 958 F. Supp. 992, 1010 (E.D.
Pa. 1997) (quoting Hurst v. Beck, Civ. A. No. 91-2492, 1992 WL 396592, at *4 (E.D. Pa.
Dec. 17, 1992) (examining Evans)); McC/enaghan v. Turi, 567 F. App'x. 150, 156 (3d Cir.
2014). As Martin states, the cases cited by Finley and Albanese in their Motions all involved
such a situation where the tortious interference or analogous claim had no independent
basis absent defamatory statements.
For example, Evans, 601 A. 2d 330 (Pa. Super. Ct. 1991 ), involved a defendant
newspaper publishing an article that contained allegedly defamatory statements that were
later orally repeated by the defendant reporter that resulted, according to the plaintiff, in the
loss of funding to the organization headed by the plaintiff. Id. at 331-32, 334. The
Pennsylvania Superior Court held that "the underlying wrong which the complaint alleges is
the defamation by publication of a libelous report, and the claim of injury set out in each
count springs from the act of publication." Id. at 333. Auld v. Mobay Chemical Co., 300 F.
Supp. 138 (W.D. Pa. 1969), involved a defendant corporation and its officers making
allegedly defamatory statements about the plaintiff, a former employee of the corporation, to
the IRS and a prospective employer that the plaintiff alleged constituted a conspiracy to
defame the plaintiff and conspiracy to injure him in his business or profession. Id. at 140.
The court applied the one year statute of limitations to the conspiracy claims because the
cause of action for all claims was for injury or damage to the reputation of the plaintiff. Id. at
141. And Pittsman v. Perrone, No. 11CV1235, 2013 WL 1465621, 29 Pa. D. & C. 5th 15
(Pa. Ct. Com. Pl. Apr. 11, 2013), solely involved an alleged defamatory communication sent
by a defendant doctor to the plaintiff's potential employer, which the plaintiff alleged
constituted defamation and tortious interference. Id. at *6.
In contrast to those cases, here, Martin's tortious interference claim is only
tangentially linked to his defamation claim in the sense that he alleges that Finley and
Albanese used false allegations of unauthorized expenses as an improper excuse to shut
down the Wells Fargo bank account and take actions to force him out of Med-Dev when
they had other improper motives. However, his tortious interference claim does not rely
upon the allegedly defamatory August 2014 Newsletter and January 2015 Manifesto which
are the subjects of his defamation claim. As a result, the Court will apply the two year
statute of limitation for tortious interference and deny Finley and Albanese summary
judgment on their time-bar argument. See 42 Pa. Stat. and Cons. Stat. Ann.§ 5524(3);
CGB Occupational Therapy, 357 F.3d at 383.
GIST OF THE ACTION DEFENSE
In their final argument against Martin's tortious interference claim, Finley and
Albanese raise a "gist of the action" defense and assert that Martin's claim is actually for
breach of contract of the Consulting Agreement and is not a tort claim. (Docs. 122 at 21-23,
125 at 21-23). They contend that:
Martin's claim is a disguised breach of contract action due to Med-Dev's
failure to pay him any consulting fees since January 2014 ... [and] is also an
attempt to pierce the corporate veil and impose liability against a select group
of directors (3 out of 6), who served in 2014.
(Docs. 122 at 22, 125 at 22-23). They note that the Delaware Chancery Court found that
the reason that Martin agreed to resign from Med-Dev in April 2014 was due to
misrepresentations by Med-Dev's counsel, Attorney Tomasek, and that Martin should have
sued Med-Dev for breach of the Consulting Agreement instead of them for tortious
interference. (Docs. 122 at 22, 125 at 23).
In response, Martin argues that he "did not allege a breach of contract claim against
any of the Defendants in this action simply because he did not have a contract with any of
the Defendants." (Docs. 129 at 10, 145at11). Martin further states that he did not sue
other members of the Med-Dev Board because he did not believe that they "participated in,
or had knowledge of, the personal attack the Defendants were plotting and executing
against him." (Docs. 129 at 10, 145 at 11). Finally, Martin posits that applying the gist of
the action doctrine to his tortious interference claim should result in a finding that the claim
is "a stand-alone claim that does not arise solely from the contract": "[w]hile Med-Dev had
contractual obligations to pay Martin his monthly consulting fees under the Agreement, the
substance of Martin's tortious interference claims are not that Med-Dev failed to meet these
obligations, but rather that the Defendants, intending to harm Plaintiff, interfered with the
Agreement, without justification or privilege, and caused Martin to suffer damages." (Docs.
129 at 11, 145 at 12).
"Pennsylvania courts apply the gist of the action doctrine 'to ensure that a party does
not bring a tort claim for what is, in actuality, a claim for a breach of contract."' Bull Int'/, Inc.
v. MTD Consumer Grp., Inc., 654 F. App'x 80, 101 (3d Cir. 2016) (quoting Bruno v. Erie Ins.
Co., 106 A.3d 48, 60 (Pa. 2014)). In Bruno v. Erie Insurance Co., 106 A.3d 48 (Pa. 2014),
the Pennsylvania Supreme Court attempted to clarify what distinguishes a tort claim from a
breach of contract claim:
The general governing principle which can be derived from our prior cases is
that our Court has consistently regarded the nature of the duty alleged to
have been breached, as established by the underlying averments supporting
the claim in a plaintiffs complaint, to be the critical determinative factor in
determining whether the claim is truly one in tort, or for breach of contract. In
this regard, the substance of the allegations comprising a claim in a plaintiffs
complaint are of paramount importance, and, thus, the mere labeling by the
plaintiff of a claim as being in tort, e.g., for negligence, is not controlling. If the
facts of a particular claim establish that the duty breached is one created by
the parties by the terms of their contract-Le., a specific promise to do
something that a party would not ordinarily have been obligated to do but for
the existence of the contract-then the claim is to be viewed as one for
breach of contract. If, however, the facts establish that the claim involves the
defendant's violation of a broader social duty owed to all individuals, which is
imposed by the law of torts and, hence, exists regardless of the contract, then
it must be regarded as a tort. Although this duty-based demarcation was first
recognized by our Court over a century and a half ago, it remains sound, as
evidenced by the fact that it is currently employed by the high Courts of the
majority of our sister jurisdictions to differentiate between tort and contract
actions. We, therefore, reaffirm its applicability as the touchstone standard
for ascertaining the true gist or gravamen of a claim pied by a plaintiff in a civil
Id. at 68-69 (internal citations omitted). In Bruno, the court evaluated a negligence claim
brought by the plaintiff homeowners against their homeowners' insurance company and
retained engineer for statements they made advising the plaintiffs that a mold issue in their
home was not serious, which was relied upon by the plaintiffs to their detriment, leading to
health problems and the home being rendered uninhabitable. Id. at 52-53. The court ruled
that although there was an insurance policy between the plaintiffs and the company that
required the company to pay up to $5,000 to the plaintiffs for investigating the presence of
mold and pay for property damage caused by mold, the policy was not at issue, because
the insurance company did pay the $5,000 to the plaintiffs. Id. at 70. Instead, the plaintiffs'
allegations concerned the negligent actions taken while the insurance company was
performing its contractual obligation to perform the investigation, and so, "the [insurance]
policy in this instance merely served as the vehicle which established the relationship
[between the parties], during the existence of which [the insurance company] allegedly
committed a tort." Id. at 70-71. Thus, the gist of the action doctrine did not bar the
negligence claim. Id.
Applying the legal principles elucidated in Bruno to this matter, the Court finds that
the gist of the action doctrine does not bar Martin's tortious interference claim. First, unlike
the cases cited by Finley and Albanese where the gist of the action doctrine was found to
apply, here, one of the contracting parties, Med-Dev, is not a named party in this lawsuit.
This negates the concern raised by Finley and Albanese, and cited by Pennsylvania courts,
that "[t]o permit a promisee to sue his promisor in tort for breaches of contract inter se would
erode the usual rules of contractual recovery and inject confusion into our well-settled forms
of actions." Pittsburgh Constr. Co. v. Griffith, 834 A.2d 572, 582 (Pa. Super. Ct. 2003)
(quoting Bash v. Bell Tel. Co. of Pa., 601 A.2d 825, 829 (Pa. Super. Ct. 1992)). Finley and
Albanese contend that Martin's pleading strategy-naming them as defendants instead of
Med-Dev-is based on a fiction, (Docs. 122 at 22-23, 125 at 22-23), and that "in this
situation, the directors and company should be viewed as one and the same," (Doc. 137 at
8). However, as previously discussed, Martin has pointed to material in the factual record to
support his claim that it was not Med-Dev that breached the contract, but rather Finley and
Albanese, as third parties operating outside the scope of their authority, who interfered with
full execution of the contract. (See Docs. 109-2 at 40, 112-1 at 43: 17-23, 128-13 1Mf 10-13,
128-16 ~~ 6, 14-16, 128-34 at 2, 129 at 7, 144-34 at 23:24 to 24:2, 145 at 7-8). While
Martin perhaps could have brought a breach of contract action directly against Med-Dev, in
factual circumstances such as these, where the inner-workings of an apparently informallyrun, small, private corporation are highly disputed, the Court cannot rule as a matter of law
that he should have pursued his lawsuit in that fashion. See Restatement (Second) of Torts
§ 766 cmt. v ("The fact that the plaintiff has an available action for breach of contract against
the third person does not prevent him from maintaining an action under the rule stated in
this Section against the person who has induced or otherwise caused the breach.").
Secondly, the duty here alleged to have been breached by Finley and Albanese is
one that is "a broader social duty owed to all individuals, which is imposed by the law of
torts and, hence, exists regardless of the contract." Bruno, 106 A.3d at 68. As noted by the
Pennsylvania Supreme Court in Adler, the common law has long:
recognized an action in tort for an intentional, unprivileged interference with
contractual relations. It is generally recognized that one has the right to
pursue his business relations or employment free from interference on the
part of other persons except where such interference is justified or constitutes
an exercise of an absolute right: Restatement, Torts, s 766.
Adler, 393 A.2d at 1182 (quoting Bir/ v. Phi/a. Elec. Co., 167 A.2d 472, 474 (Pa. 1961)).
Examining "the substance of the allegations comprising [the] claim in [the] plaintiff's
complaint [which is] of paramount importance," Bruno, 106 A.3d at 68, Martin has alleged
that Finley and Albanese "grew increasingly hostile towards Martin in early 2014 and sought
to oust him from Med-Dev by manufacturing a controversy concerning Martin's business
expenses," and "[a]fter manufacturing the controversy regarding Martin's expenses,
Defendants sought additional ways to oust Martin from the Company." (Doc. 1 ~~ 18, 35).
Martin alleges that "[h]e stopped receiving his monthly consulting fees after Defendant
Finley closed the corporate account," (id.~ 32), and that Finley and Albanese improperly
filed a criminal complaint with the LCDA with the intent of driving Martin out of Med-Dev,
including threatening criminal action if he did not sign a settlement agreement relinquishing
his interest in Med-Dev,
These allegations sufficiently state a claim for
tortious interference and, as previously stated, are supported by (admittedly disputed)
material in the factual record. Therefore, the Court will deny summary judgment on these
grounds, and because the Court has rejected all of Finley and Albanese's other arguments
against Martin's tortious interference claim, the claim will proceed to trial.
ABUSE OF PROCESS (COUNT Ill- ALL DEFENDANTS)
In their Motions, Finley, Albanese, and Minora all make similar arguments to
establish that they are entitled to summary judgment on Plaintiff's third claim, abuse of
process. "The tort of 'abuse of process' is defined as the use of legal process against
another 'primarily to accomplish a purpose for which it is not designed."' Rosen v. Am.
Bank of Rolla, 627 A.2d 190, 192 (Pa. Super. Ct. 1993) (quoting Restatement (Second) of
The gravamen of the misconduct for which the liability stated [under this tort] is
imposed is not the wrongful procurement of legal process or the wrongful
initiation of criminal or civil proceedings; it is the misuse of process, no matter
how properly obtained, for any purpose other than that which it was designed to
Id. (quoting Restatement (Second) of Torts§ 682 cmt. a) (emphasis added)). To succeed
on an abuse of process claim,
the plaintiff must show some definite act or threat not authorized by the
process, or aimed at an objective not legitimate in the use of the process ... ;
and there is no liability where the defendant has done nothing more than carry
out the process to its authorized conclusion, even though with bad intentions.
Lerner v. Lerner, 954 A.2d 1229, 1238 (Pa. Super. Ct. 2008) (quoting Shiner v. Moriarty,
706 A.2d 1228, 1236 (Pa. Super. Ct. 1998)) (internal alterations omitted). "The gist of an
action for abuse of process is the improper use of process after it has been issued, that is, a
perversion of it .... " Publix Drug Co. v. Breyer Ice Cream Co., 32 A.2d 412, 415 (Pa.
1943) (quoting Mayer v. Walter, 64 Pa. 283, 285 (Pa. 1870)). The presence or absence of
probable cause is irrelevant to a claim for abuse of process, nor does the plaintiff have to
prove that the underlying action terminated in his favor. Smith v. Wambaugh, 887 F. Supp.
752, 757 (M.D. Pa. 1995). "Quite simply, a court should ask whether there has been a
'perversion' of the process, or, whether a legal process has been used 'as a tactical weapon
to coerce a desired result that is not the legitimate object of the process."' Gen.
Refractories Co. v. Fireman's Fund Ins. Co., 337 F.3d 297, 307 (3d Cir. 2003) (quoting
McGee v. Feege, 535 A.2d 1020, 1026 (Pa. 1987)).
Defendants raise several arguments against Martin's abuse of process claim,
although they do not join together on all of them. All Defendants argue that Martin's abuse
of process claim is barred by collateral estoppel because it was essentially denied in
Martin's previous Delaware Chancery Court suit. (Docs. 122 at 26-27, 123 at 14-16, 125 at
26-28). Finley and Albanese also attempt to shift responsibility to Minora and argue that it
was he, not they, who initiated the criminal complaint with the LCDA, and thus, they have
not engaged in a "definite act or threat" as required by the tort. (Docs. 122 at 24, 125 at 2425). Additionally, Finley, Albanese, and Minora argue that the procurement of the legal
process, which included the search warrants issued by the LCDA, was not improper, and
that it was not intended to coerce Martin to give up his Med-Dev shares. (Docs. 122 at 2425, 123at12-14, 125 at 25-26). The Court will address each argument in turn, and will
deny the entry of summary judgment on Martin's abuse of process claim.
COLLATERAL ESTOPPEL/ISSUE PRECLUSION
All Defendants argue that Martin's abuse of process claim is barred by collateral
estoppel (issue preclusion), because it was an issue that was litigated and decided in
Martin's previous Delaware Chancery Court case. They argue that "[t]he Delaware
Chancery Court held Martin is not entitled to an award of legal fees based on the actions of
Med-Dev and Finley during the LCDA investigation." (Docs. 122 at 27, 125 at 27). Minora
further contends that "[t]he Delaware Chancery Court denied Martin's claim that Med-Dev
and Finley acted in bad faith by proposing a settlement under which they would drop the
criminal charges against Martin in exchange for a relinquishment of his interest in the
company." (Doc. 123 at 15). Martin responds that Defendants do not satisfy any of the
elements of issue preclusion, most notably that the issue of the impropriety of the LCDA
investigation was only considered for the purposes of fee shifting and that discovery has
revealed essential documents that "were previously withheld in the Chancery Court matter."
(Docs. 129 at 14-15, 143 at 8-10, 145 at 15-17).
As previously stated, the Court must look to Delaware issue preclusion doctrine in
evaluating the parties' arguments.11 See supra Section IV.A.3. Delaware courts look to four
factors: "(1) the issue previously decided is identical with the one presented in the action in
question, (2) the prior action has been finally adjudicated on the merits, (3) the party against
whom the doctrine is invoked was a party or in privity with a party to the prior adjudication,
and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate
the issue in the prior action." Betts, 765 A.2d at 535. The issue decided in the prior action
must be necessary to the outcome of the prior judgment. Machin, 642 A.2d at 1239 (citing
Chrysler Corp. v. New Castle Cty., 464 A.2d 75, 80 (Del. Super. Ct. 1983)); see also
In their respective briefs, the parties both apply Pennsylvania issue preclusion doctrine, but as previously
noted, the Court must look to the issue preclusion doctrine of the state in which the previous judgment was
entered. Turner, 449 F.3d at 548. However, the Court notes that Pennsylvania and Delaware look to the
same four factors. See Nationwide Mut. Fire Ins. Co., 571 F.3d 299, 310 (3d Cir. 2009) (citing Rue v. KMart Corp., 552 Pa. 13, 713 A.2d 82, 84 (1998)).
Restatement (Second) of Judgments § 27 cmt. h (if judgment not dependent on the
determination of the issue, it is dicta and does not have preclusive effect).
However, even if an issue would otherwise be barred from relitigation by the
doctrine, it is not precluded if the burden of proof on the issue in the initial action was higher
than in the subsequent action. TR lnv'rs, LLC v. Genger, C.A. No. 6697-CS, 2013 WL
603164, at *15 & n.143 (Del. Ch. Feb. 18, 2013) (citing Restatement (Second) of Judgments
§ 28(4) (issue preclusion does not apply when "[t]he party against whom preclusion is
sought had a significantly heavier burden of persuasion with respect to the issue in the initial
action than in the subsequent action")); see also Grogan v. Garner, 498 U.S. 279, 284-85
(1991) (same).12 Thus, for example, if a party lost on an essential issue in the initial action
under a clear and convincing burden of proof, it would not be precluded from raising that
issue in a subsequent action with a preponderance of the evidence burden.
The Court finds that Defendants have not established all the elements of issue
preclusion with respect to Martin's abuse of process claim. First, the Delaware Chancery
Court did not determine the precise issue that is contested by the parties in the instant
matter, the Defendants' abuse of process during the LCDA investigation, because the
Chancery Court's consideration of the LCDA investigation never resulted in that ultimate
The Court notes that the Delaware Chancery Court in Genger did apply issue preclusion to the
defendant, even though a higher burden of proof applied with respect to the issue that was litigated by the
defendant in the previous matter. However, the Genger Court noted that it was only doing so because the
higher burden of proof was imposed by the previous court as a sanction for spoliation of evidence and
contempt of court. Thus, allowing the defendant to claim issue preclusion in the new matter would have
been rewarding him for his prior bad conduct and would essentially have rendered the previous sanction
nugatory. Genger, 2013 WL 603164, at *15. Those unique circumstances do not apply here.
finding. As Martin points out, the Delaware Chancery Court's consideration of Finley's
conduct in the LCDA investigation and during settlement negotiations was solely for the
purpose of determining whether Finley's conduct constituted "bad faith" for purposes of
awarding attorneys' fees. (See Doc. 109-1 at 126-27). The Chancery Court explicitly stated
that "bad faith" only applies to "conduct taken during litigation rather than before it
commences." (Id. at 126). Neither the LCDA nor Finley commenced litigation against
Martin for his purported criminal acts regarding the diversion of Med-Dev funds. Thus, the
Chancery Court's subsequent and extended discussion of Finley's conduct during the LCDA
investigation, which could bear upon a determination whether such conduct constituted an
abuse of process, was dicta: "Even if the bad faith exception to the American Rule did
permit fee-shifting based on pre-litigation conduct, however, Defendants' complained-of
actions here do not rise to the level of bad faith sufficient to justify an award of attorneys'
fees." (Id. at 126-27) (emphasis added).
Further, the Chancery Court decided the issue under a different, higher evidentiary
standard than is before the parties in this action. The Chancery Court applied to Martin '"the
stringent evidentiary burden of producing clear evidence of bad-faith conduct."' (Id.at 127
(quoting Marra v. Brandywine Sch. Dist., C.A. No. 5574-VCN, 2012 WL 4847083, at *4 (Del.
Ch. Sept. 28, 2012)). Here, Martin must prove his abuse of process claim under the
traditional civil litigation burden of proof, preponderance of the evidence. Applying issue
preclusion in these circumstances would be inappropriate, and so the Court will deny the
entry of summary judgment of the abuse of process claim on the grounds that it is barred by
INVOLVEMENT OF FINLEY AND ALBANESE
Finley and Albanese next contend that Martin has no evidence that they "supplied
any information to the LCDA, let alone false information. Rather, Minora initiated the
criminal investigation of Martin on behalf of the corporation." (Docs. 122 at 24, 125 at 2425). Albanese further argues that he was even less involved in the LCDA investigation than
Finley, pointing to the absence of his name in the LCDA Incident Report as a source of
information for the criminal complaint and that "there is no evidence that Albanese directed
Finley or Minora on what information to supply to the LCDA." (Doc. 122 at 24). Finley and
Albanese thus urge the Court to conclude that they did not engage in any "definite act or
threat," as required by the tort.
Martin responds that there are "numerous questions of fact that preclude summary
judgment on the part of any Defendants in this matter." (Doc. 145 at 13). He points to
evidence in the record to identify factual disputes regarding Albanese's involvement with the
decision to hire Minora, and the involvement of Albanese and Finley in conjunction with
Minora with respect to the decision to allegedly threaten Martin with criminal charges to get
him to sign the settlement agreement and give up his interest in Med-Dev. (Docs. 1121f
108, 112-3 at 13:14-22, 23:16-24:8, 32:16-33:20, 128-21, 128-23 at 2, 128-25, 128-27 at
87:16-88:2, 89:13-16, 89:23-90:17, 128-28, 129 at 12-13, 145 at 13-15).
The Court finds that Martin has raised disputes of material fact to preclude granting
summary judgment on Finley and Albanese's proposed grounds that they were not involved
in a "definite act or threat." The Court also notes that Finley and Albanese's argument
misconstrues the "definite act or threat" in question here, which is not the initial filing by
Minora of a criminal complaint with the LCDA, but rather the alleged abuse of the legal
process by using the threat of an arrest to extort a settlement from Martin. In its previous
opinion adopting in part and rejecting in part Magistrate Judge Carlson's Report and
Recommendation on Minora's Motion to Dismiss, (Doc. 64), the Court addressed this issue.
While referencing only Minora, the reasoning also applies to Finley and Albanese:
As Plaintiff admits, the abuse of process claim began to accrue against
Defendant Minora personally when Defendant Minora himself used the threat
of the criminal proceedings as a means of coercing Martin to enter into a civil
settlement." (Doc. 62, at 4). Thus, it is the final event, the use of the ongoing
criminal investigation to leverage a favorable civil settlement, that, when
applied in conjunction with the prior allegations, sufficiently alleges a
perversion of process; i.e. the improper use of the criminal complaint and
subsequent search warrants to achieve the allegedly unlawful and unethical
objective of extracting a civil settlement.
(Doc. 64 at 3-4). As Martin has pointed to disputes in the factual record over the
involvement of Finley and Albanese in the alleged threat, the Court will deny summary
judgment on these grounds.
LEGITIMATE OBJECT OF THE PROCESS
All Defendants next argue that there was no abuse of process because there was no
improper use of the process, as they contend they were not using it to seek to extort Martin.
Rather, they were seeking an independent investigation by the LCDA to determine if Martin
had engaged in criminal conduct. (Docs. 122 at 24-25, 123 at 12-13, 125 at 25-26). They
contend that the undisputed facts show that Martin had used Med-Dev funds without
authorization, and that Martin raised the idea of agreeing to resign from Med-Dev in
exchange for his entire interest in the company. (Docs. 122 at 24-25, 123 at 13, 125 at 2526). Minora separately argues that there is no evidence that he "attempted to use his prior
employment with the LCDA to sway the outcome of the LCDA investigation or to threaten
Martin to give up his ownership interest in Med-Dev." (Doc. 123 at 13). Finley and
Albanese also argue that "[a] judicial privilege extends to statements made to law
enforcement for the purpose of initiating a criminal investigation." (Docs. 122 at 25, 125 at
Martin responds that "the case at bar represents a textbook example of abuse of
process by way of extortion." (Docs. 129 at 11, 143 at 4, 145 at 12). He states that
evidence in the factual record indicates that all Defendants acted improperly in bringing the
criminal complaint and using it as leverage to extract a settlement from him. Specifically, he
points to Minora's deposition testimony, which he contends establishes that Minora did not
do a detailed investigation before contacting the LCDA, (Doc. 117-7 at 7: 17-8: 15, 142-8 at
32:13-34:1, 44:5-19, 143 at 5-6), and other material in the record to support his claim that
Finley and Albanese hired Minora with the intent of improperly using Minora's current or
past connection with the LCDA to strengthen their purportedly unfounded case against
Martin, (Docs. 128-24 at 37:5-10, 128-25, 128-28, 129at12, 142-13 at46:21-47:4, 145 at
13). He further asserts that Minora played a key role in the abuse of process, by
"indicat[ing] to Martin's counsel that Finley, Albanese, and Moore wanted Martin out of the
Company and they wanted a stock transfer whereby Martin would relinquish all his stock in
Med-Dev," (Doc. 143 at 6-7), and that Minora told Martin's counsel that, in exchange, his
clients would be willing to stop advocating for Martin's criminal prosecution. (Doc. 117-9 at
23:24-24:5, 142-13 at 28:9-21, 32:18-33:6, 35:4-7). He states that it was Defendants,
through Minora, who drafted the settlement agreement that falsely stated that the LCDA
believed that probable cause existed to charge Martin with criminal conduct, and that it was
Defendants who used the threat of such criminal prosecution to coerce Martin to enter into
the settlement agreement, despite knowing of the weakness of their case.1 3 (Docs. 128-25,
In his Responses to Defendants' Statements of Undisputed Material Facts, Martin cites Fed. R. Evid. 408
to argue that the Court should not consider the settlement negotiations between the parties. (See, e.g.,
Doc. 128 ~ 102). The Court is puzzled by Martin's position, as he has put the settlement negotiations front
and center in his arguments surrounding his abuse of process claim. Indeed, in the Delaware Chancery
Court action, Martin sought to introduce settlement-related evidence in order to prove his bad faith claim
regarding the LCDA investigation. (See Doc. 109-1at115 n.53). The Delaware Chancery Court properly
allowed the settlement evidence, and the Court will do so here. The Rule 408 prohibition is cabined to
prevent introduction of settlement evidence only to "prove or disprove the validity or amount of a disputed
claim or to impeach by a prior inconsistent statement or a contradiction." Fed. R. Evid. 408(a). The
Advisory Committee notes to Rule 408 emphasize that it does not bar introduction of settlement evidence
when "the claim is based upon a wrong that is committed during the course of settlement negotiations."
Fed. R. Evid. 408 advisory committee's note to 2006 amendment (citing Uforma/Shelby Bus. Forms, Inc. v.
NLRB, 111 F.3d 1284 (6th Cir. 1997)); see also Am. Eagle Outfitters, Inc. v. Lyle &Scott Ltd., 644 F. Supp.
2d 624, 642-43 (W.D. Pa. 2008) (citing Uforma), aff'd in part &rev'd in part on other grounds, 584 F.3d 575
(3d Cir. 2009). Additionally, Rule 408 allows the Court to admit settlement negotiation evidence if it is
admitted for the purpose of "proving a witness's bias or prejudice." Fed. R. Evid. 408(b). As this is the crux
of Martin's claim-that Defendants improperly conducted and used the settlement talks and offers as an
unlawful threat against Martin and are now claiming that they did not do so-the Court will reject Martin's
argument that it cannot consider the negotiations in its evaluation of the record.
129 at 13, 142-12 at 58:22-59:24, 142-13 at 35:14-21, 43:1-11, 142-14 at 3, 143 at 7-8, 145
at 14-15). Martin summarizes his view of the facts in his Opposition:
At no time did Albanese, Finley, Moore, or Minora attempt to do any proper
investigation, offer Martin any chance to explain or justify expenses, nor did
they seek reimbursement; rather, they sought to compel Martin to forfeit his
role, his fees and his shares of stock in the Company or they were going to
bring criminal charges.
(Doc. 143 at 7).
The Court will not grant the entry of summary judgment on Defendants' arguments
that the criminal investigation was initiated and conducted with a proper purpose that is not
an abuse of process. While the parties apparently agree that Martin did, on at least two
occasions, improperly use Med-Dev funds, the Court finds that Martin has identified
numerous factual disputes raised with respect to the use of an alleged threat of criminal
prosecution to coerce Martin into signing the settlement agreement. There are numerous
disputed issues of material fact that remain for trial, including: the true origins of the decision
to go to the LCDA to file the criminal complaint and the motivations of Finley and Albanese,
to the extent they made that decision; Minora's knowledge of Finley and Albanese's
motivations; and the sequence and nature of the settlement discussions between the
parties, including who initiated and broached the idea of a civil settlement as a means of
resolving the criminal investigation.
Additionally, as Magistrate Judge Carlson previously noted in his R&R addressing
Finley and Albanese's Motion for Judgment on the Pleadings, (Doc. 63):
[W]e note that threatening a meritless criminal prosecution for the sole
purpose of gaining leverage in a civil settlement is an ethically problematic
practice which has been condemned by courts in the past. Realuyo v. Diaz,
No. 98CV7684 (GBD), 2006 WL 695683, at *2 (S.D.N.Y. Mar. 17, 2006).
Moreover, this practice has been considered by state and county bar
associations in Pennsylvania and is viewed as violative of Pennsylvania's
standards of professional conduct. Guidance Opinion Number 88-20, 1988
WL 236401, at *1 (1988) ("the Committee is of the opinion that letters from
lawyers threatening criminal prosecutions are inappropriate and that the tenor
of the Rules prohibit them.").
(Doc. 63 at 27-28). Martin points to the communication from Defendants to his counsel
seeking his signature on the settlement agreement: "Mr. Martin has five days to accept or
reject this agreement as is. Failing that Med-Dev intends to seek criminal charges against
Mr. Martin." (Doc. 142-14 at 3, 145 at 12-13). The Court cannot say that no reasonable
juror could find it constitutes an improper threat of criminal prosecution.
Finally, Finley and Albanese's argument that the statements made to the LCDA to
initiate the criminal investigation are judicially privileged again miss the thrust of Martin's
argument, which is that the legal process was abused by Defendants when they threatened
criminal prosecution in an attempt to extort a settlement. Accordingly, the Court will deny
summary judgment on these grounds, and Martin's abuse of process claim survives.
C. DEFAMATION/FALSE LIGHT (COUNT IV· DEFENDANTS FINLEY AND ALBANESE)
Finley and Albanese argue for summary judgment on Martin's fourth claim for
defamation and false light invasion of privacy for publication of the August 2014 Newsletter
and January 2015 Manifesto.14 The Court will deny summary judgment on this claim.
"Under Third Circuit jurisprudence, the Court must apply a two-step approach when
presiding over a defamation action. The Court must determine: '(1) whether the defendants
have harmed the plaintiffs reputation within the meaning of state law; and (2) if so, whether
the First Amendment nevertheless precludes recovery."' Mzamane v. Winfrey, 693 F. Supp.
2d 442, 476 (E.D. Pa. 2010) (quoting Marcone v. Penthouse Int'/ Magazine for Men, 754
F.2d 1072, 1077 (3d Cir.1985) (internal quotation marks omitted)). Here, Finley and
Albanese have not raised a First Amendment defense, nor does the Court find sua sponte
that one would apply, and thus, the Court's analysis will focus on the Pennsylvania state law
elements of defamation.
Under Pennsylvania law, to establish a claim of defamation, a plaintiff has the
burden of showing: "(1) The defamatory character of the communication[;] (2) Its publication
by the defendant[;] (3) Its application to the plaintiff[;] (4) The understanding by the recipient
of its defamatory meaning[;] (5) The understanding by the recipient of it as intended to be
applied to the plaintiff[;] (6) Special harm resulting to the plaintiff from its publication[;] [and]
The Court notes that Martin styled his defamation claim as one for defamation, defamation per se, libel,
and false light, although in his Oppositions to Finley and Albanese's Motions, he only specifically addresses
the defamation claim. (Doc. 1~~133-51).
(7) Abuse of a conditionally privileged occasion." 42 Pa. Stat. and Cons. Stat. Ann.§
8343(a); see also Graboff v. Colleran Firm, 744 F.3d 128, 135 (3d Cir. 2014). Once a
plaintiff has established these elements, the defendant bears the burden of proving "(1) [t]he
truth of the defamatory communication[,] (2)[t]he privileged character of the occasion on
which it was published [or] (3)[t]he character of the subject matter of defamatory comment
as of public concern." 42 Pa. Stat. and Cons. Stat. Ann.§ 8343(b).
The tort of false light invasion of privacy is related to defamation. Pennsylvania has
adopted the Restatement (Second) of Torts standard, which "imposes liability on a person
who publishes material that 'is not true, is highly offensive to a reasonable person, and is
publicized with knowledge or in reckless disregard of its falsity."' Graboff, 744 F.3d at 136
(quoting Larsen v. Phi/a. Newspapers, Inc., 543 A.2d 1181, 1188 (Pa. 1988) (en bane)
(citing Restatement (Second) of Torts§ 652E)); see also Vogel v. WT. Grant Co., 458 Pa.
124, 129 n.9, 327 A.2d 133 (1974).
"It can be difficult to distinguish between the tort of false light invasion of privacy and
the tort of defamation. Some commentators have characterized false light as 'the right to be
left alone,' whereas defamation protects one's interest in a good reputation, but the lines
between them can blur." Fanelle v. Lojack Corp., No. CIV.A. 99-4292, 2000 WL 1801270,
at *9 (E.D. Pa. Dec. 7, 2000). However, there are several significant differences:
First, false light requires only proof of the falseness of the communication; it
does not require harm to reputation or any other social consequences
inherent in a defamation action. Thus, where a publication is false and
offensive to plaintiff but might not harm the reputation of plaintiff, plaintiff
would have a cause of action for false light, but likely would not be able to
proceed with a defamation claim. Second, false light requires scienter, or at
least reckless disregard, whereas defamation claims not involving public
figures or matters of public concern require only a showing of negligence.
See Rush v. Phi/a. Newspapers, Inc., 732 A.2d 648, 654 (Pa. Super. Ct.
1999). Third, the communication must be highly offensive to a reasonable
person in a false light claim, while there is no such requirement in a
defamation suit. See id. Fourth, false light requires "publicity," meaning
widespread dissemination, as opposed to mere "publication" under
defamation. Commentators appear to agree that a false light claim presents
a higher hurdle for plaintiff to surmount than a defamation claim.
Id. (internal citation omitted) (citing Rodney A. Smolla, Law of Defamation, Vol. 1, §
10:10 (2d ed. 2000)); see also Graboff, 744 F.3d at 138 n.8 (citing Am. Future Sys.,
Inc. v. Better Bus. Bureau of E. Pa., 923 A.2d 389, 400 (Pa. 2007) ("explaining that a
party may be liable for defamation against a non-public figure if it acted
The Court's analysis will focus on only those elements of Martin's claims that are
contested by Finley and Albanese. First, Finley and Albanese contend that they did not
make the allegedly defamatory statements. Next, they raise the purported truth of the
statements and conditional privilege as affirmative defenses. Finally, they challenge
Martin's false light claim.1s
and Albanese also make an argument with respect to the possible award of punitive damages for
Martin's defamation claim, contending that Martin cannot prove "actual malice," knowledge of falsity or
reckless disregard of the truth, to support punitive damages. (Docs. 122 at 33, 125 at 32-33). The Court
will subsequently address this argument in conjunction with Finley and Albanese's later contention that
punitive damages should not be allowed with respect to any of Martin's claims. See infra Section IV.E.
However, the Court notes that Finley and Albanese's argument regarding punitive damages for defamation
incorrectly conflates the term "actual malice," required to be shown by public figures seeking recovery in a
defamation action, with "common law malice" required under Pennsylvania law to establish punitive
STATEMENTS OR PUBLICATIONS
Finley and Albanese first argue that they did not make the statements in the August
2014 Newsletter or January 2015 Manifesto. (Docs. 122 at 28-30, 125 at 29). Albanese
states that Martin has not pointed to evidence in the factual record to support that Albanese
was involved in making the statements. (Doc. 122 at 28-29). Finley contends that Med-Dev
was the entity that made the statements. (Doc. 125 at 29). Martin responds by pointing to
evidence in the factual record to attempt to raise factual disputes on this issue, including an
August 2014 email from Finley to investors stating that a newsletter is attached and being
sent "on behalf of the Board of Directors & management of Med-Dev Corp.", (Doc. 112-4 at
58), and an email from Albanese that appears to indicate that he reviewed a draft of the
newsletter, (Doc. 109-2 at 141 ).
None of the parties cite to any legal authority to state what constitutes "publication"
under Pennsylvania defamation law. Pennsylvania courts refer to the Restatement
(Second) of Torts§ 577(1) definition: publication is "communication intentionally or by
negligent act to one other than the person defamed." Flaxman v. Burnett, 574 A.2d 1061,
1066 (Pa. Super. Ct. 1990); see also Cushman v. Trans Union Corp. 115 F.3d 220, 230 (3d
Cir. 1997). In addition to direct publication, publication can also be procured, which requires
the plaintiff to show that the "third party-defendant directed or participated in the publication
damages for defamation. Sprague v. Am. Bar Ass'n, 276 F. Supp. 2d 365, 375 & n.14 (E.D. Pa. 2003)
(citing Sprague v. Walter, 656 A.2d 890, 923 (Pa. 1995)). Proving common law malice requires a showing
of conduct that is '"outrageous, because of the defendant's evil motive or his reckless indifference to the
rights of others ... conduct which is malicious, wanton, reckless, willful, or oppressive ... "' Sprague, 276
F. Supp. 2d at 376 (quoting Restatement (Second) of Torts§ 908(2)).
of the defamatory publication by another ... [and] requires, at very least, evidence of some
affirmative action on the part of the defendant." Ertel v. Patriot-News Co., 674 A.2d 1038,
1043 (Pa. 1996). Thus, in Ertel, the Pennsylvania Supreme Court found that there was not
publication by procurement with respect to the defendant writer of an allegedly defamatory
report because the defendant did not take affirmative action to direct or participate in the
decision of a newspaper to publish the report, "he merely failed to hinder its publication"
after the newspaper reported contacted him and the defendant said "'I don't care what you
do with [the report)."' Id. at 1043-44. In contrast, in Byars v. School District of Philadelphia,
No. CIV. A. 12-121, 2015 WL 4876257 (E.D. Pa. Aug. 13, 2015), the Eastern District of
Pennsylvania denied entry of summary judgment because it found a genuine issue of
material fact with respect to publication by procurement. In that case, the Court analyzed
allegedly defamatory statements made by the School District's Deputy Chief
Communications Officer to the Philadelphia Enquirer on behalf of the School District. Id. at
*10. The plaintiff cited evidence that showed that the Deputy Chief Communications Officer,
Deputy Superintendent, and Chief Communications Officer communicated by email
regarding a response to the newspaper article that contained the allegedly defamatory
statements, and that the Deputy Chief Communications Officer "had only been on the job for
three weeks ... and would not have made the statements on behalf of the School District
without direction from her supervisor." Id.
"By its nature, the question of whether there has been publication by the defendant is
a question of fact for the jury." Agriss v. Roadway Exp., Inc., 483 A.2d 456, 463 (Pa. 1984).
The Court finds that Martin has raised a genuine factual dispute with respect to Finley and
Albanese's involvement with publication of the Newsletter and the Manifesto such that they
either directly published the statements or procured their publication. Martin points to
evidence in the record suggesting that the two traded drafts and exchanged comments on
both the Newsletter and Manifesto. With respect to Albanese's role, Albanese sent an email
to Finley in January 2015 purportedly regarding the Manifesto in which he advised an
addition to it: "I think we should mention Martin's - Nelcon folly and it's [sic] cost including
legal fees resulting from his unilateral and cavalier decision making management style."
(Doc. 128-29 at 4). A dispute with Nelcon is subsequently mentioned in the final version of
the Manifesto. (See Doc. 109-2 at 134-35). Martin also points to an email from Albanese
suggesting that he reviewed a draft of the Newsletter. (Doc. 109-2at141). And Martin also
points to Finley's deposition testimony, where Martin asserts Finley testified that he did not
act unilaterally with respect to any issues involving the discipline and ouster of Martin. (Doc.
112-3 at 33:11-13). Therefore, at the very least, Martin has raised a factual dispute with
respect to whether Albanese "procured" the publication of the Newsletter and Manifesto
from Finley, similar to the defendants in Byars.
Finley's attempt to characterize the Newsletter and Manifesto as having been
published by Med-Dev rather than him is also unavailing. While his analysis of the issue is
sparse, Finley's stratagem appears to be framing the publication of the Newsletter and
Manifesto to the Court as one of improper respondeat inferior, where the agent (Finley) is
being held responsible for the actions of the principal (Med-Dev). See Davis v. Hoffman,
972 F. Supp. 308, 314 (E.D. Pa. 1997) ("Nurse Puchini, the agent of Dr. Hoffman, cannot be
liable for his alleged intentional tort, under some sort of doctrine of respondeat inferior.");
Restatement (Third) of Agency § 7.01 cmt. d ("[T]here is no principle of 'respondeat
inferior."'). However, as previously discussed, Martin has raised a genuine dispute of
material fact as to whether Finley and Albanese were acting within the scope of their
authority as corporate directors when they purportedly engaged in tortious conduct against
Martin. Thus, there is a dispute over whether it was really Med-Dev, the corporation, acting
through Finley and Albanese as its agents, when actions were taken to close the Wells
Fargo bank account, seek Martin's departure from the Board, and publish the Newsletter
Nevertheless, even if Finley and Albanese were acting within the scope of their
authority when publishing the Newsletter and Manifesto, "[a] corporate officer is individually
liable for the torts he personally commits and cannot shield himself behind a corporation
when he is an actual participant in the tort." Donsco, Inc. v. Casper Corp., 587 F.2d 602,
606 (3d Cir. 1978); see also Wicks v. Milzoco Builders, Inc., 470 A.2d 86, 90 (Pa. 1983)
(describing Pennsylvania's "participation theory" of liability, which ascribes personal liability
to corporate officers who "take part in the commission of a tort by the corporation" or when
they "specifically directed the particular [tortious] act to be done or participated, or
cooperated therein") (citations omitted). Here, in the case of a small corporation that seems
to have operated relatively informally, with numerous factual disputes as to the purported
involvement of Finley and Albanese in taking actions against Martin, summary judgment is
As a result, the Court will deny Finley and Albanese summary judgment on these
TRUTH OR PRIVILEGE DEFENSE
Finley and Albanese next argue that the statements in the Newsletter are
substantially true or privileged. They contend that the allegedly defamatory statement in the
Newsletter, that Martin was "forced to resign" from Med-Dev's Board after an "extensive
internal investigation into the alleged mishandling/misappropriation of Med-Dev corporate
funds" is substantially true because they state that "Martin admits that he would not have
resigned but for Finley pushing the issue of his unauthorized expenses." (Docs. 122 at 30,
125 at 30). They also argue that they were conditionally privileged to make the alleged
defamatory statements as corporate directors of Med-Dev acting in Med-Dev's interest
because the statements "concerned allegations of wrongdoing by Martin as Chairman of
Med-Dev, which could affect the shareholders and investors." (Docs. 122 at 31-32, 125 at
30-31). Finley and Albanese do not address the Manifesto, which contain additional alleged
defamatory statements, including that Martin improperly failed "to disclose his indictment,
arrest and arraignment for Theft by Deception in Bergen County NJ on Thursday May 7,
2009" before entering into the Consulting Agreement. (Doc. 109-2 at 129).
Martin responds that Finley and Albanese had knowledge that the statements in the
Newsletter and Manifesto were false. (Docs. 129 at 17-19, 145 at 18-20). In particular,
Martin points to an email chain between Defendants where they discussed a possible
retraction of "a prior statement that Martin was 'forced to resign."' (Doc. 128-33 at 4).
Martin also argues that Finley and Albanese acted with personal animus against Martin,
outside the scope of their authority as corporate directors of Med-Dev, and against MedDev's interest, making their defamatory statements unprivileged. (Docs. 128-32 at 2, 4, 129
at 19, 145 at 18); see also supra Section IV.A.3.
Truth is an affirmative defense to defamation. 42 Pa. Cons. Stat. Ann.§ 8343(b)(1).
"A defendant may avoid liability for defamation if it shows that its statements were
'substantially true."' Graboff, 744 F.3d at 136 (citations omitted). "The proof of truth must
go to the gist or sting of the defamation." Dunlap v. Phi/a. Newspapers, Inc., 448 A.2d 6, 15
(Pa. 1982) (quoting Sack, Libel, Slander, and Related Problems at 50-51, 137-38 (1980)
(internal quotation marks omitted)). "The test is whether the [alleged] libel as published
would have a different effect on the mind of the reader from that which the pleaded truth
would have produced." Dunlap, 448 A.2d at 15 (internal quotations omitted). Determining
the truth of an alleged defamatory statement is typically a matter for a jury. Krochalis v. Ins.
Co. of N. Am., 629 F. Supp. 1360, 1366 (E.D. Pa. 1985) (citing Restatement (Second) of
Torts§ 617(b) (only "if the evidence is so overwhelming that any other conclusion would be
unreasonable, the court may direct the jury to make the proper finding")).
Based on the factual record present, the Court does not find that no reasonable juror
could find that the statements contained in the Newsletter and Manifesto are false. As an
initial matter, Finley and Albanese do not address the statements in the Manifesto, and so
they cannot assert the affirmative defense of truth with respect to those statements.
However, with respect to the Newsletter, their contention that Martin has admitted that he
was essentially "forced to resign" from Med-Dev exists in a contentious factual record.
Finley and Albanese's argument here hinges on Martin's characterization of his April
2014 resignation in the Complaint as an admission that he was forced to resign from the
Med-Dev Board because of the unauthorized expenses issue: "By April 2014, Martin
recognized that Defendants' false allegations [about his expenses] were distracting the
company from its mission. To end the distractions and allow Med-Dev to move forward,
Martin agreed to resign from the company contingent on Edward Lipes and Gregory Rainey
being appointed to the Board." (Doc. 1 mJ 45-46). However, Martin asserts that his
decision to resign was not made in response to the allegations, in the sense that he was
admitting that they were true. (Docs. 1281f 21, 1441f 19). Instead, Martin asserts in his
deposition testimony that he resigned:
Because the company had gotten dysfunctional. Dr. Moore and Finley had
gone rogue. Dr. Moore was conducting a study on his own and wouldn't
disclose the protocols of that study to either Dr. Peters or myself. I asked
Finley, what were the protocols and he wouldn't tell me. The company was
heading off a cliff and I said the only way to save this company was for Lipes
and Rainey to join the board and for me to resign.
(Doc. 109-1at69:20-70:4). Additionally, he asserts that he was already planning to
resign from Med-Dev prior to Finley raising the unauthorized expense issue and
closing the Wells Fargo bank account, pointing to an email he sent to Finley and
Albanese in December 2013 that indicates that he was planning to resign in the first
half of 2014. (Docs. 128 ~ 33, 128-8, 144 ~ 26). The Manifesto also references this
plan: "Prior to April 19, 2014, MARTIN stated his intention to resign in emails dated
December 27 & 30, 2013." (Doc. 109-2 at 130). Viewed through the eyes of Martin
and in context, the statement in the Newsletter is arguably defamatory, because it
could imply that he was admitting his guilt:
On April 19, 2014, after an extensive internal Investigation into the alleged
mishandling/misappropriation of Med-Dev corporate funds, Michael G. Martin
was forced to resign as Chairman of the Board & Corporate Officer of MedDev. Mr. Martin is no longer associated with Med-Dev and accordingly
should not be communicated with to discuss any Med-Dev Corp. business
Also, William P. Peters, MD, PhD resigned as an Independent Board member
and as CEO. Dr. Peters continues to remain a founding member of Med-Dev.
(Doc. 112-4 at 61 ). The Court also notes that at the time the Newsletter was published in
August 2014, Martin asserts he had already withdrawn his offer to resign from the Board.
(Docs. 109-1at114, 128 ~ 24, 128-6). Given the extensive factual disputes on this issue,
the Court cannot rule as a matter of law that the Newsletter was "substantially true" with
respect to the statements regarding Martin's resignation.
Finley and Albanese also cannot avail themselves of conditional privilege, an
affirmative defense to defamation under Pennsylvania law. 42 Pa. Cons. Stat. Ann.§
8343(b)(2). "Communications are privileged when they are 'made on a proper occasion,
from a proper motive, in a proper manner, and based upon reasonable cause .... "'
Emekekwue v. Offor, 26 F. Supp. 3d 348, 364 (M.D. Pa. 2014) (quoting Choi v. Sohn, Civ.
No. 01-1782, 2004 WL 627060, at *3 (E.D. Pa. Mar. 1, 2004)). "Stated differently, a
conditional privilege arises 'whenever circumstances are such as to lead any one of several
persons having a common interest in a particular subject matter correctly or reasonably to
believe that facts exist which another sharing such common interest is entitled to know."'
Emekekwue, 26 F. Supp. 3d at 364 (quoting Tucker v. Merck & Co., Inc., 102 F. App'x 247,
253-54 (3d Cir. 2004)). Pennsylvania courts have recognized that "in the past, corporations
and directors of corporations have been allowed to claim a conditional privilege when
publishing allegedly defamatory statements." Simms v. Exeter Architectural Prod., Inc., 916
F. Supp. 432, 436 (M.D. Pa. 1996) (citing Montgomery v. Dennison, 69 A.2d 520 (Pa.
1949); Bargerstock v. Washington Greene Cmty. Action Corp., 580 A.2d 361 (Pa. Super. Ct.
"Once the conditional privilege has been raised and established, the burden of
proving abuse of that conditional privilege then shifts to the plaintiff." Simms, 916 F. Supp.
at 436 (citing Banas v. Matthews Intern Corp., 502 A.2d 637, 638 (Pa. Super. Ct. 1985)).
Abuse of a conditional privilege is indicated when the publication is actuated by
malice or negligence, is made for a purpose other than that for which the privilege is
given, or to [a] person not reasonably believed to be necessary for the
accomplishment of the purpose of the privilege, or includes defamatory matter not
reasonably believed to be necessary for the accomplishment of the purpose.
Simms, 916 F. Supp. at 436 (quoting Beckman v. Dunn, 419 A.2d 583, 588 (Pa. Super. Ct.
1980) (internal citations and footnote omitted)). The existence of a conditional privilege is a
question of law, but it is a question of fact as to the possible abuse of the privilege. Simms,
916 F. Supp. at 436 (citing Johnson v. Res. for Human Dev., Inc., 860 F. Supp. 218, 223
(E.D. Pa. 1994); Agriss, 483 A.2d at 463).
As a threshold matter, the Court notes that Finley and Albanese, as corporate
directors of Med-Dev, may have had a conditional privilege to make the allegedly
defamatory statements to their shareholders if they were acting as corporate directors when
doing so, because the allegations of wrongdoing against Martin, a former director, "could
affect the shareholders and the corporation." Simms, 916 F. Supp. at 436 (finding a
conditional privilege under similar circumstances). However, Finley and Albanese have not
established, as a matter of law, that they did not abuse their conditional privilege, to the
extent it existed. Martin has raised numerous disputes of material fact to argue that the
purportedly defamatory statements in the Newsletter and Manifesto were "actuated by
malice or negligence." Id. For example, Martin points to an email he sent to Albanese in
2010 informing him that the Bergen County charges, later mentioned in the Manifesto as
having never been disclosed by Martin, were being dropped. (Doc. 128-34). Martin also
points to a sworn statement from Frank LaForgia, a shareholder of Med-Dev, who testified
that Albanese made slanderous and inflammatory statements about Martin, and was trying
to promote "disharmony between Martin and me to the benefit of him and his associates."
12). As previously noted, Martin also points to an email chain between
Defendants where they discussed a possible retraction of "a prior statement that Martin was
'forced to resign."' (Doc. 128-33 at 4). And Tomasek testified in his sworn statement that
Finley and Albanese knew that "the information in the August 2016 Newsletter is false" and
that "[i]t appeared to [him] that there was a personal vendetta against Martin." (Doc. 144-16
As a result, the Court will deny Finley and Albanese summary judgment on these
Finley and Albanese further argue that Martin's false light claim fails "for same
reasons [sic] his defamation claim fails." (Docs. 122 at 34, 125 at 33). Finley and Albanese
do not specify what these "reasons" are, but the Court notes that one of the major
distinctions between defamation and false light is that proving false light requires a showing
that the communication was publicized with knowledge or in reckless disregard of its falsity.
Graboff, 744 F.3d at 136. As noted above, Martin has raised genuine factual disputes
regarding Finley and Albanese's purported knowledge or reckless disregard of the
purported falsity of the Newsletter and Manifesto. Such factual disputes preclude the entry
of summary judgment. Lorentz v. Westinghouse Elec. Corp., 472 F. Supp. 946, 953 (W.D.
Because the Court has rejected all of Finley and Albanese's arguments against
Martin's defamation and false light claims, the claims survive.
D. I/ED (COUNT V- ALL DEFENDANTS)
On Martin's final claim for llED, all Defendants argue that the claim fails because
their alleged misconduct does not satisfy the strict requirements of Pennsylvania law that
the behavior be "outrageous." (Docs. 122 at 35-37, 123 at 16-18, 125 at 34-36). They also
contend that because Martin did not submit an expert report to support his claim of harm, he
cannot provide expert testimony at trial and so cannot prove his claim. (Docs. 122 at 37-39,
123at18-20, 125 at 36-38). Martin responds that the question of whether the misconduct is
outrageous is a question of fact for the jury, and that his treating physician was not required
to produce an expert report and will testify at trial as a lay witness. (Docs. 129 at 19-23, 143
at 10-15, 145 at 20-24).
Ordinarily, in order to prevail on an llED claim, a defendant's "conduct must be so
outrageous in character, and so extreme in degree, as to go beyond all possible bounds of
decency, and to be regarded as atrocious, and utterly intolerable in a civilized society." Hoy
v. Angelone, 554 Pa. 134, 720 A.2d 745, 754 (Pa.1998) (quoting Buczek v. First Nat'/ Bank
of Mifflintown, 366 Pa. Super. 551, 531A.2d1122, 1125 (Pa. Super. Ct.1987)). The
Pennsylvania Superior Court has repeatedly held that, "generally [a cognizable llED] case is
one in which the recitation of the facts to an average member of the community would
arouse his resentment against the actor, and lead him to exclaim, 'Outrageous."' See, e.g.,
Small v. Juniata Coll., 452 Pa. Super. 410, 682 A.2d 350, 355 (Pa. Super. Ct. 1996). As
Magistrate Judge Carlson noted in his Report and Recommendation, (Doc. 63 at 32-33):
Thus, with respect to claims for intentional infliction of emotional distress,
"courts have been chary to allow recovery for a claim of intentional infliction of
emotional distress. Only if conduct which is extreme or clearly outrageous is
established will a claim be proven." Hoy v. Angelone, 720 A.2d 745, 753-54
(Pa. 1998). Indeed, the Restatement (Second) of Torts instructs that "[i]t has
not been enough that the defendant has acted with intent which is tortious or
even criminal, or that he has intended to inflict emotional distress, or even
that this conduct has been characterized by 'malice,' or a degree of
aggravation that would entitle the plaintiff to punitive damages for another
tort." Restatement (Second) of Torts§ 46, cmt. d; Hoy, 720 A.2d at 754.
The Court finds it unnecessary to address Defendants' second argument against
Martin's llED claim regarding the availability of expert medical testimony at trial because it
agrees with Defendant's first argument that the misconduct alleged here by Martin is not
sufficiently "outrageous" to support an llED claim. While the Court was reluctant to dismiss
Martin's llED claim earlier in this litigation, the further development of the factual record at
the summary judgment stage has convinced the Court that the alleged misconduct of
Defendants does not satisfy Pennsylvania's strict requirements for an llED claim. Martin's
case against Defendants arose out of a business dispute in which the parties accused each
other of misconduct, and does not present the circumstances under which Pennsylvania
courts have previously found outrageous conduct to support an llED claim. As a result, the
Court will grant Defendants' request for entry of summary judgment on Martin's llED claim.
E. AVAILABILITY OF PUNITIVE DAMAGES (ALL DEFENDANTS)
Finally, all Defendants contend that the granting of punitive damages on all of
Martin's claims should be denied. Martin responds in his Oppositions that the factual record
"is replete with examples of [Defendants'] outrageous conduct and [their] reckless
indifference to Martin's rights." (Docs. 143at15, 145 at 24). At the least, Martin contends,
"there is a question of material fact as to these matters." (Docs. 143at15, 145 at 24). The
Punitive damages "are not awarded to compensate the plaintiff for her damages, but
rather to heap an additional punishment on a defendant who is found to have acted in a
fashion which is particularly egregious." Phillips v. Cricket Lighters, 584 Pa. 179, 190, 883
A.2d 439 (2005). In Pennsylvania, "[p]unitive damages may appropriately be awarded only
when the plaintiff has established that the defendant has acted in an outrageous fashion
due to either the defendant's evil motive or his reckless indifference to the rights of
others." Id. at 189, 883 A.2d 439 (internal citation and quotation marks omitted). Reckless
indifference, "or as it is sometimes referred to, 'wanton misconduct', means that the actor
has intentionally done an act of an unreasonable character, in disregard of a risk known to
him or so obvious that he must be taken to have been aware of it, and so great as to make it
highly probable that harm would follow." Smith v. Brown, 283 Pa. Super. 116, 120, 423 A.2d
743 (Pa. Super. 1980) (internal citation and quotation marks omitted). "The state of mind of
the actor is vital. The act, or the failure to act, must be intentional, reckless or
malicious." Feld v. Merriam, 506 Pa. 383, 396, 485 A.2d 742 (1984). "The Supreme Court
has made clear that, historically, the issue of punitive damages was tried to a jury in cases
sounding in tort." Pichler v. UNITE, 542 F.3d 380, 389 (3d Cir. 2008) (citing Day v.
Woodworlh, 54 U.S. (13 How.) 363, 14 L. Ed. 181 (1851)). Thus, "where there is a genuine
issue of material fact regarding the willfulness or recklessness of a defendant's conduct,"
summary judgment is inappropriate. Pichler, 542 F.3d at 389; see also Eagle Traffic Control
v. Addeo, 889 F. Supp. 200, 201 (E.D. Pa. 1995) (citing Trotman v. Mecchella, 618 A.2d
982, 985 (Pa. 1992)) (noting in Pennsylvania "[t]he question of punitive damages is usually
determined by the trier of fact; the Court can decide the issue only when no reasonable
inference from the facts alleged supports an award of punitive damages").
As noted above, this case is essentially about a business dispute that allegedly got
bitterly out of hand, with a messy and contested factual record. While Defendants are
correct in noting that Martin admitted to engaging in the improper use of Med-Dev funds,
and may be able to prove at trial that they did not engage in conduct with an evil motive or
reckless indifference to Martin's rights, that is a determination for a jury to make. Thus, the
Court will deny Defendants summary judgment on the issue of punitive damages, and it will
remain a possible avenue of recovery for Martin at trial.
For the reasons outlined above, the Court will grant Defendants' Motions in part and
deny them in part. A separate order follows.
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