Constantakis v. Bryan Advisory Servs., LLC

275 A.3d 998

Kathyrn A. CONSTANTAKIS

v.BRYAN ADVISORY SERVICES, LLC and Richard G. Bryan, Appellants

William Vescio and Bryan Vescio

v.Bryan Advisory Services, LLC and Richard G. Bryan, Appellants

Kathyrn A. Constantakis

v.Bryan Advisory Services, LLC and Richard G. Bryan, Appellants

William Vescio and Bryan Vescio

v.Bryan Advisory Services, LLC and Richard G. Bryan, Appellants

No. 533 WDA 2021

No. 1034 WDA 2021

Superior Court of Pennsylvania.

Submitted December 20, 2021

Filed: May 5, 2022

Elizabeth M. Casey, Philadelphia, for appellants.

Sandra D. Grannum, Florham Park, NJ, for appellants.

Vicki K. Horne, Pittsburgh, for Constantakis, appellee.

Steven D. Irwin, Pittsburgh, for Vescio, appellees.

BEFORE: BENDER, P.J.E., DUBOW, J., and COLINS, J.^*

OPINION BY BENDER, P.J.E.:

Richard G. Bryan ("Mr. Bryan") and Bryan Advisory Services, LLC ("BAS") (collectively "Appellants") appeal from the orders entered by the Court of Common Pleas of Allegheny County on April 21, 2021, granting the requests for emergency special relief in the form of preliminary injunctions filed by Kathryn A. Constantakis and Bryan Vescio (collectively "Appellees"). After careful review, we affirm in part, reverse in part, and remand with instructions.¹

The trial court summarized the relevant factual and procedural background of these matters in its Pa.R.A.P. 1925(a) opinion, as follows:

I. The Parties

[BAS] is a limited liability company dually incorporated under the laws of the Commonwealth of Pennsylvania, with a registered business address at 125 Technology Drive, Suite 105, Canonsburg, Washington County, Pennsylvania 15057. Mr. Bryan is President and Chief Compliance Officer of Bryan Funding, Inc., which is under common control with BAS, and both are owned by Mr. Bryan.

... Kathryn A. Constantakis ("Ms. Constantakis"), William Vescio and Bryan Vescio[ ] are all associated through Vescio Asset Management, LLC ("VAM"), a limited liability company located at Waterfront II Office Building, 2100 Georgetown Drive, Suite 304, Sewickley, [Pennsylvania] 15243. Ms. Constantakis is an Investment Adviser Representative ("IAR"). She has been employed with VAM since October 2012[,] in her role as a Senior Portfolio Manager. William Vescio is the sole owner and managing member of VAM. Bryan Vescio is the Vice President of Operations and Investment Manager at VAM, and the son of William Vescio.

II. Factual and Procedural Background

VAM is currently identified as a branch office of Bryan Funding, Inc. From approximately August 2010 until January 2021, VAM provided investment management services to clients through BAS, an [sic ] Securities Exchange Commission ("SEC")-Registered Investment Adviser ("RIA"). As the RIA under which VAM operated, BAS provided VAM with compliance services, including receiving payments from VAM clients and monitoring VAM emails under bryanfunding.com. Other than its supervisory responsibilities, BAS was not involved in the day-to-day investment management services that VAM provides.

Ms. Constantakis is the Senior Portfolio Manager at VAM, and as a condition of her employment, BAS directed Ms. Constantakis to register with [the] Financial Industry Regulatory Authority ("FINRA") as a broker.^[2] Ms. Constantakis thereafter registered with FINRA as a broker from April 2016 through November 2019[,] until Bryan Funding, Inc. terminated its registration as a broker-dealer and the registration of Ms. Constantakis as a broker. As noted above, William Vescio is the sole owner and managing member of VAM, and Bryan Vescio is the Vice President of Operations and Investment Manager at VAM.

In approximately December [of] 2020, VAM applied for registration as an RIA. VAM intended to establish itself as a new advisory firm separate and independent from BAS. In tandem with that process, the administrative assistant of VAM created new firm letterhead, e-mail addresses, and prototype invoices in anticipation of its eventual registration so that all invoices would be ready for finalization when VAM received its SEC registration. VAM's administrative assistant sent the prototype invoices for review using the BAS interoffice e-mail. Mr. Bryan was able to access and view the prototypes in the email. Upon seeing the protype [sic ] invoices, Mr. Bryan and BAS were alarmed, and subsequently conducted a physical audit of VAM's office. According to Mr. Bryan, if those invoices had actually been sent to BAS clients, BAS clients would have been defrauded into diverting fees to VAM that were contractually owed to BAS.

On or about January 13, 2021, Appellees learned that Mr. Bryan filed [Uniform Termination Notices for Securities Industry Registration ("Form U5")³ ] accusing William Vescio, Bryan Vescio, and Ms. Constantakis of unspecified SEC violations. The Form U5s contain allegations that William Vescio, Bryan Vescio, and Ms. Constantakis actually sent out the protype [sic ] invoices with intent to defraud clients. Mr. Bryan also filed an Investment Adviser Public Disclosure ("IAPD") concerning Ms. Constantakis. The IAPD explains that a termination is disclosed when the IAR was discharged after allegations were made that accused the IAR "of violating investment-related statutes, regulations, rules or industry standards of conduct; fraud or the wrongful taking of property...." The IAPD which Mr. Bryan filed for Ms. Constantakis contains essentially the same allegations as the Form U5s. Like the Form U5, the IAPD is publicly available.

BAS and Mr. Bryan blocked VAM's ability to access any of its client accounts and left VAM without a platform on which to operate, effectively halting the ability of Appellees to provide direct financial services and fulfill fiduciary obligations to clients. Additionally, BAS and Mr. Bryan wrote letters to VAM's clients informing them that it had terminated the employment of William Vescio, Bryan Vescio and Ms. Constantakis. On or about January 21, 2021, VAM finalized its registration with the SEC as an investment adviser.

On March 8, 2021, William and Bryan Vescio filed a complaint at GD[-]21-001965, which alleged breach of contract, tortious interference with contractual relations, and defamation. Then, on March 17, 2021, Ms. Constantakis filed a complaint at GD[-]21-002478, which also alleged a count of tortious interference with contractual relations and another count of defamation. Both complaints name [BAS] and [Mr.] Bryan as defendants.

Appellees maintain that, as a result of the allegations in the Form U5s and the IAPD, Appellants are (1) interfering with current and potential future contractual relations with clients; (2) interfering with Appellees’ ability to obtain IAR registration with VAM or another RIA; (3) interfering with the ability of Appellees to be approved by an investment management platform to service such clients; (4) interfering with Appellees’ ability to obtain employment (presently or in the future) that requires FINRA or IAR registration or approval; and (5) generally interfering with Appellees’ professional reputation in a manner that does, and will, interfere with their ability to be employed.

On March 31, 2021, this court consolidated the actions at GD[-]21-001965 and GD[-]21-002478, and assigned them upon motion to the Commerce and Complex Litigation Center.^[4] Thereafter, this court held a multi-day evidentiary hearing on Appellees’ motions for special injunctive relief. During the hearing, despite having several months to investigate the allegations contained in the Form U5s and the IAPD, this court found that Appellants failed to present any evidence that Bryan Vescio or Ms. Constantakis violated any investment-related statutes, regulations, rules, and/or industry standards of conduct. Additionally, this court found that, even if the VAM prototype invoices were sent out to BAS clients prior to the filing of the Form U5s and IAPD report, Appellants failed to demonstrate that Bryan Vescio or Ms. Constantakis had anything to do with the alleged event. Beyond valuing accounts and verifying fee calculations, Bryan Vescio demonstrated that he had no involvement in creating or sending invoices to clients: [H]e never saw them and did not have authority to prepare or transmit them. Similarly, Ms. Constantakis demonstrated that she never created, sent, or collected invoices in the name of VAM. Finally, Mr. Bryan's text messages demonstrate that he was willing to amend the Form U5s so long as the parties came to an agreement, and Mr. Bryan could somehow recapture William Vescio's and VAM's clients.

On April 21, 2021, following the conclusion of the multi-day hearing, this court granted Ms. Constantakis’[s] and Bryan Vescio's requests for injunctive relief. The injunctions enjoined Appellants from making false, unsubstantiated, and defamatory statements about Ms. Constantakis and Bryan Vescio. This court further ordered that the defamatory language in the Form U5s and IAPD be expunged, and required Appellants to file neutral, amended Form U5s for Ms. Constantakis and Bryan Vescio, as well as a neutral, amended IAPD for Ms. Constantakis.^[5] On April 29, 2021, Appellants appealed to the Superior Court of Pennsylvania from the [Injunction Orders].^{[6 ]} On May 17, 2021, Appellants filed their Statement of Errors Complained of on Appeal.

Trial Court Opinion ("TCO"), 8/17/21, at 1-5 (unnecessary capitalization and footnote omitted).

On July 16, 2021, this Court directed Appellants to show cause as to why this appeal should not be quashed in whole or in part as to the claims stemming from GD-21-001965, where no notice of appeal was filed on that docket, for failure to comply with Pennsylvania Rule of Appellate Procedure 341(a) and its Note. See Per Curiam Order ("Rule to Show Cause"), 7/16/21 (single page) (citing Pa.R.A.P. 341, Official Note ("Where ... one or more orders resolves issues arising on more than one docket or relating to more than one judgment, separate notices of appeals must be filed."); Commonwealth v. Walker , 646...