Envtl. Constr. Servs. v. Menta

ENVIRONMENTAL CONSTRUCTION SERVICES, INC., et al. Plaintiffs v. DOMINIC MENTA, et al. Defendants

Civil Action No. 19-3477

United States District Court, E.D. Pennsylvania

April 13, 2022

MEMORANDUM OPINION

NITZA I. QUINONES ALEJANDRO, J.

INTRODUCTION

Plaintiffs Environmental Construction Services, Inc. (“ECSI360”), Element Mechanical Services LLC, and Limbach360, LLC-three related entities in the business of providing fullservice construction and engineering services in the HVAC industry (collectively “Plaintiffs”)- filed this civil action against Defendants Dominic Menta, Environmental Control Services Inc., and ECSI II, Inc. (collectively “Defendants”), alleging, inter alia violations of the Racketeer Influence and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq., and the Lanham Act, 15 U.S.C. § 1125, as well as state law claims for tortious interference with prospective contracts.^[1] In response to Plaintiffs' complaint, Dominic Menta, Environmental Control Solutions, Inc., and ESCI II, Inc., asserted a number of counterclaims and third-party claims against Michael Brown and ECSI360 premised on purported loans that these parties made to Brown and ECSI360 that have not been repaid.

Before this Court is Defendants' motion for partial summary judgment filed pursuant to Federal Rule of Civil Procedure (“Rule”) 56, in which Defendants seek judgment with respect to Plaintiffs' RICO, Lanham Act, and state law tortious interference claims. Defendants also seek summary judgment with respect to their own counterclaims and third-party claims for breach of contract. [ECF 99]. Plaintiffs oppose the motion. [ECF 104]. The issues raised by the parties have been fully briefed and are ripe for disposition.^[2] For the reasons set forth herein, Defendants' motion is granted with respect to Plaintiffs' RICO, Lanham Act, and tortious interference claims, and denied with respect to Defendants' counterclaims and third-party breach of contract claims.

BACKGROUND

In their operative complaint, Plaintiffs assert numerous claims against Defendants, all premised upon Defendants' various participation in an alleged scheme to divert business opportunities and existing business away from Plaintiffs and toward Defendants. Following the completion of discovery, Defendants filed the instant partial motion for summary judgment, arguing, inter alia, that Plaintiffs have failed to proffer sufficient evidence to meet their summary judgment burdens on their RICO, Lanham Act, and tortious interference claims. Plaintiffs disagree.

When ruling on a motion for summary judgment, a court must consider all record evidence and supported relevant facts in the light most favorable to the non-movant-here, Plaintiffs. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Galena v. Leone, 638 F.3d 186, 196 (3d Cir. 2011). The facts relevant to the underlying motions are summarized as follows:^[3]

Plaintiff ECSI360 is a full-service construction and engineering firm in the HVAC industry formed in July 2010 by Michael Brown (“Brown”) and Defendant Dominic Menta (“Menta”). Brown is the majority owner of ECSI360; Menta is the minority owner. Brown serves as ECSI360's President and Chief Executive Officer, and Menta serves as its Vice President and Secretary. Plaintiffs Element Mechanical Services LLC (“Element”) and Limbach360, LLC (“Limbach360”) are wholly owned subsidiaries of ECSI360.

Because it is majority-owned by Brown, a businessman of African American and Spanish descent, ECSI360 is a certified minority business enterprise (“MBE”). ECSI360s's MBE status provides ECSI360 unique opportunities to bid on certain government work that is only available to MBEs.

Menta also wholly owns two other companies-Defendants Environmental Control Services, Inc., and ECSI II, Inc., (collectively, “Environmental Control Services”). Environmental Control Services offers air duct cleaning and sealing, air pollution control, dust collection, air filtration, industrial ventilation, and odor control services. Prior to incorporating ECSI360, Brown knew that Menta operated these other companies in the HVAC business and that Menta would continue to operate those businesses. Brown also understood that Menta and the companies that he alone owned and operated were not prohibited from bidding on all projects for which they alone were solicited or projects that fell within their particular areas of expertise without necessarily including ECSI360.

In the summer of 2019, Brown purportedly discovered that Menta had been exploiting various aspects and resources of ECSI360 to advance his own financial interests and those of his other companies.^[4] Based on this purported discovery, Brown commenced this action.

LEGAL STANDARD

Rule 56 governs summary judgment motion practice. Fed.R.Civ.P. 56. Specifically, this Rule provides that summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Id. A fact is “material” if proof of its existence or non-existence might affect the outcome of the litigation, and a dispute is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. When evaluating a motion under Rule 56, the court must view the evidence in the light most favorable to the nonmoving party. Galena, 638 F.3d at 196.

Pursuant to Rule 56, the movant bears the initial burden of informing the court of the basis for the motion and identifying those portions of the record that the movant “believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). This burden can be met by showing that the nonmoving party has “fail[ed] to make a showing sufficient to establish the existence of an element essential to that party's case.” Id. at 322. After the movant has met its initial burden, summary judgment is appropriate if the nonmoving party fails to rebut the movant's claim by “citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials” that show a genuine issue of material fact or by “showing that the materials cited do not establish the absence or presence of a genuine dispute.” Fed. R. Civ. P 56(c)(1)(A)-(B). The nonmoving party must “do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The nonmoving party may not rely on “bare assertions, conclusory allegations or suspicions, ” Fireman's Ins. Co. of Newark v. DuFresne, 676 F.2d 965, 969 (3d Cir. 1982), nor rest on the allegations in the pleadings. Celotex, 477 U.S. at 324. Rather, the nonmoving party must “go beyond the pleadings” and, either by affidavits, depositions, answers to interrogatories, or admissions on file, “designate ‘specific facts showing that there is a genuine issue for trial.'” Id.

DISCUSSION

As noted, Defendants seek summary judgment with respect to Plaintiffs' RICO, Lanham Act, and tortious interference claims. Each of these claims is addressed below.

Plaintiffs' RICO Claim (Count I) Against Defendant Menta

At Count I of the amended complaint, Plaintiffs allege that Defendant Menta is liable under 18 U.S.C. § 1962(c) of RICO for alleged violations of the federal wire fraud statute, 18 U.S.C. § 1343, on account of his alleged wrongful use of ECSI360 and Limbach360, to divert work away from Plaintiffs and to Defendants. In the motion for summary judgment, Menta argues that Plaintiffs have failed to present evidence sufficient to meet their summary judgment burden with respect to, inter alia, the requisite financial loss required for a RICO claim. Specifically, Menta argues that Plaintiffs have failed to present evidence sufficient to show that Menta's alleged conduct was the proximate cause of any damages suffered by Plaintiffs, i.e., the diverted business. After a thorough review of the evidentiary record, this Court agrees with Menta.

Section 1962(c) of RICO prohibits “any person . . . associated with any enterprise engaged in . . . interstate or foreign commerce, [from] conducting] or participating], directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.” 18 U.S.C § 1962(c). To prevail under § 1962(c), a plaintiff must demonstrate: (1) “the existence of an enterprise affecting interstate commerce, ” (2) “that the defendant was employed by or associated with the enterprise ” (3) “that the defendant participated, either directly or indirectly, in the conduct of the affairs of the enterprise, ” and (4) that the defendant's participation involved a “pattern of racketeering activity.” Bailey v. Reed, 29 Fed.Appx. 874, 875 (3d Cir. 2002). In addition, a plaintiff must show that it suffered injury, i.e., financial loss, to its business or property proximately caused by the defendant's violation of § 1962. Maio v. Aetna, Inc., 221 F.3d 472, 483 (3d Cir. 2000); Kolar v. Preferred Real Estate Inv., Inc., 361 Fed.Appx. 354, 362 (3d Cir. 2010). The United States Supreme Court has stated that a RICO “plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation [of RICO].” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985). The requisite “showing of injury requires proof of a concrete financial loss and not mere injury to a valuable intangible property interest.” Maio, 221 F.3d at 483 (citation omitted). In addition, a “plaintiff is...