Martin v. Finley

349 F.Supp.3d 391

Michael G. MARTIN, Plaintiff,

v.Thomas J. FINLEY, et al., Defendants.

3:15-CV-1620

United States District Court, M.D. Pennsylvania.

Filed October 12, 2018

Kevin F. Berry, Tamara S. Grimm, O'Hagan Meyer, Kimberly A. Havener, White & Williams LLP, Philadelphia, PA, for Plaintiff.

Sean P. McDonough, Dougherty, Leventhal & Price, L.L.P., Moosic, PA, Kristi A. Buchholz, Jonathan Dryer, Marc L. Bogutz, Wilson, Elser, Moskowitz, Edelman & Dicker LLP, Philadelphia, PA, J. Timothy Hinton, Haggerty Hiinton & Cosgrove LLP, Scranton, PA, for Defendants.

MEMORANDUM OPINION

Robert D. Mariani, United States District Judge

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, Med-Dev 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 ("IIED"). Martin also alleges abuse of process and IIED 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 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 IIED 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 IIED.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 IIED 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 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 IIED).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 non-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. 109 ¶ 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 ¶¶ 3-5, 112 ¶¶ 3-5).

Plaintiff served as the initial Chairman of the Board of Directors of Med-Dev ("Board"), (Docs. 109 ¶ 9, 112 ¶ 9, 117 ¶ 3), and was "a Director and Officer of Med-Dev," (Docs. 109 ¶ 17, 112 ¶ 17). His duties "included attracting investors, distribution of products, sales, testing of the products, and overall direction of the Company." (Docs. 109 ¶ 10, 112 ¶ 10, 117 ¶ 4). Plaintiff never had any other official title at Med-Dev, (Docs. 109 ¶ 11, 112 ¶ 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. 128 ¶ 12, 144 ¶ 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. 109 ¶ 13, 112 ¶ 13, 117 ¶ 5). The members of the Board in 2013 were Plaintiff, Finley, Moore, and William Peters, M.D. (Docs. 109 ¶ 14, 112 ¶ 14). Albanese was appointed to the Board on January 16, 2014, (Docs. 109 ¶¶ 15-16, 112 ¶¶ 15-16), although Plaintiff contends that Albanese resigned from the Board shortly afterwards, (Docs. 128 ¶¶ 15-16, 144 ¶¶ 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, 144 ¶¶ 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...