Orkin v. Albert

579 F.Supp.3d 238

Wayne ORKIN and Arthur Orkin, Plaintiffs,

v.Lisa Sue ALBERT and Ian Albert, Defendants.

CIVIL ACTION NO. 4:21-40060-TSH

United States District Court, D. Massachusetts.

Filed January 10, 2022

Jason Edward Tauches, PiltserCowan Law LLC, Boston, MA, for Plaintiffs.

Garrett A.D. Gee, Irwin B. Schwartz, Sara W. Khan, Bla Schwartz, PC, Westwood, MA, for Defendants.

ORDER AND MEMORANDUM ON PLAINTIFFS’ MOTION FOR A PRELIMINARY INJUNCTION (Docket No. 7)

HILLMAN, D.J.

Plaintiffs Wayne and Arthur Orkin commenced this action against defendants Lisa and Ian Albert for defamation (Count I, II, III), breach of fiduciary duty (Counts IV, V), breach of contract (Counts VI, VII), unjust enrichment (Count VIII), injunctive relief (IX), and intentional interference with advantageous business relationships (Count X, XI). Wayne and Lisa are siblings, Arthur was Wayne and Lisa's father,¹ and Ian is Lisa's son. Their dispute concerns three family businesses: Boost Web SEO, Inc. ("Boost Web"), OBANC Corp. ("OBANC"), and IA Payments Corp. ("IA Payments") (collectively, "the Companies").

The plaintiffs, after filing their complaint, moved for a temporary restraining order and preliminary injunction. (Docket No. 7). In August 2021, the Court denied the plaintiffs’ request for a temporary restraining order but allowed the parties to conduct expedited discovery regarding the plaintiffs’ request for a preliminary injunction. (Docket No. 19). After expedited discovery, the plaintiffs filed a supplemental memorandum in support of their request for a preliminary injunction. (Docket No. 28). Although expedited discovery has provided some support for the plaintiffs’ claims, the plaintiffs have not demonstrated a likelihood of success on the merits. Moreover, the plaintiffs have made no showing of irreparable harm. Accordingly, the Court denies their request for a preliminary injunction.

Background

Boost Web is a Florida corporation specializing in search engine optimization. OBANC is a Delaware corporation specializing in e-commerce services and web optimization. IA Payments is a Delaware corporation specializing in electronic payment processing. Wayne alleges that he founded the Companies and has always served as their president. Lisa maintains that Boost Web is her company, that she is its president and sole officer, and that Wayne does not hold any equity. Ian maintains that he is the president and director of OBANC and IA Payments, and that Wayne does not hold a corporate office or any equity in either company. Both Lisa and Ian assert that Wayne has provided only sales and administrative support to the Companies.

Wayne alleges that, pursuant to a verbal agreement between Lisa and himself, he and Lisa are both officers of Boost Web, he is responsible for the day-to-day business of the company, Lisa is responsible for the accounting, and he is an authorized signer on Boost Web's bank account with Wells Fargo. Wayne also alleges that, pursuant to a verbal agreement between Ian and himself, he and Ian are both officers of OBANC and IA Payments. Lisa and Ian deny the existence of any verbal agreements designating Wayne the president or an officer of the Companies.

Wayne alleges that Lisa and Ian violated their agreements by (1) removing him as an authorized signer on Boost Web's Wells Fargo account, (2) stopping payments to him from Boost Web and OBANC's Wells Fargo accounts, (3) informing clients and third parties that he is neither an officer of nor affiliated with the Companies, (4) not including him or keeping him informed about the Companies’ tax filings, and (5) diverting corporate funds for private use.

Lisa and Ian admit that they stopped certain payments directed to Wayne and that Lisa removed him as an authorized signer on Boost Web's Wells Fargo account. Wayne admits that, in response, he directed a client of Boost Web, Card Connect, to reroute its monthly $35,000 to $50,000 payments to another account, controlled by Wayne.

Separately, the plaintiffs allege that Lisa defamed them by filing a complaint against Wayne for elder abuse with Massachusetts health agencies and at least one of Arthur's doctors. Arthur also alleged that Lisa and Ian used his credit card and JetBlue points without his consent. Lisa admits to sending the complaint but maintains that the allegations were true. Lisa and Ian maintain that they had Arthur's permission to use his credit card.

In their motion for a preliminary injunction, the plaintiffs ask the Court to enjoin the defendants from (1) removing any funds from Boost Web, OBANC, or IA Payment accounts at Wells Fargo, (2) directly or indirectly contacting clients, third-party contractors, and vendors of the Companies, and (3) directly or indirectly contacting any of Arthur's medical providers. They also ask the Court to order the defendants to (4) send Wayne all email, text, and verbal communications they have made to clients, contractors, employees, and vendors of the Companies, (5) send Wayne a copy of the taxes that they submitted to the IRS, including any and all 1099's and tax returns filed on behalf of the Companies, (6) send Wayne any and all credit card statements for the Capital One credit card used for Boost Web expenses, and any documents concerning the Companies’ accounts, including the Wells Fargo account, (7) reinstate Wayne as an authorized signer of the Companies’ accounts at Wells Fargo, and (8) rescind their false statement concerning allegations of elder abuse to the Massachusetts Department of Elder Affairs.

Legal Standard

Four factors determine whether a court should issue a preliminary injunction: "(1) the plaintiff's likelihood of success on the merits; (2) the potential for irreparable harm in the absence of an injunction; (3) whether issuing an injunction will burden the [non-moving party] less than denying an injunction would burden the [moving party]; and (4) the effect, if any, on the public interest." Jean v. Massachusetts State Police , 492 F.3d 24, 26-27 (1st Cir. 2007) (citation omitted).

Discussion

1. Likelihood of Success on the Merits

Likelihood of success on the merits is "the most important part of the preliminary injunction assessment." Jean , 492 F.3d at 27. If a movant cannot show that he is likely to succeed on the merits, "the remaining factors become matters of idle curiosity." New Comm Wireless Servs., Inc. v. SprintCom, Inc. , 287 F.3d 1, 9 (1st Cir. 2002). In their supplemental briefing, the plaintiffs argue that they are likely to succeed on their defamation claims, breach of contract claims, and unjust enrichment claim.

a. Defamation (Counts I, II, III)

To prevail on a claim for defamation, a plaintiff must establish that the alleged defamatory statements were false. Noonan v. Staples, Inc. , 707 F. Supp. 2d 85, 89 (D. Mass. 2010) ; see also Turner v. Wells , 879 F.3d 1254, 1262 (11th Cir. 2018). Counts I and III relate to statements allegedly made by Lisa about Wayne and Arthur concerning Arthur's health and medical care. On the motion for a temporary restraining order, the Court rejected the merits of this claim because Wayne and Arthur had provided no evidence, beyond conclusory allegations, that the statements were false. Wayne has provided no new evidence, nor made any new argument, regarding these counts. As before, the plaintiffs have not demonstrated a likelihood of success on the merits.

Count II alleges that Lisa and Ian made false statements to the Companies’ clients that Wayne is not affiliated with the Companies and is not an officer of the Companies. On the motion for a temporary restraining order, Wayne had not provided any detail as to when or to whom such statements were made. In supplemental briefing on the motion for a preliminary injunction, Wayne has provided an excerpt from Lisa's deposition, in which she testified that she called Card Connect to tell Card Connect that Wayne is not an authorized person on behalf of Boost Web with whom Card Connect should be dealing.²

To demonstrate that Lisa's statement was false, Wayne points to his LinkedIn profile, which lists him as a co-founder of Boost Web and OBANC; his Boost Web email signature, which lists his title as President; and an email from an accountant describing Wayne as a shareholder and officer of Boost Web. Wayne further points to a receipt from his purchase of the Boost Web website domain name in 2012, a year before Lisa registered Boost Web as a corporation; a lease agreement for office space for Boost Web, signed by Lisa as "Lisa Albert for Wayne Orkin;" a check deposited to the Boost Web Wells Fargo account made out to "Boost Web SEO, Wayne Orkin;" an agreement assigning rights to residual payments from one of Wayne's other companies to Boost Web; and emails demonstrating that Wayne was involved in Boost Web's tax and financial planning.

In contrast, Lisa points to Boost Web's Florida corporation annual report for the 2018, 2019, and 2020 tax years, all of which list her as the president, and Boost Web's articles of incorporation, which list her as the initial officer and/or director.³ Likewise, Ian points to OBANC and IA Payments’ Delaware annual franchise tax reports for the 2020 tax year, both of which list him as the president of those companies.⁴

The evidence suggests, contrary to the defendants’ assertion, that Wayne has provided more than administrative and sales support to the Companies. The evidence does not establish, however, as Wayne contends, that he is the president or an officer of the Companies.⁵ Indeed, the corporate documents put Lisa and Ian in charge. To the extent that Lisa and Ian are in charge, the Court sees no reason why they cannot determine who is, and who is not, authorized to deal with the Companies’ clients on the Companies’ behalf. Thus, Lisa's statement to a Boost Web client that Wayne is not an authorized person on behalf of Boost Web with whom the client should be dealing was not necessarily false. Whether or not Wayne ultimately...