First Niagara Risk Management, Inc. v. Folino

RESPONSE in Opposition re MOTION for Summary Judgment Partially

E.D. Pa.January 8, 2018

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA FIRST NIAGARA RISK MANAGEMENT, INC. Plaintiff, v. JOHN A. FOLINO Defendant. § § § § § § § § § § § § § Civil Action No. 2:16-cv-1779-JHS PLAINTIFF FIRST NIAGARA RISK MANAGEMENT, INC.’S RESPONSE IN OPPOSITION TO DEFENDANT JOHN A. FOLINO’S MOTION FOR SUMMARY JUDGMENT Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 1 of 59 i TABLE OF CONTENTS I. INTRODUCTION.....................................................................................................................1 II. COUNTERSTATEMENT OF UNDISPUTED MATERIAL FACTS .....................................5 III. ARGUMENT ............................................................................................................................5 A. The Gist of the Action Doctrine Does Not Bar Any of FNRM’s Claims. ..........................5 1. Folino Waived the Gist of the Action Doctrine Defense Because He Failed To Raise It In His Answer. .................................................................................................5 2. The Gist of the Action Doctrine Does Not Bar FNRM’s Breach of Fiduciary Duty of Loyalty Claim or Tortious Interference with Contract..............................................6 B. Folino is Not Entitled to Summary Judgment on FNRM’s Breach of Fiduciary Duty of Loyalty Claim..................................................................................................................8 1. Folino Owed FNRM a Fiduciary Duty of Loyalty. .......................................................9 2. Folino Breached His Fiduciary Duty of Loyalty. ........................................................10 i. Folino Engages in Self-Dealing and Conflicts of Interests. ..................................11 a. During His Employment, Folino Increased His Active Involvement in the Business Operations of RTI of Florida............................................................11 b. Folino Engages RTI of Florida to Compete With FNRM for Wisconsin White Sand, LLC’s Insurance Business. .........................................................12 c. Folino Uses Client Finance Direct, LLC to Finance Insurance Premiums for FNRM’s Former Customers, Prospective Customers, and First Niagara Bank, N.A. Customers.....................................................................................13 d. Folino Directs FNRM Employee Rae Weitzel to Work On His Non- FNRM Businesses During Business Hours .....................................................14 ii. Folino Assists Inservio and RTI of Florida in Competing Against FNRM .........15 a. Inservio and Robert Jacomen Steal FNRM’s Risk Management Business and Folino Does Nothing to Stop It.................................................................15 b. Folino’s Company RTI of Florida Competes Against FNRM for FNRM’s Customers and Folino Conceals The Conflict of Interest ...............................16 iii. Folino Establishes a Second Competing Insurance Agency While Working for FNRM....................................................................................................................20 iv. Folino Fails to Perform His FNRM Job Duties.....................................................23 3. FNRM Suffered Harm as a Direct Result of Folino’s Disloyal Conduct. ...................24 C. Folino’s Breach of the Non-Solicitation Covenant of his Employment Agreement Resulted in Damages to FNRM And Presents a Genuine Issue of Material Fact .............28 1. Folino Caused Damage to FNRM by Breaching His Non-Solicitation Agreement....29 i. Folino Assists RTI of Florida to Solicit Dandy Service Corporation’s Business. ................................................................................................................29 Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 2 of 59 ii ii. Folino, Through Jacomen, Solicits ABC Transit, Inc.’s Business to RTI of Florida....................................................................................................................31 iii. Folino Unlawfully Solicits Jacomen to Start Inservio Causing FNRM to Lose Risk Management Business...................................................................................33 iv. Folino Unlawfully Solicits Walter VanNewkirk to RTI of Florida Causing FNRM to Lose Fortis Management Group, LLC’s Insurance Business. ..............34 v. Folino Assists RTI of Florida to Solicit M.A. Brightbill/Brightbill Transportation, Inc.’s Business. ............................................................................35 vi. Folino Assists RTI of Florida to Solicit A.J. Myers & Sons’ Business. ...............36 2. FNRM Can Establish Damages With Reasonable Certainty As a Result of Folino’s Breach. ..........................................................................................................37 D. This Court Must Deny Folino’s Motion for Summary Judgment on FNRM’s Breach of Contract Claim for Folino’s Unlawful Solicitation of Former FNRM Employees.......39 1. FNRM Lost Business Because of Folino’s Breach of the Non-Solicitation Covenant of His Employment Agreement...................................................................39 2. The Liquidated Damages Provision is Not FNRM’s Sole Remedy for Folino’s Breach of His Non-Solicitation Covenant. ..................................................................40 E. Folino is Not Entitled to Summary Judgment on FNRM’s Civil Conspiracy to Obstruct Justice Claim.......................................................................................................42 1. FNRM’s Breach of Fiduciary Duty of Loyalty Claim is the Tortious Conduct that Predicates FNRM’s Civil Conspiracy Claim. .............................................................42 2. The Record Evidence Shows that Folino and Kolongowski Entered into an Agreement to Conceal Evidence that Kolongowski was Required to Produce Under the Court Order in the Kolongowski Lawsuit. .................................................43 3. Folino’s Failure to Produce Relevant Text Messages Further Supports An Agreement Between Himself and Kolongowski to Obstruct Justice. .........................46 F. Folino is Not Entitled to Summary Judgment on FNRM’s Pennsylvania Uniform Trade Secrets Act Claim....................................................................................................48 1. Kolongowski was Folino’s Agent When He Stole FNRM’s Trade Secrets................48 2. Injunctive Relief Does Not Preclude Monetary Damages Under PUTSA..................50 IV. CONCLUSION .......................................................................................................................51 Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 3 of 59 iii TABLE OF AUTHORITIES Page(s) Cases Accurso v. Infra-Red Servs., Inc., 23 F. Supp. 3d 494 (E.D. Pa. 2014).........................................................................................42 Alexander Mill Servs., LLC v. Bearing Distrib., Inc., No. 06-1116, 2007 WL 2907174 (W.D. Pa. Sept. 28, 2007) ....................................................7 Basile v. H & R Block, Inc., 777 A.2d 95 (Pa. Super. Ct. 2001) ............................................................................................9 Bolus v. United Penn Bank, 525 A.2d 1215 (Pa. Super. Ct. 1987) ......................................................................................24 Brader v. Allegheny Gen. Hosp., 64 F.3d 869 (3d Cir.1995) .......................................................................................................28 Bruno v. Erie Ins. Co., 106 A.3d 48 (Pa. 2014)..............................................................................................................6 Charpentier v. Godsil, 937 F.2d 859 (3d Cir. 1991) ......................................................................................................5 Commonwealth Trust Co. of Pitt. V. Hachmeister Lind Co., 181 A. 787 (Pa. 1935)..............................................................................................................24 Condo. Ass’n Court of Old Swedes v. Stein-O’Brien, 973 A.2d 475 (Pa. Commw. Ct. 2009) ....................................................................................40 Creeger Brick & Building Supply, Inc. v. Mid-State Bank & Trust Co., 560 A.2d 151 (Pa. Super. Ct. 1989) ........................................................................................28 Delahanty v. First Pa. Bank, N.A., 464 A.2d 1243 (Pa. Super. Ct. 1983) ..........................................................................24, 29, 38 DePuy Synthes Sales, Inc. v. Globus Med., Inc., 259 F. Supp. 3d 225 (E.D. Pa. 2017).........................................................................................7 El v. Se. PA Transp. Auth., 418 F. Supp. 2d 659 (E.D. Pa. 2005), aff’d sub nom ..............................................................37 Ferrer v. Trustees of the Univ. of Penn., 825 A.2d 591 (Pa. 2002)..........................................................................................................40 FFR SE, LLC v. Sanborn, No. 14-5439, 2015 WL 3970923 (E.D. Pa. 2015)...................................................................49 Fishman Org., Inc. v. Frick Transfer, Inc., 564 F. App’x 649 (3d Cir. 2004) .............................................................................................24 Freedom Med. Inc. v. Gillespie, 634 F. Supp. 2d 490 (E.D. Pa. 2007)...................................................................................9, 10 Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 4 of 59 iv Frontier Constr. Co. v. Mazzella et al., No. 09-794, 2009 WL 3806754 (W.D. Pa. Nov. 13, 2009).......................................................9 Garczynski v. Countrywide Home Loans, Inc., 656 F. Supp. 2d 505 (E.D. Pa. 2009).......................................................................................49 Goldstein v. Phillip Morris, Inc., 854 A.2d 585 (Pa. Super. Ct. 2004) ........................................................................................42 Gregory v. Chehi, 843 F.2d 111 (3d Cir. 1988) ....................................................................................................48 HearBest, Inc. v. Adecco USA, No. 13-1026, 2014 WL 7183478 (W.D. Pa. Dec. 16, 2014) ...................................................38 Howe v. LC Philly, LLC, No. 13-1026, 2014 WL 7183478 (W.D. Pa. Dec. 16, 2014) ...................................................38 James Corp. v. North Allegheny Sch. Dist., 938 A.2d 474 (Pa. Commw. 2007)..........................................................................................40 Landau v. Western Pennsylvania Nat. Bank, 282 A.2d 335 (Pa. 1971)..........................................................................................................42 Logan v. Mirror Printing Co. of Altoona, Pa., 600 A.2d 225 (Pa. Super. Ct. 1991) ........................................................................................28 Mente Chevrolet Oldsmobile, Inc. v. GMAC, 451 F. App’x 214 (3d Cir. 2011) .............................................................................................41 Moore v. Grossman, No. 7389-2008, 2010 WL 1435550 (Pa. Com. Pl. Jan. 27, 2010), aff’d, 13 A.3d 987 (Pa. Super. Ct. 2010)..................................................................................................5 Moses v. McWilliams, 549 A.2d 950 (Pa. Super. Ct. 1988) ........................................................................................42 Murphy v. Mid East Oil Co., No. 06-1343, 2007 WL 527715 (W.D. Pa. Feb. 14, 2007) .....................................................10 Oestreich v. Envion. Inks & Coatings Corp., No. 89-8907, 1990 WL 210599 (E.D. Pa. Dec. 17, 1990) ......................................................20 Orthovita, Inc. v. Erbe, No. 07-2395, 2008 WL 423446 (E.D. Pa. Feb. 14, 2008).........................................................9 Peck v. Haberle, 642 A.2d 509 (Pa. Super. Ct. 1994) ........................................................................................40 PNC Mortg. v. Superior Mortg. Corp. No. 09-5084, 2012 WL 628000 (E.D. Pa. 2012).......................................................................9 Power Restoration Int’l, Inc. v. Pepsico, Inc., No. 12-1922, 2015 WL 1208128 (E.D. Pa. Mar. 17, 2015) ..............................................24, 29 Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 5 of 59 v Reginella Const. Co. v. Travelers Cas & Sur. Co. of Am., 971 F. Supp. 2d 470 (W.D. Pa. 2013), aff’d sub nom. Reginella Const. Co. v. Travelers Cas. & Sur. Co. of Am., 568 F. App’x 174 (3d Cir. 2014)........................................5 Remington Fin. Grp., Inc. v. Corcoran, No. 07-1710, 2007 WL 2936203 (E.D. Pa. Oct. 9, 2007) .......................................................28 Robinson Protective Alarm Co. v. Bolger & Picker, 516 A.2d 299 (1986)................................................................................................................29 In re Solfanelli, 221 B.R. 141 (Bankr. M.D. Pa. 1998) .....................................................................................43 Solid Wood Cabinet Co. v. Partners Home Supply, No. 13-3598, 2015 WL 1208182 (E.D. Pa. Mar. 13, 2015) ....................................................11 Somers v. Somers, 613 A.2d 1211 (Pa. Super. Ct. 1992) ......................................................................................28 Synthes, Inc. v. Emerge Medical, Inc., 25 F.Supp.3d 617 (E.D. Pa. 2014).....................................................................................11, 20 Takeda Pharm. USA, Inc. v. Spireas, No. 17-0452, 2017 WL 4401988 (E.D. Pa. Oct. 3, 2017) (Slomsky, J.)...................................7 TelAmerica Media Inc. v. AMN Television, 2002 WL 32373712 (E.D. Pa. Sept. 26, 2002)..................................................................24, 25 Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466 (Pa. 1979)....................................................................................................42, 43 USG Ins. Services, Inc. v. Bacon, No. 16-01024, 2016 WL 6901332 (W.D. Pa. Nov. 22, 2016).............................................7, 10 Williams v. Hilton Grp. PLC, 93 F. App’x 384 (3d Cir. 2004) .................................................................................................6 Youtie v. Macys Retail Holdings, Inc., 653 F.Supp.2d 612 (E.D. Pa. 2009).........................................................................................50 Zeno v. Ford Motor Co., 480 F. Supp. 2d 825 (W.D. Pa. 2007) .....................................................................................29 Zimmer v. Gruntal & Co. Ins., 732 F. Supp. 1330 (W.D. Pa. 1989) ........................................................................................42 Statutes 12 Pa. C.S.A. § 5302 ...............................................................................................................49, 50 12 Pa. C.S.A. § 5305 .....................................................................................................................50 Other Authorities Restatement (Second) of Contracts § 205 .....................................................................................28 Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 6 of 59 vi Restatement (Second) of Contracts § 205(d).................................................................................28 Rule 12(b) ........................................................................................................................................6 Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 7 of 59 1 I. INTRODUCTION On December 18, 2017, Defendant John A. Folino (“Folino”), moved for summary judgment (“Motion”) (Dkt. 76) on all nine causes of action that First Niagara Risk Management, Inc. (“FNRM” or the “Company”) asserted in its Amended Complaint (Dkt. 49). Folino argues that his escalating campaign of disloyalty against his employer was perfectly legal; that absent a contract, he was free to start and operate competing businesses, provide material support to FNRM employees to do the same, and refuse to perform the functions of his executive position because he disagreed with the Company’s direction. His arguments ignore myriad damning facts that prove his guilt and doom his Motion. Folino implicitly realizes the futility of his Motion because he spends much of it attacking the credibility of FNRM’s expert report and damage calculations, despite the fact that he has no expert witness or expert report of his own with which to refute the sound testimony and well-supported conclusions of the Company’s expert. Indeed, the amount of damages that FNRM suffered as a result of Folino’s misconduct and the credibility of FNRM’s expert are matters for the trier of fact and not a basis to grant a motion for summary judgment. The core of this dispute is Folino’s utter lack of business integrity. In August 2010, FNRM paid Folino $5 million for substantially all of the assets of Folino’s two Pittsburgh-based insurance agencies, Associates of Risk Transfer, Inc. (“ARTI”) and Three Rivers Financial Services, Inc. (“TRFS”). In addition, the Asset Purchase Agreement (“APA”) permitted Folino to earn up to an additional $1.6 million depending on the business’ achievement of a targeted growth rate over a three-year period after the acquisition. FNRM did not purchase RTI Insurance Services of Florida, Inc. (“RTI of Florida”), an insurance agency in Florida that Folino owned, because it was not in FNRM’s business footprint. Before the acquisition, the parties agreed and understood that Folino would remain a “passive investor” in RTI of Florida and that Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 8 of 59 2 he would spend substantially all of his time working for FNRM. In August 2010, Folino also signed an Employment Agreement with a restrictive covenant provision prohibiting him from soliciting FNRM customers, prospects and employees during his employment and for one year after termination. In exchange, Folino became FNRM’s Regional Director of Insurance for Western Pennsylvania, with a rich compensation package. After Folino obtained the three years of earn out payments under the APA, however, Folino took a series of deliberate actions to steal the business back from FNRM through a combination of overt and covert actions. On the one hand, Folino openly told his managers that he was going “on strike” or “taking a knee” in response to corporate decisions with which he took issue. Behind the scenes, Folino began directing more of his time, energy, and resources towards growing RTI of Florida’s presence in Pennsylvania, using RTI of Florida to compete with FNRM for FNRM’s customers and employees (and intentionally failing to disclose these conflicts of interest to FNRM), and soliciting FNRM employees to work for or with RTI of Florida. The net effect of this disloyal conduct was a precipitous and measurable decline in Folino’s existing book of business and his new business generation, which Folino now purports to argue is too speculative for FNRM to recover as damages. Folino’s goal was to divert FNRM business, for which FNRM had paid him well, to RTI of Florida or other competing businesses and then leave FNRM, steal any remaining clients, and reap the profits. FNRM only discovered Folino’s plot after it sued another FNRM executive who had resigned to run his own competing business - one that Folino had funded - while both were still employed by FNRM. Folino actually had helped FNRM hire this executive, Thomas Kolongowski, in 2014 as the head of FNRM’s Eastern Pennsylvania operations. In September 2015, Folino assisted Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 9 of 59 3 Kolongowski1 in establishing an insurance agency in Eastern Pennsylvania, Trident Risk Advisors, LLC (“Trident”), that directly competed with FNRM. Folino had planned for Trident to be affiliated with of RTI of Florida in Eastern Pennsylvania. While both Folino and Kolongowski were still employed as executives at FNRM, they travelled to Florida to visit a FNRM prospect in order to get its business for Trident. An RTI of Florida employee also attended that meeting with the FNRM prospect. Moreover, Kolongowski and Folino routinely communicated about Trident and had at least three in-person meetings in the Philadelphia suburbs to discuss Trident. Folino appeared in photographs taken for Trident’s website during Folino’s employment with FNRM. Ultimately, Folino provided Kolongowski and Trident with: (1) $150,000 in start-up capital; (2) administrative resources, including access to RTI of Florida’s checking accounts to purchase equipment; and (3) RTI of Florida employees to work with Kolongowski to draft employment agreements and insurance documents to help obtain Trident’s first customer, W.J. Castle P.E. & Associates (“The Castle Group”), which was a FNRM prospect. Folino also participated in conference calls with Kolongowski about Trident and on at least one call they discussed Trident’s pipeline and prospect list, which included many current and former FNRM customers. FNRM had no idea that Folino, a FNRM executive, was funding a competing insurance agency during his employment. Shortly after Kolongowski resigned his employment in January 2016 to operate Trident, FNRM discovered that Kolongowski had forwarded to his personal Comcast email account hundreds of FNRM documents containing the Company’s confidential information and trade 1 In February 2016, FNRM sued Kolongowski for, among other things, his breach of the restrictive covenants in his employment agreement. See FNRM v. Kolongowski and Trident, Dkt. 16-0719 (“Kolongowski Lawsuit”). The parties entered into a Final Injunction (Dkt. 69 of the Kolongowski Lawsuit) after this Court found Kolongowski in civil contempt of the parties’ Preliminary Injunction and Forensic Discovery Order (“Court Order”) and awarded FNRM nearly $100,000 in attorneys’ fees. Dkt. 46 and 59 of the Kolongowski Lawsuit). Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 10 of 59 4 secrets, such as power point presentations, proprietary sales programs, customer policy renewal and contact information. FNRM later discovered that weeks prior to his resignation, Kolongowski had also been stealing hard-copy documents, loading them into his car and bringing them home to assist in operating Trident. In February 2016, FNRM initiated a lawsuit against Kolongowski and obtained a Court Order granting access to, among other things, Kolongowski’s text messages. The text messages exposed only the tip of the iceberg regarding Folino’s misconduct, revealing that Folino had worked for months with Kolongowski to establish Trident. In April 2016, FNRM terminated Folino’s employment, initiated this lawsuit, and the parties entered into a Stipulated Injunction. Despite agreeing to turn over his phone and computers for forensic imaging as part of the Stipulated Injunction, Folino spent the next few months fighting to prevent FNRM from accessing his personal email account and text messages. It soon became clear why. After this Court ordered Folino to provide FNRM full access to his personal email and text messages on August 11, 2016, FNRM discovered that Folino had engaged in a years’ long campaign of disloyalty and competitive behavior that was staggering in its brazenness and breadth. Indeed, there were so many other companies that Folino had started or placed business for that either competed directly with FNRM or siphoned away its clients that FNRM had to amend its complaint in January 2017 to include all of the newly-discovered acts of disloyalty.2 2 Folino continues to hide the ball even at this late stage of the litigation. FNRM has two pending motions to compel - one against Folino’s long-time lawyer/business partner, Eugene Tempesta, to obtain documents and testimony regarding Folino’s other competing businesses and one demanding that Folino produce the many emails and documents which appear to discuss non-privileged, business-related actions that took place during his employment with FNRM that are listed on his sham of a privilege log. See Motions to Compel, filed November 28, 2017 (Dkt. 74) and October 2, 2017 (Dkt. 68). The full picture of Folino’s deceit has yet to be revealed. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 11 of 59 5 Now, with so much of Folino’s deceit in the record, he asks this Court for summary judgment, thus continuing his pattern throughout this litigation of minimizing his egregious behavior and denying any liability. The record is replete with extensive evidence that supports FNRM’s claims and no amount of misdirection or “alternative facts” on Folino’s part can shield him from the consequences of his actions. When viewed in the light most favorable to FNRM, the facts in this case not only call for the denial of Folino’s Motion, they cry out for justice. Accordingly, this Court must deny Folino’s Motion for Summary Judgment in its entirety. II. COUNTERSTATEMENT OF UNDISPUTED MATERIAL FACTS FNRM incorporates by reference its separate Counterstatement of Undisputed Facts as if the same were set forth fully herein and at length. III. ARGUMENT A. The Gist of the Action Doctrine Does Not Bar Any of FNRM’s Claims. 1. Folino Waived the Gist of the Action Doctrine Defense Because He Failed To Raise It In His Answer. It is well-settled that the “[f]ailure to raise an affirmative defense by responsive pleading or by appropriate motion generally results in the waiver of that defense.” Charpentier v. Godsil, 937 F.2d 859, 863 (3d Cir. 1991). At least one court has found that a defendant waived the gist of the action doctrine defense prior to trial because the defendant failed to raise it in preliminary objections or in its answer to plaintiff’s complaint. Moore v. Grossman, No. 7389-2008, 2010 WL 1435550 (Pa. Com. Pl. Jan. 27, 2010), aff'd, 13 A.3d 987 (Pa. Super. Ct. 2010); but see Reginella Const. Co. v. Travelers Cas & Sur. Co. of Am., 971 F. Supp. 2d 470, 473 (W.D. Pa. 2013), aff'd sub nom. Reginella Const. Co. v. Travelers Cas. & Sur. Co. of Am., 568 F. App’x 174 (3d Cir. 2014) (explaining that gist of the action doctrine is not an affirmative defense). Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 12 of 59 6 In this case, Folino waived his right to assert that the gist of the action doctrine bars any of FNRM’s claims because he never raised it as a defense in his answer to FNRM’s initial Complaint or its Amended Complaint. See Dkt. 24 and 50. In fact, Folino pled 16 “affirmative defenses” in its answer to FNRM’s Amended Complaint, but the gist of the action doctrine was not one of them. Further, Folino did not file a Rule 12(b) motion to dismiss seeking to dismiss FNRM’s non-contract based claims pursuant to the gist of the action doctrine. Instead, Folino engaged in over a year of discovery on all of FNRM’s claims; he cannot now assert that the gist of the action bars any of them. 2. The Gist of the Action Doctrine Does Not Bar FNRM’s Breach of Fiduciary Duty of Loyalty or Tortious Interference with Contract. Regardless, the gist of the action doctrine does not apply here because FNRM’s tort claims are based on tortious conduct that occurred after expiration of the “Best Efforts” clause in his Employment Agreement. Folino argues that this Court must dismiss FNRM’s claims for breach of fiduciary duty of loyalty (Count I), tortious interference with contract (Count V), tortious interference with contract (Count VI), and tortious interference with prospective contract (Count VII) because they are inextricably interwoven with Folino’s contractual duties under his Employment Agreement. This fundamentally misstates FNRM’s tort claims, which do not require construction or application of the Employment Agreement The gist of the action doctrine precludes a tort claim “based on [a] party’s actions undertaken in the course of carrying out a contractual agreement . . . when the gist or gravamen of the cause of action . . . although sounding in tort, is, in actuality, a claim against the party for breach of its contractual obligations.” Bruno v. Erie Ins. Co., 106 A.3d 48 (Pa. 2014). Although the gist of the action doctrine “call[s] for a fact-intensive judgment as to the true nature of the claim,” Williams v. Hilton Grp. PLC, 93 F. App’x 384, 386 (3d Cir. 2004), whether the doctrine Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 13 of 59 7 applies in a particular setting is a question of law. Alexander Mill Servs., LLC v. Bearing Distrib., Inc., No. 06-1116, 2007 WL 2907174, at *8 (W.D. Pa. Sept. 28, 2007). Further, “dismissals under the gist of the action doctrine should take care not to preclude a party’s right to plead claims in the alternative.” DePuy Synthes Sales, Inc. v. Globus Med., Inc., 259 F. Supp. 3d 225, 235 (E.D. Pa. 2017) (quoting USG Ins. Services, Inc. v. Bacon, No. 16-01024, 2016 WL 6901332, at *7 (W.D. Pa. Nov. 22, 2016)). This Court has explained that In determining whether the doctrine applies, a court must identify the nature of the duty breached. The nature of the duty ‘is the critical determinative factor’ as to ‘whether the claim is truly one of tort, or for breach of contract.’ The nature of the duty is ‘established by the underlying averments supporting the claim in a plaintiff’s complaint.’ As such, the substance of a plaintiff’s allegations ‘are of paramount importance, and, thus the mere labeling by the plaintiff of a claim as being a tort . . . is not controlling.’ Takeda Pharm. USA, Inc. v. Spireas, No. 17-0452, 2017 WL 4401988, at *17 (E.D. Pa. Oct. 3, 2017) (Slomsky, J.) (internal citations omitted). Here, FNRM’s tort-based claims are distinct and independent of Folino’s obligations in his Employment Agreement. Most critically, the gist of the action doctrine cannot bar FNRM’s breach of fiduciary duty of loyalty claim because no contractual obligation governed Folino’s employment or his duty of loyalty to FNRM from July 31, 2013 to his discharge in April 2016. . Folino’s Employment Agreement was for a term of three years. The terms of the Employment Agreement, including Section 3 (the “Best Efforts” clause), expired on July 30, 2013, three years after he signed the Employment Agreement. Because the Best Efforts clause expired before there is evidence that Folino engaged in disloyal conduct, the gravamen of this claim is Folino’s breach of fiduciary duty of loyalty - not his contractual obligations under the Best Efforts clause. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 14 of 59 8 Moreover, FNRM’s tortious interference with contract claim is not a recast of Folino’s breach of contract claim. FNRM alleges, and has now proven through discovery, that Folino tortiously interfered with FNRM’s risk management contracts with numerous clients. He accomplished this by encouraging former FNRM employee Robert Jacomen to resign his employment and start his own risk management company, Inservio Risk Management Group, LLC (“Inservio”). In turn, Inservio, with Folino’s knowledge and approval, interfered with FNRM’s risk management contracts it had with its customers and diverted FNRM’s risk management business to Inservio. Although Folino was the producer on these accounts and had long-standing relationships with the customers, he not only failed to keep their risk management business with FNRM, he actively assisted Jacomen and Inservio in interfering with FNRM’s risk management business.3 Accordingly, the gist of the action doctrine does not bar FNRM’s tort claims. B. Folino is Not Entitled to Summary Judgment on FNRM’s Breach of Fiduciary Duty of Loyalty Claim. FNRM has clearly established an extensive factual record supporting its claim against Folino for breach of the fiduciary duty of loyalty. Folino does not dispute that he owed FNRM a fiduciary duty of loyalty or address the record establishing that he breached this duty. However, simply ignoring bad facts does not make them disappear. Once the Best Efforts clause of Folino’s Employment Agreement expired and Folino received his earn-out payment, he embarked on a lengthy crusade of blatantly disloyal conduct against FNRM. Rather than acting in FNRM’s best interests, he secretly planned his departure from FNRM by siphoning FNRM 3 Unlike the Best Efforts clause in Folino’s Employment Agreement, FNRM agrees that the non-solicitation covenant (Dkt. 76-1, section 8) in his Employment Agreement survived the “Term” (Dkt. 76-1, section 1(j)) of the Employment Agreement. Indeed, the non-solicitation provision expired one year after FNRM terminated his employment. See Dkt. 76-1, section 1(d). Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 15 of 59 9 employees and business to RTI of Florida and by establishing a competing insurance agency in Pennsylvania, Trident Risk Advisors, LLC. 1. Folino Owed FNRM a Fiduciary Duty of Loyalty.4 Under Pennsylvania law, “[a] confidential relationship will . . . . give rise to a fiduciary duty.” Freedom Med. Inc. v. Gillespie, 634 F. Supp. 2d 490, 517 (E.D. Pa. 2007) (quoting Basile v. H & R Block, Inc., 777 A.2d 95, 101-02 (Pa. Super. Ct. 2001)) (“[A] confidential relationship and the resulting fiduciary duty may attach wherever one occupies toward another such a position or advisor or counselor as reasonably to inspire confidence that he will act in good faith for the other’s interest.”). “The duty of loyalty requires that an employee ‘refrain from competing with the [employer] and from taking action on behalf of, or otherwise assisting, the [employer’s] competitors throughout the duration of the agency relationship, as well as a duty not to use property or confidential information of the [employer] for the [employee’s] own purpose or those of a third party.’” PNC Mortg. v. Superior Mortg. Corp., No. 09-5084, 2012 WL 628000, at *26 (E.D. Pa. 2012) (quoting Frontier Constr. Co. v. Mazzella et al., No. 09-794, 2009 WL 3806754, at *11 (W.D. Pa. Nov. 13, 2009)). Courts routinely decline to bar breach of fiduciary duty of loyalty claims based on the gist of the action doctrine when the plaintiff alleges harms outside of the parties’ contract. Orthovita, Inc. v. Erbe, No. 07-2395, 2008 WL 423446, at *7-8 (E.D. Pa. Feb. 14, 2008)) (holding that claims for breach of fiduciary duty and duty of loyalty not barred because 4 Folino’s argument that the parol evidence rule bars FNRM from claiming that Folino promised to be a “passive investor” in RTI of Florida during his employment is a red herring. Folino MSJ, G.4, pg. 53-55 of 57. As explained above, FNRM’s breach of fiduciary duty of loyalty claim is not based on a contractual interpretation of the Best Efforts clause in Folino’s Employment Agreement. Therefore, the parol evidence rule is not relevant in this case. For the same reasons, Folino’s argument that he was permitted, pursuant to the Best Efforts clause, to “manage his personal investments” like RTI of Florida, a direct competitor of FNRM, is equally meritless. At the very least, these are disputed material facts which preclude summary judgment. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 16 of 59 10 complaint alleges “generalized harm” from “acts and omissions” that go beyond contractual claims and former employee’s “fiduciary duties extend beyond the limits of an employment contract due to the parties’ relative positions.”); Murphy v. Mid East Oil Co., No. 06-1343, 2007 WL 527715, at *6-7 (W.D. Pa. Feb. 14, 2007) (“gist of the action” doctrine does not bar claims for breach of fiduciary duty). In Freedom Medical, the court declined to dismiss the plaintiff’s breach of fiduciary duty claim because Freedom Medical sufficiently alleged that the defendant, a vice president, had a confidential relationship with his former employer that could “give rise to independent duties to refrain from disclosing or misappropriating trade secrets or from breaching a fiduciary duty.” Freedom Medical, 634 F. Supp. 2d at 517. Likewise, in USG Ins. Servs., Inc. v. Bacon, the court declined to dismiss a breach of fiduciary claim based on the gist of the action doctrine against its former Regional Manager because the complaint alleged conduct that did not stem from his employment agreement -- that he failed to perform his job duties in an adequate manner before resigning. No. 16-1024, 2016 WL 6900132, at *9 (W.D. Pa. Nov. 22, 2016). This case is analogous to Freedom Medical and Bacon. FNRM placed Folino in a special position of trust regarding FNRM’s operations, employees, customers, customer prospects, confidential information and trade secrets when it hired him as its First Vice President and Regional Direct of Insurance for Western Pennsylvania. See Dkt. 76-1; FNRM’s Counterstatement of Material Undisputed Facts (“CSOF”) ¶¶ 13-20. As a result of Folino’s position, he owed FNRM a duty of loyalty and a fiduciary duty to act solely for FNRM’s benefit. Nothing in the record establishes anything differently. 2. Folino Breached His Fiduciary Duty of Loyalty. To establish a breach of fiduciary duty of loyalty under Pennsylvania law, a plaintiff must prove “(1) that the defendant negligently or intentionally failed to act in good faith and solely for Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 17 of 59 11 the benefit of plaintiff in all matters for which he or she was employed; (2) that the plaintiff suffered injury; and (3) that the agent’s failure to act solely for the plaintiff’s benefit . . . was a real factor in bring[ing] about plaintiff’s injury.” Solid Wood Cabinet Co. v. Partners Home Supply, No. 13-3598, 2015 WL 1208182 at *6 (E.D. Pa. Mar. 13, 2015) (quoting Synthes, Inc. v. Emerge Medical, Inc., 25 F.Supp.3d 617, 667 (E.D. Pa. 2014)). The record evidence shows that Folino breached his fiduciary duty of loyalty throughout much of his employment with FNRM by intentionally directing a coordinated campaign to harm FNRM’s business and improve his own position as well as that of his competing insurance agency, RTI of Florida. Folino’s flagrant conduct harmed FNRM. His breach of his duty of loyalty manifested itself in four ways: he (1) engaged in self-dealing creating impermissible conflicts of interest, (2) influenced FNRM employees to resign their employment to work for or with RTI of Florida to divert business opportunities from FNRM to RTI of Florida and failed to disclose his conflicts of interest; (3) spent time and resources that he should have devoted solely to FNRM establishing a competing insurance agency, Trident, as well as engaged in other competitive behavior; and (4) refused to perform his job duties. i. Folino Engages in Self-Dealing and Conflicts of Interests. a. During His Employment, Folino Increased His Active Involvement in the Business Operations of RTI of Florida. Beginning in at least 2014, after Folino received his earn-out payments under the 2010 APA, Folino became an active rather than passive participant in determining the business strategy and advising on the operation of RTI of Florida. CSOF ¶ 33. He routinely received RTI of Florida financial statements and business production reports and he and Goda, the president of RTI of Florida, corresponded about RTI of Florida’s business strategy. See CSOF ¶¶ 34; 40; 45- 47. Folino also interviewed at least one prospective RTI of Florida employee, Paul Rivera, and Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 18 of 59 12 communicated with a prospective commercial insurance producer for employment with RTI of Florida. CSOF ¶¶ 36; 42-43. In 2015, he and Goda discussed construction at RTI of Florida’s office. CSOF ¶ 39. Folino also communicated with Rivera about RTI of Florida writing insurance for a prospective FNRM customer. CSOF ¶ 44. Finally, in December 2015, Goda and Folino discussed RTI of Florida’s 2016 business strategy. CSOF ¶ 45. Folino did all of this rather than focus on improving FNRM’s Western Pennsylvania business by retaining existing customers and generating new business. In addition to spending time working on the business of RTI of Florida, Folino, as explained supra, worked diligently (and successfully) to grow its footprint in Pennsylvania. Indeed, Folino worked with FNRM employees that were loyal to him to lure FNRM customers to RTI of Florida and to expand his competing insurance agency into Eastern Pennsylvania by establishing a company called Trident with another former FNRM executive, Kolongowski, during their employment. b. Folino Engages RTI of Florida to Compete With FNRM for Wisconsin White Sand, LLC’s Insurance Business. In the fall of 2014, Folino acquired a 25% ownership interest in a company called Wisconsin White Sand, LLC (“WWS”). CSOF ¶¶ 121-22. WWS supplies industrial sand and proppants to companies in a variety of industries including hydraulic fracking. CSOF ¶ 123. At the time that Folino acquired an interest in WWS, he considered it to be a candidate for commercial insurance through FNRM. CSOF ¶ 125. In the third quarter of 2014, Folino asked FNRM’s marketing department to put together a proposal for WWS’ insurance. CSOF ¶ 127. However, nothing in the record shows that FNRM’s marketing department created an insurance proposal or any marketing materials in an effort to obtain WWS’ insurance. CSOF ¶ 128. There Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 19 of 59 13 is also no evidence that Folino did anything to try to assist FNRM to place WWS insurance and he did not inform any of his superiors about the potential business opportunity. CSOF ¶¶ 128-29. Rather than helping FNRM place WWS’ insurance, he worked with RTI of Florida to place WWS’ commercial insurance. CSOF ¶ 132. While RTI of Florida was working to place WWS’ insurance, it kept Folino, the majority owner of RTI of Florida and a part-owner of WWS, apprised of insurance proposals it was receiving from insurance carriers. Id. Despite the blatant self-dealing and disloyalty to FNRM, Folino did not disclose to anyone at FNRM that RTI of Florida was working to place WWS’ insurance. CSOF ¶ 135. Due to Folino’s failure to disclose his conflict of interest, RTI of Florida secured the commercial insurance for WWS that FNRM, an insurance agency with at least ten times the annual revenue as RTI of Florida and with access to significantly more markets, allegedly could not. CSOF ¶¶ 130-31. What is more, in September 2015, Folino, on behalf of WWS, approved RTI of Florida’s proposals for WWS’ property, general liability and umbrella insurance. CSOF ¶ 133. Like in 2014, the record evidence is devoid of any suggestion that Folino disclosed this self-dealing and conflict of interest to anyone at FNRM. CSOF ¶ 134. c. Folino Uses Client Finance Direct, LLC to Finance Insurance Premiums for FNRM’s Former Customers, Prospective Customers, and First Niagara Bank, N.A. Customers. During Folino’s employment he owned and operated an insurance premium finance company with Goda called Client Direct Finance, LLC (“Client Direct”). CSOF ¶ 136. The purpose of Client Direct is to loan money to companies to help them pay their commercial insurance premiums. CSOF ¶ 137. Though Folino informed FNRM about his ownership in Client Direct, Folino did not receive permission from FNRM to refer FNRM customers to Client Direct. CSOF ¶ 138. On Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 20 of 59 14 March 7, 2012, FNRM’s Executive Vice president Mike Strakhov discovered that Folino had referred a FNRM client to Client Direct and demanded that Folino not do so again because it was a conflict of interest. CSOF ¶¶ 139-40. In September 2014, unbeknownst to FNRM, Folino and RTI of Florida utilized Client Direct to finance the insurance premiums for WWS, a direct contravention of Strakhov’s order. CSOF ¶ 142. Less than a year later on or about June 3, 2015, Folino utilized Client Direct to finance insurance premiums for ABC Transit, Inc. (“ABC”). CSOF ¶¶ 143; 145. Although Folino, with the assistance of Robert Jacomen, diverted ABC’s insurance business to RTI of Florida in May 2015, ABC was still a client of First Niagara Bank, N.A., creating a conflict of interest for Folino. CSOF ¶ 144. Six months later, Folino used Client Direct to finance the insurance premiums for W.J. Castle P.E. & Associates (“The Castle Group”). CSOF ¶ 146. The Castle Group was a former FNRM prospect that became the first client for Trident, the competing insurance agency that Folino helped establish with former FNRM executive Kolongowski. Id. Folino never informed FNRM that Client Direct was financing the insurance premiums for FNRM customers, prospects or First Niagara Bank, N.A. clients which directly benefitted Folino. Such conduct, as Strakhov told Folino in 2012, was a gross conflict of interest. d. Folino Directs FNRM Employee Rae Weitzel to Work On His Non-FNRM Businesses During Business Hours. Rae Weitzel worked for ARTI before FNRM acquired their assets in August 2010. CSOF ¶ 23. During her employment with ARTI and TRFS, she estimated that she spent “about half of her time on RTI and TRFS work and the other half of her time on other work for John Folino, including the management of the building and tenants.” CSOF ¶ 24. After FNRM acquired ARTI, Weitzel became an employee of FNRM and worked in its accounting department. CSOF ¶ 25. Throughout her employment, FNRM employees routinely reported Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 21 of 59 15 that she was never around, late in completing all of her FNRM-related assignments, and not available for FNRM-related calls. CSOF ¶ 26. FNRM asked Folino to address Weitzel’s poor performance but Folino refused to do so because she was spending time working on Folino’s other businesses. CSOF ¶ 27. Weitzel’s failure to timely perform her FNRM work because she was working on Folino’s other business at his direction harmed FNRM. Indeed, it paid Weitzel to be a full time FNRM employee but she spent only about 50% of her time performing FNRM work. CSOF ¶ 24. FNRM terminated Weitzel’s employment in January 2015 as part of its Organization Simplification initiative. CSOF ¶ 28. ii. Folino Assists Inservio and RTI of Florida in Competing Against FNRM. a. Inservio and Robert Jacomen Steal FNRM’s Risk Management Business and Folino Does Nothing to Stop It. Robert Jacomen worked as an account executive for FNRM from December 2012 until March 2015. CSOF ¶ 48. Among other things, Jacomen facilitated the risk management services that FNRM provided to its customers. CSOF ¶ 51. In November 2015, Jacomen told Folino that he wanted to start his own risk management company. CSOF ¶ 55. Folino did not discourage Jacomen from doing so and even considered investing in the company. CSOF ¶¶ 55- 61. Although, Folino testified that he did not invest in Inservio, he did permit Jacomen to use the address of a building he owned as the address for Inservio. Folino never informed FNRM about the assistance he provided to Jacomen. CSOF ¶¶ 62-63. When Jacomen resigned his employment from FNRM, Inservio had no risk management clients. CSOF ¶¶ 66-67. Within a few weeks of his resignation, however, Inservio had acquired the risk management business of FNRM customers Maroadi Storage & Transfer (“Maroadi”) and Myers Well Service, Inc. (“Myers Well”). CSOF ¶ 69. Folino was not only the FNRM producer on these accounts, but also good friends with their owners or principals, and FNRM had Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 22 of 59 16 provided risk management services to each. Id. Although Jacomen told Folino that he was working to acquire Maroadi and Myers Well’s risk management business, Folino did nothing to try to keep the business for FNRM. CSOF ¶¶ 70-71. Over the next several months, Inservio took over providing risk management for these FNRM customers, one after the other - Schneider’s Dairy, Myers Water Transfer, LLC, ABC, A.J. Myers, and Dandy. CSOF ¶¶ 54; 72; 76; 78. Folino was the producer for all of these clients and could have -indeed, should have - worked with them to keep their risk management business with FNRM. CSOF ¶ 54; 71; 73; 80; 223. Instead, Folino encouraged Jacomen to start Inservio, and Folino initiated a partnership between Jacomen and Inservio and RTI of Florida whereby Inservio provided risk management services for RTI of Florida’s customers - which were formerly FNRM’s customers. CSOF ¶¶ 60-61; 81-84. b. Folino’s Company RTI of Florida Competes Against FNRM for FNRM’s Customers and Folino Conceals The Conflict of Interest. Additionally, with Folino’s knowledge and approval, Jacomen worked with RTI of Florida to divert FNRM clients to RTI of Florida. CSOF ¶¶ 172-76. This pitted Folino’s employer against a competing insurance agency that Folino owned - a clear conflict of interest. Id. In the spring of 2015, Jacomen and RTI of Florida persuaded ABC, a school bus company outside of Pittsburgh, to cancel its insurance business with FNRM and move it to RTI of Florida. CSOF ¶¶ 161; 172-176. Although Folino knew that RTI of Florida acquired ABC’s insurance business, Folino intentionally hid this from FNRM. Like ABC, Folino did not disclose that RTI of Florida, the insurance agency that he owned, also competed against FNRM to place the commercial insurance of FNRM customers M.A. Brightbill or A.J. Myers & Sons, two other school bus companies in Pennsylvania. CSOF ¶¶ 147-60; 220-36. Folino was the FNRM producer on both of these accounts, and long-time friends with the business owners. See CSOF Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 23 of 59 17 ¶¶ 147-49; 220; 233. In fact, Folino, to the detriment of FNRM, provided documents to RTI of Florida to assist it to submit insurance proposals for M.A. Brightbill to insurance carriers. CSOF ¶¶ 153-55. Indeed, on July 14, 2014, Goda, president of RTI of Florida, sent Folino a text message stating “[c]an you also get me a copy of the ma Brightbill body works garage policy. I just want to make sure I have all the right coverages. Thanks.” CSOF ¶ 153. Two weeks later, Goda sent another text message to Mr. Folino about M.A. Brightbill: “I did talk to the people in Ohio and they did confirm that the submission has been sent to Utica for BrightBill Transportation, Inc.” CSOF ¶ 154. Even though Folino knew that RTI of Florida was competing against FNRM, Folino stayed silent and never informed anyone at FNRM about the conflict of interest. Like ABC, Brightbill, and A.J. Myers, Folino also failed to disclose that RTI of Florida competed with FNRM to place FNRM prospect Fortis Management Group, LLC’s (“Fortis”)5 insurance. See CSOF ¶¶ 213; 215-19. Folino secured Fortis’ insurance for RTI of Florida by coordinating a relationship between Walter VanNewkirk and RTI of Florida while VanNewkirk worked for FNRM. CSOF ¶¶ 99-114. In January 2015, VanNewkirk emailed Goda stating, “Mr. Folino suggested I reach out to you to discuss potential employment opportunities for life after First Niagara . . . Also, [Mr. Folino] indicated you are coming to Pittsburgh later this month; it would be great to meet you.” CSOF ¶ 100. Folino did not discourage Goda from exploring employment opportunities with VanNewkirk. CSOF ¶¶ 101-02; 106-10. Throughout early 2015, Folino and VanNewkirk continued discussing the possibility of VanNewkirk working for RTI of Florida. Id. In fact, on January 23, 2015, VanNewkirk texted Folino again asking whether Folino had a “non fnrm email we could start communicating and I can copy in on 5 Fortis is the predecessor company of Extendicare, a former FNRM customer that VanNewkirk serviced as an account executive with FNRM. CSOF ¶ 213. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 24 of 59 18 with Goda.” Folino promptly responded to VanNewkirk giving him his non-FNRM email address. CSOF ¶ 105. Folino also communicated with Goda about provisions of an independent broker agreement between RTI of Florida and VanNewkirk. CSOF ¶ 108-09. Throughout the winter and spring of 2015, VanNewkirk expressed excitement to Folino and Goda place insurance business with RTI of Florida. See CSOF ¶ 110. Folino did not tell anyone at FNRM that VanNewkirk was considering resigning from FNRM and was going to use RTI of Florida to place insurance for FNRM prospects, including Fortis. VanNewkirk resigned his employment in May 2015. CSOF ¶ 114. In June, with Folino’s knowledge and approval, VanNewkirk worked with RTI of Florida to place Fortis’ insurance. CSOF ¶ 215-19. The record evidence does not show that Folino ever told anyone at FNRM where Fortis placed its insurance or try to place it with FNRM. Undoubtedly, however, Folino’s most egregious breach of his fiduciary duty of loyalty to FNRM occurred in late 2015 with Dandy Service Corporation (“Dandy”). Dandy is a trucking company located outside of Pittsburgh and is owned by Dan and Christine Lang. CSOF ¶¶ 180- 81. Lang and Folino were long-time personal friends and Folino had serviced Dandy for more than twenty years because Lang trusted Folino’s opinion on insurance and saw him as a trusted advisor. CSOF ¶ 182; 184. Most of Dandy’s commercial insurance policies were up for renewal in November 2015. CSOF ¶ 185. In anticipation of this, in August 2015, RTI of Florida started working to obtain Dandy’s insurance business. CSOF ¶ 188. RTI of Florida did this with Folino’s knowledge and approval. Id. In late September, Lang told Folino that FNRM had to submit its insurance renewal quotes before October 27, 2015. CSOF ¶ 191. Lang also told Folino that RTI of Florida was one of the other agencies bidding for Dandy’s business but that Lang would give FNRM the “last look.” CSOF ¶ 189. Folino did not tell anyone at FNRM that Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 25 of 59 19 an insurance agency that he owned was competing with FNRM for one of its largest customers. CSOF ¶ 195-96. In addition to RTI of Florida and FNRM, Cottingham & Butler (“Cottingham”), an insurance agency that specializes in insurance for trucking companies, also bid for Dandy’s insurance. CSOF ¶ 197. Although Dandy had been a FNRM customer for five years and Cottingham offered the lowest price for Dandy’s insurance, Dandy chose to place its insurance with RTI of Florida. CSOF ¶ 187; 205. During the bidding process, Goda provided Folino with RTI of Florida’s insurance proposal to Dandy as well as the talking points Goda used to persuade Dandy to move its business. CSOF ¶¶ 200-01. When Folino’s supervisor, John Hoffman, discovered that Dandy had moved its insurance to another company and asked Folino what happened, Folino lied and told Hoffman that Dandy placed its insurance with Cottingham. CSOF ¶ 208-10. Folino’s lie prevented Hoffman from discovering that RTI of Florida rather than FNRM had received the “last look” which should have gone to FNRM. Had FNRM received the “last look” it could have done exactly what RTI of Florida did - provide a lower bid to get the business. Cottingham actually provided Dandy with the lowest bid of all, yet Dandy chose RTI of Florida. CSOF ¶ 204. In sum, Folino knew that RTI of Florida, an insurance agency he owns, was competing against FNRM for FNRM’s Pennsylvania customers but did not inform anyone at FNRM about it. Incredibly, Folino testified that he did not believe that it was a conflict of interest for RTI of Florida, an insurance agency that he owned, to compete against FNRM, his then employer, for FNRM business. CSOF ¶ 120. Such ethically void testimony shows the brazenness of Folino’s intentional conduct and precludes summary judgment. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 26 of 59 20 iii. Folino Establishes a Second Competing Insurance Agency While Working for FNRM. “Employees at-will do not breach a fiduciary duty to the employer by making preparations to compete upon termination of employment provided the employee does not use the confidential information of his employer, solicit the customers of his employer, or otherwise engage in conduct directly damaging his employer during the period of employment.” Synthes, Inc., 25 F. Supp. 3d at 667 (quoting Oestreich v. Envion. Inks & Coatings Corp., No. 89-8907, 1990 WL 210599, at *6 (E.D. Pa. Dec. 17, 1990)) (emphasis added). In the present case, the record evidence shows that Folino and Kolongowski engaged in conduct directly damaging to FNRM during their employment. Their first known disloyal act was in September 2015, when he and Kolongowski travelled to Sumterville, Florida, without FNRM’s knowledge, to meet with a prospective customer. CSOF ¶¶ 247-49. RTI of Florida employee Paul Rivera also attended the meeting with the prospective customer. CSOF ¶ 250. The purpose of the trip was to obtain the prospective customer’s business for the insurance agency that ultimately became known as Trident. CSOF ¶ 251-52; 256-59. In fact, after the meeting, Kolongowski emailed Folino and said, among other things, “I am very hopeful we will be able to gain [Mr. Cohrs’] confidence and earn his business. I will follow up with [Mr. Rivera] tomorrow morning and deliver a strong follow-up draft thank you e-mail to [Mr. Cohrs] . . . . “I am excited for the opportunity to move forward with you and develop a new division and team within your organization!” CSOF ¶ 252 (emphasis added). On October 19, 2015, Folino engaged his personal attorney, Eugene Tempesta, to incorporate Trident. CSOF ¶¶ 259. Throughout November and December 2015, Folino and Kolongowski routinely communicated via email about Trident. CSOF ¶¶ 261-70. In November and December, Kolongowski and Folino used time that they should have spent on FNRM Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 27 of 59 21 business having at least two in-person meetings in the suburbs of Philadelphia to discuss Trident. CSOF ¶¶ 261; 269. Folino provided Kolongowski at least $150,000 in start-up capital for Trident. CSOF ¶ 243. Folino also provided Kolongowski and Trident administrative resources. CSOF ¶¶ 242; 244. For example, Folino had (1) Weitzel set up a bank account for Trident, keep track of monetary contributions that Folino made to Trident, and send invoices for Trident; (2) RTI of Florida employees complete insurance applications for Trident’s first customer, a FNRM prospect; and (3) his counsel Jeffrey Adler review Trident’s lease agreement for office space. CSOF ¶¶ 242; 244; 268. On January 19, 2016, Kolongowski, while still employed by FNRM, thanked Rivera, Goda and Folino for their assistance in bringing “[The Castle Group], [a FNRM prospect] on board to Trident, our very FIRST official client up here with the new entity!” CSOF ¶¶ 276 (emphasis added). Although Kolongowski, Folino and Goda allegedly never executed an operating agreement, the draft operating agreements contemplated that Folino’s investment company, 691 Investments, LLC, would be the majority owner of Trident. CSOF ¶¶ 276. On February 4, 2016, while he was still employed as an executive at FNRM, Folino traveled to Radnor, Pennsylvania to meet with Kolongowski, Jacomen, Goda, Gil Nassib, and April Giumento to discuss building business for Trident and to take pictures for the Trident website. CSOF ¶ 287. Throughout the first quarter of 2016, Folino participated on conference calls with Kolongowski to discuss Trident. CSOF ¶¶ 90-92; 303-06. Folino even participated on a conference call where the Trident team discussed its pipeline and prospects, which included numerous current and former FNRM customers. Id. Unsurprisingly, Kolongowski and Folino used their personal email accounts to conduct Trident business so as to avoid discovery by FNRM. CSOF ¶ 255. Had it not been for Folino’s advice, counsel, resources, and $150,000 in Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 28 of 59 22 start-up capital, Kolongowski could not have established Trident. Although Folino was employed as a FNRM executive, he deliberately failed to inform FNRM that he was working with Kolongowski to establish Trident and that Trident stole a FNRM prospect. Perhaps worse than surreptitiously working with another FNRM executive to establish a competing insurance agency during his employment, Folino also provided Kolongowski advice on how to prevent FNRM from discovering their devious conduct. CSOF ¶¶ 294-99. After FNRM discovered that Kolongowski emailed scores of documents containing FNRM’s confidential information and trade secrets to himself before resigning his employment, FNRM initiated a lawsuit and a motion for preliminary injunction against Kolongowski. CSOF ¶¶ 281- 86; 289-91. Subsequently, FNRM and Kolongowski entered into a Court Order. CSOF ¶¶ 292. The Court Order required that Kolongowski provide his “personal computers and other devices” to a third-party forensic discovery vendor for forensic examination so that FNRM could be assured that its information was not “compromised” and to “facilitate its return to FNRM.” CSOF ¶ 293. Before doing so, however, Kolongowski consulted with Folino who told Kolongowski to “play hard ball” and not provide FNRM access to his personal Comcast email account, the account Kolongowski used to conduct Trident business. CSOF ¶ 295. Following Folino’s instruction, Kolongowski did not provide the discovery vendor and FNRM access to his personal Comcast email account and did not inform FNRM that he intentionally and purposefully moved relevant documents from his laptop to an external hard drive before the discovery vendor imaged his computer. CSOF ¶ 299. Accordingly, the record evidence shows that during his employment, Folino negligently and intentionally failed to act in good faith and solely for the benefit of FNRM by spending time, Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 29 of 59 23 money and resources to establish Trident and to assist Kolongowski to evade a Court Order and hide key documents from FNRM. iv. Folino Fails to Perform His FNRM Job Duties. Finally, Folino breached his fiduciary duty of loyalty to FNRM by purposefully and willfully failing to perform his job duties. The evidence shows that starting in 2014, Folino decided to go “on strike” and “take a knee” because he did not like business decisions that FNRM was making. CSOF ¶ 313-14. Before Folino went “on strike” he was a successful producer with a large and loyal book a business. CSOF ¶¶ 21-22; 336; 339. He also had a successful record of acquiring new business. CSOF ¶ 343. As part of his “strike,” Folino was disrespectful to his supervisor, Hoffman, and refused to perform even the most basic job duties like setting up his voice mail, responding to emails, or attending important business meetings. CSOF ¶ 316-18; 320. He refused to do these basic job duties even after he promised Hoffman and Kirk Jensen, the head of FNRM, that he would do so. CSOF ¶ 320. FNRM even tried to incentivize Folino to improve his conduct by giving him a $60,000 annual base salary, in addition to sales commissions. CSOF ¶ 319. Despite FNRM’s best efforts, Folino’s pattern of unavailability and failure to do his job continued and his once loyal book of business atrophied drastically. CSOF ¶¶ 336; 339. For example, his failure to gather required insurance applications and documents lead to FNRM losing the Tamaqua Area School District account. CSOF ¶¶ 323-31. As part of his “strike” against FNRM, he also produced essentially no new business from the beginning of 2015 through April 14, 2016, the date FNRM terminated his employment. CSOF ¶ 343. Instead, of performing the job duties of a senior executive, Folino decided to focus his efforts, as outlined supra, on benefiting RTI of Florida, his other companies in which he had an ownership interest, and establishing a competing insurance agency. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 30 of 59 24 When viewing Folino’s conduct during his employment as a whole, there is no doubt that he engaged in a campaign of self-dealing and competing behavior to benefit himself to the detriment of FNRM. 3. FNRM Suffered Harm as a Direct Result of Folino’s Disloyal Conduct. Folino’s assertion that the lost profits damages caused by Folino’s disloyal conduct are too speculative is simply wrong. Dkt. 76, Folino’s MSJ, Section F, pg. 43-48 of 57. Moreover, it is not a basis on which to grant summary judgment. To recover lost profits, a plaintiff must only provide the fact finder “with a reasonable amount of information so as to enable the [fact finder] fairly to estimate damages without engaging in speculation.” Power Restoration Int'l, Inc. v. Pepsico, Inc., No. 12-1922, 2015 WL 1208128, at *4 (E.D. Pa. Mar. 17, 2015) (quoting Bolus v. United Penn Bank, 525 A.2d 1215, 1226 (Pa. Super. Ct. 1987)). “At a minimum, reasonable certainty embraces a rough calculation that is not too speculative, vague, or contingent upon some unknown factor.” Power Restoration Int'l, Inc., 2015 WL 1208128, at *4 (internal citations omitted). “Damages for lost profits are usually a matter readily susceptible of proof when a business is established and continuing.” Id. (citing Commonwealth Trust Co. of Pitt. V. Hachmeister Lind Co., 181 A. 787, 789-90 (Pa. 1935)). A court is more likely to award lost profits when a business venture is well-established. Delahanty v. First Pa. Bank, N.A., 464 A.2d 1243, 1258 (Pa. Super. Ct. 1983). TelAmerica Media Inc. v. AMN Television and Fishman Org., Inc. v. Frick Transfer, Inc., the principal cases on which Folino relies for summary judgment (Dkt. 76, Folino MSJ, Section F, pg. 43-48 of 57), are distinguishable and actually demonstrate why summary judgment is inappropriate here. TelAmerica stands for the proposition that a former employer is not permitted to obtain damages from an ex-employee based on the mere assertion that the ex- employee had left and violated a post-employment restriction or duty. In TelAmerica, the district Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 31 of 59 25 court ruled that the plaintiff had failed to adduce sufficient evidence to support its claim for lost profits, notwithstanding that the plaintiff had produced evidence of the amount of sales to its customers made by its former employee for his new employer. 2002 WL 32373712, at *18 (E.D. Pa. Sept. 26, 2002). Fishman, on the other hand, stands for the proposition that lost profit damages are not awardable when the losses are not established with reasonable certainty and are not reasonably foreseeable. There, the Third Circuit held that when a warehouse employee stole bottles of cologne, the defendant was only entitled to damages based on the actual cost of the product, and not on the potential purchase price, because the profit was not established with reasonable certainty and was not reasonably foreseeable. 564 F. App’x 649, 651 (3d Cir. 2004). In both cases, plaintiffs were seeking speculative damages. Here, FNRM”s damages directly result from attrition in a book of business which FNRM acquired for a total of $6.6 million (including the earn-out), and are neither speculative nor unforeseeable. FNRM’s expert computed damages with reference to established standards for valuing a book of insurance business by a competent valuation expert whose report is incredibly thorough and well-documented. See Dkt. 76-6, sections B-D, pg. 18-42 of 113. Folino may take issue with specific categories of loss, but the ultimate award of damages based upon the expert’s testimony is for the Court to determine at trial. Throughout the relevant time of Folino’s disloyal conduct, FNRM was a well-established insurance agency that generated over $60 million in annual revenue by providing a full range of services, including risk management, to its customers. CSOF ¶ 4. Corporate Designee Kimberly McGillicuddy testified that FNRM’s annual customer attrition rate was only 8% and FNRM’s expert report shows that is below the industry average. CSOF ¶ 337; Dkt. 76-6, section B.4, pg. 33 of 113. Furthermore, FNRM retains customers on average for 8 to 10 years. Dkt. 76-6, Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 32 of 59 26 section C.1., pg. 35 of 113. By contrast, RTI of Florida generated less than $3 million in annual revenue and served primarily Florida-based customers. CSOF ¶ 130. Folino, for his part, was a successful insurance producer with a loyal book of business and a history of generating significant new business. CSOF ¶¶ 338-39; 343. His annual attrition rate on his book of business in the two years proceeding his campaign of disloyalty was less than 4.5%, well below FNRM’s average. CSOF ¶ 338; Dkt. 76-6, section B.4, pg. 33 of 113. The customers that moved their business from FNRM to RTI of Florida and Inservio in 2014 and 2015 were among FNRM’s largest and most loyal customers that Folino serviced. See CSOF sections G.i; ii; iii; v. Once Folino “took a knee” and stepped up his self-dealing and conflicts of interest, that loyal book of business deserted FNRM for RTI of Florida, and Folino stopped producing new business. Had Folino not engaged in this conduct, industry statistics and FNRM’s own historical performance demonstrate the likelihood that FNRM’s customers would have remained with FNRM for years. Dkt. 76-6, Section B, 18-28 of 113; Dkt. 76-8, Deposition of Mr. Duffus at 146:15-148:15. Presumably, Folino would have continued to generate new business as he had done in the past during his earn-out years. Dkt. 76, Section C, pg. 29-35 of 113; Dkt. 76-8, Deposition of Mr. Duffus at 22:18 -26:12; 35:14-41:18. Thus, but for Folino’s disloyal conduct, FNRM would not have suffered the harm it has incurred Folino did not retain an expert to refute FNRM’s expert report. Instead, he argues that FNRM’s expert does not cite any record evidence to establish that Folino’s conduct caused FNRM to lose profit from customers cancelling their insurance business. This is not true. As explained above, there is a direct link between when Folino began his disloyal conduct and the decline in his book of business. Folino’s argument that FNRM cannot establish damages for Folino’s failure to generate new business fairs no better. Rather than cite record evidence, he Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 33 of 59 27 states that FNRM is not entitled to damages over a 9 1/4 year period because “[m]any things can happen over the course of eight to ten years that can cause an insurance company to lose new clients . . . .” Such an assertion - with no record evidence in support and no expert testimony to back it up - is speculative, at best. In sum, Folino merely disputes the damages conclusions of FNRM’s expert’s report. Folino had the opportunity to file a Daubert motion, but choose instead this back-door method of creating doubt about the certainty of FNRM’s damages in a summary judgment motion. Whether FNRM’s expert report is rationally based on the record is an issue for trial, as it depends largely on the credibility of FNRM’s expert. Folino’s damages argument only underscores the material issues of fact which exist in this case. It is not a basis to grant summary judgment on FNRM’s breach of fiduciary duty of loyalty claim. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 34 of 59 28 C. Folino’s Breach of the Non-Solicitation Covenant of his Employment Agreement Resulted in Damages to FNRM and Presents a Genuine Issue of Material Fact6 Folino concedes - as he must - the first two elements of FNRM’s breach of contract claim (Count III of the Amended Complaint): the existence of a contract and a breach. Instead, Folino argues that FNRM cannot establish than any of his conduct resulted in damages to FNRM. In support of his argument, he relies on a faulty premise. He cites a variety of evidence (completely ignoring other more damning record evidence) and asks the court to draw inferences from the record evidence in his favor. Folino MSJ, E.1.a-f, pg. 37-43 of 57. But summary judgment requires just the opposite. Accordingly, when viewed in the light most favorable to FNRM, the record evidence shows that Folino’s conduct resulted in FNRM losing business. Under Pennsylvania law, there must be a causal connection between the breach and the loss. Logan v. Mirror Printing Co. of Altoona, Pa., 600 A.2d 225, 226 (Pa. Super. Ct. 1991); Brader v. Allegheny Gen. Hosp., 64 F.3d 869, 878 (3d Cir.1995) (“This is a natural extension of 6 Although Pennsylvania does not recognize an independent cause of action for breach of implied covenant of good faith and fair dealing, Remington Fin. Grp., Inc. v. Corcoran, No. 07- 1710, 2007 WL 2936203, at *2 (E.D. Pa. Oct. 9, 2007), Pennsylvania has found a general duty of good faith and fair dealing in the performance of a contract. The Restatement (Second) of § 205; Creeger Brick & Building Supply, Inc. v. Mid-State Bank & Trust Co., 560 A.2d 151, 153 (Pa. Super. Ct. 1989). “The obligation to act in good faith in the performance of contractual duties varies somewhat with the context . . . . certain strains of bad faith [] include: evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of power to specify terms, and interference with or failure to cooperate in the other party’s performance.” Somers v. Somers, 613 A.2d 1211, 1213 (Pa. Super. Ct. 1992) (citing Restatement (Second) of Contracts, § 205(d) (emphasis added). Here, as shown above, Folino did not act in good faith in the performance of his contractual duties under his Employment Agreement. FNRM does not seek duplicative damages for this claim and its breach of contract claims, however, this Court should decline to dismiss this FNRM’s breach of implied covenant of good faith and fair dealing so FNRM can establish Folino’s bad faith in the performance of his contractual duties at trial. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 35 of 59 29 the general rule [a plaintiff must plead damages resulting from an alleged breach of contract] that damages for breach of contract are not recoverable unless there is a “causal relationship between the breach and the loss.”) (quoting Robinson Protective Alarm Co. v. Bolger & Picker, 516 A.2d 299, 303 n. 9 (1986)). Stated differently, to establish damages for lost profits, a plaintiff must show (1) that damages were the proximate consequence of the breach and (2) damages can be established with reasonable certainty. Power Restoration Int'l, Inc. v. PepsiCo, Inc., No. 12- 1922, 2015 WL 1208128, at *4 (E.D. Pa. Mar. 17, 2015) (quoting Delahanty, 464 A.2d at 1258). Notably, however, causation is generally a fact issue left for the ultimate trier of fact. See Zeno v. Ford Motor Co., 480 F. Supp. 2d 825, 837-38 (W.D. Pa. 2007) (refusing to grant summary judgment because triable question of fact regarding whether defendant’s conduct caused plaintiff damages). 1. Folino Caused Damage to FNRM by Breaching His Non-Solicitation Agreement. Folino claims that his conduct did not cause FNRM to lose business from the following customers: Dandy, ABC, Fortis, Maroadi, Schneider’s Dairy, Myers Well, Brightbill, and A.J. Myers. When viewing the record evidence in the light most favorable to FNRM, however, there is a genuine issue of material fact regarding whether Folino’s conduct was the proximate cause of the damages that FNRM sustained from losing these customers. i. Folino Assists RTI of Florida to Solicit Dandy Service Corporation’s Business. Dandy, a trucking company located outside of Pittsburgh, became a client of ARTI in the mid-1990s and at the time that FNRM acquired ARTI it was ARTI’s second largest customer. CSOF ¶¶ 180-81. When FNRM purchased ARTI, Dandy became a FNRM customer and remained a FNRM customer until 2015. CSOF ¶¶ 182; 185. As the producer on the Dandy account, Folino was responsible for managing the relationship. CSOF ¶ 186. Given Dandy’s Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 36 of 59 30 long-term relationship with Folino, Dandy remained a loyal FNRM customer until 2015 even though FNRM could not always get the cheapest deductibles for Dandy’s insurance policies. CSOF ¶ 187. In September 2015, Lang informed Folino that he intended to put his commercial insurance business out for bid7 but that he would give FNRM the “last look.” CSOF ¶¶ 189-91. Lang informed Folino that RTI of Florida was one of the other bidders bidding for Dandy’s business. CSOF ¶ 192. Cottingham, a large commercial insurance broker for the trucking industry, also sought to obtain Dandy’s commercial insurance business. CSOF ¶ 197. As early as mid-August, Folino was aware that Jacomen and VanNewkirk worked with Goda and Rivera to create a submission proposal for Dandy to solicit its business to RTI of Florida. CSOF ¶¶ 188. Throughout the bidding process, Folino, while employed as an executive by FNRM, was aware of and assisted RTI of Florida in obtaining Dandy’s insurance business. CSOF ¶ 199-202. Indeed, in the week before Dandy made its final decision, RTI of Florida kept Folino apprised of how it was soliciting Dandy. CSOF ¶ 202. Goda even provided Folino a copy of the insurance program proposal that RTI of Florida provided to Dandy as well as the talking points that he used to persuade Dandy to move its insurance business to RTI of Florida. CSOF ¶ 201. Folino provided RTI of Florida with direction for how to secure Dandy’s business, including instructing Goda to do research on Cottingham’s insurance proposal in order to undercut it. CSOF ¶ 202. On October 28, 2015, just five days before RTI of Florida ultimately secured Dandy’s insurance business, Folino texted Goda: “Make sure someone communicates with Dan [Lang] we are working on the Best program for him at the right price. Also, do some 7 When a company puts its insurance business out to bid it means that it contacts a number of different agencies and asks them to put together proposals for the company’s review. CSOF ¶ 190. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 37 of 59 31 recon[naissance] on the carriers Cottingham [&Butler] is using so we can shoot some holes in it.” Id. (emphasis added). Folino’s text messages and other communications with Goda make clear that he was not working to retain Dandy’s business for FNRM and instead was assisting RTI of Florida to solicit Dandy’s business to RTI of Florida. Before Dandy made its final decision to place its commercial insurance with RTI of Florida, Lang showed Folino the insurance proposal from Cottingham but did not show him the proposal that Dandy received from RTI of Florida. CSOF ¶ 203. Of course, Folino had already seen this document as Goda provided him with it on October 28, 2015. CSOF ¶ 202. On November 2, 2015, RTI of Florida placed Dandy’s auto physical damage, cargo umbrella, and workers’ compensation insurance. CSOF ¶¶ 206-07. Lang, a long term personal friend of Folino, testified that Folino never solicited Dandy’s insurance business to RTI of Florida and that he moved Dandy’s insurance business to RTI of Florida because it offered a substantially better price than FNRM’s proposal. Dkt. 77, Folino’s Statement of Facts, ¶ 16. The record evidence, however, shows that Folino worked closely with RTI of Florida to solicit Dandy’s business. CSOF ¶¶ 199-202. Thus, Lang’s testimony contradicts the documents in the record creating a genuine issue of material fact regarding whether Folino’s conduct caused Dandy to move its insurance to RTI of Florida. ii. Folino, Through Jacomen, Solicits ABC Transit, Inc.’s Business to RTI of Florida. ABC is a school bus contractor in Pennsylvania that is owned by Aaron Silverman. CSOF ¶ 161. Silverman’s father-in-law also owns a school bus business called W.L. Roenigk. CSOF ¶ 165. At the time that FNRM purchased ARTI, W.L. Roenigk was ARTI’s largest account. CSOF ¶ 166. ABC became a FNRM client in June 2013 and Folino was the producer on the account and was responsible for managing the customer relationship. CSOF ¶ 162. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 38 of 59 32 Starting in November 2014, Folino influenced and encouraged former FNRM employee Robert Jacomen to resign his employment and start his own risk management business, Inservio.8 CSOF ¶¶ 55-63. While both Folino and Jacomen worked for FNRM, Jacomen approached Folino about investing in Inservio. CSOF ¶ 55. Although Folino ultimately decided not to invest in Inservio, he permitted Jacomen to list 125 Hillvue Lane Pittsburgh, PA 15237 as Inservio’s address. Folino owns this building and leased space in the building to FNRM to house FNRM’s Western Pennsylvania office. CSOF ¶¶ 62-63. Jacomen resigned his employment with FNRM on March 18, 2015. CSOF ¶ 65. Shortly thereafter, RTI of Florida hired Inservio to provide risk management services to its clients. CSOF ¶ 81-83. Inservio began providing risk management services to ABC. CSOF ¶ 78-80. Because of RTI of Florida and Inservio’s partnership, Jacomen began using an RTI of Florida email address. CSOF ¶ 83. In the spring of 2015, Jacomen worked with RTI of Florida’s president Goda and RTI of Florida employee Paul Rivera to place ABC’s commercial insurance. CSOF ¶¶ 172; 174-75. ABC cancelled its insurance business with FNRM and moved it to RTI of Florida. CSOF ¶ 176-77. In sum, Folino influenced and encouraged Jacomen to resign his employment with FNRM and start his own risk management company. CSOF ¶¶ 55-63. In turn, Jacomen and Inservio worked with RTI of Florida to solicit ABC’s insurance business away from FNRM. CSOF ¶¶ 172; 174-75. Despite this record evidence, Silverman testified that he cancelled ABC’s commercial insurance business with FNRM because of “customer service issues.” CSOF ¶¶ 169-70. He also testified that he told Folino about these “customer service” issues but that Mr. Folino told him that “his hands were tied.” CSOF ¶ 169. Accordingly, the record evidence 8 A risk management company provides counsel and advice to customers to help them manage risk in connection with their commercial insurance policies. CSOF ¶ 55. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 39 of 59 33 creates a genuine issue of material fact regarding whether Folino’s conduct was the proximate cause of ABC cancelling its insurance business with FNRM. iii. Folino Unlawfully Solicits Jacomen to Start Inservio Causing FNRM to Lose Risk Management Business. It is undisputed that Folino influenced Jacomen to resign his employment to start Inservio. CSOF ¶¶ 55-63. At the time that Jacomen resigned his employment, FNRM provided risk management services to its customers. CSOF ¶¶ 51-53. Inservio had no customers when Jacomen resigned from FNRM. CSOF ¶ 67. Within a few weeks, however, two FNRM customers, Maroadi and Myers Well Services, cancelled their risk management business with FNRM and moved to Inservio, a one-man company. CSOF ¶ 69. Folino was the FNRM producer on both of these accounts. CSOF ¶¶ 69; 71. Over the next few months, ABC, Dandy, A.J. Myers, Myers Water Transfer, a company that is partially owned by Folino, and Schneider’s Dairy, also moved their risk management business to Inservio. CSOF ¶¶ 72-78. Folino was the FNRM producer on all of these accounts and had long-standing relationships with the owners of these companies. See CSOF ¶¶ 73; 76-77; 80; 162-66; 182; 220-23. When one of these customers canceled their risk management contracts with FNRM so they could move to Inservio, Jacomen informed Folino about it as a “courtesy;” yet, Folino did not try to save the account for FNRM. See CSOF ¶¶ 70; 74. But for Folino influencing and encouraging Jacomen to establish Inservio, FNRM would not have lost the risk management work that it did for Maroadi Myers Well, ABC, Dandy, A.J. Myers, and Myers Water Transfer, all accounts on which Folino was the producer and with whom he had long-term personal relationships. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 40 of 59 34 iv. Folino Unlawfully Solicits Walter VanNewkirk to RTI of Florida Causing FNRM to Lose Fortis Management Group, LLC’s Insurance Business. In 2015, FNRM employee Walter VanNewkirk was working to place Fortis’ insurance with FNRM. CSOF ¶ 213. At the same time, however, Folino solicited and influenced VanNewkirk to resign his employment with FNRM to work for or with RTI of Florida. CSOF ¶¶ 99-103; 105-114. In fact, on January 20, 2015, VanNewkirk emailed Goda and said “Mr. Folino suggested I reach out to you to discuss potential employment opportunities for life after First Niagara . . . Also, [Mr. Folino] indicated you are coming to Pittsburgh later this month; it would be great to meet you.” CSOF ¶ 100 (emphasis added). Folino and Goda ultimately discussed potential employment opportunities for VanNewkirk at RTI of Florida. CSOF ¶ 101. Folino did nothing to discourage Goda from having RTI of Florida hire VanNewkirk or establish an independent broker arrangement with him. Id. Throughout the latter half of January 2015, Folino and VanNewkirk continued to discuss potential employment opportunities with FNRM. CSOF ¶ 105. For example, on January 23, 2015, VanNewkirk sent a text message to Folino asking whether he had a non-FNRM email account which they could use to communicate. Id. Folino then provided VanNewkirk his personal email address. Id. VanNewkirk resigned his employment with FNRM on May 14, 2015. CSOF ¶ 111. Immediately after he resigned, he began working with RTI of Florida to place Fortis’ insurance, the very customer for which he had worked to place with FNRM just months before. CSOF ¶¶ 114; 214. VanNewkirk kept Folino aware of his progress regarding Fortis and even asked Folino to assist when there was an issue with a submission that RTI of Florida had submitted on Fortis’ behalf. CSOF ¶ 216. On June 5, 2015, VanNewkirk told Folino that the ball is “in RTIs court[.] I am done begging for someone to come through on two COI. I have done all I can do. FWD. See you[r] email. Fortis needs something professional today. They can’t use what we sent and Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 41 of 59 35 are extremely upset.” Id. Folino responded, “On it.” Id. Thus, the record evidence establishes that Folino, while employed as an executive at FNRM, unlawfully solicited VanNewkirk to work with RTI of Florida and assisted him in placing Fortis’ insurance with RTI of Florida, a competitor of FNRM. v. Folino Assists RTI of Florida to Solicit M.A. Brightbill/Brightbill Transportation, Inc.’s Business. M.A. Brightbill (“Brightbill”) is a school bus dealership in Pennsylvania. CSOF ¶ 147. Before FNRM purchased ARTI in August 2010, Brightbill was one of ARTI’s largest accounts. CSOF ¶ 148. After the acquisition, Brightbill became a FNRM customer. CSOF ¶ 149. In late 2014, Brightbill moved its commercial insurance business from FNRM to RTI of Florida. CSOF ¶ 150. Although RTI of Florida president Goda testified that he did not inform Folino that Brightbill was moving its business to RTI of Florida, the documentary evidence shows that Folino was well aware that a long-time customer was contemplating cancelling its insurance business with FNRM and moving it to RTI of Florida. CSOF ¶ 152-55. Indeed, as RTI of Florida was preparing to secure Brightbill’s commercial insurance, Goda sent the following text messages to Folino:  Goda to Folino: “Can you also get me a copy of the ma [sic] Brightbill body works garage policy. I just want to make sure I have all the right coverages. Thanks.”  Goda to Folino: “I did talk to the people in Ohio and they did confirm that the submission has been sent to Utica for BrightBill Transportation, Inc.”  Goda to Folino: “[p]lease send the loss runs for MA Brightbill Bodyworks.” Id. These text messages create a genuine issue of material fact regarding whether Folino assisted RTI of Florida to solicit Brightbill’s business away from FNRM to RTI of Florida. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 42 of 59 36 vi. Folino Assists RTI of Florida to Solicit A.J. Myers & Sons’ Business. Before FNRM acquired ARTI, one of ARTI’s largest customers was A.J. Myers, a school bus company in Pennsylvania. CSOF ¶¶ 220. When FNRM purchased ARTI, A.J. Myers became a FNRM client and Folino was the producer on the account. CSOF ¶¶ 222-23. Folino was therefore responsible for the client relationship. CSOF ¶ 223. Jacomen serviced the A.J. Myers account as the account executive on behalf of FNRM. CSOF ¶ 224. In late 2015, Bill Myers, the owner of A.J. Myers, called Goda expressing frustration that FNRM’s bond department did not properly handle a bond for A.J. Myers. CSOF ¶ 226. Goda then informed Folino that Myers was upset about how FNRM handled A.J. Myers’ bond. CSOF ¶ 227. Nothing in the record shows that Folino did anything to try to rectify the issue that Myers raised or to try to save the account on behalf of FNRM. Indeed, when a manager at A.J. Myers emailed Folino on his personal email account a copy of a performance bond in February 2016, rather than address the issue A.J. Myers claimed it had with FNRM, Folino forwarded the bond to Rivera and Goda at RTI of Florida. CSOF ¶ 232. This demonstrates that not only was Folino aware that RTI of Florida was soliciting A.J. Myers’ business but also that Folino assisted in the process. Id. Furthermore, on August 31, 2016, seemingly out of nowhere, Myers emailed Todd Moules, the Market President for First Niagara Bank N.A. (now Key Bank), expressing anger that his family’s companies, A.J. Myers, Myers Well Services, Myers Motor Coach, were “named” in this lawsuit. CSOF ¶ 233. Thus, there is a genuine issue of material fact regarding whether Folino solicited or assisted in soliciting A.J. Myers’ business away from FNRM to RTI of Florida. In sum, when viewing the evidence in the light most favorable to FNRM, there is a genuine issues of material fact exist regarding whether Folino’s conduct was the proximate cause Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 43 of 59 37 of FNRM’s damages. Accordingly, this Court must deny Folino’s Motion regarding Count III of FNRM’s Amended Complaint. 2. FNRM Can Establish Damages With Reasonable Certainty As a Result of Folino’s Breach. In addition to establishing causation, FNRM can also establish damages with reasonable certainty. Pursuant to Folino’s Employment Agreement, FNRM is entitled to, among other damages, “two times the revenue received by [FNRM] during the preceding twelve months from all insurance business written by [FNRM] for all accounts lost as a result of [Folino’s] actions in breach of this paragraph.” Dkt. 76-1, Section 8(c) (emphasis added) as a result of a breach of his non-solicitation covenant. Thus, for example, as a result of Folino’s solicitation of Dandy to RTI of Florida, FNRM is entitled to in revenue that FNRM received the year before Folino solicited Dandy away from FNRM and in liquidated damages under section 8(c) of Folino’s Employment Agreement. Accordingly, damages can be calculated based on a reasonable degree of certainty for the former FNRM customers that moved their business to RTI of Florida in Section B.1.i-iv. See, Dkt. 76-6, pg. 16-23 of 113. These damages are wholly separate from the damages FNRM seeks as a result of Folino’s breach of fiduciary duty of loyalty as those damages relate to the deterioration of Folino’s book of business and lack of new business generation in Eastern Pennsylvania during his campaign of disloyalty. FNRM’s expert report also presents an alternative damages theory that again accounts both for Folino’s breach of his non-solicitation covenant and breach of fiduciary duty of loyalty. Dkt. 76-6, section IV, pg. 59-69 of 113. Specifically, as a result of Folino’s unlawful solicitation of FNRM customers to RTI of Florida, FNRM seeks damages for lost revenue ($603,016) and disgorgement of RTI of Florida revenue ($761,016). This does not constitute duplicative damages because the former accounts for revenue FNRM would have received but for Folino’s Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 44 of 59 38 unlawful solicitation, and the latter is the amount that RTI of Florida has benefited from obtaining these former FNRM customers. On the other hand, for Folino’s breach of fiduciary duty of loyalty, FNRM seeks to recover the compensation and benefits that it paid to Folino during the period that he engaged in disloyal conduct ($198,545). Both of FNRM’s theories of damages is rationally supported by the record evidence and grounded in the standards for valuing a book of business by a competent valuation expert. However, which damages theory is correct is not an issue for summary judgment but rather is for the Court to determine at trial. Delahanty, 464 A.2d at 1257 (“The determination of damages is a factual question to be determined by the fact-finder”); see also El v. Se. PA Transp. Auth., 418 F. Supp. 2d 659, 669 (E.D. Pa. 2005), aff'd sub nom. El v. Se. Pennsylvania Transp. Auth. (SEPTA), 479 F.3d 232 (3d Cir. 2007) (denying defendant’s motion for summary judgment on basis of plaintiff’s alleged failure to show disparate impact because “the matter of determining the admissibility of expert testimony is not appropriately done on summary judgment and the matter of crediting the testimony of [] expert witnesses is properly left to the [trier of fact].”); HearBest, Inc. v. Adecco USA, No. 13-1026, 2014 WL 7183478, at *12 (W.D. Pa. Dec. 16, 2014) (denying defendant’s motion for summary judgment because plaintiff “sufficiently quantified its damages, it is up to the jury to determine whether it has proved each element alleged is a proximate result of [defendant’s] breach of its obligations under the contract.”).9 9 FNRM agrees with Folino that it cannot recover punitive damages for Folino’s breach of the non-solicitation covenant of his Employment Agreement; however, this does not preclude FNRM from receiving consequential damages as a result of breach of the non-solicitation covenant or as a result of his breach of his fiduciary duty of loyalty to FNRM. Moreover, Folino’s blatantly competitive and disloyal behavior when he was a FNRM executive with is exactly the sort of outrageous behavior that punitive damages are designed to address. Howe v. LC Philly, LLC, No. 10-5495, 2011 WL 1465446, at *6 (E.D. Pa. Apr. 15, 2011) (Slomsky, J.) (explaining punitive damages may be awarded “when an act is committed with either reckless indifference to the rights of others or bad motive.”). Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 45 of 59 39 D. This Court Must Deny Folino’s Motion for Summary Judgment on FNRM’s Breach of Contract Claim for Folino’s Unlawful Solicitation of Former FNRM Employees. Folino’s solicitation of former FNRM customers to work for RTI of Florida also gives rise to claims for breach of contract. Folino argues that he is entitled to summary judgment on FNRM’s breach of contract claim as to employee solicitation because (1) FNRM cannot establish that Folino’s solicitation of FNRM employees caused FNRM to lose business; and (2) the liquidated damages provision is FNRM’s sole remedy as a result of Folino’s breach. These arguments are predicated on resolution of disputed facts and thus these claims cannot be decided as a matter of law. 1. FNRM Lost Business Because of Folino’s Breach of the Non- Solicitation Covenant of His Employment Agreement. Folino does not dispute that he unlawfully influenced Jacomen, VanNewkirk and Kolongowski to resign their employment from FNRM in violation of sections 8(a)-(b) of his employment agreement. Folino’s unlawful conduct is well-document. See supra section III.B.2.ii.a (Jacomen); III.B.2.ii.b (VanNewkirk); III.B.2.iii (Kolongowski). The record evidence also shows that Folino’s unlawful conduct lead to FNRM losing (1) the risk management business of numerous FNRM customers to Jacomen and Inservio (see supra section III.B.2.ii.a and III.C.1.iii); (2) the insurance business of Dandy, ABC, and Fortis to RTI of Florida (see supra section III.B.2.ii.a; III.C.1.i-ii; iv); and (3) The Castle Group’s insurance business to Trident. See supra III.B.2.iii. Thus, the record evidence shows that Folino breached the non-solicitation provision of his Employment Agreement and the breach resulted in harm to FNRM. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 46 of 59 40 2. The Liquidated Damages Provision is Not FNRM’s Sole Remedy for Folino’s Breach of His Non-Solicitation Covenant. Folino argues that the liquidated damages provision in his Employment Agreement is the sole remedy for Folino’s unlawful solicitation of FNRM employees. Dkt. 76, G.2, pg. 50-51. Although difficult to follow, his argument seems essentially contends that this Court should grant his Motion on FNRM’s breach of contract claim as to the unlawful solicitation of FNRM employees because FNRM is not entitled to consequential damages. This argument has no merit. To start, the amount of damages owed to FNRM as a result of Folino’s conduct will be an issue for the Court and is not appropriate to decide on a motion for summary judgment. Peck v. Haberle, 642 A.2d 509, 511 (Pa. Super. Ct. 1994) (explaining that amount of damages is an issue properly determined by the trier of fact). Nevertheless, FNRM’s damages are not limited to the provision in his Employment Agreement because the liquidated damages provision does not state that FNRM is entitled to liquidated damages as a result of a breach to the exclusion of all other damages. It is well-settled that “consequential damages can be appropriate in a breach of contract case” under Pennsylvania law. Condo. Ass'n Court of Old Swedes v. Stein-O'Brien, 973 A.2d 475, 483 (Pa. Commw. Ct. 2009). [A] party is entitled to recover whatever damages it suffered, provided the damages were such that would naturally and ordinarily result from the breach, or the damages were reasonably foreseeable and within the contemplation of the parties at the time of contracting and can be proved with reasonable certainty James Corp. v. North Allegheny Sch. Dist., 938 A.2d 474, 497 (Pa. Commw. 2007). “Where the consequential damages are ‘foreseeable’ and were contemplated by the ‘parties at the time they made the contract,’ they will be awarded in order to put the victim of the contract breach in the same position as if there had been performance, not breach.” Stein-O'Brien, 973 A.2d at 483 (quoting Ferrer v. Trustees of the Univ. of Penn., 825 A.2d 591, 610 (Pa. 2002)). Triers of fact have awarded, and appellate courts have upheld, consequential damages awards. See Condo. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 47 of 59 41 Ass'n Court of Old Swedes v. Stein-O'Brien, 973 A.2d 475, 483-84 (Pa. Commw. Ct. 2009) (uploading award of $213,000 for consequential damages due to lost rental income); Mente Chevrolet Oldsmobile, Inc. v. GMAC, 451 F. App’x 214, 218 (3d Cir. 2011) (affirming $4 million consequential damage award; award was not speculative because the jury was provided with expert testimony estimating various forms of damage). Through expert and fact witness testimony at trial, FNRM will establish that it is entitled to the former FNRM employees’ salaries starting from when Folino began influencing and encouraging them to resign their employment and that those damages are the reasonably foreseeable result of Folino’s misconduct. That is, but for Folino’s encouragement and assistance, Jacomen would not have resigned his employment to establish and operate Inservio, and VanNewkirk would not have resigned his employment to become an independent broker for RTI of Florida. Likewise, but for Folino’s encouragement, resources, and $150,000 in start-up capital, Kolongowski would not have resigned his employment with FNRM to establish and operate Trident. FNRM will also be able to establish that damages associated with Folino’s solicitation of FNRM employees was logically contemplated by the parties at the time they executed the Employment Agreement. The inclusion of the non-solicitation covenant, and specifically sections 8(a) and (b), shows that the parties contemplated that FNRM would suffer damages if Folino “influence[d] or [sought] to influence any employee to leave the Company’s employ.” Further, as an experienced business, man Folino surely understood that damages in the amount of a portion of the salaries of the employees that he solicited would put FNRM in the same position as if Folino had not unlawfully solicited the FNRM employees. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 48 of 59 42 Thus, FNRM is not limited to just damages outlined in liquidated damages provision of his Employment Agreement. This is especially the case here because Folino’s unlawful solicitation of FNRM employees was part of a broader plan to systematically harm FNRM while benefitting himself and his competing insurance agency. E. Folino is Not Entitled to Summary Judgment on FNRM’s Civil Conspiracy to Obstruct Justice Claim. 1. FNRM’s Breach of Fiduciary Duty of Loyalty Claim is the Tortious Conduct that Predicates FNRM’s Civil Conspiracy Claim. To escape liability on FNRM’s civil conspiracy claim, Folino argues that because the gist of the action doctrine bars Folino’s tort-claims, there is no “tortious conduct” that predicates his civil conspiracy claim. The record evidence does not support this. “To prove a civil conspiracy, it must be shown that two or more persons combined or agreed with intent to do harm an unlawful act or to do an otherwise lawful act by unlawful means.” See Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466, 472 (Pa. 1979) (citing Landau v. Western Pennsylvania Nat. Bank, 282 A.2d 335, 339 (Pa. 1971). Further, it is also the case that a plaintiff must “plead or develop a[] separate underlying international or criminal act that can support a civil conspiracy claim.” Accurso v. Infra-Red Servs., Inc., 23 F. Supp. 3d 494, 512 (E.D. Pa. 2014) (quoting Goldstein v. Phillip Morris, Inc., 854 A.2d 585, 590 (Pa. Super. 2004))). In this case, for the reasons explained supra II.A.2, the gist of the action doctrine does not bar FNRM’s breach of fiduciary duty of loyalty claim. Thus, FNRM’s breach of fiduciary duty of loyalty claim is the underlying tort to FNRM’s civil conspiracy claim. See e.g., Moses v. McWilliams, 549 A.2d 950, 971 (Pa. Super. Ct. 1988); Zimmer v. Gruntal & Co. Ins., 732 F. Supp. 1330, 1335 (W.D. Pa. 1989) (“breach of fiduciary duty is tortious conduct”). In its breach of fiduciary duty of loyalty claim, FNRM asserts, inter alia, that Folino conspired to circumvent Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 49 of 59 43 the Court Order in the FNRM v. Thomas Kolongowski and Trident Risk Advisors, LLC, Dkt. 16- 0719 (“Kolongowski Lawsuit”) brought by FNRM to protect its business information. Dkt. 49, ¶ 115. Accordingly, because this allegation establishes the necessary predicate tortious conduct to establish a civil conspiracy claim this Court, must deny summary judgment. 2. The Record Evidence Shows that Folino and Kolongowski Entered into an Agreement to Conceal Evidence that Kolongowski was Required to Produce Under the Court Order in the Kolongowski Lawsuit. Next, Folino argues that there is no evidence that he and Kolongowski agreed to circumvent the Court Order in the Kolongowski Lawsuit by suppressing, altering and/or destroying the information contained on Kolongowski’s personal computers and personal devices. Dkt. 76, Folino MSJ, section C, pg. 21-28. Folino contends that because there are no explicit text messages between Folino and Kolongowski outlining their tortious and devious conduct, no agreement existed. Id. at 23-28 of 57. The text messages from Kolongowski which reflect conversations he had with Folino and Kolongowski’s conduct show otherwise. The circumstantial evidence establishes the existence of an agreement between Folino and Kolongowski to circumvent a Court Order by concealing key evidence related to Trident. “The hallmark of a conspiracy is an agreement [and] [s]uch an agreement must ordinarily be proven by circumstantial evidence.” In re Solfanelli, 221 B.R. 141, 144 (Bankr. M.D. Pa. 1998) (citing Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466, 472 n. 9 (Pa. 1979)). The record evidence shows that starting in September 2015, Kolongowski and Folino began planning to start an insurance business to compete with FNRM. CSOF ¶¶ 247-52. Indeed, they traveled to Florida to meet with a prospective client for their competing entity that became Trident. Id. Such plans and preparations also included discussions of Trident’s operating agreement, Kolongowski’s employment contract, compensation package, benefits, and meetings with realtors and architects and web designers. CSOF ¶¶ 259-70. In late 2015 and early 2016, Folino, Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 50 of 59 44 Kolongowski and others continued to develop Trident as they attended numerous in-person meetings to discuss Trident instead of working on behalf of their employer, FNRM. CSOF ¶¶ 261-62; 269-70. Folino provided Kolongowski and Trident $150,000 in start-up funding and administrative resources. CSOF ¶ 242-44. In mid-January 2016, with the assistance of RTI of Florida employees, Kolongowski and Trident secured its first customer which was a former FNRM prospect. CSOF ¶¶ 275-76. On February 4, 2016, Folino, Kolongowski and the rest of the Trident team met in Radnor, Pennsylvania to take pictures for the Trident website. CSOF ¶ 287. Throughout February and March, Folino continued to provide funding for Trident and participated in conference calls regarding Trident. SOF ¶ 90-92; 243; 303-306. All told, Folino remained involved in Trident until Folino and FNRM entered into a Stipulated Injunction on April 21, 2016. See CSOF ¶ 93; 350-51. After Kolongowski resigned his employment from FNRM, FNRM discovered, through Kolongowski’s text messages that Folino had worked with Kolongowski to prevent FNRM from discovering the full scope of their disloyal activities related to Trident. CSOF ¶¶ 291-99; 347. Kolongowski kept Folino abreast of what he told FNRM during his resignation meeting and Kolongowski and Folino discussed the cease and desist letter than FNRM sent him after FNRM discovered Kolongowski had taken FNRM’s trade secrets with the intent to start a competing business. CSOF ¶¶ 278-80; 289-90. On February 12, 2016, FNRM filed a lawsuit against Kolongowski requesting that this Court order Kolongowski to provide FNRM with access to his personal computing devices and personal email accounts for a forensic examination. CSOF ¶¶ 291-92. On February 25, 2016, this Court entered the Court Order requiring Kolongowski to “provide access to his personal computers and other devices” for forensic evaluation. CSOF ¶ Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 51 of 59 45 293. The Court Order provided Kolongowski until March 3, 2016 to turn over his personal computer and other devices for forensic examination. CSOF ¶ 295. On March 2, 2016, Kolongowski and his friend Joseph Dwyer, who assisted Kolongowski in moving relevant and discoverable evidence related to Trident and the solicitation of a FNRM prospect, The Castle Group, to an external hard drive, had the following text message exchange:  March 2: Kolongowski to Dwyer: “Any chance you would be able to join me at [Attorney] Bell’s office at 11:15?” Dwyer to Kolongowski: “Yes.”  March 2: Dwyer to Kolongowski: “Got it. Should I bring anything?”  March 2: Kolongowski to Dwyer: “Nothing I can think of, no, Sir. Talking with John Folino last night; he recommended my IT specialist be present, if possible [for meeting at Attorney Bell’s office to turn over personal devices].”  March 2: Kolongowski to Dwyer: “Need to be there [no later than] 10:30. Need time to call Folino in Pittsburgh with Jim Bell on the line.”  March 2: Kolongowski to Dwyer: “Folino says play hard ball as well; no phone no Comcast authorization.” Id. (emphasis added). Kolongowski testified at his deposition that Folino told him before March 3 that “nobody ever turns in their personal cell phone” and that Folino said that he would not turn over his personal cell phone. Dkt. 76, Folino MSJ, pg. 25 of 57. Kolongowski also testified that Folino never told him not to provide FNRM access to his Comcast email account and that Folino never told Kolongowski to conceal or hide information on his personal laptop or cell phone. Id. at 26 of 57. This, however, is contrary to Kolongowski’s contemporaneous statement. Also, Kolongowski’s credibility is further diminished given that his Court has already labeled him a contemnor as a result of him violating the Court Order by communicating with a former FNRM prospect while enjoined from doing so. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 52 of 59 46 With clear direction from Folino about not providing FNRM with access to his personal Comcast email account, Kolongowski met with Associate Director, Forensics & Collections of Epiq eDiscovery Solutions, Inc. (“Epiq”) Tony Pitre at Kolongowski’s attorney’s office to turn over his personal devices for forensic examination. CSOF ¶¶ 296-99. Although Kolongowski did provide Epiq access to his cell phone and personal laptop, (minus the documents and confidential information he had removed the day before), he did not provide FNRM access to his personal Comcast email account, the email address that Kolongowski used for communicating about Trident. CSOF ¶ 299. Kolongowski pled ignorance during his deposition about this and stated that he thought that he provided Epiq access to his Comcast email account. Dkt. 77, Folino’s Statement of Facts, ¶ 45. His faux ignorance at his deposition on this issue stands in stark contrast to the undisputed fact that it took FNRM nearly three months and a motion to compel to force Kolongowski to comply with the Court Order and provide FNRM with access to Kolongowski’s Comcast email account. CSOF ¶ 299. Once Kolongowski provided FNRM access to his Comcast email account, FNRM discovered a treasure trove of highly Trident- related emails. This is precisely why Folino told Kolongowski to “play hard ball” and not provide FNRM access to his Comcast email account. 3. Folino’s Failure to Produce Relevant Text Messages Further Supports An Agreement Between Himself and Kolongowski to Obstruct Justice. As further evidence of Folino and Kolongowski’s conspiracy to obstruct justice, Folino has failed to produce numerous highly relevant text messages and emails related to Kolongowski and Trident. CSOF ¶¶ 361-67. FNRM is only aware of the existence of these texts messages through the Kolongowski Lawsuit and because it received some of these emails from RTI of Florida in response to a subpoena. CSOF ¶ 362. Most pertinent to the civil conspiracy claim are Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 53 of 59 47 text messages between Folino and Kolongowski the day before Kolongowski provided Epiq access to his personal computer and cell phone (but not his Comcast email account).  March 2, 2016 at 3:39 PM: Text message from Kolongowski to Folino - “John, are you available over the next 5-10 minutes for a call with attorney Jim Bell?”  March 2, 2016 at 4:15 PM: Text message from Folino to Kolongowski - “Can I call you when I leave clients in 20 [minutes ?].”  March 2, 2016 at 4:48 PM: Text message from Kolongowski to Folino - “Attorney is saying no problem having them image the cell phone. Just feeling unsure; wouldn’t mind you and he talking. The imaging expert is scanning the computer hard drive now.” Mr. Folino responded: “I’m available.” Id. Since June 2016, FNRM has asked Folino to produce these text messages and any other communications on or around March 2 related to Kolongowski turning over his personal devices for forensic examination. CSOF ¶¶ 363. Folino also has a continuing obligation to produce relevant documents throughout the litigation. Despite this, Folino has failed to produce these text messages or explain the circumstances under which Folino destroyed or deleted them. Instead, Folino’s counsel has blamed Epiq for Folino’s failure to produce highly relevant text messages and emails related to Trident. CSOF ¶ 366. Out of the hundreds of thousands of pages of documents Epiq obtained in this case, these text messages and key emails related to Trident are missing. CSOF ¶ 362. Given this, FNRM is entitled to an adverse inference at trial against Folino that those key emails and texts would have proven fatal to Folino’s defense, and that Folino destroyed them to prevent FNRM from discovering the conspiracy. See CSOF ¶¶ 363-67. At the very least, such vital missing evidence and Folino’s questionable explanation regarding its whereabouts preclude summary judgment. In sum, the record provides circumstantial evidence that Folino and Kolongowski entered into an implicit agreement to conceal FNRM’s access to Trident-related communications in contravention of the Court Order. This circumstantial evidence is more than sufficient to create a Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 54 of 59 48 genuine issue of material fact regarding the agreement element of FNRM’s civil conspiracy claim.10 F. Folino is Not Entitled to Summary Judgment on FNRM’s Pennsylvania Uniform Trade Secrets Act Claim (Count IX). Finally, Folino argues that there is no evidence that he ever misappropriated FNRM’s trade secrets in violation of the Pennsylvania Uniform Trade Secrets Act (“PUTSA”) because he never personally took any of FNRM’s trade secrets. Dkt. 76, Folino MSJ, section D.1., pg. 28- 30 of 57. Even if Folino did acquire FNRM’s trade secrets, however, he argues (citing no case law in support) that the injunctions entered against himself and Kolongowski preclude an award of monetary damages in this case. Id. at 30-32 of 57. Both of these arguments fail. 1. Kolongowski was Folino’s Agent When He Stole FNRM’s Trade Secrets. Folino used Kolongowski as his agent to misappropriate FNRM’s trade secrets for Trident’s benefit, a company for which Folino provided start-up funding that he hoped to recoup at some point. CSOF ¶ 243. The genesis of this entire dispute occurred when FNRM discovered that Kolongowski engaged in a deliberate theft of FNRM’s trade secrets before he resigned his employment including emailing, among other things, FNRM’s Eastern Pennsylvania Book of Business, FNRM’s claims presentations, client specific presentations, a proprietary TCOR analytics report, and insurance applications that FNRM prepared for the FNRM prospect that Trident stole. CSOF ¶¶ 281-82. Each of these documents derived independent economic value to FNRM, they are not generally known to the public, not readily ascertainable by proper means, 10 Folino does not address, and therefore concedes, that FNRM can establish a legal harm as a result of Mr. Folino and Mr. Kolongowski’s civil conspiracy. “A civil conspiracy is not actionable unless it causes legal harm.” Gregory v. Chehi, 843 F.2d 111, 118 (3d Cir. 1988). “Absent specific injury, a plaintiff asserting civil conspiracy cannot recover.” Id. (citations omitted). Here, FNRM suffered legal harm as a result of Folino and Kolongowski’s conduct because FNRM did not obtain the full benefit of the injunction to which Kolongowski agreed and was unable to expeditiously prosecute its claims against Kolongowski and Trident. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 55 of 59 49 and FNRM keeps these documents secret from the public. 12 Pa. Stat. and Cons. Stat. Ann. § 5302; CSOF ¶ 283. Further, the documents and information that Kolongowski took before he resigned his employment cost FNRM hundreds of thousands of dollars to purchase, develop or create. CSOF ¶ 284. When Kolongowski emailed FNRM’s trade secrets to himself he was acting as Folino’s agent. Under Pennsylvania law, an agency relationship can be established in four ways: (1) express authority; (2) implied authority, to do all that is proper, usual and necessary to exercise of authority actually granted; (3) apparent authority, as where principal holds one out as agent by words or conduct; and (4) agency by estoppel. FFR SE, LLC v. Sanborn, No. 14-5439, 2015 WL 3970923, *8, (E.D. Pa. 2015) (citing Garczynski v. Countrywide Home Loans, Inc., 656 F. Supp. 2d 505, 511 (E.D. Pa. 2009)). “Apparent authority exists when there is no express grant of authority, but a reasonable person would believe an agency conduct.” Garczynski, 656 F. Supp. 2d at 511 (internal citations omitted). Here, Kolongowski had apparent authority from Folino to act on Trident’s behalf when Kolongowski emailed FNRM’s trade secrets. When Kolongowski emailed FNRM’s trade secrets to himself, he did so for a purpose; to assist in establishing and operating Trident. CSOF ¶ 281-82. By late January 2016, when Kolongowski began stealing FNRM’s trade secrets, Folino had already had numerous in-person meetings with Kolongowski to establish Trident, permitted RTI of Florida to assist Kolongowski and Trident to steal a FNRM prospect, and provided Kolongowski with start-up capital to establish Trident. CSOF ¶¶ 247-77. Put another way, Kolongowski emailed FNRM’s trade secrets for the benefit of Trident, a company which Folino was funding and from which he hoped to one day profit. These facts show that a Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 56 of 59 50 reasonable person would believe that Kolongowski had the apparent authority to act on Folino’s behalf. 2. Injunctive Relief Does Not Preclude Monetary Damages Under PUTSA. The preliminary injunctive relief that FNRM obtained against Folino and the final injunction against Kolongowski do not preclude monetary damages under PUTSA. First, although Kolongowski is “forever enjoined” from disclosing FNRM’s trade secrets, Kolongowski has never confirmed that he has destroyed the trade secrets that he stole before he resigned his employment. CSOF ¶ 311. Because Kolongowski has already violated one Court Order, FNRM has little confidence that Kolongowski will abide by the parties’ Final Injunction. Accordingly, the only way that FNRM can be assured that Kolongowski, Folino, Trident, or RTI of Florida will not use FNRM’s trade secrets is if FNRM receives a final injunction forever enjoining Folino from disclosing and possessing FNRM’s trade secrets, including the trade secrets that Kolongowski stole. This is critical given that the Stipulated Injunction to which the parties agreed ended on January 1, 2018. Thus, FNRM is entitled to final injunctive relief against Folino. This alone precludes summary judgment on FNRM’s PUTSA claim. Second, PUTSA also permits a prevailing party to receive attorneys’ fees if there is evidence of willful and malicious misappropriation. 12 Pa. C.S.A. § 5305. Under the PUTSA, willful and malicious means “[s]uch intentional acts of gross neglect of duty as to evidence a reckless indifference of the rights of others on the part of the wrongdoer, and an entire want of care so as to raise the presumption that the person at fault is conscious of the consequences of his carelessness.” Id. at § 5302; Youtie v. Macys Retail Holdings, Inc., 653 F.Supp.2d 612 (E.D. Pa. 2009) (finding genuine issues of material fact regarding whether employee’s actions were intentional or recklessly indifferent to defendant). In the present case, there is a genuine issue of Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 57 of 59 51 material fact regarding whether Kolongowski, as Folino’s agent, acted intentionally and recklessly by emailing scores of FNRM trade secrets to himself on behalf of Trident. Kolongowski and Folino’s state of mind at the time that Kolongowski’s stole FNRM’s confidential documents and trade secrets are key to determining liability under this claim. Thus, an issue of fact remains and this Court must deny Folino’s Motion on this count. IV. CONCLUSION For the reasons explained above, FNRM respectfully requests that this Court deny Folino’s Motion for Summary Judgment in its entirety. Dated: January 8, 2018 GREENBERG TRAURIG, LLP By: /s/ Kelly Dobbs Bunting___________ Robert M. Goldich, Esq. Kelly Dobbs Bunting, Esq. Adam R. Roseman, Esq. 2700 Two Commerce Square 2001 Market Street Philadelphia, PA 19103 Tel: 215.988.7800 Fax: 215.988.7801 goldichr@gtlaw.com buntingk@gtlaw.com Attorneys for First Niagara Risk Management, Inc. Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 58 of 59 52 CERTIFICATE OF SERVICE I, Adam R. Roseman Esq., hereby certify that on January 8, 2018, I served a true and correct copy of the foregoing FNRM’s Response in Opposition to Defendant John A. Folino’s Motion for Summary Judgment upon the following via ECF: Jeffrey S. Adler Angela A. Cronk Burns White LLC 100 Four Falls Corporate Center, Suite 515 1001 Conshohocken State Road Conshohocken, PA 19428 Counsel for Defendant John A. Folino Dated: January 8, 2018 /s/ Adam R. Roseman______ Adam R. Roseman Case 2:16-cv-01779-JHS Document 79 Filed 01/08/18 Page 59 of 59