Baron Financial Corp. v. Natanzon, No. SKG-03-3563.

• Citation: 471 F.Supp.2d 535
• Decision Date: 11 July 2006
• Docket Number: No. SKG-03-3563.
• Parties: BARON FINANCIAL CORPORATION v. Rony NATANZON, et al.
• Court: United States District Courts. 4th Circuit. United States District Court (Maryland)

471 F.Supp.2d 535

BARON FINANCIAL CORPORATION v. Rony NATANZON, et al.

No. SKG-03-3563.

United States District Court, D. Maryland.

July 11, 2006.

COPYRIGHT MATERIAL OMITTED

David B. Goldstein, Esq., Brooke Schumm, III, Esq., Daneker, McIntire, Schumm, Prince, Goldstein, Manning & Widmann, P.C., Baltimore, MD, for Baron Financial Corporation.

Robert B. Levin, Esq., Paul Mark Sandler, Esq., Shapiro, Sher, Guinot & Sandler, Baltimore, MD, for Rony Natanzon.

GAUVEY, United States Magistrate Judge.

Pending before the Court is Plaintiff — Counter Defendant, Baron Financial Corporation's ("Baron") and Third-Party Defendant, Samuel Buchbinder's ("Buchbinder") Motion to Dismiss, or in the Alternative for Summary Judgment, as to Counter-Plaintiff/Third Party Plaintiff Rony Natanzon's ("Natanzon") Counterclaim and Third-Party Complaint ("Counterclain"). (Paper No. 87). The issue is fully briefed. No hearing is necessary. Local Rule 105.6. Two counts remain before the Court: Count I (Intentional Interference with Economic Interests) and Count IV (unfair competition).¹ For the reasons discussed below, the Court hereby GRANTS Baron and Buchbinder's motion and dismisses Natanzon's counterclaim with prejudice.

I. Background

ERN, LLC ("ERN") and Natanzon jointly filed the counterclaim against Baron and Buchbinder on February 25, 2004. On April 28, 2004, ERN filed for bankruptcy. Pursuant to Section 362 of the bankruptcy code, all proceedings therein regarding ERN were stayed. (Paper No. 28). A bankruptcy trustee was appointed for ERN on May 24, 2004. Baron and Buchbinder have moved to dismiss the counterclaim only as to Natanzon.

In evaluating a motion to dismiss, the unwavering focus of the Court must necessarily be on the language and content of the counterclaim. A careful reading of the counterclaim demonstrates the gravamen of the complaint are actions against and damages to ERN. References to actions affecting Natanzon as separate from his role in ERN and damages to Natanzon separate from his role in ERN are few and largely subsidiary. Thus, careful scrutiny of the actions and damages alleged against Natanzon does not yield any viable claims of Natanzon.

II. Analysis

Baron and Buchbinder argue that plaintiff does not have standing to bring his claim for tortious interference or unfair competition claim. In the alternative, Baron and Buchbinder argue that Natanzon failed to state a claim on which relief can be granted. They allege that the claim for tortious interference should be dismissed because Buchbinder and Baron are parties to the underlying MOU/Rider business relationship, and because Natanzon failed to allege that the conduct complained of was wrongful. Moreover, Baron and Buchbinder allege that the unfair competition claim should be dismissed because the conduct complained of does not support a claim for "unfair competition." The Court largely agrees with Aaron and Buchbinder's arguments.

A. Standard of Review

When the legal sufficiency of a complaint is challenged under a Rule 12(b)(6) motion, the court assumes "the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations." Eastern Shore Mkts. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir.2000) (citing Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984)). A Rule 12(b)(6) motion to dismiss "should only be granted if, after accepting all well-pleaded allegations in the plaintiff's complaint as true, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief." Migdal v. Rowe Price-Fleming Int'l Inc., 248 F.3d 321, 325 (4th Cir.2001). Furthermore, the "Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon which he bases his claim." Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Rather, Rule 8(a)(2) of the Federal Rules of Civil Procedure requires only a "short and plain statement of the claim showing that the pleader is entitled to relief." Migdal, 248 F.3d at 325-26; see also Swierkiewicz v. Sorema N.A., 534 U.S. 506, 513, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (stating that a complaint need only satisfy the "simplified pleading standard" of Rule 8(a)).

In reviewing the complaint, the court accepts all well-pleaded allegations of the complaint as true and construes the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff. Ibarra v. United States, 120 F.3d 472, 473 (4th Cir.1997); Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). However, in considering a motion to dismiss, the court "need not accept as true unwarranted inferences, unreasonable conclusions, or arguments" nor "the legal conclusions drawn from the facts." Eastern Shore Mkts., Inc., 213 F.3d at 180. Accord Sensormatic Sec. Corp. v. Sensormatic Elecs. Corp., 329 F.Supp.2d 574, 578 (D.Md.2004). In addition, courts need not accept conclusory factual allegations devoid of reference to any facts, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir.1979).

B. Claim of Intentional Interference with Economic Interests

Both parties agree that Natanzon does not have standing to address claims which belong solely to ERN. See National American Ins. Co. v. Ruppert Landscaping Co., Inc., 187 F.3d 439, 441 (4th Cir. 1999). (Paper No. 99 at 4).

Natanzon asserts that he has standing to bring a tortious interference claim on the following facts: Baron and Buchbinder allegedly damaged ERN's and Natanzon's economic relationships with independent sales organizations (ISOs) and merchants by making statements to ISOs about their lawsuits against ERN and Natanzon and about Natanzon personally. (Paper No. 99 at 8-10, 12, 16); Baron interfered with Natanzon's business interests by "frustrating ERN's and Natanzon's ability to devote" their full time to the operation of their business, (Paper No. 18 at 12, 16) and Baron and Buchbinder allegedly filed lawsuits and otherwise interfered in Natanzon's attempt to rehabilitate ERN and meet his obligations under the MOU. (Paper No. 99 at 2). Each of Natanzon's claims will be addressed in turn.

1 Interference with the Natanzon's obligations under the MOU

First, Natanzon asserts that Baron and Buchbinder interfered in Natanzon's attempt to rehabilitate. ERN and meet his obligations under the MOU. As a matter of law, this claim cannot stand.

The tort of wrongful interference with an existing contract will not lie where the defendant is a party to the economic relationship with which the defendant has allegedly interfered. Kaser v. Financial Protection Marketing, Inc., 376 Md. 621, 831 A.2d 49 (2003); Alexander & Alexander, Inc. v. B. Dixon Evander & Assoc., 336 Md. 635, 640 n. 8, 650 A.2d 260, 265 (1994);² Travelers Indem. Co. v. Merling, 326 Md. 329, 343, 605 A.2d 83, 89-90 (1992); K & K Management, Inc. v. Lee, 316 Md. 137, 156, 557 A.2d 965, 974 (1989); Wilmington Trust Co. v. Clark, 289 Md. 313, 329, 424 A.2d 744, 754 (1981). Judge Quarles previously dismissed Baron and Buchbinder's complaint against Natanzon for tortious interference with the MOU, because Natanzon, Baron and Buchbinder are all parties to the MOU. (Paper No. 71). For the same reasons, as a matter of law, Natanzon cannot recover for tortious interference with the MOU.

2. Interference, with ERN's and Natanzon's economic relationship with independent sales organizations.

Natanzon also alleges that Baron and Buchbinder's wrongful conduct damaged ERN and Natanzon's relationship with the independent sales organizations (ISOs) and merchants. (Paper No. 99 at 8-10).

"Tortious interference with business relationships arises only out of the relationship between three parties, the parties to a contract or other economic relationship . . . and the interferer." K & K Management, Inc. v. Lee, 316 Md. 137, 154, 557 A.2d 965, 973 (1989). A party may maintain an action "upon the doctrine that a man who induces one of two parties to a contract to break it, intending thereby to injure the other or to obtain a benefit for himself, does the other an actionable wrong." Natural Design, Inc. v. Rouse Co., 302 Md. 47, 485 A.2d 663 (1984).³ Accord Restatement (Second) of Torts § 766.

Only parties to the contract or economic relationship have standing to bring a tortious interference claim; third-parties who are affected by the wrongful interference may not recover unless they are intended beneficiaries of the relationship or contract⁴ See Restatement (Second) of Torts § 766 cmt. p ("The person protected by the rule . . . is the specified person with whom the third person" had a contract that the actor caused him to perform . . . Thus, if A induces B to break a contract with C, persons other than C who may be harmed by the action as, for example, his employees or suppliers, are not within the scope of the protection afforded by this rule, unless A intends to affect them. Even then they may not be able to recover unless A acted for the purpose of interfering with their [the employees' or the suppliers'] contracts."); Macklin v. Robert Logan Assocs., 334 Md. 287, 297, 639 A.2d 112, 117 (1994)(Tortious interference with an economic relationship "is committed when a third party's intentional interference with another in his or her business or occupation induces a breach of an existing contract or, absent an existing contract, maliciously or wrongfully infringes upon an economic relationship."); CSY Liquidating Corp. v. Harris Trust and Savings Bank, 162 F.3d 929, 933 (7th Cir. 1998)("[T]he tort of intentional interference with contract is meant to protect the parties (including third-party beneficiaries, assignees, and others having the rights of the parties) to contracts, rather than persons who might be harmed by a breach of someone else's contract.") (internal citations omitted).

As a result, a shareholder or member...