Bert Co. v. Matthew Turk, William Collins, Jamie Heynes, David Mcdonnell, First Nat'l Ins. Agency, LLC
| Decision Date | 05 May 2021 |
| Docket Number | No. 975 WDA 2019,No. 817 WDA 2019,817 WDA 2019 |
| Citation | 257 A.3d 93 |
| Parties | The BERT COMPANY d/b/a Northwest Insurance Services v. Matthew TURK, William Collins, Jamie Heynes, David McDonnell, First National Insurance Agency, LLC, First National Bank, and FNB Corporation Appeal of: Matthew Turk, First National Insurance Agency, LLC, First National Bank, and FNB Corporation The Bert Company d/b/a Northwest Insurance Services, Appellant v. Matthew Turk, William Collins, Jamie Heynes, David McDonnell, First National Insurance Agency, LLC, First National Bank and FNB Corporation Matthew Turk v. The Bert Company, Northwest Bank, and Northwest Bancshares, Inc. Appeal of: the Bert Company d/b/a Northwest Insurance Services |
| Court | Pennsylvania Superior Court |
Frank T. Grieco, Pittsburgh, for appellant.
Andmoragan C. Thomas, Warren, Zachary N. Gordon, Pittsburgh, Kenneth W. Africano, Buffalo, NY, for appellee.
I. Introduction
In 2016, insurance broker Matthew Turk divided his loyalty between two masters. One was his then-employer, the Bert Company, d.b.a. Northwest Insurance Services (NWI). The other was the self-styled "First National Family,"1 who, through months of meetings and strategizing, offered Mr. Turk a new position and made him its undercover servant to destroy NWI's relationship with its customers and other employees. As the evidence showed, the First National Family plotted to "lift out" Mr. Turk and his colleagues, en masse , and transplant them into its own corporate structure. The Family hoped these new hires would bring their NWI clients with them and, thereby, hollow out NWI. This, in turn, would potentially force NWI to sell its entire clientele to the First National Family.
When NWI realized the scope and breadth of Mr. Turk's betrayal, it filed this lawsuit against him, the employees who departed with him, and the First National Family. On claims for breach of contract and tort theories, NWI won a verdict of $3,050,000 in compensatory and punitive damages against four out of seven defendants. The trial court also ordered Mr. Turk to pay NWI $361,093.74 in attorneys’ fees, based on his non-solicitation contract with NWI.
In this joint appeal, the four tortfeasors raise seven claims of error, including a challenge to the jury's award of punitive damages under the Due Process Clause. U.S. Const. amd. XIV, § 1. This presents a question of first impression in Pennsylvania — namely, how should courts calculate the ratio(s) of damages when multiple defendants claim the punitive damages against them are unconstitutionally excessive? As explained below, the calculation is on a per-defendant basis and includes any potential harm that the tortfeasors desired to inflict upon the plaintiff. Because none of the tortfeasors’ appellate issues affords them relief, we affirm.2
II. Factual Background
There are many individuals and entities involved in this case. Thus, we identify the major actors below to assist the reader:
| Northwest | |
| Northwest Savings Bank | A bank, Parent Company of NWI, headquartered in Erie |
| NWI | Plaintiff, an insurance agency, headquartered in Erie |
| Douglas Bert | Co-founder of The Bert Co., President of NWI |
| The First National Family | |
| F.N.B. Corp. | Defendant, Parent Company of First National Bank and FNIA, headquartered in Pittsburgh |
| First National Bank | Defendant, a bank, headquartered in Pittsburgh |
| FNIA | Defendant, an insurance agency, headquartered in Pittsburgh |
| Vincent Delie, Jr. | President, Chairman, & CEO of F.N.B. Corp. and First National Bank |
| Ralph Fuchs | CFO of First National Bank |
| Bob Moorehead | Chief Wholesale Banking Officer of First National Bank, Marty Muchnok's Boss |
| Marty Muchnok | President of FNIA |
| Susan Lorenz | Assistant V.P. of F.N.B. Corp. |
| Jeff Tebaldi | Senior V.P. of First National Bank, Erie Branch |
| Benton Elliott | Senior V.P. of First National Bank, Cleveland Branch |
| Yvette Fulton | Deemed an Employee of F.N.B. Corp. by the Trial Court |
| Matthew Turk | Defendant, Senior V.P./Account Executive of FNIA, Formerly Senior V.P. of NWI |
| Will Collins | V.P. and Team Leader of FNIA, Formerly of NWI |
| Jamie Heynes | Account Executive of FNIA, Formerly of NWI |
| David McDonnell | Employee of FNIA, Formerly of NWI |
| Others | |
| Linda Wallin | Witness, Formerly an NWI Recruit, Formerly an Employee of FNIA |
| The Jury | Citizens (12) of Warren County |
The Bert Co. opened its doors as a commercial-insurance-brokerage firm in 1994, when Douglas Bert and his father went into business together. They eventually sold the company to Northwest Savings Bank in 2012. Mr. Bert remained the President, but the agency began doing business as NWI through a property-and-casualty ("P&C") team and employee-benefits ("EB") team. By 2016, NWI had a substantial clientele in northwestern Pennsylvania and western New York and was worth in excess of $9,400,000.
The First National Family of companies all shared the same office space in downtown Pittsburgh. The corporate "Family" was so well-integrated that FNIA President, Marty Muchnok, had difficulty telling where one entity's workforce ended and the next began. N.T., 12/14/18, at 242-43 (). FNIA brokered insurance policies to commercial clients for the First National Family.
Mr. Muchnok worked at the same Pittsburgh offices as First National Bank and F.N.B. Corp.’s executives. He reported to Bob Moorehead. N.T., 12/14/18, at 222. First National Bank paid Mr. Muchnok (and all other FNIA personnel), provided Mr. Muchnok with 401(k) benefits, and listed itself as his employer on his W-2 Form. See id. at 224-225. Mr. Muchnok managed FNIA's P&C and EB divisions, life-insurance sales, insurance-brokerage practice, hiring employees, acquisitions, and lift outs. He defined a "lift out" as when one business has "an opportunity to hire multiple people out of the same office [or] organization ... where they come over to form either a department or ... region" within the hiring business. Id. at 228.
In 2016, FNIA had a minor market share in northwestern Pennsylvania; it had an office in Meadville with only 15 employees. See N.T., 12/14/18, at 227. To grow its market share in the region, the First National Family decided to "lift out" NWI's employees by convincing them to leave NWI for FNIA and have them bring their clients with them. Mr. Muchnok called this a plan to "initiate a hostile takeover" of NWI. NWI's Ex. 54 at 1. He first approached Mr. Turk, the head of NWI's P&C division, about the First National Family's plan in the fall of 2016. Mr. Turk, who had worked at NWI for eleven years, held a Senior V.P. position and had an agreement not to solicit NWI clients or employees for competitors. See NWI's Ex. 3; NWI's Ex. 26. Several people worked under Mr. Turk, including William Collins, Jamie Heynes, and David McDonnell.
Through the fall and winter of 2016, Mr. Turk repeatedly traveled from Erie to Pittsburgh to meet with the First National Family about the lift out. On November 2, 2016, Mr. Muchnok invited Mr. Turk to an afternoon of meetings. The agenda listed a one-hour meeting between Mr. Turk and Mr. Moorehead of First National Bank.
Two weeks later, the First National Family arranged a second meeting with Mr. Turk in Pittsburgh. In preparation for this meeting, Mr. Muchnok e-mailed Mr. Turk and asked him to bring several pieces of sensitive data from NWI. This request included a:
Mr. Turk gave Mr. Muchnok information on Mr. Collins and Ms. Heynes's employment
and their compensation packages, Mr. Collins’ book of clients, and Mr. Collins’ phone number. Mr. Turk also identified Ms. Heynes as a good account executive. The agenda for Mr. Turk's second visit, which ran from 11:30 am until 5:00 pm, included the following hour-long meeting with "Marty [Muchnok]’s Boss, First National Bank Chief Wholesale Banking Officer, Robert Moorehead," at 2:00 pm. NWI's Ex. 51 at 2.
When he returned to Erie, Mr. Turk approached Mr. Collins, gave him Mr. Muchnok's phone number, and told Mr. Collins to contact Mr. Muchnok about an employment opportunity. See N.T., 12/14/18, at 16-17. Mr. Collins subsequently drove to Pittsburgh to meet with "First National" employees in the middle of January 2017 for at least three hours. See NWI's Ex. 102 at 1; N.T., 12/14/18, at 19. Mr. Collins disclosed "that [his NWI] book of business was something around $500,000." Id. at 23.
By the end of January 2017, Mr. Muchnok e-mailed Mr. Turk "to pound out any loose ends and come up with a game plan." NWI Ex. 54 at 1. He told Mr. Turk, "We need to hammer out every detail and then initiate a hostile takeover ..." Id. (ellipsis in original). They scheduled a lunch in Grove City to develop their "game plan."
The following month, Mr. Turk and Mr. Muchnok met with two Senior V.P.s of First National Bank, Mr. Tebaldi and Mr. Elliot. See N.T., 12/12/18, at 188. To facilitate that meeting, Mr. Muchnok e-mailed the Senior V.P.s and outlined the plan to raid NWI:
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