Combined Energies v. Cci, Inc.

• Decision Date: 18 June 2009
• Docket Number: No. CV-07-17-B-W.,CV-07-17-B-W.
• Parties: COMBINED ENERGIES, Plaintiff, v. CCI, INC., Defendant.
• Court: U.S. District Court — District of Maine

Page 226

628 F.Supp.2d 226

COMBINED ENERGIES, Plaintiff, v. CCI, INC., Defendant.

No. CV-07-17-B-W.

United States District Court, D. Maine.

June 18, 2009.

COPYRIGHT MATERIAL OMITTED

John J. Aromando, Pierce Atwood LLP, Portland, ME, Thomas G. Rohback, Axinn, Veltrop & Harkrider, Hartford, CT, for Plaintiff.

Glenn Israel, Ronald W. Schneider, Jr., Lorelle Londis Dwyer, Bernstein, Shur, Portland, ME, for Defendant.

ORDER ON THE RECOMMENDED DECISION

JOHN A. WOODCOCK, JR., Chief Judge.

Combined Energies (CE) and CCI, Inc. (CCI) were once contractually "strategically aligned" to obtain and perform jobs from the United States Navy in the northeastern part of the United States. After CCI hired away a majority of CE's most valuable employees and discharged CE as its prime subcontractor, their relationship soured and CE filed the inevitable lawsuit. Following a pair of motions from CCI, the Magistrate Judge recommended summary judgment be granted on all but one of CE's claims, leaving only a narrowly confined breach of contract count. The Court agrees with the Magistrate Judge only on Count Four, which alleges a breach of implied covenants of good faith and fair dealing. For the remainder, the Court concludes that CE has raised genuine issues of material fact on Count One, a claim of tortious interference with an advantageous business relationship, Count Two, a claim of unjust enrichment, Count Three, a more broadly construed breach of contract claim, and Count Six, a punitive damages count, each of which raises factual questions susceptible to resolution by a factfinder.

I. PROCEDURAL HISTORY

The United States Magistrate Judge filed with the Court on December 24, 2008, 2008 WL 5412307 her Recommended Decision (Docket # 68) (Rec. Dec.) on Defendant's Motion for Summary Judgment on Counts I, IV, V, and VI (Docket # 39) and Defendant's Motion for Summary Judgment on Counts II and III (Docket # 46). The Plaintiff CE filed its objection on January 16, 2009 (Docket # 70) (Pl.'s Obj.), and the Defendant CCI filed its response on February 3, 2009 (Docket # 72) (Def.'s Resp.). Oral argument was held on May 28, 2009.

II. DISCUSSION

CE's Complaint asserts five claims against CCI: tortious interference (Count One); unjust enrichment (Count Two); breach of contract (Count Three); breach of implied covenants including the duty of good faith and fair dealing (Count Four); and, punitive damages (Count Six).¹ Compl. (Docket # 1). The Magistrate Judge recommends that the Court grant CCI's motions for summary judgment, leaving only a breach of contract claim limited as it pertains to the fulfillment of contract N62472-05-R-7510 with the Navy. Rec. Dec. at 22. CE objects to the Magistrate Judge's recommendation. Pl.'s Obj.²

A. Tortious Interference (Count One)

CE alleges that "[b]y luring away CE's employees, CCI, through fraud and intimidation, tortiously interfered with CE's business relationships with CE's employees and with CE's ability to perform under its current contracts and to obtain new contracts." Compl. ¶ 24.

Tortious interference requires "`(1) that a valid contract or prospective economic advantage existed; (2) that the defendant interfered with that contract or advantage through fraud or intimidation; and (3) that such interference proximately caused damages.'" Currie v. Indus. Sec., Inc., 2007 ME 12, ¶ 31, 915 A.2d 400, 408 (quoting Rutland v. Mullen, 2002 ME 98, ¶ 13, 798 A.2d 1104, 1110). Fraud occurs when a defendant

(1) mak[es] a false representation (2) of a material fact (3) with knowledge of its falsity or in reckless disregard of whether it is true or false (4) for the purpose of inducing another to act or refrain from acting in reliance on it, and (5) the other person justifiably relies on the representation as true and acts upon it to the damage of the plaintiff.

Rutland, 2002 ME 98, ¶ 14, 798 A.2d at 1111 (quoting Petit v. Key Bank of Maine, 688 A.2d 427, 430 (Me.1996)). Intimidation

`is not restricted to frightening a person for coercive purposes,' but rather exists wherever a defendant has procured a breach of contract by `making it clear' to the party with which the plaintiff had contracted that the only manner in which that party could avail itself of a particular benefit of working with defendant would be to breach its contract with plaintiff.

Currie, 2007 ME 12, ¶ 31, 915 A.2d at 408(quoting Pombriant v. Blue Cross/Blue Shield of Maine, 562 A.2d 656, 659 (Me. 1989)).

Although CE alleges that CCI interfered with CE's customer contracts, the greater part of its efforts are focused on interference with CE's relationships with its employees. CE has failed to identify, and the court has not found, a case where a court has applied Maine law to uphold a claim of tortious interference by one corporation against another for recruitment of employees. Nevertheless, the viability of such a theory finds support in one of the earliest tortious interference cases reported in Maine.

In Perkins v. Pendleton, 90 Me. 166, 38 A. 96 (1897), a stonecutter brought suit against a union, alleging that the union had pressured his employer to discharge him after the stonecutter refused to join its ranks. The Maine Law Court addressed whether liability could adhere for interference with the employment relationship of an at-will employee, concluding that the lack of an employment contract for a definite term did not foreclose an interference claim. Id. at 176-77, 38 A. at 99-100. The Perkins Court relied in part upon Walker v. Cronin, 107 Mass. 555 (1871), where the Massachusetts Supreme Court held that an action could be maintained by a boot and shoe manufacturer against a third party for interfering with the manufacturer's existing and prospective relationship with its current and anticipated employees. Perkins, 90 Me. at 172-74, 38 A. at 98.

Although tortious interference more typically is invoked by a wronged employee, see, e.g., Currie, 2007 ME 12, ¶¶ 30-35, 915 A.2d at 408-09 (vacating summary judgment on employee's claim against a corporation); Grover v. Minette-Mills, Inc., 638 A.2d 712, 716-17 (Me.1994) (affirming jury verdict for employee against a corporation and its employees), a tortious interference cause of action may also be brought by wronged employer.³

1. Valid Contract or Prospective Economic Advantage

To establish its tortious interference claim, CE must first show CE interfered with a valid contract or prospective economic advantage. CE contends that, despite the absence of written contracts, its employees "had a contractual right to be paid for their labor and a contractual duty to work for their employer with absolute loyalty as long as they were employed." Pl.'s Mem. of Law in Opp'n to Def.'s First Mot. for Summ. J. at 16 (Docket # 50) (citing Universal Electric Corp. v. Golden Shield Corp., 316 F.2d 568, 573 (1st Cir. 1963)).

In Universal Electric, the First Circuit addressed a situation where key employees of a company, having procured useful inside information about its customer base, resigned and established a company to directly compete with their former employer. Id. at 569-71. Applying New York state law, the First Circuit's opinion mostly discussed whether the former employees had violated a contractual covenant not to compete. Id. at 571-73. The Universal Electric Court also referred to an employee's duty of loyalty to an employer, and observed that "[a]t common law the employee owes a duty of loyalty to his employer." Id. at 573. Nevertheless, CE offers no authority to suggest that Maine law squarely recognizes a duty of loyalty akin to Universal Electric. For its part, CCI argues that the Maine Law Court "has only decided cases involving [an] employee's breach of the duty of loyalty involving directors of a corporation or partners in a partnership." Def.'s Resp. at 10 (citing Rosenthal v. Rosenthal, 543 A.2d 348 (Me.1988)).

To resolve this motion for summary judgment, the Court need not mete the boundaries of Maine's duty of loyalty. Under Maine law, a tortious interference claim requires either a valid contract or prospective economic advantage. Currie, 2007 ME 12, ¶ 31, 915 A.2d at 408. An existing employment relationship fits squarely within the latter category. See MacKerron v. Madura, 445 A.2d 680, 683 (Me.1982) ("This Court has long recognized interference with an existing employment or contract relationship as an actionable tort." (emphasis added)); Barnes v. Zappia, 658 A.2d 1086, 1090 (Me.1995) (substituting the "existing employment" language of MacKerron for the more general "prospective economic advantage").

2. Interference through Fraud or Intimidation

Most of the allegedly fraudulent and intimidating statements identified by CE were made by Duncan Morrison, CE's general manager during November and December 2006. Accordingly, the Magistrate Judge identified "the nub" of CE's tortious interference claim as whether Mr. Morrison's statements "can fairly be attributed to CCI." Rec. Dec. at 13.

To hold CCI accountable for Mr. Morrison's conduct, CE must adduce sufficient evidence to allow a finder of fact to determine that during the relevant period, there was an employment or agency relationship between Mr. Morrison and CCI. Under Maine law, the "vital factor in determining [an employee-employer] relationship is `whether or not the employer has the power of control or superintendence over the other person.'" Forum Fin. Group v. President & Fellows of Harvard Coll., 173 F.Supp.2d 72, 88 n. 22 (D.Me.2001) (quoting Legassie v. Bangor Publ'g Co., 1999 ME 180, ¶ 6, 741 A.2d 442 444). "Maine agency law similarly focuses on control: `Agency is the fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.'" Id. (quoting Perry v. H.O. Perry & Son Co., 1998 ME 131, ¶ 7, 711 A.2d 1303, 1305); Camden Nat'l Bank v. Crest Constr.,...