Nashef v. Aadco Med., Inc., Case No. 5:12–cv–243.

CourtUnited States District Courts. 2nd Circuit. District of Vermont
Writing for the CourtCHRISTINA REISS
Citation947 F.Supp.2d 413
PartiesCharles NASHEF, Plaintiff, v. AADCO MEDICAL, INC., Robert Marchione, and Anthony Skidmore, Defendants.
Docket NumberCase No. 5:12–cv–243.
Decision Date28 May 2013

947 F.Supp.2d 413

Charles NASHEF, Plaintiff,
AADCO MEDICAL, INC., Robert Marchione, and Anthony Skidmore, Defendants.

Case No. 5:12–cv–243.

United States District Court,
D. Vermont.

May 28, 2013.

[947 F.Supp.2d 414]

Robert D. Mabey, Esq., Stephen D. Ellis, Esq., Ellis Boxer & Blake, Springfield, VT, for Plaintiff.

Kerin E. Stackpole, Esq., Paul Frank Collins PC, Kristina Roomet Brines, Esq., Paul Frank Collins PC, Burlington, VT, for Defendants.

(Doc. 17, 32)


Pending before the court are two related motions: a motion for judgment on the

[947 F.Supp.2d 415]

pleadings for Counts Two and Three of the Verified Counterclaim, filed by Plaintiff Charles Nashef (Doc. 17), and a cross-motion to amend the Verified Answer and Counterclaim to add facts and three additional counterclaims, filed by Defendants AADCO Medical, Inc. (“AADCO”), AADCO President and Chief Executive Officer Robert Marchione, and AADCO Vice President Anthony Skidmore (Doc. 32).1

Mr. Nashef filed a Verified Complaint setting forth several claims that arise out of the termination of his employment with AADCO. Defendants filed a Verified Answer and Counterclaim that asserts counterclaims for conversion, breach of contract, and abuse of process. Mr. Nashef moves for judgment on the pleadings with regard to the counterclaims set forth in Count Two (breach of contract) and Count Three (abuse of process) (Doc. 17), contending that he is entitled to judgment as a matter of law in his favor on both of these counterclaims because Defendants have failed to state a claim upon which relief may be granted. Defendants oppose the motion, arguing that both counterclaims are “sufficiently pled” to survive a motion for judgment on the pleadings. (Doc. 30 at 3–6.)

In the alternative and as a separate request, Defendants seek to amend their counterclaims to plead additional facts that Defendants contend would cure the alleged deficiencies in Counts Two and Three. In addition, Defendants seek to add three additional counterclaims for malicious prosecution (Count Four), negligent misrepresentation (Count Five), and a violation of the Vermont Consumer Fraud Act, 9 V.S.A. §§ 2451–2481w (“VCFA”) (Count Six). (Doc. 32.) Mr. Nashef opposes the motion to amend on the grounds that the proposed amendments are futile. (Doc. 35 at 5–9; Doc. 43.)

The court heard oral argument on February 4, 2013. Mr. Nashef is represented by Stephen D. Ellis, Esq. and Robert D. Mabey, Esq. Defendants AADCO, Mr. Marchione, and Mr. Skidmore are represented by Kerin E. Stackpole, Esq. and Kristina Roomet Brines, Esq.2

I. Factual and Procedural Background.

The following facts are derived from the allegations set forth in Defendants' Verified Counterclaim. AADCO is a Vermont corporation engaged in the business of designing, manufacturing, and selling medical imaging products. In March 2011, Mr. Nashef was hired as AADCO's Director of Sales by Mr. Marchione and Mr. Skidmore.

Defendants allege that after Mr. Nashef began his employment with AADCO in February 2011, he failed to perform his job duties in a satisfactory manner. They allege that Mr. Nashef's deficiencies included failing to provide weekly reports of sales and monthly summary sales management reports, both of which are allegedly standard in the industry. Mr. Nashef also allegedly ignored management's requirements that he review daily and monthly reports from his sales team, which resulted in Mr. Nashef's unawareness of his sales teams' needs. Defendants further allege that Mr. Nashef “managed his sales team as though he was the sole decision maker,” while ignoring upper management, which “adversely affected not only Mr. Nashef's

[947 F.Supp.2d 416]

own ability to maximize returns on his [teams, but also] adversely affected others within AADCO.” (Doc. 9 at 11, ¶ 8.) As another example of “disregard of AADCO's management directives,” Defendants claim AADCO approved Mr. Nashef's application for a “Veterinary Trade Show Budget,” but that Mr. Nashef then failed to develop a “Veterinary Market Sales Plan” and failed to garner any subsequent leads from trade shows. Id. at 11, ¶ 9. Although Defendants allegedly attempted to assist Mr. Nashef in improving his performance, Defendants claim that Mr. Nashef's performance did not improve.

Defendants further assert that Mr. Nashef failed to perform certain specific tasks, including registering AADCO products with the Food and Drug Administration (“FDA”). Id. at 11–12, ¶¶ 10–12. Due to his purported experience with lighting, Mr. Nashef was also responsible for obtaining Underwriters Laboratories (“UL”) certification and FDA 510(k) determination of lighting products. Defendants allege that Mr. Nashef assured Defendants that the products were registered or certified when, in fact, they were not, and that Defendants then had to “step in and finish” registration and certification. Id. Finally, Mr. Nashef was assigned to negotiate with certain Chinese manufacturers for the production of some AADCO products, but allegedly failed to complete those negotiations, necessitating the intervention of Mr. Marchione and Mr. Skidmore to complete the negotiations themselves.

As a result of Mr. Nashef's alleged deficiencies in performance, Defendants claim that AADCO could not meet the forecasted sales goals that Mr. Nashef set for 2012. In turn, because of attrition and the adverse impacts on recruitment allegedly caused by Mr. Nashef, AADCO's sales staff was “cut in half” within months after Mr. Nashef started as Director of Sales. Id. at 10, 11, ¶¶ 4, 7. In their motion to amend, Defendants seek to add allegations that AADCO had no tangible sales growth in 2011 and that AADCO lost half of its sales team and fifty-four percent of its sales to Original Equipment Manufacturers while Mr. Nashef was Director of Sales.

During his employment, Mr. Nashef was allegedly repeatedly warned in writing that his behavior was unacceptable and that he risked termination if he did not take steps to improve his performance. On May 8, 2012, Mr. Nashef received a written warning from Mr. Marchione for Mr. Nashef's alleged “extreme and disruptive behavior” in response to what Defendants label as “constructive criticism” concerning Mr. Nashef's management of the sales department. Id. at 10, ¶ 2. After Mr. Nashef allegedly failed to alter his conduct, AADCO terminated his employment on August 10, 2012.

After his termination, Mr. Nashef allegedly retaliated against Defendants by failing to return AADCO property, including proprietary and confidential information. In addition, Mr. Nashef filed this lawsuit against Defendants on October 25, 2012. In their motion to amend, Defendants seek to add the allegation that Mr. Nashef “filed and served on [Defendants] a Verified Complaint containing statements Mr. Nashef knew to be false and motivated by Mr. Nashef's desire to exact revenge on [Defendants].” (Doc. 32–1 at 12, ¶ 15.)

II. Conclusions of Law and Analysis.

The court has diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1) and thus is required to apply Vermont law to the substantive issues raised by the parties' state law claims. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938);

[947 F.Supp.2d 417]

Omega Eng'g, Inc. v. Omega, S.A., 432 F.3d 437, 443 (2d Cir.2005); see also Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328, 337 n. 4 (2d Cir.2006).

A. Mr. Nashef's Motion for Judgment on the Pleadings.

“The standard for addressing a Rule 12(c) motion for judgment on the pleadings is the same as that for a Rule 12(b)(6) motion for failure to state a claim.” Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir.2006). “In each case, the court must ‘accept as true the complaint's factual allegations and draw all inferences in the plaintiff's favor.’ ” Id. (quoting Karedes v. Ackerley Grp., Inc., 423 F.3d 107, 113 (2d Cir.2005)). “To survive a Rule 12(c) motion, the complaint must contain sufficient factual matter to ‘state a claim to relief that is plausible on its face.’ ” Graziano v. Pataki, 689 F.3d 110, 114 (2d Cir.2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The pleadings standards enunciated in Twombly and later in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), therefore apply to a motion for judgment on the pleadings, and so the court must determine whether the “well-pleaded factual allegations ... plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 664, 129 S.Ct. 1937. However, the court need not credit “legal conclusions” or “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Id. at 678, 129 S.Ct. 1937.

“Determining whether a [pleading] states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679, 129 S.Ct. 1937 (internal citation omitted). “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir.1995) (internal quotation marks omitted). In applying these standards, the court's analysis is confined to “the facts alleged in the [pleading], documents attached to the [pleading] as exhibits, and documents incorporated by reference in the [pleading].” DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir.2010).

1. Prior Breach of Contract by Mr. Nashef (Count Two).

In Count Two, Defendants allege that Mr. Nashef breached his obligations under his employment contract when he “consistently failed to abide by reasonable management directives” and “failed...

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