Salvitti v. Lascelles
| Decision Date | 20 April 2023 |
| Docket Number | Civil Action 19-00696 |
| Parties | ALFRED SALVITTI, et al., Plaintiffs, v. SCOTT LASCELLES, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Plaintiffs Alfred Salvitti, Nico Salvitti, and John-David Potynsky brought a twelve-count complaint, as amended, against Defendants Scott Lascelles and Dana DiSabatino, for damages arising out of a purported business relationship that disintegrated over time. Defendants raised counterclaims for tortious interference with business relationships, among other claims. Presently before the Court is Defendants' Renewed Motion for Summary Judgment (ECF No. 139), Plaintiffs' Responses thereto, including a motion for leave to amend their expert report (ECF Nos. 143, 160), and a number of reply briefs.
Because Plaintiffs have failed to establish how they will prove unjust enrichment and resulting damages in a manner that complies with the law of the case, and do not state how amending their export report would bridge the gap in their theory of damages, Plaintiffs' Motions will be denied and Defendants' Motions will be granted.
Plaintiffs Alfred Salvitti and Nico Salvitti (collectively “the Salvittis”) patented and designed a knife and partnered with Plaintiff John-David Potynsky (collectively “Plaintiffs”) to produce the knife under the name “Colonel Blades.” At the end of 2013, Plaintiffs reached out to Defendant Lascelles to assist with the marketing and sales of Colonel Blades. In March 2014 the parties verbally agreed that a limited liability company should be formed to help manage the production of Colonel Blades. On March 28, 2014, Lascelles registered The Colonel, LLC (the “LLC”) with the Pennsylvania Department of State and listed himself as the sole member. Lascelles then managed the day-today operations of Colonel Blades, including marketing, managing internet sales, working with manufacturers, and distributing the product. Defendant Lascelles also enlisted his spouse, Defendant DiSabatino (collectively “Defendants”), to assist with developing a business plan.
This case began as a patent infringement and corporate mismanagement case.[1]Compl., ECF No. 1. The gist of Plaintiffs' claim was that they agreed to form an LLC to sell knives with Defendants and contributed their intellectual property, industry connections, and initial capital, as part of this agreement, but then were cut out of the business as soon as it became profitable in 2017. After not receiving profit distributions for some time, as purportedly agreed, Plaintiffs sent Defendants a cease-and-desist letter, revoking Defendants' limited license to use Plaintiffs' patents. Two weeks later, when Plaintiffs observed that Defendants were continuing to offer the patented knives for sale, Plaintiffs sued Defendants in this Court.
This case, filed in 2019, has been plagued by numerous delays. These delays primarily arose during discovery. A special master was appointed to facilitate Plaintiffs' review of certain documents. Following over two years of discovery, the parties filed motions for summary judgment in July of 2021.
Defendants sought summary judgment with respect to Plaintiffs' claims for breach of contract (Count II), breach of fiduciary duty (Count III), unjust enrichment (Count IV), conversion (Count V), conspiracy (Count VI), aiding and abetting (Count VII), and money had and received (Count VIII). Defendants also sought summary judgment with respect to Plaintiffs' claims for injunctive relief based on the breach of contract and breach of fiduciary duty claims (Counts IX, X, XI, XII). Plaintiffs filed a motion for summary judgment as well.
On January 6, 2022, the Court granted Defendants' motion for summary judgment in part and denied Plaintiffs' motion. On June 1, 2022, the Court granted Defendants' motion to exclude Plaintiffs' expert, Michael Rountree, C.P.A. on the grounds that his report was not sufficiently reliable. See Salvitti v. Lascelles, No. 19-696, 2022 WL 1766934 (E.D. Pa. June 1, 2022) . That same day, Defendants voluntarily dismissed their counterclaims for breach of contract, unjust enrichment, and conversion. See Order, ECF No. 127. At this point, what remains outstanding are Plaintiffs' claim for unjust enrichment against Defendant Lascelles, and Defendants' counterclaim for tortious interference with contractual relations.
Broadly, Plaintiffs argue that Defendants were unjustly enriched because of their “failure to pay an agreed-upon two-thirds share of business profits.” Pls.' Updated Pretrial Mem. at 1, ECF No. 137. Plaintiffs describe the benefits conferred upon Defendants in general terms as: “(i) allow[ing] defendant Lascelles to use plaintiffs' patents (ii) . . . Mr. Potynsky's law enforcement and military contacts as a primary customer base and (iii) assist[ing] in day-to-day functions as needed [with the assumption that] defendant Lascelles would manage operations.” Id. at 1-2. Plaintiffs point to Defendants' books and records as evidence to approximate Defendants' total sales, from which Plaintiffs seek to recover a share for their contributions to the business. Id. at 2. Plaintiffs purport to testify about their contributions to the business--such as the value of the patents, their efforts to promote the business, and their relationships with Defendants. Id. at 3-5.
Defendants, on the other hand, argue that they were not unjustly enriched by any of Plaintiffs' alleged contributions to the business; rather, Defendants themselves, as well as other non-parties to this case, were the moving force underlying the business's success leading up to the filing of this lawsuit. Defs.' Pretrial Mem. at 2, 6-8, ECF No. 138.
The Court shall grant summary judgment on a party's claim “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).[2]Thus, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In other words, “there is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Id. at 249; accord SodexoMAGIC, LLC v. Drexel Univ., 24 F.4th 183, 203-04 (3d Cir. 2022). “Still, in assessing the genuineness of a potential factual dispute, inferences from the underlying facts should be drawn in favor of the nonmoving party.” SodexoMAGIC, LLC, 24 F.4th at 204.
Summary judgment is also warranted where a party fails to present admissible evidence that supports an element of the claim at issue. Ware v. Rodale Press, Inc., 322 F.3d 218, 226 (3d Cir. 2003); see also Cabrera v. Ross Stores of Pa., LP, 646 Fed.Appx. 209, 211-12 (3d Cir. 2016) (); accord SodexoMAGIC, LLC, 24 F.4th at 204 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).
Despite extended discovery and motion practice, following the dismissal of most of their claims and the exclusion of their expert witness, a forensic accountant, Plaintiffs have yet to identify the kind or type, much less the extent of the benefit conferred upon Defendants on or after February 19, 2015, the beginning point of the statute of limitations.[4]As a result, summary judgment in favor of Defendants as to Plaintiffs' unjust enrichment claim is warranted.
“Unjust enrichment is an equitable remedy, defined as ‘the retention of a benefit conferred by another, without offering compensation, in circumstances where compensation is reasonably expected, and for which the beneficiary must make restitution.'” Commonwealth v. Golden Gate Nat'l Senior Care LLC, 194 A.3d 1010, 1034 (Pa. 2018) (quoting Roethlein v. Portnoff Law Assocs., Ltd., 81 A.3d 816, 825 n.8 (Pa. 2013)). For Plaintiffs to prove unjust enrichment, they must show that “1) [they] conferred benefits on the defendant, 2) the defendant appreciated such benefits, and 3) the benefits were accepted and retained under such circumstances that it would be inequitable for the defendant to retain the benefit without the payment of value.” Berardi v. USAA Gen. Indem. Co., 606 F.Supp.3d 158, 163 (E.D. Pa. 2022) (citing Mitchell v. Moore, 729 A.2d 1200, 1203 (Pa. Super. 1999)). A benefit that is conferred upon a defendant is not unjustly retained where a plaintiff confers such benefit in the hope of obtaining a future benefit in return. Burton Imaging Grp. v. Toys “R” Us, Inc., 502 F.Supp.2d 434, 440 (E.D. Pa. 2007) ().
A claim of unjust enrichment “based on a theory of quasicontract may be pled as an alternative to a breach of contract claim.” Whitaker v. Herr Foods, Inc., 198 F.Supp.3d 476, 493 (E.D. Pa. 2016) (Robreno, J.). By contrast, where a claim of unjust enrichment is based on unlawful or improper conduct such as fraud or self-dealing, the claim is deemed to be derivative of the underlying tort.[5]Id. As this Court stated in Whitaker, “[i]f Plaintiff intends to assert an unjust enrichment claim based on the same unlawful or improper conduct that supports his tort claims, Plaintiff's claim would fail because the Court has dismissed Plaintiff's tort claims.” Id. at 494.
Given that the Court has already dismissed Plaintiffs' breach of fiduciary duty claims...
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