Fuel Digital, Inc. v Corinella

[*1] Fuel Digital, Inc. v Corinella 2006 NY Slip Op 52590(U) [15 Misc 3d 1122(A)] Decided on October 24, 2006 Supreme Court, New York County Lowe, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on October 24, 2006
Supreme Court, New York County

Fuel Digital, Inc., Plaintiffs

against

Carmelo Corinella a/k/a Carmine Corinella, James Ingram and Splashlight Studios, Inc., Defendants Carmelo Corinella Defendant-Counterclaim Plaintiff Edward Weinstock Counterclaim Defendant



Carmelo Corinella Defendant-Counterclaim Plaintiff

against

Edward Weinstock Counterclaim Defendant



602497/06

Richard B. Lowe, J.

Plaintiff Fuel Digital, Inc. ("Fuel") brings this lawsuit against defendants Carmelo Corinella ("Corinella"), James Ingram ("Ingram"), and Splashlight Studios, Inc. ("Splashlight") (collectively, "the Defendants") for breach of contract, breach of fiduciary duties, aiding and abetting breach of contract and fiduciary duties, unfair competition, civil conspiracy, and injunctive relief. Corinella countersues Fuel and Edward Weinstock, Fuel's majority shareholder ("Weinstock"), (collectively, "the Counterclaim Defendants") for defamation, breach of a non-disparagement clause, and interference with prospective business relations. In the instant motion, the Counterclaim Defendants seek to dismiss the counterclaims, contending that the alleged defamatory statements were privileged, and that Corinella failed to plead defamation, breach of contract, and tortious interference with prospective business relationships with specificity.

Background

Fuel is a New York Corporation engaged in the graphic arts business. Its services are primarily [*2]sold to the marketing and advertising industries. Corinella was one of Fuel's founders. He held an ownership interest in Fuel, and was its Chief Executive Officer ("CEO") from 2001 until December 11, 2003.

In December 2003, Corinella agreed to a buyout of his ownership interest in Fuel. He was paid in excess of $1 million in company stock. In exchange, Corinella entered into a Settlement and Termination of Interests Agreement ("Buyout Agreement"). The Buyout Agreement contained a covenant not to compete with Fuel and a non-solicitation provision, which prohibited Corinella from soliciting Fuel employees to leave them. It also contained a non-disparagement provision, whereby Fuel was prohibited from making direct or indirect statements about Corinella's business or professional reputation.

Corinella remained at Fuel as a Sales Executive pursuant to a Sales Executive Agreement, where he would service key accounts and help solicit new business. This agreement contained non-disclosure, non-compete, and non-solicitation covenants, as well as a requirement that Corinella adhere to the duty of loyalty to Fuel.

Corinella, while Fuel's CEO, hired Ingram in 2003 to serve as its Chief Operating Officer ("COO"). In June 2004, Ingram left Fuel's employment. Upon separation from Fuel, Ingram entered into a Separation Agreement and General Release with them. This agreement included a non-solicitation clause. Following Ingram's departure from Fuel, he became president of Digitalab, Inc. ("Digitablab"), a division of Splashlight. Fuel alleges that Splashlight formed Digitalab, with Ingram at the helm, in order to unfairly compete with them.

In the underlying action, Fuel alleges that Corinella and Ingram violated their various restrictive covenants by acting in concert to divert business opportunities and employees away from them. In particular, they aver that Corinella utilized Fuel's confidential client list for his own benefit; Corinella and Ingram solicited a number of Fuel employees to leave Fuel and join Splashlight; and Corinella and Ingram diverted Fuel's key clients away from them to Splashlight and RDA International ("RDAI"), a company that Corinella holds an interest in.

Corinella countersues the Counterclaim Defendants, alleging that the lawsuit is frivolous and was filed for the sole purpose of undermining his ability to compete in the marketing and advertising industry. In particular, Corinella alleges that the Counterclaim Defendants' statements to third parties that he diverted business and employees from Fuel are false and defamatory; that they breached the Buyout Agreement's non-disparagement provision by making these remarks; and that these comments tortiously interfered with his ongoing business relationships.[FN1]

In the instant motion, the Counterclaim Defendants seek to dismiss Corinella's counterclaims, pursuant to NYCPLR 3211(a)(7). Their motion is premised on the grounds that the alleged defamatory statements were privileged and that Corinella failed to plead his defamation, breach of contract, and tortious interference with prospective business relationships claims with specificity. Corinella opposes the motion, and requests in his Opposition Papers that this Court give him leave to replead if it grants the motion to dismiss for lack of specificity.

[*3]DISCUSSION

In a motion to dismiss pursuant to CPLR 3211 (a), the court takes the facts as alleged in the Complaint as true and accords the benefit of every possible favorable inference to the non-movant (see AG Capital Funding Partners, LP v State Street Bank and Trust Co, 5 NY3d 582 [2005]). In support of their motion, the Counterclaim Defendants assert three arguments based on both privilege and procedural issues supporting their contention that the counterclaims must be dismissed. Each of these arguments are addressed, infra.

I. The Counterclaim Defendants' Arguments for Dismissal

a. Absolute Privilege

In his counterclaim, Corinella alleges that the Counterclaim Defendants defamed him by telling current Fuel employees, former Fuel-employee Russell Agrassani ("Agrassani"), and others in the industry that he acted dishonestly by violating his restrictive covenants. The Counterclaim Defendants aver that these statements are absolutely privileged from a defamation claim under three theories: statements made concerning a judicial proceeding are privileged; those statements made by employers to employees about a lawsuit against another employee are privileged; and statements made to third parties that are relative to a litigant's claim are privileged. They contend that because of this absolute privilege, the counterclaim should be dismissed.

"Statements made by parties, attorneys, and witnesses in the course of a judicial or quasi-judicial proceeding are absolutely privileged, notwithstanding the motive with which they are made, so long as they are material and pertinent to the issue to be resolved in the proceeding." (Sinrod v Stone, 20 AD3d 560 [2nd Dept 2005].) The purpose of the absolute privilege ". . .is to encourage cooperation. . .so that witnesses can discharge their public duty freely with the knowledge that they will be insulated from the harassment and financial hazards of subsequent litigation." (Tolisano v Texon, 144 AD2d 267 [1st Dept 1988].)

Here, Corinella does not allege that the Counterclaim Defendants made the remarks during a trial, deposition, or other judicial/quasi judicial proceeding. Since the alleged statements were made outside of a judicial proceeding, the Counterclaim Defendants are misguided as to their reliance on the first absolute-privilege theory asserted. Under that theory, statements made during, not outside, a judicial or quasi-judicial proceeding are protected. Accordingly, since there is no allegation that the statements were not made within a judicial/quasi-judicial arena, the Counterclaim Defendants cannot avail themselves of this theory in support of their motion to dismiss.

An employer's statements to employees about a lawsuit against another employee is afforded an absolute privilege when the statements ". . .accurately reflect the substance of the lawsuit and do not suggest more egregious conduct than that recounted in the complaint. . ." (Hughes Training Inc., v Pegasus Real Time, 255 AD2d 729 [3d Dept 1998].)

Here, the Counterclaim Defendants told their employees about their lawsuit against Corinella. In their remarks, they informed their employees that Corinella "was diverting business from Fuel", "breached his agreement with and duties to Fuel", and "was working for a competitor. . .in violation of his agreement. . ." This is their basis for, and contention in, the lawsuit. Corinella does not allege that the Counterclaim Defendants made additional remarks about him other than their aversions in the instant action; the statements did not go beyond the allegations plead in the complaint. Since the Counterclaim Defendants told their employees about the complaint's pleadings with no additional contentions, this Court finds that the statements are therefore privileged against a defamation claim. [*4]

"Statements by parties to a legal proceeding are absolutely privileged if those statements are any way pertinent to the litigation." (Black v Green Harbour Homeowner's Ass'n, Inc., 19 AD3d 962 [1st Dept 2005].) "The test of pertinency in this regard is extremely liberal so to as embrace anything that may possibly or plausibly be relevant or pertinent." (Id.)

Here, the statements made to Agrassani and others in the industry were pertinent to the litigation. The Counterclaim Defendants, as party to a litigation, told others their contention that Corinella violated his restrictive covenants. A litigant's position in a legal proceeding is logically related to the underlying litigation because all lawsuits have at least two adverse viewpoints. Since the Counterclaim Defendants stated their litigation-pertinent aversion that Corinella was in breach of his covenants, these comments are also privileged against a defamation claim.

b. Failure to Plead with Specificity

The Counterclaim Defendants aver that Corinella's counterclaim for slander, breach of contract, and tortious interference with prospective business relationships should be dismissed because he failed to plead them with particularity. They argue that the remark's recipients; their time, place and manner; and the business relationships affected were not specified in the complaint.

i. The Defamation Claim

"A cause of action sounding in defamation, which fails to comply with. . .CPLR 3016(a). . .mandates dismissal." (Simpson v. Cook Pony Farm, 12 AD3d 496 [2d Dept 2004].) "A complaint for defamation that simply names "various" people as the recipients ". . .fails to comply with the requirements of CPLR 3016(a). . ." (Wadsworth v Beaudet et al, 267 AD2d 727 [2d Dept 1999].) A claim for defamation is properly dismissed when ". . .dates, times, and places are left unspecified." (Bell v Owners, Inc., 299 AD2d 207 [1st Dept 2002].)

Here, Corinella contends that the Counterclaim Defendants defamed him by telling their "employees", "colleagues and others in the industry", and Agrassani that he diverted business opportunities and employees away from them. These appear to be the particular words needed to satisfy CPLR 3016(a) because Corinella articulates what he alleges to be defamatory remarks. However, Corinella fails to fulfill his other specific-pleading obligations with respect to the words' recipients and the time, place, and manner of the words spoken.

Two of the three recipients named in the complaint are not specific persons. Corinella's contention that the Counterclaim Defendants' "employees" were the comments' recipients is vague. There is no allegation as to whom within the Fuel-employee universe heard the remarks. No individual employee is named. Equally vague is Corinella's aversion that "colleagues and others in the industry" heard the statements. Again, there is no specific client or industry-professional named as the statements' recipient(s).

Corinella does name one specific recipient, Agrassani. Nevertheless, the complaint fails because Corinella does not list the statements' specific time, place, and manner. As to the time and date, he avers "on or about July 4, 2006" and "on or about the first week of August 2006." Such ambiguous times and dates will not suffice to satisfy CPLR 3016(a)'s specificity requirements. Additionally, Corinella does not assert the location where the remarks were made, nor the method in which the statements were delivered. For example, he does not state that the comments were made at an employee meeting or an industry conference via a verbal communication, email, or inter-office memorandum. Without the particularity required in his pleadings, Corinella fails to meet his burden. Accordingly, the defamation counterclaim is dismissed for lack of specificity.

ii. Breach of Contract [*5]

Corinella argues that the Counterclaim Defendants breached the Buyout Agreement by making statements in violation of its non-disparagement clause. The Counterclaim Defendants assert the same grounds for dismissing the breach of contract claim as they do for dismissing the defamation claim; namely, that Corinella failed to plead his claim with specificity.

Their allegation, however, only addresses the points of law in support of the defamation's dismissal; they do not present an argument for dismissal of a breach of contract claim. While the Counterclaim Defendant's underlying arguments in support of the dismissal of both claims may be similar, these are nonetheless two separate causes of action that require distinct arguments warranting their respective dismissals. Accordingly, it is incumbent upon the moving party to put forth the proper legal theories in support of each of her/his assertions. Since the Counterclaim Defendants do not provide this Court with an argument supporting their motion to dismiss Corinella's breach of contract claim, it is unable to decide this motion's merits.

iii. Interference with Prospective Business Relationships

"The tort of intentional interference with prospective economic advantage requires a showing that through the intentional and wrongful acts of the defendant, identified third parties were prevented from entering into a business relationship with the plaintiff." (Levy v P&R Dental Strategies, Inc., 302 AD2d 255 [1st Dept 2003].) "An essential element of the tort is that is that the plaintiff would have consummated a contract with another person but for the interference of the defendant." (School of Visual Arts v Kuprewicz, 771 NYS2d 804 {3 Misc 3d 278} [2003].)

Here, in support of Corinella's contention that the Counterclaim Defendants interfered with his economic prospects, he alleges that they falsely said that he a) caused "Young & Rubicam to stop sending work to Fuel and instead send such work to. . .Splashlight..."; b) that the Angastora Bitters account "was diverted by Corinella to. . .RDAI"; and c) that the J. Walter Thomson account "was diverted by Corinella. . .to Splashlight. . ." This is the basis for Corinella's defamation claim; namely that the Counterclaim Defendants' remarks were false. However, this does not allege that these named clients, or any other specifically-named client, ceased doing business or would not do business with Corinella as a result of the Counterclaim Defendants' alleged remarks. Furthermore, Corinella only makes general assertions that these statements were ". . .injuring Corinella in his business and profession. . ."; he offers nothing in particular to support his aversion. Accordingly, Corinella's counterclaim for tortious interference with a business relationship is dismissed for failing to state a cognizable claim.

II. Corinella's Request to Replead

In his Opposition Papers, Corinella requests that if this Court grants the Counterclaim Defendants' motion to dismiss for lack of specificity, he receive permission for leave to replead the dismissed claims. Since this Court has granted the motion to dismiss the defamation and tortious interference with prospective business relationship claims, it now must ascertain whether Corinella establishes "good ground" to support his application to replead.

"If the opposing party desires leave to plead again in the event the motion is granted, he shall so state in his opposing papers. . ." (NYCPLR 3211(e)) "Leave to plead again shall not be granted unless the court is satisfied that the opposing party has good ground to support his cause of action or defense. . ." (Id.) The proposed new pleadings should be supported by "evidence as on a motion for summary judgment." (Pritchard Services v First Winthrop Properties, Inc., 172 AD2d 394 [1st Dept 1991].) [*6]

Here, Corinella complied with CPLR 3211(e) by requesting leave to replead in his Opposition Papers if the motion is granted. However, in order for this Court to grant him leave, Corinella must provide grounds that are akin to evidence in support of a summary judgment motion. He fails to do so.

First, Corinella fails to provide this Court with an indication on how he would replead his claims if leave is granted. He does not provide the required specificity, nor does he even address how he will plead with particularity if leave is granted. For example, he does not name specific persons in his Opposition Papers, nor does he provide this Court with a framework as to how his revised pleadings will differ from the original pleadings. Second, since he does not provide the CPLR-mandated particularity, he cannot meet his burden to provide evidence that would satisfy a summary-judgment motion. In his complaint, Corinella alleges that the Counterclaim Defendants's statements were false, and that they knew or should have known they were false; he reiterates this in his Opposition Papers. This is the contention of any litigant pursuing a defamation claim. But this aversion alone is insufficient to move this Court to find that there is no triable issue of fact. The allegations itself do not refute, as a matter of law, the Counterclaim Defendants' counter-positions as non-meritorious. Accordingly, since Corinella fails to provide good ground in support of his application, his request to replead is denied.

CONCLUSION

For the foregoing reasons, it is hereby

ORDERED that Corinella first counterclaim for slander per se is dismissed; and it is further

ORDERED that Corinella's third counterclaim for tortious interference with prospective business relationships is dismissed; and it is further

ORDERED that Corinella's request for leave to replead is denied; and it is further

ORDERED that the Counterclaim Defendants serve an answer to the complaint within 10 days of service of a copy of this order with notice of entry.

Dated: October 24, 2006

ENTER:

____________________________

RICHARD B. LOWE, III, J.S.C. Footnotes

Footnote 1: Corinella also alleged that the Plaintiff's lawsuit was in violation of 22 NYCRR 130-1.1. He subsequently withdrew the claim in his Opposition Papers.