IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

MICHAEL REIS, SR. and )

LAWRENCE J. KATZ, on Their Own ) Civil Action

Behalf and as Assignees of ) No. 05-cv-01651

Weaver Nut Company, Inc., )

 )

Plaintiffs )

 )

vs. )

 )

BARLEY, SNYDER, SENFT )

& COHEN LLC., )

 )

Defendant )

* * *

APPEARANCES:

LYNANNE B. WESCOTT, ESQUIRE

On behalf of Plaintiffs

ARTHUR W. LEFCO, ESQUIRE

On behalf of Defendant

* * *

O P I N I O N

JAMES KNOLL GARDNER,

United States District Judge

This matter is before the court on Defendant Barley

Snyder, LLC’s Motion for Summary Judgment Pursuant to

Fed.R.Civ.P. 56, which motion was filed together with the

Memorandum of Law in Support of Defendant Barley Snyder, LLC’s

Motion for Summary Judgment Pursuant to Fed.R.Civ.P. 56 on

Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 1 of 36
January 30, 2012.1 Plaintiffs’ Memorandum of Law in Opposition

to Defendant’s Motion for Summary Judgment was filed March 19,

2012.2

After oral argument on defendant’s motion for summary

judgment conducted before me on May 9, 2012, I took the matter

under advisement. Hence, this Opinion.

SUMMARY OF DECISION

For the reasons expressed below, I grant defendant’s

motion for summary judgment. Specifically, I grant defendant’s

motion on that remaining portion of Count I of plaintiffs’

Amended Complaint alleging a claim for breach of fiduciary duty

on behalf of plaintiffs Michael Reis, Sr. and Lawrence J. Katz,

individually. Summary judgment on this claim was granted because

plaintiffs did not and cannot establish either that defendant was

required to fulfill any fiduciary duties to plaintiffs, or that

plaintiffs suffered any injury. Accordingly, plaintiffs did not

and cannot establish that any failure to act was a real factor in

causing any injuries to plaintiffs.

In addition, I grant defendant’s motion for summary

judgment on the remaining portion of Count IV of the Amended

1

In addition to its motion and memorandum of law, defendant also

filed Defendant Barley Snyder, LLC’s Statement of Indisputable Facts in

Support of its Motion for Summary Judgment Pursuant to Fed.R.Civ.P. 56, on

February 28, 2012. Furthermore, a Reply Memorandum in Support of Defendant

Barley Snyder, LLC’s Motion for Summary Judgment was filed April 9, 2012.

2

Plaintiffs’ Response in Opposition to Defendant’s Statement of

Indisputable Facts in Support of its Motion for Summary Judgment was also

filed March 19, 2012.

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Complaint brought by plaintiffs individually alleging tortious

interference with contractual relations by defendant. Summary

judgment on this claim was granted because plaintiffs did not and

cannot establish either the absence of privilege or justification

on the part of defendant, or actual legal damage as a result of

defendant’s conduct. 

JURISDICTION

This action is before the court on diversity

jurisdiction. Plaintiff Michael Reis, Sr. is a resident of the

State of Illinois and plaintiff Lawrence J. Katz is a resident of

the State of New Jersey. Defendant Barley, Snyder, Senft &

Cohen, LLC is a Pennsylvania limited liability company. The

amount in controversy is in excess of $75,000. See 28 U.S.C. 

§ 1332. 

VENUE

Venue is proper because plaintiffs allege that the

facts and circumstances giving rise to the cause of action

occurred in Lancaster County, Pennsylvania, which is in this

judicial district. 28 U.S.C. §§ 118, 1391.

PROCEDURAL HISTORY

 On April 10, 2005 plaintiffs Reis and Katz, on their

own behalf and as assignees of Weaver Nut Company, Inc., filed

their initial Complaint in this matter. The original Complaint

alleged five causes of action: breach of fiduciary duty 

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(Count I); professional negligence (Count II); abuse of process

(Count III); interference with a contractual relationship (Count

IV); and conversion (Count V).

On June 23, 2005 defendant filed its initial motion to

dismiss. Plaintiffs July 7, 2005 response included a request to

amend the Complaint. My Order dated March 17, 2006 and filed

March 20, 2006 granted plaintiffs’ request to amend.

On April 12, 2006 plaintiffs filed their Amended

Complaint. The Amended Complaint contains the original five

causes of action and an additional cause of action for breach of

contract (Count VI). On May 2, 2006 defendant filed its second

motion to dismiss. On May 19, 2006 plaintiffs responded. 

By my Order and Opinion dated March 30, 2007 I granted

in part and denied in part defendant’s motion to dismiss

plaintiffs’ Amended Complaint. 

I granted defendant’s motion to dismiss that portion of

Count I of plaintiffs’ Amended Complaint brought by plaintiffs

Michael Reis, Sr. and Lawrence J. Katz, in their individual

capacities, alleging a breach of fiduciary duty by defendant law

firm, Barley, Snyder, Senft & Cohen, LLC (“Barley Snyder”). 

I granted defendant’s motion to dismiss that portion of

Count II alleging a claim of professional negligence against

defendant Barley Snyder, brought by plaintiffs Reis and Katz,

individually.

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I granted defendant’s motion to dismiss Count III of

plaintiffs’ Amended Complaint alleging a cause of action against

defendant for abuse of process brought by plaintiffs Reis and

Katz in their individual capacities.

Moreover, I granted defendant’s motion and dismissed

from Count IV of the Amended Complaint the claims of Reis and

Katz, individually, alleging interference with an advantageous

relationship by defendant.

Finally, I granted defendant’s motion to dismiss Count

V of plaintiffs’ Amended Complaint alleging a cause of action

against Barley Snyder for conversion brought by plaintiffs Reis

and Katz in their individual capacities.

I dismissed all claims contested in the motion to

dismiss on the grounds of a release. These claims were brought

by plaintiffs Michael Reis, Sr. and Lawrence J. Katz acting in

their individual capacity. They included breach of fiduciary

duty (Count I), professional negligence (Count II), abuse of

process (Count III), tortious interference with contractual

relations (Count IV), and conversion (Count V).

I dismissed those counts because plaintiffs Reis and

Katz entered into a release between themselves and Weaver Nut

Company, Inc. (“the Company”) and the other shareholders of the

Company (E. Paul Weaver, III and his wife Miriam J. Weaver). The 

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release document released the Weavers, the Company, and its

officers, directors and employees from all liability. 

Although the release specified that it did not release

defendant law firm from any claims, I concluded in this diversity

action that, if confronted with the issue, the Supreme Court of

Pennsylvania would recognize and rule that the release of the

principals (the Company and the Weavers) would act as a release

of the agent (defendant law firm Barley Snyder).

Specifically, I relied on the decisions of the Supreme

Court of Pennsylvania in Mamalis v. Atlas Van Lines, 522 Pa. 214, 

560 A.2d 1380 (Pa. 1989) and the Superior Court of Pennsylvania

in Pallante v. Harcourt Brace Jovanovich, Inc., 427 Pa.Super.

371, 629 A.2d 146 (Pa.Super. 1993) for the proposition that, as a

matter of law, the release of the principals serves to release

claims of any person or entity acting as an agent, servants or

employees of the principals. 

As a result of my rulings on defendant’s motion to

dismiss, the following six claims against defendant Barley Snyder

remained in this lawsuit: Count I: (1) breach of fiduciary duty

brought by plaintiffs as assignees of the Company; (2) aiding and

abetting breach of a fiduciary duty brought by plaintiffs

individually; (3) aiding and abetting breach of a fiduciary duty

brought by plaintiffs as assignees of the Company. Count II: 

(4) professional negligence brought by plaintiffs as assignees of

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the Company. Count IV: (5) tortious interference with

contractual relations brought by plaintiffs as assignees of the

Company. Count VI: (6) breach of contract brought by plaintiffs

as assignees of the Company.

By Memorandum and Order dated March 28, 2008, and for

the reasons expressed in that Memorandum, I granted the Motion of

Defendant, Barley Snyder, LLC, to Strike Plaintiffs’ Demand for a

Jury Trial, denied plaintiffs’ Countermotion Pursuant to Federal

Rule of Civil Procedure 39 and struck plaintiffs’ Demand for Jury 

Trial filed June 29, 2007. Thus, this matter was tried before me

without a jury. 

I presided over a 35-day non-jury trial in this matter

on July 7-9, 11, 16-18, 21-23, 25, 28-29, August 6-8, 11-15,

September 9-12, 18, 23-26, November 14, 2008, January 13-15 and

27, 2009.

By Verdict and Adjudication filed September 30, 2009, I

found in favor of defendant Barley, Snyder, Senft & Cohen, LLC

and against plaintiffs Michael Reis, Sr. and Lawrence J. Katz on

all six claims.

Regarding Count I of plaintiffs’ Amended Complaint, I

found in favor of defendant on plaintiffs’ claim for breach of

fiduciary duty brought by plaintiffs Reis and Katz as assignees

of the rights of the Company. Specifically, I concluded that

Barley Snyder did have a fiduciary duty to its client Weaver Nut

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Company which demanded undivided loyalty and prohibited Barley

Snyder from engaging in conflicts of interest. A breach of such

duty is actionable. However, I concluded that Barley Snyder

neither breached its duty of loyalty to Weaver Nut Company nor

engaged in any other conflict of interest.

In addition, regarding the two other claims contained

in Count I, aiding and abetting breach of a fiduciary duty

brought by Reis and Katz individually, and aiding and abetting

breach of a fiduciary duty brought by Reis and Katz as assignees

of the Company, I concluded that E. Paul Weaver, III, as

President of Weaver Nut Company owed fiduciary duties to Mr. Reis

and Mr. Katz as shareholders of the Company, and to the Company,

which he breached. 

However, I concluded that plaintiffs failed to prove by

a preponderance of the evidence that Barley Snyder either had

knowledge of the breach by Mr. Weaver, or provided substantial

assistance or encouragement to Mr. Weaver. Rather, I concluded

that based upon the information provided to Barley Snyder, the

firm acted both legally, ethically, and in good faith, concerning

both of its clients (the Weavers and the Company).

Regarding Count II alleging professional negligence

against Barley Snyder, brought by Reis and Katz as assignees of

the Company, I concluded that plaintiffs failed to establish by a

preponderance of the evidence that Barley Snyder failed to

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exercise the ordinary skill and knowledge which attorneys are 

required to utilize or that there were any damages owing to the

Company as a result of the actions of Barley Snyder.

Regarding Count IV alleging tortious interference with

contractual relations against Barley Snyder, brought by Reis and

Katz as assignees of the Company, I concluded that a contract

existed, but that defendant did not take purposeful action

specifically intended to harm the existing relation because the

law firm was the agent of the Company. Moreover, I concluded

that there was either privilege, legal justification, or both,

for the actions taken by defendant. Also, I concluded that

plaintiffs failed to establish damages on Count IV by a

preponderance of the evidence.

Finally, Count VI alleged breach of contract for the

professional services rendered to Weaver Nut Company, brought by

plaintiffs Reis and Katz in their capacity as assignees of the

rights of the Company. I concluded that there was a contract

between the Company and Barley Snyder for legal services, but

that the contract was not breached by Barley Snyder. Moreover, 

plaintiffs failed to establish by a preponderance of the evidence

that the Company suffered any damages under the contract.

Plaintiffs appealed from the final judgment entered

September 30, 2009 to the United States Court of Appeals for the

Third Circuit. During the pendency of the appeal, the Supreme

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Court of Pennsylvania overruled the decision of the Superior

Court of Pennsylvania in Pallante, supra, and determined that the

release of a principal does not bar claims against the

principal’s agent, where the release expressly preserves

potential claims against the agent. See Maloney v. Valley

Medical Facilities, Inc., 603 Pa. 399, 984 A.2d 478 (Pa. 2009).

As a result of the Maloney decision of the Supreme

Court of Pennsylvania, the Third Circuit in this case reinstated

plaintiffs’ dismissed individual claims for breach of fiduciary

duty (Count I) and tortious interference with contractual

relations (Count IV). 

The Third Circuit Court of Appeals upheld my dismissal

of all the remaining claims which I dismissed either pretrial 

(at the motion-to-dismiss stage), or at the conclusion of trial. 

See Reis v. Barley Snyder, Snyder, Senft & Cohen, LLC, 

426 Fed.Appx. 79 (3d Cir. 2011).

Finally, the Third Circuit reversed and remanded this

matter. In its Opinion filed February 11, 2011, the Third

Circuit stated: 

Neither side addresses the question of

whether the District Court’s factual findings as

to Weaver Nut’s claims should bind Reis and Katz

and preclude them from pursuing their individual

claims. Even a non-party may be “bound by the

determination of issues” if he or she “controls or

substantially participates in the control of the

presentation on behalf of a party.” This is a

factual inquiry, and the [District] Court is in a

better position than we are to address it in the

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first instance. We will therefore reverse the

dismissal of the individual claims for breach of

fiduciary duty and tortious interference, and will

remand this case for an analysis of the preclusion

issues and, if necessary, further proceedings on

these two individual claims.

Reis, 426 Fed.Appx. at 83-84 (citations omitted).

The gist of defendant’s within motion for summary

judgment is that my Findings of Fact and Conclusions of 

Law at the non-jury trial do preclude plaintiffs from moving

forward on these remaining two reinstated and remanded claims.

STANDARD OF REVIEW

 In considering a motion for summary judgment, the court

must determine whether “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue of

material fact and that the moving party is entitled to judgment

as a matter of law." Fed.R.Civ.P. 56(c); Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986);

Federal Home Loan Mortgage Corporation v. Scottsdale Insurance

Company, 316 F.3d 431, 433 (3d Cir. 2003). Only facts that may

affect the outcome of a case are “material”. Moreover, all

reasonable inferences from the record are drawn in favor of the

non-movant. Anderson, supra. 

Although the movant has the initial burden of

demonstrating the absence of genuine issues of material fact, the

non-movant must then establish the existence of each element on

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which it bears the burden of proof. See Watson v. Eastman Kodak

Company, 235 F.3d 851, 857-858 (3d Cir. 2000). 

Plaintiff cannot avert summary judgment with

speculation or by resting on the allegations in his pleadings,

but rather must present competent evidence from which a jury

could reasonably find in his favor. Ridgewood Board of Education

v. N.E. for M.E., 172 F.3d 238, 252 (3d Cir. 1999); Woods v.

Bentsen, 889 F.Supp. 179, 184 (E.D.Pa. 1995).

FACTS

In my Verdict and Adjudication dated and filed

September 30, 2009 I set forth 139 Findings of Fact, 11

Conclusions of Law and discussion of the applicability of those

findings and conclusions to the claims presented at the previous

non-jury trial. I incorporate those findings and conclusions

here. However, I restate here those findings of fact and

conclusions of law which are pertinent to my discussion and

conclusions below.

Findings of Fact

15. Mr. Katz operates a company named Summit Private

Capital Group, which is a fictitious name under which

he does business.

17. Weaver Nut Company, through its President E. Paul

Weaver, III, entered into the Merchant Banking and

Corporate Development Agreement with Summit Private

Capital Group through Lawrence J. Katz as Executive

Managing Director. 

43. From late 2001 through early 2003 Mr. Katz worked

behind the scenes attempting to find new business

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acquisitions and possible business partners for Weaver

Nut Company. 

44. One potential transaction pursued by Mr. Katz

involved a possible merger with a company named

National Bulk Foods. No deal was ever consummated with

National Bulk Foods.

 

54. On March 26, 2003 Mr. Weaver had an initial

telephone contact with Paul Mattaini, Esquire, a

partner at Barley Snyder. Barley Snyder did not 

represent either E. Paul Weaver, III or Weaver Nut

Company before that date.

55. During the telephone call with Attorney Mattaini,

Mr. Weaver discussed the situation at the Company, the

problems as he perceived them, and he gave Attorney

Mattaini a brief description of the Merchant Banking

and Corporate Development Agreement.

56. At the time Mr. Weaver retained Barley Snyder, he

was the President and sole director of Weaver Nut

Company.

57. On April 1, 2003 Mr. and Mrs. Weaver, together

with John Maksel, met with Attorneys Mattaini and 

Shawn M. Long, of Barley Snyder at the offices of the

firm.

58. During the April 1, 2003 meeting, Mr. Weaver gave

Attorney Mattaini a brief description of the history of

the Company, how Mr. Weaver became involved with 

Mr. Reis and Mr. Katz, the situation regarding the

development agreement and what was happening under the

agreement, differences that had developed between

Messrs. Reis and Katz and Mr. Weaver on how the Company

was being run, and how all those issues fit with the 

relationship that was ongoing under the development

agreement.

59. Mr. Weaver expressed a serious concern to Attorney

Mattaini that the mixed messages that were being sent

to customers and vendors were hurting both the shortand long-term viability of the Company.

60. Mr. Weaver falsely advised Mr. Mattaini that Mr.

Reis and Mr. Katz were not shareholders in the Company 

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and that the stock warrants mentioned in the

development agreement had not been exercised by them.

61. In determining whether to undertake the

representation of Weaver Nut Company and E. Paul

Weaver, III, Attorney Mattaini considered the

applicable provisions of the Pennsylvania Rules of

Professional Conduct including Rule 1.13 and its

comments. Attorney Mattaini correctly concluded that

the firm was not precluded from representing either or

both parties.

62. Barley Snyder inquired regarding the corporate

records of Weaver Nut Company with its corporate

counsel Robert Sisko, Esquire, but was advised that

counsel did not have the corporate records being

sought.

63. Angela Weaver Nolt, Mr. and Mrs. Weaver’s

daughter, who was an employee of Weaver Nut Company,

advised Barley Snyder that the box where the corporate

records were stored at Weaver Nut Company had been

moved, and when located, did not contain the corporate

records that had previously been in the box. Weaver

Nut Company advised Barley Snyder that it did not have

the corporate records requested by Barley Snyder or

copies of them.

64. Weaver Nut Company employees were unable to find,

and Barley Snyder was unable to review, the corporate

records of Weaver Nut Company because Michael Reis had

removed the corporate records from the premises of

Weaver Nut Company and had placed them in a safe

deposit box at Blue Ball National Bank without the

knowledge or consent of E. Paul Weaver, III.

65. The corporate records that were removed from

Weaver Nut Company included all the original share

certificates for the Company.

66. Barley Snyder advised Mr. Weaver that termination

of the Merchant Banking and Corporate Development

Agreement and termination of the employment of Mr. Reis

and Mr. Katz and other employees was an aggressive

strategy which might lead to litigation. After

consultation with counsel, Mr. Weaver decided that it

was in the best interests of Weaver Nut Company to end 

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its relationship with Messrs. Reis and Katz and to

terminate the employment of certain employees.

67. Barley Snyder took direction from Mr. Weaver based

upon his role as President and sole director of Weaver

Nut Company and his assertion that Messrs. Reis and

Katz were not shareholders in the Company.

68. Attorney Mattaini reasonably believed that Barley

Snyder was able to provide competent and diligent

representation to Weaver Nut Company and to Mr. and

Mrs. Weaver at the same time because their interests

were not adverse to one another, based upon Mr.

Weaver’s false representations that Messrs. Reis and

Katz were not shareholders.

69. Barley Snyder did an internal conflict of interest

check prior to meeting with the Weavers.

70. On April 11, 2003, Barley Snyder attorney Shawn M.

Long sent a letter to Mr. Reis and Mr. Katz.

71. The April 11, 2003 letter was copied to Barley

Snyder attorneys Paul G. Mattaini, a partner, and

Matthew H. Haverstick, an associate.

72. The April 11, 2003 letter advised Mr. Reis and 

Mr. Katz that Weaver Nut Company was terminating the 

Merchant Banking and Corporate Development Agreement

together with their employment with Weaver Nut Company.

73. On April 11, 2003, other Company personnel hired

by Mr. Reis, including the office manager (Marie

Wagner), the warehouse manager (George Haynes) and the

general manager (David Fisher), were fired by E. Paul

Weaver, III.

74. Barley Snyder and its attorneys took action on

behalf of the Weavers and Weaver Nut Company without

consulting Mr. Reis and Mr. Katz.

75. Barley Snyder received instructions from Weaver

Nut Company through E. Paul Weaver, III, its President

and sole director who had legal authority to speak for,

and bind, Weaver Nut Company.

76. On or about April 15, 2003 Messrs. Reis and Katz

advised Barley Snyder that together they held 50% of

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the shares in Weaver Nut Company. Mr. Weaver disputed

this assertion when questioned by Barley Snyder

attorneys. Because the corporate books and records

were missing, Barley Snyder had no means of verifying

either position. Barley Snyder correctly determined

that the issue of who owned shares in Weaver Nut

Company was in dispute. 

96. On April 30, 2003 an action was commenced in the

Court of Common Pleas of Lancaster County, Pennsylvania

entitled Weaver Nut Company, Inc. et al. v. Summit

Private Capital Group, et al., No. CI-03-03473 seeking

damages for the alleged torts of defamation, tortious

interference with contractual relations and conversion. 

On May 1, 2003 the case was removed to the United

States District Court for the Eastern District of

Pennsylvania and was assigned to Senior District Judge 

James McGirr Kelly as case number 2003-cv-2815.

97. On April 30, 2009 Weaver Nut Company and E. Paul

Weaver, III also filed a Petition for Special Injunction in Lancaster County case number CI-03-03473

seeking, among other things, to enjoin Messrs. Reis and

Katz from communicating with vendors of Weaver Nut

Company, interfering with the operation of the Company

and for the return of all Company books, records and

other property.

98. On April 30, 2003 a shareholder derivative action

was commenced in the United States District Court for

the Eastern District of Pennsylvania entitled Reis et

al. v. Weaver Nut Company et al, and was assigned to

Judge James McGirr Kelly as case number 2003-cv-2621.

99. The filing of the shareholder derivative action

created a potential conflict of interest for Barley

Snyder in their joint representation of both Weaver Nut

Company and Mr. and Mrs. Weaver. Barley Snyder advised

Weaver Nut Company that it would need to secure other

counsel. Barley Snyder continued to represent Mr. and

Mrs. Weaver, individually.

100. Weaver Nut Company attempted to retain the

services of their former corporate counsel Robert

Sisko, to no avail.

101. On May 20, 2003 an attorney not affiliated with

Barley Snyder, Christopher S. Underhill, Esquire, met

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with Mr. Weaver at the offices of Barley Snyder to

discuss his possible retention on behalf of Weaver Nut

Company.

102. On May 22, 2003 Attorney Underhill sent an

engagement letter to Weaver Nut Company accepting the

Company as a client, addressing the scope and purpose

of the representation, explaining his purpose as

counsel for the Company and attaching his Statement of

Fees and Costs and explaining that his law firm would

bill the Company on a monthly basis for his services.

103. On May 23, 2003 Mr. Weaver, as President of

Weaver Nut Company, signed the engagement letter

indicating his receipt of the letter from Attorney

Underhill and agreement to its terms. 

104. Barley Snyder did not represent or provide any

legal services or advice to Weaver Nut Company after

the Company retained Attorney Underhill.

113. Attorney Underhill determined that the

shareholder derivative lawsuit brought by Messrs. Reis

and Katz was not helpful to the Company and would

probably be harmful to the Company. Attorney Underhill

concluded that Weaver Nut Company should defend the

lawsuit rather than acting on the plaintiff’s side.

114. Attorney Underhill made all of his legal

determinations independently and free of any influence

or coercion from either John Maksel, E. Paul Weaver,

III or Barley Snyder.

117. Overall, the financial program instituted after

the departure of Messrs. Reis and Katz, together with

the cost savings from the firing of all the employees

including Messrs. Reis and Katz, resulted in significant savings to the Company.

118. The increases in operating costs implemented by

Messrs. Reis and Katz offset the increase in gross 

profit margin that the Company enjoyed during their

tenure.

121. Weaver Nut Company significantly decreased its

operating costs after the departure of Messrs. Reis and

Katz.

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130. Despite falling sales, Weaver Nut Company was

more profitable in 2004, 2005 and 2006 than it had been

in 2001-2003.

132. E. Paul Weaver, III in his role as President and

sole director of Weaver Nut Company owed fiduciary

duties to Mr. Reis, Mr. Katz and to Weaver Nut Company.

133. Mr. Weaver breached his fiduciary duties to 

Mr. Reis, Mr. Katz and Weaver Nut Company.

134. Barley Snyder knew that Mr. Weaver owed fiduciary

duties to the Company.

135. Barley Snyder had no knowledge that Mr. Weaver

was breaching fiduciary duties to either the Company or

to Messrs. Reis and Katz.

136. On December 15, 2003 all litigation involving 

Mr. Reis, Mr. Katz, the Weavers and the Company was 

settled pursuant to a consolidated Settlement

Agreement.

137. As part of the settlement, Messrs. Reis and Katz

received a combined $415,000 of which $100,000 was for

attorneys’ fees. In addition, under the Settlement

Agreement Weaver Nut Company was required to provide 

health insurance coverage for Messrs. Reis and Katz for

a period of one year.

138. As part of the terms of the Settlement Agreement,

Messrs. Reis and Katz were required to return to the

Weavers any shares in Weaver Nut Company they may have

had.

139. As part of the settlement, Weaver Nut Company

assigned to Mr. Reis and Mr. Katz any claims the

Company might have against Barley Snyder.

Conclusions of Law

1. Defendant Barley Snyder did not breach its

fiduciary duties to Weaver Nut Company.

2. Defendant Barley Snyder did not aid or abet the

breach of any fiduciary duty owed by E. Paul Weaver,

III, to plaintiffs Michael Reis, Sr. or Lawrence J.

Katz.

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3. Defendant Barley Snyder did not aid or abet the

breach of any fiduciary duties owed by E. Paul Weaver,

III, to Weaver Nut Company.

4. Defendant Barley Snyder was not negligent in the

performance of its professional services to Weaver Nut

Company.

5. Defendant Barley Snyder did not tortiously

interfere with Weaver Nut Company’s contractual

relations with Michael Reis, Sr., Lawrence J. Katz or

Summit Private Capital Group.

6. Defendant Barley Snyder was privileged and legally

justified in assisting the termination of the Merchant

Banking and Corporate Development Agreement.

8. The Merchant Banking and Corporate Development

Agreement did not create a joint venture between Weaver

Nut Company and Summit Private Capital Group. 

9. Plaintiffs Michael Reis, Sr. and Lawrence J. Katz

have not proven by a preponderance of the evidence that

they suffered any damages in their individual

capacities.

11. Plaintiffs’ proposed damages are all speculative

and conjectural.

CONTENTIONS OF THE PARTIES

Contentions of Defendant

 Defendant contends that my Findings of Fact and

Conclusions of Law regarding the five claims brought by

plaintiffs as assignees of Weaver Nut Company and the one claim

brought by plaintiffs individually (for aiding and abetting

breach of fiduciary duty) preclude plaintiffs from now recovering

on the two claims which were remanded by the United States Court

of Appeals for the Third Circuit (breach of fiduciary duty and

interference with contractual relations). Defendant argues that

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the Third Circuit recognized that “[even] a non-party may be

‘bound by the determination of issues’ if he or she ‘controls or

substantially participates in the control of the presentation 

on behalf of a party.’” Reis, 426 Fed.Appx. 79, at 83, citing

Marshak v. Treadwell, 240 F.3d 184, 195 (3d Cir. 2001).

Defendant asserts that plaintiffs controlled the

presentation of the previously dismissed claims. Specifically,

defendant asserts that each plaintiff had a proprietary and

financial interest in the potential judgment and in this court’s

factual and legal determinations. Each was present at trial and

testified on his own behalf and on behalf of the assigned claims

of Weaver Nut Company. 

Furthermore, defendant argues that the release entered

into between the Weavers and plaintiffs clearly provided that no

other entity or person held a stake in the previously adjudicated

claims. Thus, defendant contends that under the Third Circuit’s

decision in Marshak, plaintiffs are bound by this court’s

previous Findings of Fact and Conclusions of Law.

Regarding plaintiffs’ breach of fiduciary duty claim,

defendants contend that they owe no fiduciary duties to

plaintiffs because there was no attorney-client relationship

based upon an express written or oral contract. Furthermore,

defendant contends that plaintiffs never asked it to do anything

for them, nor did defendant agree to provide any services to

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plaintiffs. On the contrary, defendant law firm argues that it

was counsel for the corporation (Weaver Nut Company) and its 

President (E. Paul Weaver, III), and was not counsel for

plaintiffs in any role.

Regarding plaintiffs’ claim for tortious interference

with contractual relations, defendant argues that as the agent of

Weaver Nut Company, it cannot be liable for tortious interference

with a contract between its principal (Weaver Nut) and another

party. In addition, defendant asserts that it was privileged to

give Weaver Nut Company the advice it gave regarding termination

of the contract with plaintiffs and that defendant is protected

from liability for interfering with contracts.

Finally, defendant asserts that plaintiffs are

precluded from pursuing either of the remanded causes of action

because of my prior determination that plaintiffs have suffered

no damages. Defendant argues that plaintiffs’ inability to

establish any damages at the earlier non-jury trial will preclude

plaintiffs from establishing any damages related to the current

claims, because plaintiffs are collaterally estopped from

revisiting that issue.

Contentions of Plaintiffs

Initially, plaintiffs argue that neither issue

preclusion (collateral estoppel) or claim preclusion (res

judicata) should apply in this case because plaintiffs did not

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 21 of 36
have a full and fair opportunity to litigate the issues presently

before the court because of a change in Pennsylvania law on the

two remaining claims. Plaintiffs contend that there are numerous

disputes on material issues of fact which preclude granting

summary judgment in this matter.

Plaintiffs contend that material disputed issues of

fact remain concerning whether defendant had access to Weaver Nut

Company’s corporate tax returns (which plaintiffs contend clearly

demonstrated that Messrs. Reis and Katz were shareholders at the

end of 2001 and 2002). Plaintiffs further contend that a

significant dispute remains regarding whether the business

arrangement between plaintiffs and Weaver Nut Company constituted

a “joint venture”, notwithstanding my contrary determination at

the earlier trial. Plaintiffs contend that I erred in making the

prior determination, and that issue is not now foreclosed.

Plaintiffs also assert that material disputed issues of

fact preclude summary judgment on their claim for tortious

interference with contract. Specifically, plaintiffs argue that

under a participation theory, an agent or officer of a

corporation may be held individually liable for personal

participation in tortious acts. More specifically, plaintiffs

contend that there is an issue of fact for the jury to determine

concerning on whose behalf defendant was acting (for Mr. Weaver 

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 22 of 36
or for Weaver Nut Company) when plaintiffs were discharged from

Weaver Nut Company.

Finally, plaintiffs contend that they have an expert

witness on damages who was not presented at the first trial and 

that a jury should now determine whether plaintiffs have suffered

damages with regard to the remanded claims.

DISCUSSION

In its remand decision, the United States Court of

Appeals for the Third Circuit directed that “an analysis of the

preclusion issues, and, if necessary, further proceedings on

these two individual claims” should be addressed by this court in

the first instance because “[t]his is a factual inquiry and the 

[trial] Court is in a better position than we are to address it

in the first instance.” Reis, 426 Fed.Appx. at 83-84.

The first aspect of this inquiry is whether plaintiffs

controlled or substantially participated in the control of the

presentation of the earlier proceeding. Marshak, supra. Here,

contrary to plaintiffs’ contention that they did not have a full

and fair opportunity to litigate the issues now present in the

light of a change in Pennsylvania law on the two remaining

claims, plaintiffs were in total control of the presentation of

evidence, cross-examination of witnesses and how the entire trial

was presented to the court on the original six claims. 

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 23 of 36
The issues were addressed in detail, and the plaintiffs

had 35 trial days in which to present their claims. To now aver

that they did not have a full and fair opportunity to address all

the relevant issues belies the extensive record produced at trial 

and over emphasizes the import of the Maloney decision of the

Supreme Court of Pennsylvania. 

Specifically, plaintiffs contend that Maloney

dramatically changed agency law in the Commonwealth of

Pennsylvania. I disagree. In Maloney, the Supreme Court of

Pennsylvania did not change the substantive law concerning

agency. Rather, the Court simply permitted the parties to craft

releases to permit claims against agents which ordinarily would

be precluded by a release of the principal. 

Thus, Maloney did not change the elements or proof

necessary to prove claims against an agent. It simply permitted

some claims to proceed by agreement of the parties that normally

would have been released if the claims against the principal were

released. Therefore, based upon my reading of Maloney, I

conclude that plaintiffs’ contention that Maloney significantly

changed the law of agency is without merit. 

Accordingly, after presiding over the lengthy non-jury

trial in this case I can state without reservation that

plaintiffs controlled the presentation of evidence and had a full

and fair opportunity to address all the issues involved in the

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 24 of 36
case. Thus, I must addre+ss the elements of collateral estoppel

to determine whether my previous Findings of Fact and Conclusions

of Law now preclude plaintiffs from satisfying all of the

elements of their two remaining causes of action.

For collateral estoppel to preclude re-litigation of an

issue, each of the following factors must be present: (1) the

identical issue was previously adjudicated; (2) the issue was

actually litigated; (3) the previous determination was necessary

to the decision; and (4) the party being precluded from

relitigating the issue was fully represented in the prior action. 

United States v. 5 Unlabeled Boxes, 572 F.3d 169 (3d Cir. 2009).

Initially, I conclude that the issues now before the

court, more fully discussed below, were the identical issues

previously adjudicated and actually litigated. As noted above, 

plaintiffs were fully represented at the earlier trial3 and

controlled the presentation of all of their evidence. For

instance, at the earlier trial, plaintiffs presented evidence of

damages both to the Company and to themselves individually.4

Also, the issue of whether the Merchant Banking and Corporate

Development Agreement between Weaver Nut Company and plaintiff

Katz’s Summit Private Capital Group constituted a joint venture

3

Plaintiffs were represented at the earlier trial and on appeal by

experienced and competent counsel, Lynanne B. Wescott, Esquire, who also

currently represents them.

4

See for example Findings of Fact 117 and 118 and Conclusions of

Law 9 and 11, above.

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 25 of 36
was adjudicated.5 Furthermore, the issue whether defendant

Barley Snyder was privileged and legally justified in assisting 

the termination of the Merchant Banking and Corporate Development

Agreement was adjudicated as well.6

In my September 30, 2009 Adjudication, I made 139

Findings of Fact and 11 Conclusions of Law based upon testimony

of 22 witnesses and 179 exhibits presented and admitted at trial. 

Each Finding of Fact was supported by the record and my

credibility determinations, and each Conclusion of Law was

supported by the pertinent Findings of Fact. 

The issues were aggressively litigated by each party,

and my findings and conclusions were necessary to determine the

prevailing party on each of the six claims then before the court. 

Most of the specific findings and conclusions reprinted above are

directly on point to the issues now before this court. Thus, I

conclude that all of the matters addressed in my Findings of Fact

and Conclusions of Law were necessary to that decision.7

5

See Conclusion of Law 8, above, and the discussion of this aspect

of the case at pages 43 through 45 of the Adjudication filed September 30,

2009 (Document 205).

6

See Conclusion of Law 6, above, and the discussion of this aspect

of the case at pages 47 through 49 of the Adjudication.

7

None of my 139 Findings of Fact were attacked on appeal by any

party or vacated by the Third Circuit Court of Appeals. (However, the Third

Circuit did identify a proofreading error in my Finding of Fact 139, which I

have corrected in the Findings of Fact section above. See Reis, 426 Fed.Appx.

at 82 n. 2.

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 26 of 36
Remanded Claims

Breach of Fiduciary Duty

In Count I of the Amended Complaint, plaintiffs bring a

cause of action for breach of fiduciary duty by defendant. 

Specifically, plaintiffs assert that by representing both Weaver

Nut Company and the Weavers, defendant Barley Snyder breached a

fiduciary duty that it owed to plaintiffs as 50% shareholders in

the Company. More specifically, plaintiffs assert that the

Merchant Banking and Corporate Development Agreement between

Weaver Nut Company and plaintiff Katz’s Summit Private Capital

Group was for the benefit of the Company and that by aiding the

Weavers in terminating that contract, defendant law firm harmed

the Company. 

In addition, plaintiffs assert that defendant was

operating under a conflict of interest in representing both the

Company and the Weavers at the same time. Also, plaintiffs argue

that defendant owed them a fiduciary duty because the Merchant

Banking and Corporate Development Agreement between Weaver Nut

Company and Summit Private Capital Group (a fictitious name 

company under which plaintiff Katz does business) created a joint

venture.

The elements which plaintiffs must prove in a claim for

breach of a fiduciary duty are: 

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 27 of 36
(1) that the defendant negligently or

intentionally failed to act in good faith and

solely for the benefit of plaintiff in all matters

for which he or she was employed; (2) that the

plaintiff suffered injury; and (3) that the

agent’s failure to act solely for the plaintiff’s

benefit...was a real factor in bringing about

plaintiff’s injuries.

Meyers v. Sudfeld, 2007 U.S.Dist. LEXIS 7634 at *32 (E.D.Pa. 

Feb. 2, 2007)(Padova, J.) citing McDermott v. Party City Corp.,

11 F.Supp.2d 612, 626 n. 18 (E.D.Pa. 1998)(Robreno, J.).

An attorney owes a fiduciary duty to his client which

“demands undivided loyalty and prohibits the attorney from

engaging in conflicts of interest, and breach of such duty is

actionable.” Maritrans GP Inc. v. Pepper, Hamilton & Scheetz,

529 Pa. 241, 253, 602 A.2d 1277, 1283 (Pa. 1992). 

Defendant contends that there is no attorney-client

relationship between plaintiffs and defendant. Thus, defendant

argues that because there was no attorney-client relationship

between plaintiffs and defendant, defendant owed no duties to

plaintiffs nor was defendant subject to any requirement to act

for plaintiffs’ benefit. Defendant further contends that my 

previous Verdict and Adjudication has already determined that

plaintiffs in their individual capacities suffered no damages.

In their brief, plaintiffs do not specifically address

the elements of the cause of action of breach of fiduciary duty. 

Instead they make assertions about what findings I did not make

about what information the corporate tax returns may have

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 28 of 36
revealed to defendants if they had been reviewed, sought to relitigate the issue already decided by me concerning whether or

not the agreement between Weaver Nut Company and Summit Private

Capital Group created a joint venture.8 

Conclusion of Law 8 in my September 30, 2009

Adjudication specifically states: “The Merchant Banking and

Corporate Development Agreement did not create a joint venture

between Weaver Nut Company and Summit Private Capital Group.” 

Conclusion of Law 8 was necessary for my determinations regarding

plaintiff’s claims for the aiding and abetting breach of

fiduciary duty which they brought individually, the breach of

fiduciary duty claim they brought as assignees of Weaver Nut

Company and my determination whether defendants were operating

under a conflict of interest. Thus, Conclusion of Law 8 was

relevant for a number of issues in the underlying Adjudication.

Plaintiff contends that the Third Circuit did not

specifically uphold my determination that there was no joint

venture in this case. However, when the court of appeals

reverses a judgment and remands for further proceedings on a

particular claim or issue, leaving other determinations of the

trial court intact, the unreversed determinations of the trial

court normally continue to work an estoppel. Cowgill v. Raymark

8

See Plaintiffs’ Memorandum of Law in Opposition to Defendant’s

Motion for Summary Judgment at pages 9-17.

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 29 of 36
Industries, Inc., 832 F.2d 798, 802 (3d Cir. 1987). “When the

estoppel is operative in proceedings in the same case on remand,

courts frequently speak in terms of the law of the mandate or the

law of the case rather than collateral estoppel but the

underlying principle is the same.” Id.

In footnote 4 of its decision on appeal, the United

States Court of Appeals for the Third Circuit stated: “Because we

will affirm the dismissal of the professional negligence claim

due to the lack of damages to Weaver Nut, we need not address

plaintiffs’ claim that the District Court erred in applying the

law of Pennsylvania, rather than New Jersey, and in finding there

was no joint venture.” Reis, 426 Fed.Appx. at 84. Furthermore,

it is long-settled that the doctrine applies not only to the

issues that were actually discussed by the court in a prior

decision, but also to those issues necessarily decided by

implication. See Todd and Company, Inc. v. Securities and

Exchange Commission, 637 F.2d 154 (3d Cir. 1980).

Thus, contrary to plaintiff’s assertions, the issues of

whether defendant acted under a conflict of interest or whether

the Merchant Banking and Corporate Development Agreement created

a joint venture between Weaver Nut Company and Summit Private

Capital Group under New Jersey law are issues that have been

finally decided for the purposes of this remand. 

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 30 of 36
In addition, the issue of whether plaintiffs suffered

any individual damages was also previously determined. 

Specifically, Conclusion of Law 9 states: “Plaintiffs Michael

Reis, Sr. and Lawrence J. Katz have not proven by a preponderance

of the evidence that they suffered any damages in their

individual capacities.”; and Conclusion of Law 11 states:

“Plaintiffs’ proposed damages are all speculative and

conjectural.”

I conclude that plaintiffs have not produced sufficient

evidence to overcome defendant’s motion for summary judgment

because they have not demonstrated that defendant was employed by

plaintiffs in a manner that required defendant to fulfill any 

fiduciary duties to plaintiffs. Moreover, plaintiffs have not

shown that they suffered any injury. 

In addition, plaintiffs did not demonstrate a failure

to act on the part of defendant or any injury. Therefore,

plaintiffs cannot establish the third element of a claim for

breach of fiduciary duty, that is that the failure of defendant

attorneys to act solely for plaintiffs’ benefit was a real factor

in bringing about plaintiffs’ injuries.

Next, I determined in Conclusion of Law 9 that

plaintiffs did not prove that they suffered any damages in their

individual capacities. That conclusion was support by, among

others, Findings of Fact 117 and 118 and by the discussion

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 31 of 36
contained on pages 32-35 of the Adjudication. Specifically, I 

concluded that Weaver Nut Company was more profitable without

Messrs. Reis and Katz than it was with them. 

In Finding of Fact 121, I found that Weaver Nut Company

significantly decreased its operating costs after the departure

of Messrs. Reis and Katz. In Finding of Fact 130, I found that

despite falling sales, Weaver Nut Company was more profitable in

2004, 2005 and 2006 (after the termination of plaintiffs) than it

had been in 2001-2003 (when plaintiffs were involved in the

operation of the company). This is true in significant part

because after the termination of plaintiffs on April 11, 2003

(Finding of Fact 72) and the termination on the same date of

other company personnel hired by Mr. Reis (Finding of Fact 73),

the Company no longer had to pay their salaries, benefits,

overhead and expenses.

Because I concluded that the Company was financially

better off, there can be no individual damages for the lost

expectations of profits as presented by plaintiffs at the

previous trial. 

Moreover, plaintiffs are collaterally estopped from

presenting a damages expert witness at a new trial to establish

individual damages in light of my previous determination that the

Company was better off without plaintiffs. Plaintiffs cannot now

prove that they would have had some expectation of greater share

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 32 of 36
value or that they lost potential profits when I have already

concluded at the previous trial that with their continued

participation in Weaver Nut Company, the Company would not have

been as profitable as it was without their participation. 

As indicated in the Standard of Review section, above,

plaintiffs as the non-movant in defendant’s motion for summary

judgment, must establish the existence of each element on which

they bear the burden of proof. Plaintiffs cannot avert summary

judgment with speculation or by resting on the allegations in

their pleadings, but rather must present competent evidence from

which a jury could reasonably find in their favor.

Accordingly, I grant defendant’s motion for summary

judgment and dismiss that remaining portion of Count I of

plaintiffs’ Amended Complaint in which plaintiffs in their

individual capacities assert a cause of action against defendant

for breach of fiduciary duty.

Tortious Interference with Contractual Relations

The remaining claim on remand is contained in Count IV

of the Amended Complaint. In Count IV plaintiffs individually

allege tortious interference with contractual relations by

defendant.

To state a claim for tortious interference with

contractual relations a plaintiff must allege: (1) the existence

of a contract; (2) purposeful action by the defendant specifi-

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 33 of 36
cally intended to harm the existing relation; (3) absence of

privilege or justification on the part of the defendant; and 

(4) actual legal damage as a result of defendant’s conduct. 

CAT Internet Services, Inc. v. Magazines.com, Inc., 

2001 U.S.Dist. LEXIS 8 at *14 (E.D.Pa. Jan. 4, 2001)(Padova, J.)

citing Shiner v. Moriarty, 706 A.2d 1228, 1238 (Pa.Super. 1998). 

Pennsylvania law recognizes a tortious interference

claim only where defendant has interfered with a plaintiff’s

contract with a third party. Center for Concept Development, 

Ltd., v. Godfrey, 1999 U.S.Dist.LEXIS 3337 at *6 (E.D.Pa. 

Mar. 23, 1999) (Hutton, J.).

As noted above, defendant argues that it was the agent

of Weaver Nut Company and as such cannot be liable for tortious

interference with a contract between the principal (Weaver Nut

Company) and another party. In addition, defendant asserts that

it was privileged to give Weaver Nut Company the advice it gave

regarding termination of the contract with plaintiffs and that

defendant is protected from liability for interfering with

contracts.

Finally, defendant asserts that my prior determination

that plaintiffs have suffered no damages precludes this cause of

action because the measure of damages applicable to the claims

presented at the earlier trial are no different than the measure

of damages for the current two remanded claims. Therefore,

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 34 of 36
defendant argues, plaintiffs are collaterally estopped from relitigating this damages issue.

It is clear from the evidence presented at the first

trial that plaintiffs can establish that there was a contract in

this case (the Merchant Banking and Corporate Development

Agreement). Moreover, plaintiffs can establish that defendant

clearly took purposeful action to break the contract on behalf of

Mr. Weaver and Weaver Nut Company. However, I conclude that

based upon my prior findings, plaintiff cannot satisfy either of

the other elements of the cause of action. 

Conclusions of Law 5, 6, 9 and 11 cover the issues of

privilege and damages. Specifically, they provide:

5. Defendant Barley Snyder did not tortiously

interfere with Weaver Nut Company’s contractual

relations with Michael Reis, Sr., Lawrence J. Katz

or Summit Private Capital Group;

6. Defendant Barley Snyder was privileged and

legally justified in assisting the termination of

the Merchant Banking and Corporate Development

Agreement;

9. Plaintiffs Michael Reis, Sr. and Lawrence J.

Katz have not proven by a preponderance of the

evidence that they suffered any damages in their

individual capacities; and

11. Plaintiffs’ proposed damages are all

speculative and conjectural.

As noted above, each of these Conclusions of Law was

based upon the Findings of Fact contained and discussed in the

September 30, 2009 Adjudication. Thus, because none of these

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Case 2:05-cv-01651-JKG Document 274 Filed 06/27/12 Page 35 of 36
findings and conclusions were overturned on appeal, they bind

plaintiffs on this remand. 

Accordingly, because I conclude that plaintiffs did not

and cannot satisfy either of the last two elements of their cause

of action for tortious interference with contractual relations

(the absence of privilege or justification on the part of the

defendant and actual legal damage as a result of defendant’s

conduct), I grant defendant’s motion for summary judgment. See

Watson v. Eastman Kodak Company, 235 F.3d 851, 857-858 (3d Cir.

2000). 

CONCLUSION

For all the foregoing reasons, I grant defendant’s

motion for summary judgment and dismiss the remain portions of

Counts I and IV of plaintiff’s Amended Complaint. 

 

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