Title: Empire Financial Services v. The Bank of New York
Citation: N/A
Docket Number: 310, 2005
State: Delaware
Issuer: Delaware Supreme Court
Date: April 17, 2006

IN THE SUPREME COURT OF THE STATE OF DELAWARE
EMPIRE FINANCIAL SERVICES, INC.
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No. 310, 2005
Plaintiff Below,
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Appellant, Cross-
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Appellee,
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v.
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Court Below: Superior Court
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of the State of Delaware in
THE BANK OF NEW YORK (Delaware),
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and for New Castle County
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C.A. No. 99C-01-207 and
Defendant Below,
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C.A. No. 00C-09-235
Appellee, Cross-
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Appellant.
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Submitted: February 8, 2006
Decided: April 17, 2006
Before STEELE, Chief Justice, BERGER and JACOBS, Justices.
Upon appeal from the Superior Court.  REVERSED and REMANDED.
Raymond M. Radulski, Esquire (argued), Wilmington, Delaware, and David Staats,
Esquire of the Law Office of David Staats, P.A., Wilmington, Delaware, for
Appellant.
M. Duncan Grant, Esquire, of Pepper Hamilton, LLP, Wilmington, Delaware, for
Appellee.
BERGER, Justice:
Creditors assign accounts to “secondary” collection agencies if, after approximately six
1
months, the “primary” collection agencies have been unsuccessful.
2
In this appeal we consider, among other issues, the appropriate measure of
damages in a claim arising from the theft of certain business records and the related
termination of a collection agency’s contract with a bank.  A jury found that, in
conspiracy with the bank, the president of the collection agency stole business records
from the agency, and used those records to service collections for the bank at a new
collection agency.  Because the contract between the bank and the original collection
agency was terminable at will, however, the bank argued that the original collection
agency suffered no damages.  The trial court agreed, and entered a judgment of zero
damages.  We conclude that the trial court erred in limiting the collection agency to
a contract measure of damages.  The tort measure of damages, which should have
been applied, allows recovery for lost profits resulting from the bank’s wrongful
conduct.  Accordingly, we reverse and remand for a trial on damages.
Factual and Procedural Background
From 1989 until 1997, Empire Financial Services, Inc. (Empire) was one of
several “secondary” collection agencies retained by The Bank of New York
(Delaware) (Bank) to service its unpaid credit card debt.   Under the terms of the
1
operative Secondary Collection Agreement (Agreement), the Bank referred accounts
The Agreement does not specify the information that is to be provided as part of an audit,
2
but an Empire employee testified that the information Empire develops to service an account is not
made available during an audit.
Empire disputed this term of the Agreement,  arguing that the agreement included a hand-
3
written modification eliminating the Bank’s right to recall paying and legal accounts.  The parties
agreed to submit this dispute to an arbitrator, who ruled in favor of the Bank. The Superior Court
refused to modify the arbitrator’s decision.
3
to Empire for collection either by legal action or other “collection procedures.”
Empire was given 6 months to work the account.  If Empire succeeded in establishing
a repayment schedule with the debtor (a “paying” account), or executing on a
judgment against the debtor (a “legal” account), Empire received 50% of all amounts
recovered.  
Empire compiled a database for the accounts it serviced, which included
information such as debtors’ addresses and job histories, contact numbers and notes
of contacts, attorney lists, matters referred to attorneys, and other information
developed by Empire in an effort to secure repayment from the debtors.  Under the
Agreement,  Empire was required to provide the Bank with reports, but those reports
only included the account number, referral date,  status, and balance.  In addition, the
Bank was entitled to audit any and all accounts.    The Bank could recall one or more
2
of its accounts at any time, for any reason.   Thereafter, Empire was entitled to receive
3
its 50% commission only on payments made within 7 days after the recall.  By
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January 1997, Empire’s paying and legal accounts were yielding about $22,000 per
month in profits.  
During the months before his departure, Elviro Ocasio, Jr., President and
general manager of Empire, attempted to acquire the company.  He owned 25% of the
stock and tried to purchase the remaining stock  from the three other stockholders:
Joseph Maccari, the founder, who owned  50%, and Frances and Daniel Brousseau,
who both owned 25% jointly.  Maccari rejected several buy-out proposals, however,
so Ocasio decided it was time to move on.  At the end of January 1997, Ocasio
contacted James Armistead, the Bank employee responsible for Empire’s accounts.
 Ocasio told Armistead that he was going to leave Empire and join another collection
agency. They met for lunch on January 29, 1997, and agreed informally that the Bank
would transfer its accounts from Empire to Ocasio’s new agency.  On this subject,
Ocasio testified as follows:
Q.
So when you had lunch, had you basically reached an
agreement with him that you were relatively confident that the [Bank]
would give you the Empire accounts?
A.
Although there wasn’t a verbal or written agreement, I felt
fairly confident that, when I moved to [the new agency], that I was going
to get the [Empire] account.
*
*
*
Appellee’s Appendix, B-80,82.
4
Appellee’s Appendix, B-99.
5
5
Q. 
To your thinking, did Mr. Armistead believe or know that
you had sufficient information on the accounts to basically be able to
step into Empire’s shoes and service those accounts?
A.
He had knowledge that I had some information that would
help me service the accounts.  To what detail, I don’t think he knew the
detail of what we had.4
Ocasio “clarified” this testimony by affidavit, stating that, when he left the luncheon
with Armistead, he felt he had a verbal agreement that the Bank would transfer its
accounts to the new agency,  and that Armistead “knew [Ocasio] had information that
would help [him] service [the Empire] accounts without a reduction in cash flow....”5
On Friday, January 31, 1997, Ocasio resigned from Empire.  Over the next
two days, Ocasio vandalized Empire’s offices and stole various client contracts,
personnel files, and other business records.  The following Monday, Gwen Wood,
one of Empire’s employees, opened the office in the morning and found it in
shambles. There was a letter from Armistead on Ocasio’s desk, dated January 29th,
that did not appear to have been mailed. The letter advised Ocasio, as President of
Empire, that the Bank was withdrawing all of its accounts because the Bank was
pursuing a different strategy. 
Ocasio and most of Empire’s other employees joined DBA Collection and
Administrative Services, Inc. (DBA) in early February, and the Bank transferred
Torres, obviously, did not follow that instruction, and, when he was subpoenaed in
6
connection with related litigation, he turned the two boxes of documents over to Empire.
The parties stipulated to the dismissal of Armistead prior to trial.
7
6
all of its Empire accounts to DBA within a few days after Ocasio started at DBA.
Raul Torres, one of the Empire employees who moved to DBA, testified that,
during the last week of January 1997, he helped Ocasio carry sealed boxes out of
Empire’s offices.  Torres later learned that those boxes contained all the relevant
collection data for the Bank’s accounts.  The documents were printed on
January 27, 1997, and DBA’s employees spent several weeks, working full-time,
inputting the data from those documents into DBA’s system.  According to Torres,
Ocasio instructed Torres to take the documents home with him every night, and to
destroy them after the data had been transferred.    
6
In early February 1997, Empire sought injunctive relief against Ocasio in the
United States District Court for the District of New Jersey.  Empire obtained a
temporary restraining order, and eventually reached a settlement with Ocasio.  In
1999, Empire filed suit in Delaware against the Bank, Armistead, Ocasio, and other
former Empire employees.  The operative complaint, which now names only the
Bank and Armistead as defendants, includes claims of conversion; tortious
interference with business relationships;  breach of contract; civil conspiracy; and
unjust enrichment.7
Empire Financial Services, Inc. v. Bank of New York, 2003 WL 22701442 (Del. Super.).
8
 The jury answered the following special interrogatories affirmatively:
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1.
Do you find that Empire has proven by a preponderance of the
evidence that before Elviro Ocasio left his employment with Empire,
he and James Armistead reached an agreement about what would
happen with the Bank’s accounts.
2.
Do you find that the plaintiff, Empire,  has proven by a
preponderance of the evidence that the agreement included the
commission of an unlawful or improper act?
 
3.
Do you find that plaintiff, Empire, was damaged.
Appellant’s Appendix, A-330-31.
 Appellant’s Appendix, A-150.
10
7
In 2003, the Superior Court granted the Bank’s motion for summary
judgment as to all claims except civil conspiracy.   The conspiracy claim was tried
8
in 2004, but the trial court severed liability and damages.  The jury returned a
verdict in favor of Empire on liability,   and the damages trial was scheduled to
9
begin in April 2005. Before the second trial, however, the Bank again moved for
summary judgment.  The court ruled that “[t]he measure of damages in this case
does not include ongoing lost profits.  The tortious conduct which gives rise to the
civil conspiracy claim here was this theft of the paper, of the documents, and the
information contained therein.”   The trial court entered a judgment of zero dollars
10
based on its conclusion that Empire was limited to contract damages. 
Both parties appealed.  Empire seeks review of the trial court’s:  1)refusal
to review the arbitrator’s decision about what constituted the operative
See note 3, supra.
11
8
agreement;  2) grant of summary judgment to the Bank on Empire’s breach of
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contract, unjust enrichment, and tortious interference claims; and 3) award of zero
dollars in damages.  The Bank cross-appeals from the trial court’s denial of its
motion for summary judgment on the civil conspiracy claim. 
Discussion
A.  Arbitration award.
Empire’s arbitration argument requires little comment.  The parties
stipulated to binding arbitration on the question of which version of the Agreement
governs.  Empire, dissatisfied with the arbitrator’s factual determination, filed a
complaint to modify or vacate the award.  At the hearing on the Bank’s motion for
judgment on the pleadings, Empire argued that the Superior Court should review
the arbitrator’s findings of fact, including his decision to accept the authenticity of
certain documents.  The Superior Court responded:
Well, [counsel], unless you can make a record that says you
didn’t agree to binding arbitration.... I see the decision of [the
arbitrator].  I see an explanation for his findings....  And I think it’s
– it appears to be perfectly rational, and that’s going to be the basis
on which we proceed.
 
See: Ruckman & Hansen, Inc. v. Delaware River & Bay Auth., 244 A.2d 277, 278
12
(Del.1968).
The Bank seems to acknowledge that affidavits submitted by Ocasio and Torres in June
13
2004 provide evidence of the existence of an agreement.  It argues, however, that those affidavits
must be ignored because they are inconsistent with the witnesses’ prior sworn testimony.
9
The trial court properly refused to undertake any additional review of the
arbitrator’s factual determination.   
12
Empire argues that the trial court should have reviewed the arbitrator’s
decision to determine whether he “follow[ed] the law,” as required by the parties’
stipulation.  Empire does not identify any purported errors of law, however, and
its omission is understandable, as there were no issues of law presented to the
arbitrator.  In short, Empire agreed to binding arbitration on one factual issue; the
arbitration process was conducted fairly; and the arbitrator’s decision was rational.
Empire received all the review that was legally available after binding arbitration.
B.  Denial of summary judgment on the civil conspiracy claim.
The Bank argues that the trial court erred in denying its motion for summary
judgment on the conspiracy claim.  The Bank says that there was no acceptable13
evidence of: (1) an agreement between Armistead and Ocasio to transfer the Bank’s
accounts to DBA; or (2) the Bank’s alleged knowledge that Ocasio was going to
use stolen business records to service the Bank’s accounts.  Accordingly, no issue
of fact existed and the Bank was entitled to judgment in its favor.  
Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002).
14 
Empire Financial Services, Inc. v. Bank of New York, 2003 WL 22701442 at *3(Del.
15
Super.).
 Comment a to Restatement (Second) of Torts § 876(a) explains that the conspirators’
16
“agreement need not be expressed in words and may be implied and understood to exist from
the conduct itself.”  See also, e.g., Resolution Trust Corp. v. Heiserman, 898 P.2d 1049, 1057
(Col. 1995) (quoting W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 46, at
323-24 (5th ed. 1984) for the proposition that an “[e]xpress agreement is not necessary, and all
that is required is that there be a tacit understanding . . . .”).
10
We review the trial court’s denial of a motion for summary judgment for
abuse of discretion.  “There is no ‘right’ to a summary judgment.  A trial court’s
denial of summary judgment is entitled to a high level of deference and is,
therefore, rarely disturbed.”   The trial court found it “troubling” that: (1)
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Armstead and Ocasio had a meeting; (2) shortly thereafter the Bank recalled all of
its accounts from Empire; and (3) after Ocasio left Empire he provided the Bank
with information about attorneys that apparently came from Empire’s stolen
records.  The trial court concluded that the conspiracy claim “will turn on what
inferences the jury draws from these and other circumstances.”  
15
The Bank argues that Ocasio’s testimony shows that there was no
enforceable agreement between the alleged conspirators.  To prove a conspiracy,
however, it is not necessary that there be an express agreement.   What is
16
necessary is evidence of a combination between two or more persons, followed by
Aeroglobal Capital Management, LLC. v. Cirrus Industries, Inc., 871 A.2d 428 (Del.
17
2005).
 See Beck v. Prupis, 529 U.S. 494, 500-06 (2000).  See also, e.g., Daugherty v. Kessler,
18
286 A.2d 95, 101 (Md. 1972) (holding that “[i]n action for the tort of conspiracy the damages
recoverable are those which proximately result from the wrongful conduct.”).
11
an unlawful act carried out in furtherance of such combination, and damages.   The
17
record evidence was more than sufficient to create a triable issue of fact on the
elements of a claim of conspiracy.  At their luncheon meeting, Ocasio and
Armstead discussed Ocasio’s intention to leave Empire.  Armistead indicated that
he was interested in continuing to work with Ocasio, and both men knew that
Empire’s business records were necessary to continue servicing the accounts
effectively.  Moreover, even before they met, Ocasio had printed out Empire’s
account information.  The trial court acted well within its discretion in concluding
that the conspiracy claim should not be resolved on summary judgment.
C. Zero dollar damage award.
Having prevailed on its civil conspiracy claim, Empire was entitled to be
compensated for the harm caused by the tortious act committed in furtherance of
the conspiracy.    Shortly before the damages trial, however, the trial court decided
18
that Empire suffered no damages.   The court started with the premise that Ocasio
had committed the tort of conversion by stealing Empire’s account records.  Those
records, however, had virtually no value unless Empire was servicing the Bank’s
12
accounts.  The Bank, by contrast, was expressly authorized to withdraw its accounts
from Empire at any time, for any reason.  Thus, according to the trial court, the
Bank’s conduct was not wrongful, and could not be the source of harm for purposes
of a conspiracy claim.
The problem with the trial court’s analysis is that it fails to connect Ocasio’s
theft of business records with the Bank’s decision to recall its accounts from
Empire.  The trial testimony established that the information contained in the stolen
business records was proprietary to Empire, and was critical to the uninterrupted
collection of paying and legal accounts.  Without those records, DBA, or any other
new collection agency, would have had  to start with the Bank’s original, stale
information and track down the debtors’ current addresses, phone numbers, places
of employment, etc. in an effort to procure a new repayment agreement with each
debtor.   Empire was one of the Bank’s top performing collection agencies.
Armistead may have had some loyalty to Ocasio, as he claimed, but the Bank is in
business to make profits.  Thus, it is reasonable to conclude that the Bank would
not have transferred its accounts from Empire to DBA unless DBA had the stolen
business records needed to service the accounts.
The underlying tort, therefore, is not simply an act of conversion.  Ocasio
used wrongful means –  theft – to interfere with an existing contract between
 This tort requires proof of: “(a) the reasonable probability of a business opportunity,
19
(b) the intentional interference by defendant with that opportunity, (c) proximate causation, and
(d) damages, all of which must be considered in light of a defendant's privilege to compete or
protect his business interests in a fair and lawful manner.”DeBonaventura v. Nationwide Mutual
Insurance Company, 428 A.2d 1151, 1153 (Del. 1981).  See also: Malpiede v. Townson, 780
A.2d 1075, 1099 (Del. 2001).
 Under Restatement (Second) of Torts § 766B:
20
One who intentionally and improperly interferes with another's
prospective contractual relation . . . is subject to liability to the other for the
13
Empire and the Bank.  Because that contract was terminable at will, however,
Ocasio’s conduct is more properly characterized as interference with Empire’s
expectation that its business relationship with the Bank would continue.  The
Restatement (Second) of Torts § 766, comment g, addresses this situation:
Until [it is] terminated..., the contract is valid and subsisting, and the
defendant may not improperly interfere with it. The fact that the
contract is terminable at will, however, is to be taken into account in
determining the damages that the plaintiff has suffered by reason of
its breach. . . .
One's interest in a contract terminable at will is primarily an
interest in future relations between the parties, and he has no legal
assurance of them. For this reason, an interference with this interest
is closely analogous to interference with prospective contractual
relations.
Accordingly, we construe Ocasio’s conduct as wrongful interference with a
prospective contractual relationship.   Empire’s damages, therefore, are not limited
19
to the value of the stolen records and of the assets that were destroyed at its offices.
Empire can recover for the lost profits that it would have earned, but for Ocasio’s
wrongful interference, from servicing the Bank’s accounts.20
pecuniary harm resulting from loss of the benefits of the relation, whether the
interference consists of
(a) inducing or otherwise causing a third person not to enter into or
continue the prospective relation or
(b) preventing the other from acquiring or continuing the prospective
relation.
See: Cede & Co. v. Technicolor, Inc., 542 A.2d 1182, 1191 (Del. 1988).
21
14
D. Grant of summary judgment on Empire’s remaining claims.
In light of our damages ruling, we will not address Empire’s claim that the
trial court erred in granting summary judgment on its other claims.  Empire has
obtained a favorable jury verdict  on the civil conspiracy claim and will be entitled
to seek recovery of all damages, including lost profits, arising from the wrongful
conduct.  Empire could not obtain any greater recovery for the same conduct under
a different theory.   Therefore, Empire’s remaining claims are moot. 
21
Conclusion
Based on the foregoing, the Superior Court’s entry of a zero damages
judgment is reversed and this matter is remanded to the Superior Court to hold a
trial on damages, in accordance with this Opinion.  Jurisdiction is not retained.