Court Opinion

ID: 4326770
Source: CourtListenerOpinion
Date Created: 2018-11-01 16:14:15.67358+00
Date Added: 2024-06-11T14:47:09.575003
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

 BRP HOLD OX, LLC, and TDBBS, )
 LLC,                         )
                              )
      Plaintiffs/Counterclaim )
       Defendants,            )
                              )               C.A. No. N18C-04-116 CLS
             v.               )
                              )
 WILLIAM CHILIAN,             )
                              )
      Defendant/Counterclaim  )
        Plaintiff.            )

                         Date Submitted: July 6, 2018
                          Decided: October 31, 2018

 On Plaintiffs/Counterclaim Defendants BRP Hold Ox, LLC and TDBBS, LLC’s
                       Motion to Dismiss Counterclaims.
                                  Granted.

Scott T. Earle, Esquire, Zarwin Baum DeVito Kaplan Schaer Toddy, P.C., 1007
North Orange Street, 4th Floor, Wilmington, Delaware, 19801. Attorney for
Plaintiffs/Counterclaim Defendants BRP Hold Ox, LLC and TDBBS, LLC.

William Chilian, 4307 Nevil Bend Turn, Moseley, Virgina, 23120. Pro Se.

Christopher Viceconte, Esquire, Gibbons P.C., 300 Delaware Avenue, Suite 1015,
Wilmington, Delaware, 19801. Former Attorney for Defendant/Counterclaim
Plaintiff William Chilian.

Scott, J.
      This case involves a former employee subject to a non-compete clause

undertaking employment with an organization engaged in the same general line of

business. The former employer instigated an action to enjoin the former employee’s

employment, and recover damages. The issue before the Court is whether the former

employee’s counterclaims are barred by the absolute privilege doctrine, or fail to

meet the pleading requirements.

                                   Background

      Prior to April 2017, William Chilian (Defendant/Counterclaim Plaintiff) was

employed by TDBBS, LLC as vice president of marketing, in charge of the

Barkworthies organization. TDBBS manufactures and sells natural pet treats and

chews throughout the United States. As part of his compensation from TDBBS

Defendant was granted a membership interest in the LLC. At some point the

organization as a whole was offered for sale, and Chilian took a role in marketing

the organization to potential buyers. In March 2017, BRP Hold Ox, LLC acquired

TDBBS by purchasing all membership interests in the LLC. BRP and TDBBS

(collectively “BRP”) manufacture and sell pet related products including natural dog

chews and treats and other similar items. As part of the purchase of TDBBS

members signed an agreement not to compete with TDBBS after the sale, nor

disclose any proprietary information.

                                         2
      In April 2017, Chilian left BRP’s employ, and was subsequently hired by

Central Garden & Pet Company (Central). Central consists of several subsidiaries,

at least one of which is in direct competition with Chilian’s former line of business.

      At some point BRP became aware of Chilian’s new employment situation. In

December 2017, BRP sent a demand letter to Chilian and a Central subsidiary

advising of Chilian’s contractual obligations, and requesting written confirmation of

steps the subsidiary would take to ensure Chilian’s compliance with his obligations.

The parties disagree as to whether there was response to this letter.

      On January 23, 2018, BRP filed an action in United States District Court for

the District of Delaware. Shortly after the Federal Action was filed Chilian’s

employment with Central ended. BRP subsequently withdrew their motion for

preliminary injunctive relief. Responding to a jurisdictional challenge BRP filed a

motion for voluntary dismissal of the Federal Action from the District Court. The

voluntary motion to dismiss was granted. BRP filed this action in April 2018,

asserting it is nearly identical to the complaint in the Federal Action.

                                 Parties Assertions

      Chilian asserted four counterclaims against BRP; Tortious interference with

his employment, malicious prosecution, abuse of process, and declaratory judgment.

BRP seeks dismissal of all counterclaims.

                                           3
      BRP argues the tortious interference claim is barred by the litigation privilege

which protects statements of parties in the course of judicial proceedings that are

relevant to the issue in the case. BRP asserts Chilian’s claim is based on the demand

letter and the subsequent Federal Action.

      Chilian contends the absolute litigation privilege only applies to claims of

defamation arising from statements made in the course of judicial proceedings.

Chilian contends his tortious interference claim is not a thinly veiled defamation

case, and that he has sufficiently pleaded a claim for tortious interference.

      BRP next argues Chilian has failed to state a claim for malicious prosecution.

BRP argues the Federal Action was filed in good faith. BRP further argues Chilian

has failed to allege three elements of a malicious prosecution claim including

initiating a suit without probable cause, with malice, and termination of the action

in favor of the defendant.

      Chilian contends there is evidence suggesting the initiation of the Federal

Action was without probable cause and that he has sufficiently pleaded all elements

of malicious prosecution. Chilian argues he need not present evidence at this stage

in the proceedings where the Superior Court Civil Rules allow malice to be averred

generally.

                                            4
      BRP next argues Chilian’s claim for abuse of process fails as a matter of law.

BRP argues Chilian has not alleged they had an ulterior motive or illegitimate

objective in maintaining suit against Chilian.

      Chilian contends BRP brought suit with knowledge he was not working for a

competitor, and with the intent to improperly force him to terminate his employment.

      Finally, BRP argue Chilian’s claim for declaratory judgment is redundant and

unnecessary. BRP argues the relief sought by Chilian is the inverse of their claims

and should be dismissed. Chilian argues his claim for declaratory relief is valid and

should survive at this stage of the litigation.

                                 Standard of Review

      The test for sufficiency of a complaint challenged by a Rule 12(b)(6) motion

to dismiss is whether a plaintiff may recover under any reasonably conceivable set

of circumstances susceptible of proof under the complaint.1          In making its

determination, the Court must accept all well-pleaded allegations in the complaint

as true and draw all reasonable factual inferences in favor of the non-moving party.2

The complaint must be without merit as a matter of fact or law to be dismissed.3

1
  Spence v. Funk, 396 A.2d 967, 968 (1978); see Cambium Ltd. v. Trilantic Capital
Partners III L.P., 2012 WL 172844, at *1 (Del. 2012)(citing Cent. Mortg. Co. v.
Morgan Stanley Mortg. Capital Holdings LLC, 27 A.3d 531, 537 (Del. 2011)).
2
  Ramunno v. Cawley, 705 A.2d 1029, 1034-36 (Del. 1998); Nix v. Sawyer, 466 A.2d
407, 410 (Del. Super. Ct. 1983).
3
  Diamond State Tel. Co. v. University of Delaware, 269 A.2d 52 (Del. 1970).
                                         5
Therefore, if the plaintiff can recover under any conceivable set of circumstances

susceptible of proof under the complaint, the motion to dismiss will not be granted.4

The Court need not, however, blindly accept conclusory allegations unaccompanied

by “specific supporting factual allegations.5

                                       Analysis

Tortious Interference

       Delaware Courts consistently follow the Restatement (Second) of Torts which

recognizes a claim for tortious interference with contractual relations where a

defendant utilizes “wrongful means” to induce a third party to terminate a contract.6

Conduct amounting to tortious interference has been found actionable even where

the third party is lawfully entitled to terminate a contract “at will.”7

       BRP relies on Barker v. Huang for the proposition that statements made as

part of a judicial proceeding are absolutely privileged, and therefore cannot be the

basis for an intentional tort.8

       The absolute privilege doctrine has long been recognized in Delaware as a

protection from actions for defamation. The privilege applies to statements offered

4
  Ramunno, 705 A.2d at 1034; see Cambium, 2012 WL 172844, at *1 (citing Cent.
Mortg., 27 A.3d at 537)).
5
  Korotki v. Hiller & Arban, LLC, 2016 WL 3637382, at *2 (Del. Super. Ct. 2016).
6
  ASDI, Inc. v. Beard Research, Inc., 11 A.3d 749, 751 (Del. 2010).
7
  Id. at 751.
8
  Barker v. Huang, 610 A.2d 1341 (Del. 1992).
                                         6
in the course of judicial proceedings, by judges, parties, witnesses and attorneys

when the statements are relevant to a matter at issue in the case.9

      The Delaware Supreme Court has explained the policy supporting absolute

privilege “is to facilitate the flow of communication between persons involved in

judicial proceedings and, thus, to aid in the complete and full disclosure of facts

necessary to a fair adjudication.”10 In other words, absolute privilege promotes “the

encouragement of candid discussions between contentious parties free from the

threat of collateral lawsuits based on reputationally based torts such as defamation,

libel, or intentional infliction of emotional distress.”11

      The Court of Chancery in Paige stated without holding, “policy rationale for

the privilege is best served by limiting the privilege's scope to only defamation and

related torts arising from derogatory statements alleged to be harmful to the suing

party's reputation or psychic well-being.”12

      Delaware Courts have frequently addressed questions of defamation and

related torts. In Barker v. Huang, Barker filed a complaint in Superior Court,

seeking damages for defamation of character, libel, slander, tortious invasion of

privacy, wrongful use of civil proceedings, abuse of process, intentional infliction

9
  Barker v. Huang, 610 A.2d 1341 (Del. 1992).
10
   Id. at 1345.
11
   Paige Capital Mgmt., LLC v. Lerner Master Fund, LLC, 22 A.3d 710, 722 (Del.
Ch. 2011).
12
   Id. at 720, (emphasis added).
                                       7
of emotional distress, outrageous conduct and civil conspiracy.13 Barker’s claims

stemmed from statements made by Huang in a deposition and his counterclaim in an

unrelated civil suit. Barker was not a party to that action. The Court in Barker

upheld summary judgment in favor of Huang related to the claim for defamation.

The Court found Barker’s claims arose from statements within the judicial context,

and thus covered by the defense of absolute privilege.14

      Moving to Barker’s non-defamation claims of invasion of privacy and

intentional infliction of emotional distress related to the statements made during the

course of litigation, the Court determined no matter how they were framed, Barker's

claim was “that Huang intentionally made derogatorily false statements about her,

and that she has been harmed thereby.”15 The Court held regardless of the tort theory

by which Barker sought recovery, absolute privilege barred her claims.16

      This Court in Walker v. Parson, reached the same conclusion.17 Plaintiff in

Walker brought claims of defamation and abuse of process related to two prior

actions, one in the Court of Chancery, and one in Superior Court. In the Superior

Court action, Walker wrote a letter to opposing counsel, sending a copy to a Superior

13
   Barker, at 1341.
14
   Id. at 1346.
15
   Id. at 1349.
16
   Id.
17
   Walker v. Parson, 2016 WL 3130093 (Del. Super. Ct. 2016), aff'd, 151 A.3d 455
(Del. 2016).
                                      8
Court Commissioner, that letter became part of the Court’s record in the case.

Opposing Counsel replied to Walker, also copying the Commissioner. Walker

claimed the letter in reply contained defamatory a statement. In the Chancery Court

action, Walker claimed a statement contained in a brief in support of Defendant’s

Motion to Dismiss were defamatory.          The Court determined the statements

constituted statements made during judicial proceedings, pertinent to the pending

action, and thus were privileged.18

      The facts in Denoble v. Dupont Merck Pharmaceutical Co., are substantially

similar to Walker where the statements at issue were made to the Division of

Unemployment Insurance, and therefore were absolutely privileged.19 The Court in

Denoble went one step farther and stated absolute privilege “extends to an attorney's

communication preliminary to the proceedings” citing § 586 of the Restatement

(Second) of Torts for support of this conclusion.20

      However, as the Court of Chancery noted in Paige, no other Delaware cases

addressed the absolute litigation privilege’s applicability to statements made before

the initiation of a formal judicial proceeding.21 The Court in Paige analyzed the

applicability of absolute privilege in the context of admitting the content of a demand

18
   Walker, at *3-4.
19
   DeNoble v. DuPont Merck Pharm. Co., 1997 WL 35410094, at *5 (Del. Super.
Ct. 1997), aff'd, 703 A.2d 643 (Del. 1997).
20
   Id.
21
   Paige, at 718.
                                         9
letter into evidence. In its analysis of the absolute privilege doctrine the Court noted

a determination as to whether the absolute privilege doctrine applies to

communications made in advance of litigation “should be decided in a context where

the merits of that issue are actually contested.”22

      As the Court in Paige noted, assuming absolute privilege does extend to pre-

litigation communications, the rationale for such protection is that it permits parties

to peaceably resolve their disputes prior to litigation by previewing claims that will

be made in good faith litigation.23

      AGC Networks, Inc. v. Relevante, Inc.,24 and Bove v. Goldenberg25 raise

similar questions as the present case. Following a complaint filed by AGC against

Relevante, AGC sent letters to some of its former customers informing them of the

complaint requesting that they preserve electronically stored information that might

be relevant to the issues in the case. Relevante asserted a counterclaim for tortious

interference, alleging that by sending the letters, AGC intentionally and wrongfully

interfered with Defendant’s business relationships with those parties. AGC filed a

motion to dismiss the claim asserting the absolute litigation privilege.
22
Paige Ch., at 718.
23
   Id. at 723.
24
   AGC Networks, Inc. v. Relevante, Inc., 2015 WL 1517419, at *1 (D. Del. Mar. 31,
2015).
25
   Bove v. Goldenberg, 2007 WL 446014 (Del. Super. Ct. 2007).
                                         10
      In Bove, Plaintiff asserted claims for defamation and tortious interference.

Bove based her claims on statements made in a hearing before the Delaware Human

Rights Commission wherein Bove was alleged to have violated the Delaware Equal

Accommodations Law. Bove asserted that the defendants engaged in intentional

interference by spreading misinformation which affected the success of her law

practice.

      The Courts in these two cases reached the same conclusion; the doctrine of

absolute privilege barred claims of intentional interference related to statements

made in the course of litigation.26       Furthermore, the privilege extends to

communications between the parties that are made in an effort to address their

alleged grievances.27

      The question presented before this Court involves two actions, a demand letter

from BRP addressed to Chilian and Central, and the Complaint filed in Federal

District Court. These actions were taken by BRP to address the potential violation

of contractual claims between the parties. Additionally, Chilian’s counterclaim

asserts these actions caused economic and reputational harm.28

26
   AGC Networks, Inc. v. Relevante, Inc., 2015 WL 1517419, at *1 (D. Del. Mar. 31,
2015); Bove v. Goldenberg, 2007 WL 446014, at *4 (Del. Super. Ct. 2007)
27
   Bove v. Goldenberg, at *4.
28
   Answ. at ⁋⁋ 54, 59.
                                         11
      Defamation need not accompany other claims for the absolute privilege to

apply. To the extent statements were made prior to, or during judicial proceedings,

so long as the statements were made in an effort to address the alleged grievance

between the parties, the absolute privilege doctrine applies. For this reason, BRP’s

motion to dismiss Chilian’s tortious interference claim must be Granted.

Malicious Prosecution

      To sustain a cause of action for malicious prosecution a party must show all

requirements; 1) the institution of civil proceedings; 2) without probable cause; 3)

with malice; 4) termination of the proceedings in the aggrieved party's favor; and 5)

damages which were inflicted upon the aggrieved party by seizure of property or

other special injury.29

      With respect to probable cause to initiate a suit, a person has probable cause

for bringing a civil suit if he reasonably believes that he has a good chance of

establishing it to the satisfaction of the Court or the jury.30 “[T]he existence or want

of probable cause is determined at the time of the inception of the original

proceedings...”31

29
   Nix, at 411.
30
   Henriksen v. Henriksen, 1987 WL 25466, at *1 (Del. Super. 1987) citing Prosser,
Torts § 120 at 85 (4th ed. 1971).
31
   Nevins v. Bryan, 2005 WL 2249520, at *1 (Del. Super. Ct. 2005), aff'd, 901 A.2d
120 (Del. 2006).
                                      12
      This Court in Batchelor v. Alexis Properties, LLC denied a motion to dismiss

a malicious prosecution claim stating at this stage in the suit the claimant’s

allegations must be accepted as true, however should he be unable to discover

evidence that the opposing party brought the action without probable cause and in

bad faith, the claim is subject to be resolved in the opposing party’s favor at the

summary judgment phase.32

      This case presents the same issue. At this early stage Chilian has raised

questions as to BRP’s initiation of the Federal Action in good faith.

      The requirement is a showing of malice. While malice may be averred

generally,33 the bare allegation that defendants instituted these proceedings solely to

intimidate and harass is insufficient.34 For an act to have been done in such a way

as to form the basis of a suit for malicious prosecution the act must have been done

with a wrongful or improper motive or with a wanton disregard for the rights of that

person against whom the act is directed.35

      At this stage, Chilian has pleaded BRP initiated the Federal Action with at

least the ancillary motive of forcing him from his employment. Accepting as true

32
   Batchelor v. Alexis Properties, LLC, 2018 WL 1053016, at *4 (Del. Super. Ct.
2018).
33
   Super. Ct. Civ. R. 9 (b).
34
   Nix, at 412.
35
   Nevins v. Bryan, 2005 WL 2249520, at *1 (Del. Super. Ct. 2005), aff'd, 901 A.2d
120 (Del. 2006).
                                        13
Chilian’s pleadings until such time as the factual record is more developed, Chilian

has sufficiently pleaded the malice requirement to sustain the action.

      The fourth requirement for maintaining this cause of action is a showing that

the proceedings terminated in the aggrieved party's favor. BRP points to two non-

Delaware cases for their argument that voluntary dismissal in one forum in favor of

bringing the same claims in a different forum is not a favorable disposition for a

defendant.

      The Supreme Court of Vermont’s holding in Siliski v. Allstate Ins. Co., is

persuasive. There the Court held “if the manner of termination, including dismissal,

reflects negatively on the merits of the case, it will be considered favorable to the

defendant.”36 However, this Court has denied dismissal of a malicious prosecution

claim where the party seeking dismissal has failed to present legal authority showing

that a voluntary dismissal should not be considered as a termination in the claimant’s

favor.37

      The Federal Action between the parties was dismissed by the District Court

on September 26, 2018. In the Court’s order dismissing the action, the Court denied

Chilian’s request for fees and costs noting “[BRP] acted reasonably in withdrawing

their motion expeditiously and choosing to file the Superior Court action in light of

36
  Siliski v. Allstate Ins. Co., 811 A.2d 148, 152 (Vt. 2002).
37
  Batchelor v. Alexis Properties, LLC, 2018 WL 1053016, at *4 (Del. Super. Ct.
2018).
                                           14
the jurisdictional challenge raised by [Chilian].”38 The manner of termination of the

Federal Action does not reflect a favorable termination for either side in this action.

Dismissal was voluntary following a jurisdictional challenge, and therefore, neutral.

      The final requisite to bring a malicious prosecution action is damages,

including some special injury. This Court has addressed what constitutes a “special

injury” holding it must be something more than expenses and attorney’s fees

incurred in connection with defending the original suit and alleged damage to the

claimant's reputation.39

      Defendant has alleged Attorney’s fees and costs connected with defending the

Federal Action. Alone these are insufficient. Defendant has however also alleged

the actions have caused him to lose his work, emotional distress, and other monetary

loses. These claims are sufficient to support a claim for malicious prosecution.

      Causes of action for malicious prosecution are viewed with disfavor by the

Delaware Courts, and, therefore, assessed with careful scrutiny.40 Chilian’s claim

fails to meet one of the requirements, namely the Federal Action was not terminated

in his favor. For this reason, BRP’s motion to dismiss Defendant’s malicious

prosecution claim is Granted.

38
   Brp Hold Ox, LLC & TDBBS, LLC, v. William Chilian, 2018 WL 4613195, at *2
(D. Del. Sept. 26, 2018).
39
   Cuccia v. Edinburg, 1984 WL 548380 (Del Super 1984).
40
   Nix, at 411.
                                     15
Abuse of Process

      Unlike malicious prosecution claims, which focus on a party's initiation of the

legal process, abuse of process concerns “perversion[s] of the process after it has

been issued.”41 Abuse of process and malicious prosecution both address the same

wrong, abusive litigation; it is only a matter of timing between the two. 42 In Nix The

Court also reviewed a claim for abuse of process. There the Court deferred to prior

Delaware precedent for explanation;

              In regard to the claim for abuse of process, Prosser states that the
      essential elements of the tort are: 1) an ulterior purpose; and 2) a wilful
      act in the use of the process not proper in the regular conduct of the
      proceedings. In explaining these elements, Prosser notes that some
      definite act or threat not authorized by the process, or aimed at an
      objective not legitimate in the use of the process, is required. Merely
      carrying out the process to its authorized conclusion, even though with
      bad intentions, does not result in liability. Some form of coercion to
      obtain a collateral advantage, not properly involved in the proceeding
      itself, must be shown. Prosser, Law of Torts, § 121 (4th Ed.1971).43

      In Nix, the Court dismissed a claim for abuse of process where the aggrieved

party failed to show 1) a willful and improper act in the use of process; 2) any form

of coercion; and 3) a collateral advantage to defendants arising from said

coercion.”44 Some form of coercion to obtain collateral advantage, not properly

41
   Korotki v. Hiller & Arban, LLC, 2016 WL 3637382, at *2 (Del. Super. 2016).
42
   Spence v. Spence, 2012 WL 1495324, at *3 (Del. Super. 2012).
43
   Nix, at 412.
44
   Nix, at 412.
                                       16
involved in the proceeding itself, must be shown, such as obtaining the surrender of

property or the payment of money by the use of the process as a threat or club. In

other words, a form of extortion is required.45

      In the present case Chilian has alleged BRP improperly sought to force

Chilian’s separation from his employer, cause financial hardship, intimidate others,

and to deprive a rival organization of an employee.

      These allegations mirror Chilian’s malicious prosecution claim. Defendant

has failed to allege some defect in the carrying on of litigation that would sustain an

abuse of process claim. Defendant’s injuries appear to flow from the initiation of

litigation between the parties, not some act or threat not authorized in the carrying

out of litigation. For this reason, BRP’s motion to dismiss Chilian’s abuse of process

claim is Granted.

Declaratory Judgment

      This Court is statutorily authorized to declare rights, status and other legal

relations whether or not further relief is or could be claimed, where an actual

controversy exists.46    Any person interested under written contract, may have

determined any question of construction or validity arising under the contract, and

obtain a declaration of rights, status or other legal relations thereunder.47

45
   See; Preferred Inv. Servs., Inc., 2013 WL 3934992, at *23.
46
   10 Del. C. § 6501.
47
   10 Del. C. § 6502.
                                          17
        BRP points to CompoSecure, L.L.C. v. CardUX, LLC for the proposition that

Chilian’s claim for declaratory judgment is the inverse of the relief they seek.48 The

Court there determined it was unnecessary to grant declaratory judgment as to

interpretation of a contract where the Court’s decision as to which party was in

breach served the same end.49 In the present case, Chilian has asserted the contract

between the parties is not valid. A determination of the validity of the contract, and

the obligations due under the same serves the same purpose as the relief Chilian

seeks with the counterclaim for Declaratory Judgment. As with CompoSecure this

claim is redundant and unnecessary. For this reason, BRP’s motion to dismiss

Chilian’s declaratory judgment claim is Granted.

        For the forgoing reasons, Plaintiff’s Motion to Dismiss is GRANTED.

        IT IS SO ORDERED.

                                                    /s/ Calvin L. Scott
                                                    Judge Calvin L. Scott, Jr.

48
     CompoSecure, L.L.C. v. CardUX, LLC, 2018 WL 660178, at *44 (Del. Ch. 2018).
49
     Id.
                                       18