Court Opinion

ID: 4684143
Source: CourtListenerOpinion
Date Created: 2021-05-05 16:16:25.728844+00
Date Added: 2024-06-11T08:04:19.622216
License: Public Domain

J-A12005-20

                                2021 PA Super 87

 THE BERT COMPANY D/B/A                   :  IN THE SUPERIOR COURT OF
 NORTHWEST INSURANCE SERVICES             :        PENNSYLVANIA
                                          :
                                          :
              v.                          :
                                          :
                                          :
 MATTHEW TURK, WILLIAM COLLINS,           :
 JAMIE HEYNES, DAVID MCDONNELL,           :
 FIRST NATIONAL INSURANCE                 :
 AGENCY, LLC, FIRST NATIONAL              :
 BANK, AND FNB CORPORATION                :
                                          :
                                          :
 APPEAL OF: MATTHEW TURK, FIRST           : No. 817 WDA 2019
 NATIONAL INSURANCE AGENCY,               :
 LLC, FIRST NATIONAL BANK, AND            :
 FNB CORPORATION                          :

                Appeal from Judgment Entered June 3, 2019
  In the Court of Common Pleas of Warren County Civil Division at No(s):
                              AD 260 of 2017

 THE BERT COMPANY D/B/A                   :   IN THE SUPERIOR COURT OF
 NORTHWEST INSURANCE SERVICES             :        PENNSYLVANIA
                                          :
                    Appellant             :
                                          :
                                          :
              v.                          :
                                          :
                                          :
 MATTHEW TURK, WILLIAM COLLINS,           :
 JAMIE HEYNES, DAVID MCDONNELL,           :
 FIRST NATIONAL INSURANCE                 :
 AGENCY, LLC, FIRST NATIONAL              :
 BANK AND FNB CORPORATION                 :
                                          :
 ----------------------                   :
                                          :   No. 975 WDA 2019
 MATTHEW TURK                             :
                                          :
              v.                          :
J-A12005-20

                                                 :
    THE BERT COMPANY, NORTHWEST                  :
    BANK, AND NORTHWEST                          :
    BANCSHARES, INC.                             :
                                                 :
    APPEAL OF: THE BERT COMPANY                  :
    D/B/A NORTHWEST INSURANCE
    SERVICES

                Appeal from the Judgment Entered June 3, 2019
     In the Court of Common Pleas of Warren County Civil Division at No(s):
                                 260 OF 2017

BEFORE:      KUNSELMAN, J., KING, J., and COLINS, J.*

CONCURRING/DISSENTING OPINION BY COLINS, J.: FILED: MAY 5, 2021

        Because I disagree with the learned majority’s conclusions that the

evidence at trial was sufficient to support the jury’s verdicts against appellants

First National Bank (FN Bank), and FNB Corporation (FNB) and that the

contract between The Bert Company d/b/a Northwest Insurance Services

(Plaintiff) and appellant Matthew Turk provided for recovery of attorney fees

incurred solely in litigation to recover damages, I dissent from the majority’s

affirmation of the trial court’s judgments against FN Bank and FNB and dissent

in part from its affirmance of the attorney fee award against Turk. In addition,

while I agree with the majority’s conclusions that compensatory and punitive

damages awards against appellants First National Insurance Agency, LLC

(FNIA) and Turk must be affirmed, I would affirm the judgment against Turk

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.

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and the punitive damages awards against FNIA and Turk on different grounds

than the majority.

               Plaintiff’s Claims Against FN Bank and FNB

      Appellants argue that the evidence at trial was insufficient for the jury

to find defendants FN Bank and FNB liable for conspiracy and unfair

competition and that the awards of compensatory punitive damages against

them therefore cannot stand. I agree.

      Whether the trial court erred in denying these defendants’ motions for

judgment notwithstanding the verdict (JNOV) is a question of law subject to

our plenary review.    Shamnoski v. PG Energy, 858 A.2d 589, 593 (Pa.

2004); Phillips v. A–Best Products Co., 665 A.2d 1167, 1170 (Pa. 1995).

A trial court’s denial of JNOV is reversible error where, viewing the evidence

admitted at trial in the light most favorable to the verdict winner and granting

that party every favorable inference therefrom, there was not sufficient

competent evidence to sustain the verdict. Shamnoski, 858 A.2d at 593, 602,

606; Wenrick v. Schloemann–Siemag Aktiengesellschaft, 564 A.2d

1244, 1246, 1248 (Pa. 1989); Diffenderfer v. Staner, 722 A.2d 1103, 1104

(Pa. Super. 1998).

      Both causes of action on which the jury found FN Bank and FNB liable

require proof of intent to commit a wrongful act or intent to harm. Plaintiff’s

unfair competition claim required proof that these defendants acted either

with a purpose to cripple Plaintiff’s business or a purpose to have the

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employees commit wrongs against Plaintiff.       Reading Radio, Inc. v. Fink,

833 A.2d 199, 212 (Pa. Super. 2003); Boyce v. Smith–Edwards–Dunlap

Co., 580 A.2d 1382, 1390 (Pa. Super. 1990). A plaintiff has a cause of action

for unfair competition against a competitor who hires away a group of its

employees for the purpose of crippling and destroying the plaintiff’s business,

rather than to benefit itself. Reading Radio, Inc., 833 A.2d at 212; Boyce,

580 A.2d at 1390; Ozburn–Hessey Logistics, LLC v. 721 Logistics, LLC

(Ozburn-Hessey I), 13 F.Supp.3d 465, 476-78 (E.D. Pa. 2014).

      [S]ystematically inducing employees to leave their present
      employment is actionable “when the purpose of such enticement
      is to cripple and destroy an integral part of a competitive business
      organization rather than to obtain the services of particularly
      gifted or skilled employees.”

Reading Radio, Inc., 833 A.2d at 212 (quoting Albee Homes, Inc. v.

Caddie Homes, Inc., 207 A.2d 768 (Pa. 1965)).              Hiring a competitor’s

employees for purposes of having them commit wrongful acts against their

former employer can also support a cause of action for unfair competition, but

it is an alternative basis for a cause of action for unfair competition, and is not

an essential element where the plaintiff shows systematic hiring of employees

to cripple and destroy the plaintiff’s business. Reading Radio, Inc., 833 A.2d

at 212.

      Evidence that a defendant offered employment to at-will employees of

a competitor for the purpose of acquiring valuable employees for its own

business, however, is not sufficient to support a cause of action for unfair

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competition even if the competitor is harmed by that action. Albee Homes,

Inc. v. Caddie Homes, Inc., 207 A.2d 768, 771 (Pa. 1965); Reading Radio,

Inc., 833 A.2d at 212; Boyce, 580 A.2d at 1390.            Absent evidence of a

purpose to cripple the competitor or have the employees commit wrongful

acts against their former employer, the hiring away of even a large number of

a competitor’s employees does not satisfy the elements of the tort of unfair

competition and is not actionable. Albee Homes, Inc., 207 A.2d at 771-72

(hiring of seven of competitor’s salesmen was not actionable where the record

supported only the conclusion that the defendant’s purpose was to obtain

experienced salesmen); Boyce, 580 A.2d at 1390 (defendant that hired “a

substantial number” of plaintiff’s employees was entitled to nonsuit where

there was “no evidence” that it did so “in order to cripple and destroy” plaintiff

rather than to obtain employees to start up its printing business); Ozburn-

Hessey Logistics, LLC v. 721 Logistics, LLC (Ozburn-Hessey II), 40

F.Supp.3d 437, 453 (E.D. Pa. 2014) (no unfair competition cause of action for

hiring nine of plaintiff’s employees where employees were hired for their value

to the hiring company, not to harm plaintiff).

      A cause of action for civil conspiracy requires that the plaintiff prove that

the defendant combined or agreed with one or more other parties to do an

unlawful act or to do a lawful act by unlawful means or for an unlawful

purpose. Phillips v. Selig, 959 A.2d 420, 437 (Pa. Super. 2008); Goldstein

v. Phillip Morris, Inc., 854 A.2d 585, 590 (Pa. Super. 2004). Proof of malice,

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that the defendant had an intent to injure, is an essential element of a

conspiracy claim. Skipworth v. Lead Industries Association, Inc., 690

A.2d 169, 174 (Pa. 1997); Lackner v. Glosser, 892 A.2d 21, 35 (Pa. Super.

2006); Grose v. Procter & Gamble Paper Products, 866 A.2d 437, 440

(Pa. Super. 2005); Goldstein, 854 A.2d at 590.

      Here, the evidence with respect to FN Bank and FNB showed that these

defendants approved the hiring of Turk and as many as seven other

employees of Plaintiff. Plaintiff’s Exs. 57, 60 (3/24/17 email), 61 at 2-3, 147,

149, 151, 152, 159, 164, 168, 170, 171, 172, 174; N.T. Trial, 12/14/18, at

226-28, 244-54; N.T. Trial, 12/17/18, at 95-96. In contrast to the evidence

against FNIA, however, the record at trial was devoid of any evidence that FN

Bank or FNB was aware of the effect on Plaintiff or considered that as a reason

for hiring the employees in question. No FN Bank or FNB employees testified

at trial and no witness testified that either of these defendants expressed or

knew of an intent to cripple Plaintiff’s business. While there was evidence in

communications between FNIA President Martin Muchnok and employees of

Plaintiff that Muchnok had an intent to harm Plaintiff’s ability to service its

customers and knew that Turk was soliciting customers of Plaintiff, no FN Bank

or FNB employee was a party to any of those communications. See Plaintiff’s

Exs. 54, 61 at 1, 62, 104.   To the contrary, the documents to which FN Bank

and FNB were parties showed only that the approval was based on the value

of the employees to FNIA; these documents refer to the desirability of

                                     -6-
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expanding FNIA in the Erie, Pennsylvania area and project that hiring the

employees would be profitable for FNIA. Plaintiff’s Exs. 57, 147, 149, 151,

159, 170. The fact that FN Bank and FNB approved the hiring of a significant

number of Plaintiff’s employees and did so for the purpose of quickly

expanding FNIA’s geographical reach is neither tortious or sufficient to support

an inference of intent to destroy a competitor. Albee Homes, Inc., 207 A.2d

at 771; Boyce, 580 A.2d at 1390; Ozburn-Hessey II, 40 F.Supp.3d at 453

(“coordinated lift-out” of employees of a competitor hired for their value to

the company does not constitute unfair competition).

      Nor was there any evidence that FN Bank or FNB sought to have the

employees from Plaintiff breach their non-solicitation agreements. The

evidence showed that after FN Bank and FNB were informed of the non-

solicitation agreements, their analysis of the profitability of hiring the

employees was based on an assumption that none of Plaintiff’s customers

would transfer their business to FNIA during the one-year non-solicitation

period under those agreements. Plaintiff’s Exs. 147, 159, 170. Neither FN

Bank nor FNB was a party to Muchnok’s and Turk’s communications

concerning moving customers of Plaintiff to FNIA. See Plaintiff’s Exs. 61 at 1,

62.

      There was evidence that FN Bank and FNB were aware that FNIA was

offering to buy a book of business from Plaintiff and approved the making of

such an offer. Plaintiff’s Ex. 172; N.T. Trial, 12/14/18, at 264-65; N.T. Trial,

                                     -7-
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12/17/18, at 95-96. That fact, however, does not show an intent to injure

Plaintiff.   Plaintiff’s president admitted that it is a common and standard

practice in the industry for a competitor who hires an insurance agency

employee who has built up a book of business to offer to purchase that book

of business. N.T. Trial, 12/11/18, at 115-16.

       Neither Plaintiff nor the majority point to any evidence from which the

jury could find that FN Bank or FNB had an intent to harm Plaintiff rather than

a permissible intent to obtain valuable employees for FNIA or that either of

these companies intended to induce Plaintiff’s departing employees to violate

their non-solicitation agreements. Rather, the evidence that the majority cites

as supporting the verdict against FN Bank and FNB simply shows that these

companies approved FNIA’s hiring of a group of Plaintiff’s employees that they

believed would be valuable to FNIA and would expand its business and that

they approved FNIA offering to purchase a book of business from Plaintiff.

Neither of these facts constitutes tortious conduct or is sufficient to show the

tortious intent required for unfair competition and conspiracy.

       The majority also concludes that the judgment against FN Bank can be

sustained on the basis of vicarious liability for FNIA President Muchnok’s

actions. Majority Opinion at 30-33. This basis for affirming the judgment fails

for two reasons. First, it was not a theory that was asserted and presented

to the jury at trial.   Plaintiff did not base its claims against FN Bank and FNB

on any contention that these defendants were vicariously liable for FNIA’s or

                                       -8-
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Muchnok’s actions. Rather, Plaintiff made it clear at trial that its claims against

FN Bank and FNB were based solely on these companies’ own acts and

knowledge. N.T. Trial, 12/18/18, at 34-35. The jury was instructed that it

“must decide whether punitive damages are to be assessed against each

Defendant by that Defendant’s conduct alone.” N.T. Trial, 12/20/18, at 172.

While the jury was instructed that a principal is liable for the acts of its agent,

it was not instructed that an individual may be an agent of more than one

principal. Id. at 150-54.1

       Secondly, even if the jury had found that FN Bank was vicariously liable

on the ground that Muchnok was its agent, that could not support its additional

$500,000 punitive damage awards against FN Bank and FNB.                 Vicarious

liability for an agent’s acts and the agent’s liability are a single tort for which

both defendants are liable, not separate claims.        Mamalis v. Atlas Van

Lines, Inc., 560 A.2d 1380, 1383 (Pa. 1989); Forbes v. King Shooters

Supply, 230 A.3d 1181, 1189 n.11 (Pa. Super. 2020). “A claim of vicarious

liability is inseparable from the claim against the agent since any cause of

action is based on the acts of only one tortfeasor.” Mamalis, 560 A.2d at

____________________________________________

1To the extent that the majority is holding that FN Bank or FNB can be liable
not because Muchnok was their agent but because a conspirator is liable for
co-conspirators’ actions, see Majority Opinion at 27, 32-33, that cannot
support the verdicts against FN Bank and FNB because Plaintiff failed to prove
an essential element of a cause of action for conspiracy, that FN Bank and
FNB had malice, an intent to injure Plaintiff. Skipworth, 690 A.2d at 174;
Lackner, 892 A.2d at 35.

                                           -9-
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1383. Thus, if the jury’s verdicts against FN Bank and FNB were based on

vicarious liability for Muchnok’s conduct as their agent, the verdict could give

rise to only a single, joint punitive damages award, not multiple cumulative

awards, and the $500,000 punitive damages awards against FN Bank and FNB

could not be added to and collected in addition to the $1.5 million punitive

damages award against FNIA for the same conduct by Muchnok.

      Because the evidence at trial showed only that FN Bank and FNB

approved FNIA’s hiring of employees that it considered to be economically

valuable to FNIA and FNIA’s offer to purchase a book of business from Plaintiff

and Plaintiff introduced no evidence from which the jury could infer that FN

Bank or FNB had an intent to harm Plaintiff, rather than benefit FNIA, Plaintiff

did not prove the essential elements of its conspiracy and unfair competition

claims against FN Bank and FNB. Lackner, 892 A.2d at 35; Boyce, 580 A.2d

at 1390. Accordingly, FN Bank and FNB were entitled to JNOV in their favor

on these claims and the punitive damages awards against these defendants

on these claims must be set aside.

                 The Attorney Fees Award Against Turk

      The trial court held that Plaintiff was entitled to attorney fees against

Turk under Turk’s 2017 non-solicitation agreement and awarded Plaintiff a

total of $361,093.74, consisting of $244,579.00 in attorney fees incurred by

Plaintiff in the injunction proceedings and $116,514.74 in attorney fees

                                     - 10 -
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incurred by Plaintiff in litigating its damages claims.     Trial Court Opinion,

4/29/19 at 28.

      Turk challenges this award of attorney fees and costs on two grounds:

(1) that his non-solicitation agreement only permits Plaintiff to recover

attorney fees incurred in the injunction proceedings; and (2) that the trial

court erred in the percentages of Plaintiff’s attorney fees and costs that it

awarded against Turk. While I join in the majority’s rejection of the latter

argument and its affirmance of the award of attorney fees for the injunction

proceedings, I would reverse the $116,514.74 award of attorney fees incurred

by Plaintiff in litigating its damages claims.

      As the majority correctly states, the issue of whether attorney fees in

the   damages    litigation   are   recoverable   under   Turk’s   non-solicitation

agreement is a question of law over which our review is plenary and de novo.

Under Pennsylvania law, litigants cannot recover their attorney fees from an

opposing party unless there is an express statutory authorization for award of

attorney fees, a clear agreement by the parties that attorney fees may be

recovered, or some other established exception. Trizechahn Gateway LLC

v. Titus, 976 A.2d 474, 482-83 (Pa. 2009); Lavelle v. Koch, 617 A.2d 319,

323 (Pa. 1992); Bayne v. Smith, 965 A.2d 265, 267 (Pa. Super. 2009). The

burden is on the party seeking attorney fees to show that it has the right to

recover such fees. Petow v. Warehime, 996 A.2d 1083, 1087 (Pa. Super.

2010); Gall v. Crawford, 982 A.2d 541, 549 (Pa. Super. 2009).

                                       - 11 -
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      Section 8(d) of Turk’s 2017 non-solicitation agreement contained the

following provisions concerning remedies for breach of the agreement:

      (i) I acknowledge that any violation of this Agreement may result
      in immediate termination of my Relationship with [Plaintiff] and
      may subject me to a civil action for money damages by [Plaintiff]
      for any and all losses sustained as a result of the unauthorized
      disclosure of any Confidential Information or other actions which
      breach any provision of this Agreement or any covenants
      contained herein.

      (ii) I recognize that [Plaintiff’s] remedies at law may be
      inadequate and that [Plaintiff] shall have the right to seek
      injunctive relief in addition to any other remedy available to it. If
      I breach this Agreement or any of the covenants contained herein,
      [Plaintiff] has the right to see[k] issuance of a court-ordered
      injunction as well as any and all other remedies and damages, to
      compel the enforcement of the terms stated herein. This provision
      with respect to injunctive relief shall not, however, diminish the
      right of [Plaintiff] to claim and recover damages in addition to
      injunctive relief. If court action is necessary to enforce this
      Agreement, I shall be responsible for [Plaintiff’s]
      reasonable attorney’s fees and costs; provided that
      [Plaintiff] prevails i[n] said enforcement action as
      determined by the appropriate court or tribunal before which
      matter is pending.

Plaintiff’s Ex. 26 at § 8(d) (emphasis added).

      Thus, the parties’ agreement here clearly permitted recovery of attorney

fees, but only for “court action … to enforce this Agreement.” This language

is not broad and does not expressly provide that Plaintiff can recover attorney

fees in any action brought under the agreement or for breach of the

agreement. Compare Bayne, 965 A.2d at 269 (parties’ agreement provided

for attorney fees “in an action brought for the recovery of rent or other

money’s [sic] due or to become due under this lease or by reason of a breach

                                     - 12 -
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of any covenant herein contained or for the recovery of the possession of said

premises, or to compel the performance of anything agreed to be done herein,

or to recover for damages to said property, or to enjoin any act contrary to

the provisions hereof”); Profit Wize Marketing v. Wiest, 812 A.2d 1270,

1272 (Pa. Super. 2002) (“if Employer prevails in any suit or action under this

Agreement, Employee shall reimburse Employer for its expenses incurred in

connection with such suit or action, including without limitation, its attorney’s

fees and costs”) (emphasis omitted).

      The injunction proceedings were unquestionably “court action … to

enforce this Agreement;” the issue is whether the litigation that sought only

to recover damages, rather than to compel compliance with the agreement,

constitutes enforcement of the agreement. I conclude that it does not.

      The word “enforce” indicates an intent to allow attorney fees in

proceedings brought to compel Turk to comply with the non-solicitation

agreement and the obligations that it imposed, not to recover damages for a

breach.    See Merriam-Webster’s Collegiate Dictionary 413 (11th Ed.

2003)     (defining   “enforce”   as   “constrain,”   “compel,”   and   “carry   out

effectively”).   An action for payment of money falls within a provision for

attorney fees in an action to enforce a contract where the money sought

consists of payments that the defendant is required to make under the

contract. See Trizechahn Gateway LLC, 976 A.2d at 477, 482-84 (attorney

fees in action for moneys due under lease were recoverable under agreement

                                        - 13 -
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“to pay a reasonable attorney’s fee if legal action is required to enforce

performance    by   Tenant   of   any    condition,   obligation   or   requirement

hereunder”). Here, however, the relief that Plaintiff sought in the damages

litigation consisted of recovering compensation for harm caused by the breach

of the agreement, not the compelling of payments required under the

agreement or the compelling of compliance with any obligation under the

agreement.

      Moreover, the attorney fees provision is set forth in the section of the

non-solicitation agreement, Section § 8(d)(ii), providing for injunctive relief,

not the section that set forth Plaintiff’s right to bring an action for damages,

Section § 8(d)(i). This fact would not compel the conclusion that attorney

fees are limited to actions for injunctive relief if the language of the attorney

fees provision clearly encompassed actions for damages.                 Trizechahn

Gateway LLC, 976 A.2d at 482-84. The language “court action … to enforce

this Agreement,” however, does not clearly refer to damages actions, as

opposed to enforcement of obligations under the agreement. The placement

of the attorney fees provision in the section of the agreement authorizing

injunctive relief to enforce compliance with the agreement therefore further

suggests that the attorney fees provision was not intended as an authorization

of attorney fees incurred in recovering damages for harm caused by a breach

of the agreement.

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      Neither of the cases relied on by the majority, McMullen v. Kutz, 985

A.2d 769 (Pa. 2009) and DiLucente Corp. v. Pennsylvania Roofing Co.,

655 A.2d 1035 (Pa. Super. 1995), supports its conclusion that the attorney

fees provision in the 2017 non-solicitation agreement encompasses Plaintiff’s

attorney fees in the damages litigation. In McMullen, the attorney fees that

were awarded under a provision that “the party breaching this contract shall

be responsible for payment of legal fees and costs incurred by the other in

enforcing their rights under this Agreement” were incurred in obtaining

payments that were owed the agreement, not consequential damages caused

by a past breach of the agreement.          985 A.2d at 771-72.       Thus, as in

Trizechahn Gateway LLC, the proceeding in which the fees were incurred

was an enforcement of a payment obligation under the contract and therefore

fell within the attorney fees provision. DiLucente Corp. did not involve any

contractual provision for payment of attorney fees and did not hold that a

consequential damages claim constitutes an action to enforce a contract.

Rather, it involved the issue of injunctive relief to enjoin an arbitration and did

not discuss what constitutes enforcement of a contract at all.

      Because it was Plaintiff’s burden to show a clear agreement to pay the

attorney fees that it sought and it showed only a clear agreement to pay

attorney fees incurred in litigation to enforce compliance with Turk’s

obligations under the non-solicitation agreement, the trial court’s award of

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$116,514.74 in attorney fees incurred by Plaintiff in pursuing its damages

claims must be set aside.

                    Plaintiff’s Tort Claims Against Turk

      The sole basis for Turk’s claim that he is entitled to JNOV is the argument

that Plaintiff’s breach of fiduciary duty and civil conspiracy claims against him

are barred by the gist of the action doctrine. I agree with the majority that

this argument fails, but for reasons different than those set forth by the

majority.

      As the majority states, the gist of the action doctrine prohibits a plaintiff

from suing and recovering in tort on claims that are in fact breach of contract

claims. B.G. Balmer & Co. v. Frank Crystal & Co., 148 A.3d 454, 468 (Pa.

Super. 2016); Knight v. Springfield Hyundai, 81 A.3d 940, 950 (Pa. Super.

2013); see also Bruno v. Erie Insurance Co., 106 A.3d 48, 60 (Pa. 2014).

The existence of a contract between the parties, however, does not make all

claims for damages breach of contract claims. Bruno, 106 A.3d at 69; B.G.

Balmer & Co., 148 A.3d at 469. The nature of the duty that the plaintiff

alleges that the defendant breached is the critical factor in determining

whether a tort claim is truly a breach of contract claim and therefore barred

by the gist of the action doctrine. Bruno, 106 A.3d at 68.

      The majority holds that the gist of the action does not apply because

some of Turk’s conduct on which Plaintiff’s claims for breach of fiduciary duty

and conspiracy were based occurred before Turk’s 2017 non-solicitation

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agreement and because his solicitation of a prospective employee of Plaintiff

did not violate the 2017 non-solicitation agreement. I do not agree that tort

judgment against Turk can be upheld on this basis.

      Contrary to the majority’s statements, the record demonstrates that all

the breaches of fiduciary duty and conspiracy claims that Plaintiff alleged were

violations of provisions of Turk’s non-solicitation agreements.          Before he

entered into the 2017 non-solicitation agreement, Turk was already subject

to a 2005 non-solicitation agreement and Plaintiff contended at trial that Turk

was bound by the 2005 agreement.               That 2005 agreement expressly

prohibited the solicitation of employees and the disclosure of Plaintiff’s

customer lists and commission and fee information during Turk’s employment.

Plaintiff’s Ex. 3 ¶¶(2), (3). With respect to Turk’s later conduct, the solicitation

of a prospective employee of Plaintiff violated Section 5 of the 2017 non-

solicitation agreement, which provided:

      During my Relationship with [Plaintiff], I will not, alone or with
      others, directly or indirectly, work on, plan, prepare for, organize
      or engage in any consulting, employment or other business
      activity (whether or not for compensation) that is competitive with
      the business in which [Plaintiff] is involved or may hereafter
      become involved, nor will I engage in any other activity that
      conflicts with my obligations to [Plaintiff].

 Plaintiff’s Ex. 26 § 5.

      The fact that the tort claims were based on the same conduct that also

breached the parties’ contracts does not, however, mandate the conclusion

that they are barred by the gist of the action doctrine. Rather, the critical

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issue is whether the tort claims are based on a violation of a social duty

imposed by the law of torts that exists independent of the terms of the parties’

contract. Bruno, 106 A.3d at 68. Thus, where a tort claim is based on a

fiduciary duty that exists by virtue of the defendant’s employment separate

and apart from the terms of any contract between the parties, it is not barred

even though the same conduct also constitutes a breach of an express

contractual obligation. Teva Pharmaceuticals USA, Inc. v. Sandhu, 291

F.Supp.3d 659, 678 (E.D.Pa. 2018) (breach of fiduciary duty claim for

disclosing confidential information to competitor not barred by gist of the

action doctrine even though same conduct violated employee’s confidentiality

agreement).2

       Here, the breach of fiduciary duty and conspiracy claims against Turk

were premised on tort law duties that arose out of his position with Plaintiff,

not on the provisions of his non-solicitation agreements. An employee owes

his employer a duty of loyalty not to act during his employment for a

competitor of his employer, even if he is not under any non-competition or

non-solicitation agreement. AmQuip Crane Rental, LLC v. Crane & Rig

Services, LLC, 199 A.3d 904, 913-15 (Pa. Super. 2018); Reading Radio,

Inc., 833 A.2d at 204, 211.             Turk, as Plaintiff’s Senior Vice President

____________________________________________

2 Although federal court decisions are not binding on this Court, we may rely
on them for persuasive value. AmQuip Crane Rental, LLC v. Crane & Rig
Services, LLC, 199 A.3d 904, 918 n.4 (Pa. Super. 2018).

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Property/Casualty, therefore owed Plaintiff a duty to not assist Plaintiff’s

competitor, FNIA.   Turk’s solicitation of employees and customers to leave

Plaintiff and go to FNIA and his work with FNIA to move the employees and

customers from Plaintiff to FNIA and time the employee departures to

maximize harm to Plaintiff violated this tort law duty. AmQuip Crane Rental,

LLC, 199 A.3d at 913-15; Reading Radio, Inc., 833 A.2d at 211.

      Because Plaintiff’s breach of fiduciary duty and civil conspiracy claims

against Turk were based on duties that arose under tort law and not from the

provisions of his non-solicitation agreements, I would therefore hold that

those claims are not barred by the gist of the action doctrine even though they

were also breaches of those contracts. Teva Pharmaceuticals USA, Inc.,

291 F.Supp.3d at 678.

           Constitutionality of the Punitive Damages Award

      Appellants argue that the $2.8 million in punitive damages awarded by

the jury is unconstitutionally disproportionate to Plaintiff’s compensatory

damages under State Farm Mutual Automobile Insurance Co. v.

Campbell, 538 U.S. 408 (2003), because it is over 10 times the amount of

the $250,000 in compensatory damages that the jury found that Plaintiff

suffered. In light of my conclusion that FN Bank and FNB are entitled to JNOV

on all claims and that only the $300,000 punitive damage award against Turk

and $1.5 million punitive damage award against FNIA should remain, the ratio

of the total legally valid punitive damages awards, $1.8 million, to the

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$250,000 in compensatory damages is 7.2 to 1, significantly less than 10

times the compensatory award. I therefore do not find it necessary to consider

the validity of a $2.8 million punitive damages award in this case or to address

the majority’s analysis of whether the punitive damages awards may be

separately analyzed for each defendant without considering their cumulative

effect and do not join in the majority’s conclusions on these issues.

      Appellants also contend that any ratio of punitive to compensatory

damages above 2 to 1 is constitutionally excessive. That argument is without

merit. In State Farm, the Supreme Court stated that “an award of more than

four times the amount of compensatory damages might be close to the line of

constitutional impropriety” and concluded that where the compensatory award

was $1 million and contained a noneconomic, punitive element, analysis of

the due process considerations “likely would justify a punitive damages award

at or near the amount of compensatory damages.” 538 U.S. at 425, 429. The

Court, however, declined to impose a specific ratio that punitive damages

cannot exceed and held that “because there are no rigid benchmarks that a

punitive damages award may not surpass, ratios greater than those we have

previously upheld may comport with due process where ‘a particularly

egregious act has resulted in only a small amount of economic damages.’” Id.

at 425 (quoting BMW of North America, Inc. v. Gore, 517 U.S. 559

(1996)).

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      Here, the compensatory award consisted of solely economic damages

with no punitive component. Moreover, the compensatory damages that the

jury found that Plaintiff suffered were low in proportion to the harm that

Plaintiff showed that FNIA and Turk sought to inflict on Plaintiff. While Plaintiff

ultimately suffered only $250,000 in damages, the amount of business that

FNIA and Turk sought to make Plaintiff lose was at least $1.3 million. N.T.

Trial, 12/11/18, at 51. The amount of the total punitive award, $1.8 million,

while high in comparison to Plaintiff’s actual loss, is not extraordinary in

comparison to the harm and gain that FNIA and Turk sought from their

conduct.    Given these facts, a 7.2 to 1 ratio of punitive damages to

compensatory damages is not unconstitutional under the decisions of the

United States Supreme Court or our courts. See Empire Trucking Co. v.

Reading Anthracite Coal Co., 71 A.3d 923, 938-39 & n.3 (Pa. Super. 2013)

($1.5 million award in business tort case was not unconstitutionally

disproportionate to $271,000 compensatory damages award).

      For the foregoing reasons, I would vacate Plaintiff’s judgments against

FN Bank and FNB and the trial court’s award of attorney fees against Turk

insofar as it included attorney fees incurred by Plaintiff in its litigation of its

damages claims and would affirm the breach of fiduciary duty judgment

against Turk and the punitive damages awards against Turk and FNIA solely

on the grounds discussed above.

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