Court Opinion

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Date Created: 2015-10-13 21:57:35.264653+00
Date Added: 2024-06-11T11:46:48.008428
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Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

12-6-2004

Commerce Natl Ins v. Buchler
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-1028

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http://digitalcommons.law.villanova.edu/thirdcircuit_2004/101

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                                                                 NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT

                                      No. 04-1028

             COMMERCE NATIONAL INSURANCE SERVICES, INC.,

                                                                       Appellant
                                            v.

             MICHAEL BUCHLER; NEW CASTLE INSURANCE LTD;
                         MARIANNE PISTORIA

      On Appeal from the United States District Court for the District of Delaware
                          (District Court No. 02-cv-00037)
              District Judge: Honorable Sue L. Robinson, Chief Judge

            Submitted Under Third Circuit LAR 34.1(a): November 19, 2004

                         Before: SCIRICA, Chief Judge, and
                       MCKEE and CHERTOFF, Circuit Judges.

                                (Filed December 6, 2004)

                                       OPINION

CHERTOFF, Circuit Judge.

      Michael Buchler and Marianne Pistoria left Commerce National Insurance

Services (CNIS) to join a competing insurance brokerage firm, New Castle Insurance,

Ltd., in early 2002. Buchler personally contacted many of his former CNIS clients to let
them know that he had moved to New Castle Insurance. New Castle Insurance also sent

postcards to many of Buchler’s former clients which announced Buchler’s and Pistoria’s

arrival at the firm. CNIS sued Buchler, Pistoria, and New Castle for tortious interference

with existing contracts and with prospective business relations and sued Buchler and

Pistoria for breach of the nonsolicitation and confidentiality provisions in their

employment contracts.1

       CNIS filed this appeal from a December 10, 2003 Opinion and Order of the

District Court granting summary judgment in favor of Buchler, Pistoria, and New Castle

Insurance on the breach of contract and tortious interference claims in CNIS’s Complaint.

Each claim was based on an underlying allegation that Buchler and Pistoria had breached

the terms of the nonsolicitation and confidentiality agreements in their employment

contracts with CNIS. The District Court found that summary judgment was appropriate

because CNIS had not established that Buchler’s nonsolicitation agreement applied to his

voluntary departure from CNIS, had not presented any evidence that Buchler violated the

terms of his confidentiality agreement, and had not raised any factual issue regarding the

propriety of Pistoria’s actions. (App. 30-32.) The Court further found that the tortious

interference claims failed as against Buchler, Pistoria and New Castle because CNIS’s

   1
     CNIS also brought a defamation claim against all three defendants and a conversion
claim against Buchler. The District Court granted summary judgment in favor of the
defendants on the defamation and conversion claims and CNIS has not appealed the
Court’s judgment as to these claims.

                                              2
existing business clients were free “to choose their insurance representative” and because

CNIS “failed to identify any prospective business relations that, but for defendants’

conduct, would have become clients.” (App. 33-34.)

       This Court exercises plenary review over the District Court’s decision. See Fiscus

v. Wal-Mart Stores, Inc., 385 F.3d 378, 381 (3d Cir. 2004). We will affirm.

                                            A.

       The District Court first found that Buchler did not violate the terms of the non-

solicitation agreement in section G.3 of his employment agreement because the provision

applies only to involuntary termination situations. We agree.

       Under Delaware law, the terms of a nonsolicitation agreement must be “read in a

way that allows all the language to be read together, reconciling conflicts in the language

without rendering any of it nugatory if possible.” CTF Hotel Holdings, Inc. v. M arriott

Int’l., Inc., 381 F.3d 131, 137 (3d Cir. 2004); Eugene A. Delle Donne and Son, L.P. v.

Applied Card Sys., Inc., 821 A.2d 885, 887 (Del. 2003). If the language of the agreement

is unambiguous, it must be given its plain meaning. If it is ambiguous, it must be

construed against the drafter in accordance with the “well-accepted contra proferentem

principle of construction.” Twin City Fire Ins. Co. v. Del. Racing Assoc., 840 A.2d 624,

630 (Del. 2003).

       Here, the Buchler nonsolicitation agreement, read as a whole, is ambiguous.

Section G.3.A is expressly limited to involuntary termination situations, providing that the

                                             3
employee is prohibited from providing notice to his former accounts “[f]or a period of

365 days following termination of ‘Employee’s’ employment by ‘Employer.’” (App. 57)

(emphasis added). Section G.3.B does not include this “by employer” language, instead

providing that “[f]or a period of 36 months following termination of employment,

‘Employee’ shall neither call upon or solicit, either for ‘Employee’ or for any other person

or firm, any ‘Class A, Class B, or Class C Accounts’ . . .” (App. 57) (emphasis added).

CNIS asserts that the absence of the “by employer” language in G.3.B requires its

application to all termination situations, whether voluntary or involuntary. The court,

though, must read the agreement as a whole, including the immediately subsequent “Post-

termination Purchase of Accounts” paragraph, which further defines the positions of the

parties in a section G.3.B situation and is expressly limited to involuntary termination

situations. The paragraph provides, in pertinent part:

      “Employee” agrees that if, during the 36 month period following
      termination of employment by “Employer”, an account which “Employee”
      is other wise not permitted to solicit pursuant to the provisions of
      Agreement G. of this . . . Cont[r]act, nevertheless places business through
      “Employee” either directly or with an entity with which “Employee” is
      affiliated or employed, “Employer” as fair compensation for such account
      an amount equal to the following:
      “Class A accounts”:
      .50 times annualized gross commissions for 36 months after writing account.
      “Class B accounts”:
      .50 times annualized gross commissions for 36 months after writing account.
      “Class C accounts”:
      .50 times annualized gross commissions for 36 months after writing account.
(App. 57-58) (emphasis added).

       The District Court read these two paragraphs together, and used the “termination

                                             4
of employment by Employer” language in the “Post-termination Purchase of Accounts”

paragraph to construe the “termination of employment” language in the immediately

preceding section G.3.B. This reading is reasonable, as it provides double protection to

the employer who fires an employee, first, by limiting the number of times where it will

lose Class A, B, and C accounts by preventing the employee from soliciting them, and

second, by providing for monetary relief should the accounts follow nonetheless. Had the

employer also wished to protect itself in voluntary termination situations, it can be

assumed that it would have provided for the same dual protection in G.3.B and the “Post-

termination Purchase of Accounts” paragraph. It did not, as it explicitly limited the post-

termination purchase protection to involuntary termination situations.

       Therefore, because the agreement can reasonably be read to apply solely to

involuntary termination situations, and because the Court must construe the clause against

CNIS as drafter, this Court will affirm.

                                             B.

       Michael Buchler was also bound by a confidentiality agreement, under which he

agreed that he would not use confidential information obtained at CNIS “for any purpose

other than in the course of this employment and for the exclusive benefit of [CNIS].”

(App. 55-56.) CNIS asserts that Buchler breached this agreement because, after he left

CNIS, he sent a letter to the Delaware Transit Corporation which stated, in pertinent part:

       As stated at our meeting, I feel New Castle Insurance, Ltd is extremely
       capable of servicing your group’s Life, vision, short-term disability and

                                              5
       long-term disability programs. I being personally familiar with the unique
       plan design needs to the Delaware Transit plan will certainly be beneficial
       when marketing the plan in an effort to maintain the most competitive rates.

(App. 793) (emphasis added).

       Even if the information referred to in this letter was confidential information,

something that Buchler disputes, CNIS cannot sustain a breach of contract claim based on

its use because there is no evidence that CNIS sustained damages as a result of the letter

or Buchler’s contact with Delaware Transit. Delaware law “requires a showing of

compensable injury” for a breach of a confidentiality agreement claim. Kronenberg v.

Katz, 2004 WL 1152282 at *29 (Del. Ch. 2004) (citing Great Lakes Chem. Corp. v.

Pharmacia Corp., 788 A.2d 544, 549 (Del. Ch. 2001)). Here, it is undisputed that

Delaware Transit did not follow Buchler to New Castle Insurance, but remained a CNIS

customer. We affirm the District Court’s grant of summary judgment on this claim.

                                             C.

       The District Court next concluded that there was no evidence to support the claims

that Marianne Pistoria breached the non-solicitation and confidentiality provisions in her

employment agreement. This Court will affirm.

       It is undisputed that Pistoria’s non-solicitation agreement applies to both

involuntary and voluntary termination situations. (App. 402-04.) There is no evidence,

though, that Pistoria breached the provision. Pistoria testified that she did nothing to

contact any CNIS customer or to aid New Castle Insurance in soliciting clients, (App.

                                              6
622-23), and Robert Hackett, Jr., senior vice-president of CNIS and manager for the

Delaware Division, admitted that he knew of no “specific proof” that she had, (App. 469-

71, 600-01). CNIS argues that it is still reasonable to infer that Pistoria solicited clients in

violation of her agreement because she worked at New Castle Insurance with Buchler

who admitted to soliciting clients. To survive summary judgment, though, a party must

present more than just “bare assertions, conclusory allegations or suspicions” to show the

existence of a genuine issue. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).

With no record evidence indicating that Pistoria solicited clients, this Court will affirm

the decision of the District Court as to the non-solicitation agreement claim.

       CNIS also bases its confidentiality agreement claim against Pistoria on an

inference, asserting that “[c]ertainly, a jury could reasonably infer that Pistoria used . . .

confidential CNIS information in servicing the accounts which followed Buchler and her

to New Castle.” (Appellant Reply Br. at 10.) Again, CNIS has presented no record

evidence to support their suspicion. Summary judgment, therefore, was appropriate, see

Celotex, 477 U.S. at 325, and this Court will affirm.

                                               D.

       This Court will also affirm the District Court’s finding that CNIS did not sustain a

claim for tortious interference with existing business relations. Under Delaware law, if

“there is no sustainable claim of breach, there can be no viable claim for tortious

interference” with existing business relations because the cause of action requires proof

                                               7
that the defendant intentionally took an action which caused the existing client to breach

its existing contract with the plaintiff. See Aspen Advisors v. United Artists Theatre Co.,

843 A.2d 697, 713 (Del. Ch. 2004) (citing Goldman v. Pogo.com Inc., 2002 WL

1358760, at *8 (Del. Ch. June 14, 2002); Irwin & Leighton, Inc. v. W.M. Anderson Co.,

532 A.2d 983, 992 (Del. Ch. 1987)). Here, it is undisputed that Buchler, Pistoria, and

New Castle Insurance did not cause any CNIS client to breach its contract with CNIS

because all CNIS accounts were at-will, meaning that they were free to leave at any time

and select another insurance representative. (See App. 57-58.) Therefore, CNIS cannot

state a claim for tortious interference with existing business relations, and we will affirm.

                                             E.

       We will also affirm the District Court’s grant of summary judgment in favor of

Buchler, Pistoria and New Castle Insurance on the tortious interference with prospective

contractual relations claim. To establish such a claim under Delaware law, a plaintiff

must show: (1) the existence of a valid business relationship or expectancy; (2)

knowledge of the relationship or expectancy on the part of the interferer; (3) intentional,

wrongful interference which induces or causes a breach or termination of the relationship

or expectancy; and (4) resulting damages. Gill v. Del. Park, LLC, 294 F. Supp. 2d 638,

645 (D. Del. 2003) (citing Lucent Info. Mgmt., Inc. v. Lucent Tech., Inc., 5 F. Supp. 2d

238, 243 (D. Del. 1998)) (emphasis added). Here, CNIS has presented evidence that

Buchler, Pistoria, and New Castle Insurance knew, or should have known, that CNIS had

                                              8
a valid expectancy in the continued business of its existing clients. CNIS, though, has not

presented proof that Buchler, Pistoria, or New Castle Insurance wrongfully interfered

with that expectancy.

       A competitor does not “wrongfully interfere” with its competitor’s at-will

customers by simply competing for their business. Restatement (Second) Torts § 768

(cited in Lipson v. Anesthesia Servs., P.A., 790 A.2d 1261, 1287 & n.80 (Del. Super.

2001)). Instead, the competitor is only liable if the plaintiff shows that the competitor

used “wrongful means” to compete. “Wrongful means” are tactics which are sufficiently

“predatory” that they form an independent basis for liability on the part of the defendant.

See CGB Occupational Therapy, Inc. v. RHA Health Servs., Inc., 357 F.3d 375, 388 (3d

Cir. 2004) (interpreting Restatement (Second) Torts § 768(1) and Pa. law). Such

“independently actionable conduct” includes a defendant’s breach of fiduciary duty,

“physical violence, fraud, civil suits [or] criminal prosecutions.” CGB, 357 F.3d at 389

(quoting Restatement (Second) Torts § 768, cmt. e). Provided the conduct is “sufficiently

wrongful to be actionable by someone,” it provides the basis for a tortious interference

claim even if the party claiming tortious interference lacks standing to assert the claim.

CGB, 357 F.3d at 389.

       Here, CNIS asserts that Buchler, Pistoria, and New Castle Insurance used

wrongful means because they solicited clients in violation of the Buchler and Pistoria

nonsolicitation and confidentiality provisions. The claim fails insofar as Buchler and

                                              9
Pistoria are concerned because there is no evidence that they breached the provisions, as

explained supra, sections A-C. The claim against New Castle Insurance is based on its

advertisement of Buchler’s and Pistoria’s arrival at the firm. While such action, if taken

by Pistoria may have violated her nonsolicitation agreement, CNIS has not pointed to any

“independently actionable” basis for liability against New Castle for the action. It has not

shown that New Castle was bound by the contractual provision that it did not sign, that

New Castle acted at Pistoria’s direction or aided and abetted Pistoria in taking an action

she was not otherwise permitted to take, or that New Castle had a fiduciary duty that

extended to CNIS. New Castle, without help from Pistoria, merely reported Pistoria’s

arrival at the firm. Without further proof, summary judgment in favor of New Castle

Insurance was appropriate on this claim as there is no evidence from which a reasonable

factfinder could conclude that New Castle Insurance intentionally used “wrongful

means.”

       For these reasons, this Court will affirm the District Court’s decision in its entirety.

                                              10