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BRP Hold OX, LLC v. Chilian

Superior Court of Delaware

October 31, 2018

BRP HOLD OX, LLC, and TDBBS, LLC, Plaintiffs/Counterclaim Defendants,
v.
WILLIAM CHILIAN, Defendant/Counterclaim Plaintiff.

          Date Submitted: July 6, 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., Attorney for Plaintiffs/Counterclaim Defendants BRP Hold Ox, LLC and TDBBS, LLC.

          William Chilian, Pro Se.

          Christopher Viceconte, Esquire, Gibbons P.C., Former Attorney for Defendant/Counterclaim Plaintiff William Chilian.

          Calvin L. Scott, Jr. Judge

         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.

         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.

         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.

         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] 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 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 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 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 ...


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