Opinion
Index No. 155743/2018
03-20-2024
F. Frederic Fouad, Plaintiff, v. The Milton Hershey School and School Trust, ELLIOT GREENLEAF PC, PETER GURT, RALPH CARFAGNO, ROBERT HEIST, VELMA REDMOND, DAVID SALTZMAN, JAMES W. BROWN, M. DIANE KOKEN, JAMES M. MEAD, MELISSA L. PEEPLES-FULLMORE, JAN LOEFFLER BERGEN, ANDREW S. CLINE, JARAD W. HANDELMAN, Defendant.
Attorney for Plaintiff F. Frederic Fouad: Jeffrey Schreiber, Jeffrey D Buss, F Frederic Fouad. Attorneys for Defendant The Milton School and School Trust: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant Elliot Greenleaf PC: Frank C Welzer, Vyasa Moka Murthy, Ashley Elizabeth Dale, John Kolsin Crossman. Attorneys for Defendant Peter Gurt: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant Ralph Carfagno: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant Robert Heist: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant Velma Redmond: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant David Saltzman: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant James W. Brown: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant M. Diane Koken: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant James M. Mead: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant Melissa L. Peeples-Fullmore: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant Jan Loeffler Bergen: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Defendant Andrew S. Cline: Colleen Koscheka Fox, Stephanie L Denker. Attorneys for Jarad W. Handelman: Frank C Welzer, Eleven Time Square, Vyasa Moka Murthy, Ashley Elizabeth Dale; John Kolsin Crossman.
Unpublished Opinion
Attorney for Plaintiff F. Frederic Fouad: Jeffrey Schreiber, Jeffrey D Buss, F Frederic Fouad.
Attorneys for Defendant The Milton School and School Trust: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant Elliot Greenleaf PC: Frank C Welzer, Vyasa Moka Murthy, Ashley Elizabeth Dale, John Kolsin Crossman.
Attorneys for Defendant Peter Gurt: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant Ralph Carfagno: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant Robert Heist: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant Velma Redmond: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant David Saltzman: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant James W. Brown: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant M. Diane Koken: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant James M. Mead: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant Melissa L. Peeples-Fullmore: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant Jan Loeffler Bergen: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Defendant Andrew S. Cline: Colleen Koscheka Fox, Stephanie L Denker.
Attorneys for Jarad W. Handelman: Frank C Welzer, Eleven Time Square, Vyasa Moka Murthy, Ashley Elizabeth Dale; John Kolsin Crossman.
Leslie A. Stroth, J.
The following e-filed documents, listed by NYSCEF document number (Motion 006) 148, 149, 150, 151, 152, 153, 168, 191, 192, 193, 194, 195, 196, 197, 198, 199, 200, 201, 202, 203, 204, 205, 206, 207, 208, 209, 210, 234, 235, 236, 237, 238, 239, 240, 241, 242, 243, 244, 245, 246, 247, 248, 249, 250, 251, 252, 253, 254, 255, 256, 257, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 468, 471, 472, 473, 474 were read on this motion to/for AMEND CAPTION/PLEADINGS.
The following e-filed documents, listed by NYSCEF document number (Motion 007) 173, 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 258, 273, 274, 275, 276, 277, 278, 279, 280, 281, 300 were read on this motion to/for DISMISS.
The following e-filed documents, listed by NYSCEF document number (Motion 008) 211, 212, 213, 214, 215, 216, 217, 218, 219, 220, 221, 222, 223, 224, 225, 226, 227, 228, 229, 230, 231, 232, 233, 259, 282, 283, 284, 285, 286, 287, 288, 289, 290, 299 were read on this motion to/for DISMISS.
Plaintiff F. Frederic Fouad moves for leave to file a second amended complaint (motion sequence number 006). Defendants Elliott Greenleaf P.C. and Jarad W. Handelman (motion sequence 007) and defendants The Milton Hershey School (incorrectly named as "The Milton Hershey School and School Trust"), Peter Gurt, Ralph Carfagno, Robert Heist, Velma Redmond, David Saltzman, James Katzman, James Brown, M. Diane Koken, James M. Mead, Melissa L. Peeples-Fullmore, Jan Loeffler Bergen, and Andrew Cline move to dismiss the complaint dated September 17, 2018 (the operative complaint) (motion sequence 008).
In his amended complaint, plaintiff seeks to amend its causes of action and add as parties the Hershey Trust Company (the Trust), in order to correct the naming mistake that was made in the earlier filed complaint, as well as Navada Hatfield. Hatfield has not responded to plaintiff's motion.
The individual defendants in motion sequence number 008 are on the board of the Milton Hershey School (the School) and on the board of the Trust. Gurt, Carfagno, and Cline are also School employees. Defendants in motion sequence 007, Elliott Greenleaf P.C. and Jarad W. Handelman are, respectively, a Pennsylvania law firm, and a lawyer and shareholder in the firm (together, the EG defendants). Jarad W. Handelman is a member of the boards. Since 2016, the EG defendants have acted as counsel for the School and the Trust in multiple proceedings.
I. Background
The proposed second amended complaint alleges the following. The School provides residential care and education for children in grades K through 12 in its single Hershey, PA location. The Trust funds the School and manages its charitable trust assets. The School and the Trust are part of the same 501 (c) (3) structure, each having its own board of managers/directors. The boards are mirror images of each other. Thus, the same individuals are responsible for management and fiduciary oversight of both the School and the Trust. Plaintiff alleges that this structure facilitates defendants' failure to do what is right for the children at the School. He avers that although the Trust boasts assets of $17 billion, the School and the Trust waste hundreds of millions of dollars of trust assets, engage in practices that harm the children at the School, and enable a culture of self-enrichment antithetical to the fiduciary obligations of operating a charity for society's most vulnerable children.
Plaintiff is a graduate of the School, a New York attorney, and a pro bono child welfare advocate who has spent over 20 years working for reforms at the School. School alumni formed the Milton Hershey School Alumni Association (MHSAA) to advocate for the interests of the School's students. Plaintiff joined the association in 1999 and provided it with pro bono legal assistance focused on governance of the School. In 2006, alumni formed "Protect The Hershey's Children, Inc." (PHC) to continue reform advocacy. Plaintiff joined the PHC board in 2008.
Plaintiff contends that the reforms sought by alumni threaten the entrenched culture of self-enrichment perpetuated by the School's senior leadership, and that defendants are intent on shutting down the alumni reform advocacy group because it threatens their lucrative status quo. Each board member makes at least $1.1 million for his/her part-time Board work, a pay structure "virtually unheard of in the nonprofit world" (NYSCEF, 150, SAC, ¶ 28). Rather than remedy policies and practices that endanger the children, School leadership has directed its resources to implement a broad and enduring conspiracy against plaintiff.
Plaintiff alleges that defendants have engaged in a systematic 20-year campaign to harass, intimidate, coerce, and silence him for advocating reform. He contends that they have engaged in a "brazen, deliberate, malicious, and well-funded conspiracy with a common plan and design, approved at the board level and ratified by each successive board, escalating in recent years to include:
• use of a malicious professionally designed media plan with repetitive disinformation tactics extending to powerful social media platforms to encourage, orchestrate, and incite harassment, threats, cyber-bullying, cyber-mob attacks, and relentless emotional harm;
• publication of Plaintiff's address and private contact information ("doxing") to increase the ferocity of the campaign's threats, intimidation, coercion, and distress;
• multiple acts of stalking, coercion, and two separate criminal break-ins at Plaintiff's Manhattan apartment in 2020 (one successful and where confidential information was accessed and photographed for later extortionate and other improper use and the entire apartment was ransacked);
• abusing process across multiple legal proceedings since 2017, including in this one, primarily for improper collateral purposes of malicious harassment, intimidation, coercion, and threats of pursuing meritless litigation against Plaintiff;
• suborning perjury to further their attacks, including to caste Plaintiff in a false light as purportedly: (i) unethical in his professional acts as pro bono counsel; and (ii) purportedly soliciting Hatfield as a minor (Plaintiff has never even met Hatfield); and
• banning Plaintiff without cause or justification and solely for malicious purposes from the School campus and school alumni events in New York and thereby effectively shunning him within the alumni community and depriving him of life membership rights in an alumni organization" (NYSCEF 150, Second Amended Complaint, ¶ 5).
Allegedly, defendants have taken hundreds of separate acts in person or through an agent to injure and silence plaintiff and each defendant has worked in concert with the others. The Second Amended Complaint further alleges that Hatfield, at defendants' instigation, harassed and stalked plaintiff and broke into plaintiff's New York apartment in December 2020 (NYSCEF 150, ¶ ¶ 55-58; SAC ¶ ¶ 265-81). The home invasion is alleged for the first time in the Second Amended Complaint.
II. Procedural History
On June 18, 2018, plaintiff commenced this action by summons with notice (NYSCEF 65, 70). Defendants effected a removal to the United States District Court, Southern District of New York (SDNY). On September 17, 2018, plaintiff served defendants with a verified complaint (NYSCEF 7). The EG defendants served their answer on February 6, 2019. On the same day, the case was transferred to the United States District Court, Middle District of Pennsylvania (MD Pa), where the School and the individual defendants filed their answers and plaintiff filed a first amended complaint.
Defendants made three motions to dismiss and to strike the first amended complaint. On February 19, 2020, the MD Pa Magistrate Judge issued a report and recommendation addressing defendants' motions. The Magistrate recommended that the motions be granted in part and denied in part (Fouad v Milton Hershey Sch. & Tr., 2020 WL 8254470, 2020 U.S. Dist LEXIS 29364 [MD Pa 2020]; NYSCEF 179]).
Plaintiff references his proposed pleading as the "Second Amended Complaint" although there has not been in this action a first amended complaint. The first amended complaint was filed in the MD Pa and adjudicated in the February 19, 2020 decision by the Magistrate Judge.
On September 28, 2020, the MD Pa remanded the case to New York state court for lack of subject matter jurisdiction (Fouad v Milton Hershey Sch. & Sch. Tr., 2020 WL 5775018, 2020 U.S. Dist LEXIS 177735 [MD Pa 2020]). On December 21, 2020, the case was, on application of the EG defendants, removed to the SDNY. On March 5, 2021, the SDNY ruled that the remand by the MD Pa rendered the federal proceedings a nullity for lack of subject matter jurisdiction, and returned the case to the position it occupied at the time that the case was first removed from New York to Pennsylvania in 2018 (Fouad v Milton Hershey Sch. & Sch. Tr., 523 F.Supp.3d 648, 653 [SD NY 2021]). The SDNY then remanded the case to this Court. On October 20, 2021, the complaint that was filed in SDNY on September 17, 2018 (NYSCEF 151, 197) was deemed the operative pleading in this state action (Fouad v Milton Hershey Sch. & Sch. Tr., 73 Misc.3d 1111 [Sup Ct, NY County 2021], affd 204 A.D.3d 607 [1st Dept 2022]).
III. Standard of review for motion to amend a complaint and motion to dismiss
Defendants direct their motions to dismiss to the operative complaint. The proposed Second Amended Complaint adds two defendants, the Trust and Hatfield, and omits from the operative complaint causes of action for prima facie tort, breach of covenant of good faith and fair dealing, and breach of fiduciary duty. The Second Amended Complaint sets forth causes of action for (1) intentional infliction of emotional distress; (2) abuse of process; (3) tortious interference with contractual relations; (4) civil conspiracy to commit a tort; and (5) negligent supervision, hiring, and retention.
Under CPLR 3025, a party may amend its pleading or supplement a pleading. An amendment is any change in a pleading, including the addition of facts and claims that were in existence in time for inclusion in the original pleading (Patrick M. Connors, Prac Commentaries, McKinney's Cons Laws of NY, C3025:9 [Westlaw]). A supplemental pleading is used to set forth occurrences which took place subsequent to the service of the original pleading (84 NY Jur Pleading § 191).
An amended pleading supersedes the original pleading (Healthcare I.Q., LLC v Tsai Chung Chao, 118 A.D.3d 98, 103 [1st Dept 2014]) and the defendant's original answer has no effect (Stella v Stella, 92 A.D.2d 589, 589 [2d Dept 1983]). In contrast, a supplemental complaint does not supersede the original pleading and the answer which has already been served at the time the supplemental pleading was interposed remains in effect (id.). A supplemental pleading is read in conjunction with the original pleading (Mendrzycki v Cricchio, 58 A.D.3d 171, 175 [2d Dept 2008]).
The Second Amended Complaint is a supplemental complaint because it alleges new facts that occurred after the operative pleading was filed.
Leave to amend or supplement pleadings should be freely given, absent a showing of prejudice or surprise (Edenwald Contr. Co. v City of New York, 60 N.Y.2d 957, 959 [1983]; Spiegel v Gingrich, 74 A.D.3d 425, 426 [1st Dept 2010]; Bennett v Long Is. Jewish Med. Ctr., 51 A.D.3d 959, 961 [2d Dept 2008]). The plaintiff need not establish the merit of its proposed amendments, but simply show that they are not palpably insufficient or clearly devoid of merit (MBIA Ins. Corp. v Greystone & Co., Inc., 74 A.D.3d 499, 500 [1st Dept 2010]; Fairpoint Cos., LLC v Vella, 134 A.D.3d 645, 645 [1st Dept 2015]).
On a motion to dismiss, the court accepts as true the facts alleged in the complaint as well as all reasonable inferences that may be gleaned from those facts (Amaro v Gani Realty Corp., 60 A.D.3d 491, 492 [1st Dept 2009]). The court does not assess the merits of the complaint but only determines if the complaint states legally cognizable causes of action (Skillgames, LLC v Brody, 1 A.D.3d 247, 250 [1st Dept 2003]). Nor does the court consider "[w]hether a plaintiff can ultimately establish its allegations" (EBC I, Inc. v Goldman, Sachs & Co., 5 N.Y.3d 11, 19 [2005]). To defeat a CPLR 3211 (a) (8) motion to dismiss for lack of personal jurisdiction, the plaintiff need only make a prima facie showing that there is jurisdiction over the defendant (WCVAWCK-Doe v Boys & Girls Club of Greenwich, Inc., 216 A.D.3d 1, 6 [2d Dept 2023]).
Defendants' motions to dismiss the operative complaint are denied. Plaintiff's motion to amend the operative complaint is granted to the extent that the claim for intentional infliction of emotional distress is added and the addition of the Trust and Hatfield as defendants is permitted. Plaintiff's motion is otherwise denied. As such, only one cause of action is added to the operative complaint: intentional infliction of emotional distress.
IV. Decision of the Magistrate Judge in the action before the United States District Court, M.D. Pennsylvania
The MD Pa Magistrate Judge's decision dated February 19, 2020 states that Fouad's first amended complaint in the MD Pa asserted nine counts against the same defendants in the instant action, except for Hatfield: (1) defamation; (2) false light; (3) abuse of subpoenas for subpoenas returnable in New York; (4) abuse of process; (5) intentional interference with contract; (6) intentional infliction of emotional distress; (7) civil conspiracy to commit a tort; (8) prima facie tort; and (9) "declaratory judgment as to Fouad's legal status regarding the... potential, but entirely nascent and theoretical Dragonetti Act claims" (Fouad, 2020 WL 8254470, *11, 2020 U.S. Dist LEXIS 29364, * 31-32). Under the Dragonetti Act, a plaintiff may impose liability on an individual for wrongful use of civil proceedings (42 Pa Cons Stat Ann. [CSA] § 8351 [a]; Schmidt v Currie, 470 F.Supp.2d 477, 480 [ED Pa 2005], affd 217 Fed.Appx. 153 [3d Cir 2007]).
The Magistrate Judge recommended the following. Defendants' motions to dismiss should be denied as to counts one and two to the extent that defendants challenged the legal sufficiency of the counts, but should be granted on statute of limitations grounds with respect to any allegations falling beyond the one-year period of limitations. The motions should be granted with respect to counts three, four, five, six, seven, eight, and nine, except that any abuse of process claim in count four based upon an allegation that the defendants knowingly used legal process to procure false testimony from Hatfield for the sole purpose of defaming the plaintiff, should proceed.
The Magistrate Judge further determined that the individual defendants' motion to dismiss for lack of any liability in their personal and professional capacities should be granted; and defendants' motion to dismiss the Trust should be granted. The court further recommended that the motions to strike should be granted in part and denied in part.
V. Res Judicata effect of the Magistrate Judge' February 19, 2020 decision
On March 5, 2021, SDNY ruled that the Pennsylvania proceedings had been nullified due to lack of subject matter jurisdiction (Fouad, 523 F.Supp.3d at 653). The operative complaint in this action is the complaint filed by plaintiff in SDNY on September 17, 2018. The operative complaint, the amended complaint adjudicated by the MD Pa on February 19, 2020, and the Second Amended Complaint in this case make largely the same allegations, except for the events concerning Hatfield.
Defendants contend that the February 19, 2020 decision collaterally estops plaintiff from making the same claims in this case. Plaintiff contends that the decision is not preclusive because it was nullified and it was not adopted by the Pennsylvania District Court.
Res judicata is an umbrella term encompassing both claim preclusion and issue preclusion (Rojas v Romanoff, 186 A.D.3d 103, 107 [1st Dept 2020]). A dismissal for lack of subject matter jurisdiction has preclusive effect as to the ground upon which dismissal is predicated (Hell's Kitchen Neighborhood Assn. v Bloomberg, 2007 WL 3254393, *4, 2007 U.S. Dist LEXIS 81478, *13 [SD NY 2007]; Weininger v Castro, 462 F.Supp.2d 457, 472 [SD NY 2006]). To the extent that the dismissal is an adjudication on the merits of the action, a dismissal for lack of subject matter jurisdiction has preclusive effect on the merits; otherwise the dismissal has no preclusive effect on the merits (St. Pierre v Dyer, 208 F.3d 394, 400 [2d Cir 2000]; see also Stagg, P.C. v United States Dept. of State, 983 F.3d 589, 605 n 9 [2d Cir 2020]; Roth v McAllister Bros., 316 F.2d 143, 145 [2d Cir 1963]). An order that does not indicate an intention to dismiss the action on the merits does not provide a basis for res judicata (Espinoza v Concordia Intl. Forwarding Corp., 32 A.D.3d 326, 328 [1st Dept 2006]; Matter of Farkas v New York State Dept. of Civil Service, 114 A.D.2d 563, 564 [3d Dept 1985]).
In this case, the dismissal based on lack of subject matter jurisdiction was not on the merits, while the February 19, 2020 report and recommendation was on the merits, although the Court lacked subject matter jurisdiction. "Today, it is safe to conclude that most federal-court judgments are res judicata notwithstanding a lack of subject-matter jurisdiction" (18A Fed. Prac. & Proc. Juris. § 4428 [3d ed Westlaw]). Hence, the report and recommendation would be preclusive, if not for the fact that the decision was not adopted by the district court.
Res judicata applies to final judgments (Chariot Plastics, Inc. v United States, 28 F.Supp.2d 874, 881 [SD NY 1998]). A magistrate judge has no authority to make a final and binding ruling on a dispositive motion; this authority remains with the referring court (Thomas v Arn, 474 U.S. 140, 154 [1985]; United States v Raddatz, 447 U.S. 667 [1980]; 12 Fed. Prac. & Proc. Civ. § 3070.1 [3d ed Westlaw] ["It is fundamental that those recommendations [of the magistrate judge] do not become an order of the court until the district judge takes some action"]).
Hence, the February 19, 2020 decision is not res judicata, since it was not adopted and finalized by the district court. Nonetheless, since the decision is instructive and persuasive, this decision will refer to it. On a motion to dismiss, a court may take judicial notice of related actions (Curry v Hundreds of Hats, Inc., 146 A.D.3d 593, 593-594 [1st Dept 2017]).
VI. Plaintiff's allegations relating to defendant Hatfield
Plaintiff alleges that, starting in 2002, the School and the Trust "began placing alumni," including defendants Gurt, Carfagno, Redmond, and Heist, to engage in retaliatory attacks against plaintiff. They and other agents of the entity defendants mailed thousands of letters to New York attacking plaintiff and directed "'goons'" to disrupt meetings of alumni supporting reforms (NYSCEF 150, ¶ 114).
Plaintiff alleges that Hatfield is a former School student who was expelled in 2011. By 2016, defendants had recruited Hatfield to intimidate plaintiff for which purpose Hatfield came to New York (NYSCEF 262, reply aff in further support of motion to amend, ¶ 25). Hatfield participated in social media platforms used by School leadership to smear and threaten plaintiff and stalked plaintiff at his apartment building in New York.
In its motion to file the Second Amended Complaint, plaintiff references several occurrences at the school. The suicide of a student in School care led the bereaved family to file a personal injury action (Wartluft v The Milton Hershey Sch. & Sch. Trust, 2018 WL 3995697, 2018 U.S. Dist LEXIS 141153 [MD Pa, Aug 21, 2018, No. 1:16CV2145). Another student filed a simultaneous action alleging mistreatment at the School (Dobson v The Milton Hershey Sch. & Sch. Trust, 1:16CV01958 [MD Pa]). Plaintiff alleges that the plaintiffs' claims in these actions concerned problems that plaintiff and other alumni attempted to bring to the School's attention.
On June 2, 2017, on behalf of the School, defendant Handelman deposed Hatfield in the Wartluft case, about which Hatfield had no personal knowledge. Plaintiff alleges that Hatfield knew only the social media posts about the suicide. Hatfield understood that his role at the deposition was to provide a false narrative that would assist defendants' campaign against plaintiff. Before the deposition, Hatfield tried to use the threat of his upcoming false testimony to force plaintiff into silence by offering plaintiff an agreement that Hatfield would refrain from disclosing non-existent "wrongs" plaintiff had supposedly committed in exchange for plaintiff ceasing his reform advocacy (NYSCEF 150, ¶ 208). Plaintiff did not respond to Hatfield's offer.
Plaintiff states at his deposition that Hatfield made numerous false disparaging statements about plaintiff, and that defendants knew that Hatfield's testimony was false. Handelman admitted that he knew Hatfield's testimony was suspect in that Hatfield was trying to "make himself relevant" to the Wartluft action (NYSCEF 150, ¶ 219). Hatfield's testimony provided no evidence in Wartluft, but it served its purpose in helping to legitimize the attacks on plaintiff. Defendants used Hatfield's perjury as evidence of plaintiff's wrongdoing in a July 19, 2017 letter sent to plaintiff and the NYPD banning plaintiff from all School events.
On November 18, 2020, NYPD arrested Hatfield at plaintiff's front door. On December 19, 2020, Hatfield evaded building security, kicked in the door to plaintiff's 44th floor apartment, ransacked the apartment, and accessed plaintiff's confidential information. Hatfield photographed names and addresses of plaintiff's loved ones. He lay in wait for plaintiff armed with a knife. Plaintiff was of town at the time and did not go home. Hatfield found himself trapped inside plaintiff's apartment because the door he kicked in would no longer open from the inside, forcing Hatfield to call 911 and summon the NYPD to get him out. NYPD arrested Hatfield inside plaintiff's apartment on December 20, 2020.
On Facebook, Hatfield posted photographs of plaintiff's ransacked home and threatened disclosures of plaintiff's "secrets" (NYSCEF 120, ¶ 275). Hatfield disclosed that defendants were aware of the New York break-in in real time and, rather than calling the police or trying to warn plaintiff, acted to cover up the crime by directing Hatfield to destroy evidence and flee the scene (NYSCEF 262, plaintiff aff in reply, ¶ 58). Hatfield released a podcast on Facebook in which he stated that the EG defendants were his "handlers," that they directed his actions, and that defendant Peter Gurt and the board approved the tactics employed by Hatfield to attack plaintiff. Hatfield stated that the School and Mr. Gurt directed him to the EG defendants. Plaintiff claims that Hatfield acted as defendants' agent and that his agency is further illustrated by defendants' conduct when plaintiff was trying to serve Hatfield in this case. Hatfield stated that defendants "had me evade service, move, ignore phone calls, file complaints, evade process servers, [ and] lie" (id., ¶ 46). Hatfield stated that defendants arranged for payment of counsel to defend him in this case and chose counsel whom they controlled, even when contrary to Hatfield's interests (id., ¶ 45). Hatfield described an arrangement whereby the School and Trust funnel money to non-party United Educators, which retains and pays counsel purportedly acting on Hatfield's behalf, but actually serving defendants interests (id.). Plaintiff alleges that, by this mechanism of economic support, defendants exercised control over Hatfield.
VII. Jurisdictional question - Notice of Appearance
The School and the Trust are Pennsylvania entities. The individual defendants are residents of Pennsylvania or another state besides New York, except for Saltzman, a New York resident. Defendants assert that this court has no jurisdiction over them.
By notice dated March 24, 2021, attorneys for the EG defendants appeared in this action (NYSCEF 10-12), and by notice dated March 25, 2021, an attorney appeared for the School and the individual defendants (NYSCEF 13). Plaintiff contends that defendants waived jurisdictional objections by filing notices of appearances without making jurisdictional objections.
Filing a notice of appearance in an action serves as a waiver of any objection to personal jurisdiction in the absence of the service of an answer which raises a jurisdictional objection or a motion to dismiss pursuant for lack of personal jurisdiction (U.S. Bank N. A. v Rodriguez, 201 A.D.3d 493, 493 [1st Dept 2022]; Urena v NYNEX, Inc., 223 A.D.2d 442, 443 [1st Dept 1996]). Defendants who file a notice of appearance before the time for a responsive pleading do not waive jurisdictional objections, if they object to jurisdiction at the first opportunity (see Body Glove IP Holdings LP v On Five Corp., 217 A.D.3d 561 [1st Dept 2023]). A defendant who appears before its time to answer expires is not deprived of the right to object to jurisdiction (Parrotta v Wolgin, 245 A.D.2d 872, 873 [3d Dept 1997]).
Defendants claim that it was not until October 20, 2021 that there a complaint to answer. It was then that the complaint filed in the SDNY in September 2018 was deemed the operative complaint in this action. On October 20, 2021, plaintiff filed the instant motion to amend. The decision about the operative complaint was affirmed on April 8, 2022 (Fouad, 204 A.D.3d 607). On June 30, 2022, the First Department denied leave to appeal to the Court of Appeals (NYSCEF 172). All the defendants filed their opposition to the motion to amend on July 7, 2022. The opposition papers and defendants' motions argue lack of jurisdiction.
Defendants' time to answer the complaint did not expire. They raised the jurisdictional issue at the first opportunity, after the appeals concerning which complaint was the operative complaint were finished.
VIII. More jurisdictional questions
Defendants claim that since Katzman was not named or served before the case was removed, he is not a proper party (NYSCEF 234, at 5). Katzman was not named in the summons filed in this court in June 2018 (NYSCEF 1), but he was named in the operative complaint filed in September 2018 in SDNY (NYSCEF 151). Under 28 USC § 1448, in a case removed from state court to district court in which a defendant has not been served with process, service may be completed in the same manner as in a case originally filed in such district court (see Zokaites Props. v La Mesa Racing, LLC, 2012 WL 3144127, *15, 2012 U.S. Dist LEXIS 107424, *49-50 [WD Pa 2012]; Lothian Cassidy LLC v Ransom, 428 BR 555, 558 [ED NY 2010]; Tadco Constr. Corp. v Peri Framework Sys., Inc., 460 F.Supp.2d 408, 412 [ED NY 2006]). Defendants do not claim that Katzman was not served after the SDNY summons and complaint naming him as a party was filed. It appears that Katzman was served after the remand from the state to SDNY, while the case was still in the SDNY. The Court deems that he was properly served.
CPLR 302 (a) (2) is the section relevant to the jurisdictional issue concerning defendants who are not residents in New York, since plaintiff does not claim that the other sections of 302 (a) are applicable, and defendants argue correctly that those sections do not confer jurisdiction over them.
CPLR 302 (a) (2) enables the court to exercise long-arm personal jurisdiction over any non-domiciliary, who in person or through an agent, commits a tortious act within the state, except as to a cause of action for defamation. Exercise of personal jurisdiction under the long-arm statute must comport with constitutional due process requirements (WCVAWCK-Doe v Boys & Girls Club of Greenwich, Inc., 216 A.D.3d 1, 12 [2d Dept 2023]). Where New York's long-arm statute is satisfied, the constitutional requirements are also satisfied (id.).
To invoke jurisdiction under CPLR 302 (a) (2), the tort must be committed by a defendant or its agent while physically present in New York, and the claims against defendant must arise from the tortious act (Daventree Ltd. v Republic of Azerbaijan, 349 F.Supp.2d 736, 758-759 [SD NY 2004]; Pramer S.C.A. v Abaplus Intl. Corp., 76 A.D.3d 89, 97 [1st Dept 2010]). New York stresses the necessity of the defendant's physical presence in the state (SOS Capital v Recycling Paper Partners of PA, LLC, 220 A.D.3d 25, 33 [1st Dept 2023]). That the injury occurs in New York is not enough (id.).
Where conspiracy is alleged, as in this case, the New York activities of a co-conspirator can be imputed to an out-of-state co-conspirator for purposes of personal jurisdiction based on agency (Emerald Asset Advisors, LLC v Schaffer, 895 F.Supp.2d 418, 431 [ED NY 2012]; Wimbledon Fin. Master Fund, Ltd. v Bergstein, 147 A.D.3d 644, 644 [1st Dept 2017]). A co-conspirator may be an "agent" as that term is used in 302 (a) (2) (Grove Press, Inc. v Angleton, 649 F.2d 121, 122-23 [2d Cir 1981]). While a formal agency between the defendant and its co-conspirator is not required (Chrysler Capital Corp. v Century Power Corp., 778 F.Supp. 1260, 1262 [SD NY 1991]), before the conduct of an agent may be attributed to the principal for jurisdictional purposes, the plaintiff must show that "the agent engaged in purposeful activities in this state in relation to the transaction at issue for the benefit of and with the knowledge and consent of the [nonresident] principal and the principal exercised some control over the agent in the matter" (Morgan v A Better Chance, Inc., 70 A.D.3d 481, 482 [1st Dept 2010], citing Kreutter v McFadden Oil Corp., 71 N.Y.2d 460, 467 [1988]).
Plaintiff sufficiently alleges that Hatfield was defendants' agent when he engaged in the complained-of actions of breaking into plaintiff's New York apartment, that defendants knew of his acts and approved them, and that Hatfield acted for defendants' benefit. Under CPLR 302 (a) (2), the acts of Hatfield pursuant to the alleged conspiracy were the acts of defendants through their agent (see Travelers Indem. Co. v Inoue, 111 A.D.2d 686, 687 [1st Dept 1985]). If the alleged conspiracy is proved, each conspirator stands as agent for the other (see Ghazoul v International Mgt. Servs., Inc., 398 F.Supp. 307, 312 [SD NY 1975]).
The other complained-of acts, such as telephone calls from another jurisdiction to New York or letters mailed from another jurisdiction to New York cannot be the basis for jurisdiction under 302 (a) (2). The alleged torts, which consisted of making the calls and mailing the letters, did not occur in New York (see Heinfling v Colapinto, 946 F.Supp. 260, 264 [SD NY 1996]; Beckett v Prudential Ins. Co. of Am., 893 F.Supp. 234, 239 [SD NY 1995]; see Davis v Masunaga Group., Inc., 204 F.Supp.2d 665, 666 [SD NY 2002] [injury did not occur within New York for purposes of 302 (a) (2) when defendant made twenty telephone calls from another state to plaintiff in New York State as part of a course of harassment]). Plaintiff alleges that defendants committed torts on social media. A tort committed by publishing information on a website occurs in the place where the publishers were at the time (Shamoun v Mushlin, 2014 WL12776779, *5, 2014 U.S. Dist. LEXIS 45617, *13 [SD NY 2014]), citing Bensusan Rest. Corp. v King, 126 F.3d 25, 27-28 [2d Cir 1997]). "The mere presence of tortious material on a website viewed in New York, but created and maintained elsewhere, is generally not a tort "'committed in New York'" (2 NY Prac, Com Litig in New York State Courts § 2:31 [4th ed Westlaw]; see Overseas Media, Inc. v Skvortsov, 407 F.Supp.2d 563, 572 [SD NY 2006], affd 277 Fed.Appx. 92 [2d Cir 2008]). Nonetheless, to the extent that the Second Amended Complaint alleges that Hatfield was posting on social media in New York about breaking into plaintiff's New York apartment while he was in the apartment (NYSCEF 150, SAC. ¶ ¶ 274, 278-279), there is jurisdiction over him and over defendants in regard to any tort constituted by that posting or other postings done in New York, provided that the tort is not predicated on claims of defamation, which is excluded under the long-arm statute.
IX. Intentional infliction of emotional distress - first cause of action
Plaintiff alleges that Hatfield's acts in New York caused him severe emotional distress, including embarrassment, stress, shock, fright, grief, humiliation, worry, sleeplessness, feelings of hopelessness, and depression (NYSCEF 150, ¶ 292). This court has jurisdiction over defendants as to intentional infliction of emotional distress, as plaintiff's distress resulted from acts allegedly taken in New York by defendants' agent, as part of a "deliberate and malicious campaign of harassment" (Belanoff v Grayson, 98 A.D.2d 353, 357-58 [1st Dept 1984]).
Liability for intentionally causing emotional distress attaches to "[o]ne who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another" (Restatement [Second] of Torts § 46 [1]; Howell v New York Post Co., 81 N.Y.2d 115, 121 [1993]). The requirements for demonstrating extreme and outrageous conduct are difficult to satisfy (Howell, 81 N.Y.2d at 121; Rossetti v Ambulatory Surgery Ctr. of Brooklyn, LLC, 125 A.D.3d 548, 549 [1st Dept 2015]). "Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community" (Howell, 81 N.Y.2d at 122). Defendants contend that their alleged conduct does not fit the bill. However, the court finds that the Second Amended Complaint sufficiently makes the case that sending or encouraging an individual to break into someone's apartment in order to search for evidence of bad behavior, to intimidate, and to instill fear is outrageous conduct.
X. Abuse of process - second cause of action
Plaintiff was sought as a nonparty deponent in Dobson and Wartluft in his individual capacity and as a designee of "Protect The Hersheys' Children, Inc." (PHC). The deposition in Dobson was scheduled on July 12, 2017 in New York, immediately after plaintiff was scheduled to return to New York from a business trip to Japan, and the Wartluft deposition was scheduled the next day in Pennsylvania. Defendants refused to reschedule so that plaintiff could complete his business in Japan forcing him to shorten his trip. Plaintiff alleges that defendants abused the process of subpoena and deposition in order to harass him.
Abuse of process does not concern the issuance of process, but rather the improper use of process after it is issued (3H Enterprises, Inc. v Dwyre, 182 F.Supp.2d 249, 255 [ND NY 2001]). The elements of the tort of abuse of process are that a defendant "(1) employs regularly issued legal process to compel performance or forbearance of some act (2) with intent to do harm without excuse or justification, and (3) in order to obtain a collateral objective that is outside the legitimate ends of the process" (Savino v City of NewYork, 331 F.3d 63, 76 [2d Cir 2003][internal quotation marks and citation omitted]; Curiano v Suozzi, 63 N.Y.2d 113, 116 [1984]). To show compulsion or forbearance, plaintiff must allege unlawful interference with his person or property (see O'Bradovich v Village of Tuckahoe, 325 F.Supp.2d 413, 434 [SD NY 2004]). A malicious motive alone does not give rise to an abuse of process claim (Heinfling, 946 F.Supp. at 264). There is no claim that process was abused when the process is used for the purpose for which it is intended, even if an incidental motive of spite or an ulterior purpose of benefit to the defendant is present (Rosen v American Bank, 627 A.2d 190, 192 [Pa Super 1993], citing Restatement [Second] of Torts 682, comment b).
That Fouad was deposed one time, in Wartluft, in Pennsylvania, is undisputed. Plaintiff was never deposed in New York or in Dobson (NYSCEF 150, ¶ 197). In addition, the Judge in Wartluft concluded that the information sought "was a relevant, proper line of inquiry" (Wartluft, 2017 WL 4698102, *6, 2017 U.S. Dist LEXIS 172985, *17). A SDNY judge determined the same as to the Dobson subpoena (NYSCEF 196, August 2, 2017 transcript, at 13). Defendants thus show that they were not asking for improper disclosure. Assuming that defendants were unreasonable or malicious about scheduling, their conduct did not amount to abuse. There was no undue interference with plaintiff's person or property and the subpoenas were used for their intended purpose.
The MD Pa Magistrate's February 19, 2020 decision concluded that plaintiff's claim for abuse of process failed under New York and Pennsylvania law (Fouad, 2020 WL 8254470, *3, 17, 2020 U.S. Dist LEXIS 29364, *48-49). The Magistrate Judge stated that it was possible to employ depositions and subpoenas to create abuse of process (see Manhattan Enter. Group LLC v Higgins, 816 Fed.Appx 512, 515 [2d Cir 2020]), and found one New York case basing a claim for abuse of process on a scheduling conflict (Board of Educ. of Farmingdale Union Free School Dist. v Farmingdale Classroom Teachers Assn., 38 N.Y.2d 397, 400 [1975]). From that case, the Magistrate concluded that in New York, an abuse of process claim will be based "upon a stubborn refusal to cooperate in deposition scheduling only in the most egregious of circumstances, where multiple witnesses are subpoenaed on extremely short notice and forced to comply at great cost and inconvenience" (Fouad, 2020 WL 8254470, *18, 2020 U.S. Dist LEXIS 29364, *47-48). The Magistrate Judge determined that, in Fouad's case, although the parties could not agree on dates or times for the depositions, Fouad was never required to comply with the New York subpoena, and his testimony in Wartluft was compelled by the MD Pa only after much litigation and a specific finding that the testimony was relevant to that lawsuit (id.).
The Magistrate Judge found that there was an abuse of process claim under Pennsylvania law based on the allegation that during Hatfield's deposition in Pennsylvania, defendants knowingly procured false testimony from Hatfield suggestive of criminal conduct by plaintiff (id., 2020 WL 8254470, *23, 2020 U.S. Dist LEXIS 29364, * 60-61). This court has no jurisdiction over defendants in regard to that claim, since the alleged false testimony was taken in Pennsylvania.
XI. Tortious interference with contract - third cause of action
The elements of a claim for tortious interference with contract are (1) the existence of a valid contract between plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional procuring of the breach without justification; and (4) damages (Nostalgic Partners, LLC v New York Yankees Partnership, 205 A.D.3d 426, 428 [1st Dept 2022]). The elements of tortious interference with contract in Pennsylvania are the same (Fouad, 2020 WL 8254470, *23, 2020 U.S. Dist LEXIS 29364, *62, citing Pelagatti v Cohen, 536 A.2d 1337, 1343 [Pa Super 1987]). Plaintiff makes the same assertions here that he made in the complaint discussed by the MD Pa, that defendants blocked his access to the School campus so that he was unable to participate in MHSAA functions, including Homecoming and alumni gatherings, and that he was also prohibited from attending an alumni event in New York in 2018 and 2017 (Fouad, 2020 WL 8254470, *23, 2020 U.S. Dist LEXIS 29364, *62).
The MD Pa court stated that Fouad failed to provide the court with either the contract or the specific contract provisions between himself and MHSAA which would entitle him to the benefits allegedly stripped from him. The tortious interference claim failed, because "implicit and fundamental to maintaining this cause of action is the existence of a contract between the plaintiff and a third party" and Fouad did not sufficiently allege a contract. The lack of a valid contract also prevents a claim under New York law (see Lau v Lazar, 130 A.D.3d 413, 413 [1st Dept 2015]).
XII. Civil conspiracy to commit tortious acts - fourth cause of action
Plaintiff asserts that Pennsylvania law governs his claim of civil conspiracy to commit torts, as the claim is not recognized by New York law. Under Pennsylvania law, while civil conspiracy is a cause of action, it is not a tort unto itself (Bert Co. v Turk, 257 A.3d 93, 115 [Pa Super 2021]). A claim of civil conspiracy cannot stand alone and is not independently actionable, but rather is a means for establishing liability for an underlying tort (Boyanowski v Capital Area Intermediate Unit, 215 F.3d 396, 405, 407 [3d Cir 2000]; Miller v Amazon.com Servs., Inc., 543 F.Supp.3d 80, 89 [ED Pa 2021]). A civil conspiracy becomes actionable when some overt act is done in pursuance of the common purpose or design, and actual legal damage results (Pelagatti v Cohen, 536 A.2d 1337, 1346 [Pa Super 1987]). The same is the law in New York, where civil conspiracy is not an independent cause of action (Hoeffner v Orrick, Herrington & Sutcliffe LLP, 85 A.D.3d 457, 458 [1st Dept 2011]) and the allegations of conspiracy must connect to the underlying wrongful act that that the defendants conspired to commit (Errant Gene Therapeutics, LLC v Sloan-Kettering Inst. for Cancer Research, 174 A.D.3d 473, 474 [1st Dept 2019]; Cohen Bros. Realty Corp. v Mapes, 181 A.D.3d 401, 404 [1st Dept 2020]). The gravamen of a civil conspiracy suit is the damage caused by the wrongful act, not the agreement to do the act; the damage permits the recovery for the injured party (Cohen v Pelagatti, 528 A.2d 657, 658 [Pa Super 1987]). Hence, if plaintiff means to say that in Pennsylvania the agreement to do the wrongful act is actionable, that is incorrect.
Pursuant to an "interest analysis" test to resolve conflict laws in the February 19, 2020 decision, the Magistrate Judge decided that Pennsylvania law applied to civil conspiracy, a conduct-regulating law. The Judge stated that "[i]f conflicting conduct-regulating laws are at issue, the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders" (Fouad, 2020 WL 8254470, *11, 2020 U.S. Dist LEXIS 29364, *29, quoting Padula v Lilarn Props. Corp., 84 N.Y.2d 519 [1994]). Pennsylvania was deemed the state with the greatest interest in addressing this claim because nearly all of the participants in the alleged conspiracy were Pennsylvania residents and most of the complained-of conduct took place in Pennsylvania. The court determined that plaintiff failed to properly allege the underlying torts (Fouad, 2020 WL 8254470, *28, 2020 U.S. Dist LEXIS 29364, *76).
The February 19, 2020 Magistrate's decision issued before Hatfield allegedly invaded plaintiff's New York apartment in December 2020. The underlying wrongful act/tort, that of intentionally causing emotional distress, occurred in New York. The agreement to do a wrongful act apparently took place in Pennsylvania, the act itself was in New York. As the tort pertains to conduct-regulation, the law of the place where the tort occurred should apply because that jurisdiction "will almost always have the greatest interest in regulating conduct within its borders" (Elmaliach v Bank of China Ltd., 110 A.D.3d 192, 202 [1st Dept 2013]).
Civil conspiracy requires a combination of two or more persons acting with a common purpose to do an unlawful act or to do a lawful act by unlawful means or for an unlawful purpose; an overt act done in pursuance of the common purpose; and actual legal damage (Strickland v University of Scranton, 700 A.2d 979, 987-988 [Pa Super 1997]). Civil conspiracy "is a theory of vicarious liability that renders each participant in the wrongful act responsible as a joint tortfeasor for all damages ensuing from the wrong, irrespective of whether [the co-conspirator] was a direct actor and regardless of the degree of his or her activity" (Burt Co. v Turk, 257 A.3d 93, 115 [Pa Super 2021] [citation and internal quotation marks omitted]; Cedar Capital Mgt. Group Inc. v Lillie, 79 Misc.3d 1238 [A],2023 NY Slip Op 50831[U] [Sup Ct, NY County 2023]).
Plaintiff alleges that the individual defendants joined together to engineer torts against him, that they recruited Hatfield to travel to New York to harass him, that the EG defendants were part of the conspiracy, and that the School and the Trust are liable for the harmful act committed by their board members and Hatfield.
Defendants contend that dismissal should eventuate due to the intracorporate conspiracy doctrine, which posits that the officers, agents, and employees of a single entity, each acting within the scope of his or her employment, are legally incapable of conspiring with each other (Rodriguez v City of New York, 644 F.Supp.2d 168, 200 [ED NY 2008]). A single entity cannot conspire with itself, nor can agents of a single entity conspire among themselves (Grose v Procter & Gamble Paper Prods., 866 A.2d 437, 440-441 [Pa Super Ct 2005]). "[A]n entity cannot conspire with one who acts as its agent" (General Refractories Co. v Fireman's Fund Ins. Co., 337 F.3d 297, 313 [3d Cir 2003]). The doctrine applies in the attorney-client context to preclude conspiracy liability for attorneys alleged to have conspired with clients (Tripati v Wexford Health Sources, Inc., 2022 WL 1516780, *16 [WD Pa 2022]; Town of Islip v Datre, 2022 WL 445680, *9, 2022 U.S. Dist LEXIS 26044, *32 [ED NY 2022]; Marshall v Fenstermacher, 388 F.Supp.2d 536, 553 [ED Pa 2005]). An attorney is the agent of its client (Town of Islip, supra).
Plaintiff asserts that the intracorporate conspiracy doctrine does not apply because defendants did not act within the scope of their employment. If the challenged actions occurred outside of the scope of representation, the protections of the attorney client relationship do not exist, and the attorney and client were capable of joint conspiracy (Heffernan v Hunter, 189 F.3d 405, 413 [3d Cir 1999]). An entity cannot conspire with its agents when the agents have acted for their sole personal benefit, outside of the scope of their employment and/or the scope of their agency (General, 337 F.3d at 313; Heffernan, 189 F.3d at 412; see Guillen v. City of New York, 625 F.Supp.3d 139, 160 [SD NY 2022]).
Despite the use of "sole," courts have found that an agent can have mixed personal/professional motives and still act within the scope of employment/agency (General, 337 F.3d at 313, citing Heffernan, 189 F.3d at 413; 14 NY Prac, New York Law of Torts § 9:13). "Conduct may be within the scope of employment, although done in part to serve the purposes of the servant or of a third person" (Conde Panama LLC v AECOS, Ltd., 2020 WL 2834858, *3, 2020 U.S. Dist LEXIS 96066, *5-6 [SD NY 2020], quoting Restatement [Second] of Agency § 236).
Plaintiff alleges that the board members were motivated by a desire to keep their payments for being on the boards. However, this interest was not wholly separate from the School's and the Trust's interests. Adhering to an employer's policy in order to keep one's job is not an interest wholly separate from the employer's interests (see Gordon v City of New York, 2015 WL 3473500, *17, 2015 U.S. Dist LEXIS 70915, *46-47 [SD NY 2015]). Moreover, plaintiff does not allege that the board members acted mainly for their personal benefit. Rather, he alleges that the board members' conduct served the interests of their employers, whose interest was to stop plaintiff's agitation for reform.
Conduct is within the scope of employment if it is the kind that the employee is employed to perform and is actuated, at least in part, to serve the employer (see Restatement [Second] Agency § 228). However, conduct is not within the scope of employment if it is a different kind from that authorized by the principal or "too little actuated by a purpose to serve the [principal]" (id.). Nonetheless, even unauthorized acts may be within the scope of employment "if they are clearly incidental to the master's business" (Brumfield v Sanders, 232 F.3d 376, 381 [3d Cir 2000]). Intentional, negligent, and even criminal conduct can be within the scope of employment, if they in some way further the interests of the employer (In re Ivan F. Boesky Sec. Litig., 36 F.3d 255, 265 [2d Cir 1994]; Kilbride Invs. Ltd. v Cushman & Wakefield of PA, Inc., 294 F.Supp.3d 369, 377 [ED Pa 2018]).
When an attorney made statements about the plaintiff that were obviously aimed at discrediting plaintiff as a witness against the attorney's client, the attorney was acting within the scope of his representation, even if the attorney was violating the canons of ethics (Heffernan, 189 F.3d at 413; see Urli v Town of Hempstead Sanitary Dist. No. 7, 2021 WL 4311141, *6, 2021 U.S. Dist LEXIS 181157, *19 [ED NY 2021]). "Though a purpose may be illegitimate or fraudulent, this does not necessarily bring the defendants' actions outside the scope of representation" (Shank v South Eastern Sch. Dist., 2015 WL 13861964, *6, 2015 U.S. Dist LEXIS 197340, *16 [MD Pa 2015]; see General, 337 F.3d at 313 [attorney conduct amounting to abuse of process was not outside the scope of representation and not actionable as conspiracy]). In contrast, when the plaintiff alleged that the attorney assisted the client to fraudulently convey assets, the intracorporate conspiracy doctrine did not apply (Marshall, 388 F.Supp.2d at 554). An attorney who counsels a client to act in a manner violative of a third party's rights may be liable to the same extent of a non-lawyer in the same situation (id.).
In this case, plaintiff sufficiently alleges that the EG defendants acted in a manner violative of his rights by joining in a plan to discourage him from activities to reform the School. As for the board members, the bad conduct that he alleges could have been within the scope of their employment. Whether any defendant should be protected by the intracorporate conspiracy doctrine is for future determination.
Another exception to the intracorporate conspiracy doctrine may arise where an independent third party is alleged to have joined the conspiracy (Robison v Canterbury Vill., Inc., 848 F.2d 424, 431[3d Cir 1988]; Kilbride, 294 F.Supp.3d at 383). That Hatfield joined the conspiracy in which the EG defendants and the MHS defendants were joined and that as a result defendants do not enjoy the protections of the doctrine is sufficiently alleged.
XIII. Negligent hiring, supervision, and retention - fifth cause of action
In the event that it is determined that the School's employees' conspiratorial conduct was outside the scope of their employment and the School is not liable for its agents' conduct, plaintiff presents an alternative claim that the School is liable for negligent supervision, hiring, and retention of all School officers, employees, and agents.
An action for negligent hiring provides a remedy to injured third parties who cannot recover on a respondeat superior basis, because the wrongful acts of employees are outside the scope of employment or not in furtherance of the employer's business (Heller v Patwil Homes, 713 A.2d 105, 107 [Pa Super 1998]). The employer's liability is directly based on its own negligence (id.). To make a claim for injury due to negligent hiring the plaintiff must show that the employer knew or should have known of the employee's propensity for misconduct and the necessity of controlling the employee (id.; Dowling by Blue Ridge Communications, 16 Pa D & C 5th 276, 278 [Pa Ct Comm Pl 2010]). The elements for a claim for negligent supervision are that the employer failed to exercise ordinary care to prevent intentional harm by an employee acting out of the scope of employment, that the harm is committed on the employer's premises, and that the employer knows or has reason to know of the necessity to control the employee (Belmont v MB Inv. Partners, 708 F.3d 470, 487-88 [3d Cir 2013], citing Dempsey v Walso Bureau, Inc., 246 A.2d 418, 420 [Pa Sup 1968]). The Second Amended Complaint does not set forth facts to support this claim and does not allege that the harm was committed on the employer's premises. In New York, also, it must be shown that the employer knew or should have known of the employee's propensity for the sort of conduct which caused the injury (Sheila C. v Povich, 11 A.D.3d 120, 129-130 [1st Dept 2004]). The cause of action for negligent hiring is dismissed.
Moreover, a negligent act that takes place outside of New York, such as negligent hiring, that causes an injury in the state does not confer jurisdiction under 302 (a) (2) (Edwardo v Roman Cath. Bishop of Providence, 66 F4th 69, 75 [2d Cir 2023]).
XIV. Individual liability of defendants
The complaint is dismissed against defendant Andrew Cline only, as he retired from the School in October 2018 before Hatfield's home invasion of plaintiff's apartment in December 2020 (NYSCEF 246).
Defendants point out that the Second Amended Complaint makes no specific factual allegations showing their part in a conspiracy. The Magistrate Judge found the same deficiency in the complaint before it, stating in the February 2020 decision, "Fouad fails to allege any facts indicating which of these defendants actively communicated with each other to form plans to commit the torts alleged in his complaint" (Fouad, 2020 WL 8254470, *29, 2020 U.S. Dist LEXIS 29364, *78-79). The Magistrate recommended dismissal of the conspiracy claim without prejudice to Fouad amending his complaint in the future.
Hatfield alleged that he was in a conspiracy with the EG defendants and that the School approved their actions (NYSCEF 262). The Second Amended Complaint names Gurt, Carfagno, Heist, and Redmond as being instrumental in the conspiracy. Others are not named and plaintiff does not allege anything specific that any individual actually did. Plaintiff is apparently stating that since entities can only act through their officers and employees (Koam Produce, Inc. v DiMare Homestead, Inc., 213 F.Supp.2d 314, 325-26 [SD NY 2002], affd 329 F.3d 123 [2d Cir 2003]; Jagielski v Package Mach. Co., 489 F.Supp. 232, 233 [ED Pa 1980]), the board members, who control the entities, must have agreed to engage in the wrongful acts against plaintiff.
Allegations of conspiracy connect the actions of separate defendants with an actionable tort (Alexander & Alexander of NY v Fritzen. 68 N.Y.2d 968, 969 [1986]). "Proof of a tacit, as opposed to explicit, understanding is sufficient to show agreement" to commit the tort (Freeman v HSBC Holdings PLC, 57 F4th 66, 77 [2d Cir 2023], quoting Halberstam v Welch, 705 F.2d 472, 477 [DC Cir 1983]). A civil conspirator "can be liable even if he neither planned nor knew about the particular overt act that caused injury, so long as the purpose of the act was to advance the overall object of the conspiracy" (id.).
Plaintiff claims that all the board members wanted to discredit and intimidate him and planned to do so. Even if each individual did not know about specific acts, he or she could be liable. There is no way for plaintiff to know, before disclosure, each person's involvement, if any, in the alleged conspiracy. This court finds that, at this juncture in the litigation, plaintiff sufficiently alleges that all the board members were involved in the alleged conspiracy.
The individual defendants argue that they should be immune from liability in their individual capacities and in their capacities as School and Trust board members. The Magistrate Judge determined that the individual defendants should be immune from personal liability for actions taken in their official capacities under the Pennsylvania Nonprofit Corporations Law, 15 Pa CS § § 5101 - 6162 (Fouad, 2020 WL 8254470, *37, 2020 U.S. Dist LEXIS 29364, *98). The relevant part of the law is as follows.
§ 5713. Personal liability of directors.
(a) General rule. If a bylaw adopted by the members of a nonprofit corporation so provides, a director shall not be personally liable, as such, for monetary damages for any action taken unless:
(1) the director has breached or failed to perform the duties of his office under this subchapter; and
(2) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness(15 Pa CS § 5713 [a]).
The bylaws of the School and the Trust allegedly in effect at the relevant times in this lawsuit contain a provision based on the above statute. Article VI, section 6.1 of the bylaws provides that a board member shall, to the maximum extent permitted by the laws of Pennsylvania, have no personal liability for monetary damages for any action taken or not taken, provided that said liability is not eliminated where such elimination is not permitted by law (NYSCEF 245).
The Magistrate Judge found that the exceptions to 15 Pa CS § 5713 (a) were not applicable, as Fouad had failed to allege that the individual board members were self-dealing, or acted with willful misconduct or recklessness (Fouad, 2020 WL 8254470, *38, 2020 U.S. Dist LEXIS 29364, *103). In this case, Fouad has alleged that the individual board members acted with willful misconduct by inciting Hatfield to harass him. Hence, defendants' actions may fall into the exception and may not be immune from liability.
The individual defendants argue that they should be immune from liability in their individual capacities. The individual liability of a corporate director or officer is premised upon individual participation in the wrongful act (Fouad, 2020 WL 8254470, *36, 2020 U.S. Dist LEXIS 29364, *98-99; Brindley v Woodland Vil. Rest., 652 A.2d 865, 869 [Pa Super 1995]; Merrill Lynch, Pierce, Fenner & Smith, Inc. v Arcturus Bldrs., Inc., 159 A.D.2d 283, 284 [1st Dept 1990]; Moy v Schreiber Deed Sec. Co., 535 A.2d 1168, 1171 [Pa Super 1988]). An individual is personally liable for all his or her torts, even if that individual was acting under the directions of another or in his or her official capacity as an officer or agent of a corporation (Pilot Air Freight Corp. v Sandair, Inc., 118 F.Supp.2d 557, 564 [ED Pa 2000]; 3A Fletcher Cyclopedia of Corporations § 1135 [Westlaw]). A corporate officer who participates in the wrongful conduct of the corporation, or knowingly approves the conduct, is liable just as the corporation is liable (id.). The general rule of personal liability for torts committed by an officer or agent of a corporation will apply equally to the agents of a charitable corporation (3A Fletcher Cyclopedia of Corporations § 1136 [Westlaw]).
The fact that the employee is acting for a corporation "may make the corporation vicariously or secondarily liable under the doctrine of respondeat superior," but "it does not... relieve the individual of his responsibility" (Cosmas v Bloomingdales Bros., Inc., 660 A.2d 83, 88-89 [Pa Super 1995], quoting Wicks v Milzoco Bldrs., Inc., 470 A.2d 86, 89 n 5 ([Pa Super 1983]). An individual board member will be liable for participation in a corporation's tort, even absent any tort independent of the tort committed by the corporation itself (Board of Mgrs. of the Alfred Condominium v Miller, 202 A.D.3d 467, 468 [1st Dept 2022]).
Hence, under Pennsylvania and New York law, plaintiff has alleged and shown that defendants may be individually liable for committing a tort against him.
XV. Conclusion
Upon view of the foregoing, it is hereby
ORDERED that motion sequence number 006 by plaintiff to motion to amend the complaint and to file the second amended complaint is granted to the extent that one cause of action, intentional infliction of emotional distress is permitted to be added, and Navada Hatfield and the Hershey Trust Company may be added as defendants; the motion is otherwise denied; and it is further
ORDERED that motion sequence number 007 to dismiss the complaint dated September 17, 2018 by defendants Jarad W. Handelman and Elliot Greenleaf PC is denied; and it is further
ORDERED that motion sequence number 008 to dismiss the complaint dated September 17, 2018 by defendants the Milton Hershey School, Peter Gurt, Ralph Carfagno, Robert Heist, Velma Redmond, David Saltzman, James C. Katzman, James W. Brown, M. Diane Koken, James M. Mead, Melissa L. Peeples-Fullmore, Jan Loeffler Bergen, Andrew H. Cline, and Jarad W. Handelman is denied, except that Andrew H. Cline is dismissed from this action, and it is further
ORDERED that plaintiff shall amend the caption of the second amended complaint to reflect this order; and it is further
ORDERED that defendants shall answer the second amended complaint within 30 days of receiving a copy of said complaint with notice of entry.