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Utility Metal Research, Inc. v. Coleman

March 28, 2008

UTILITY METAL RESEARCH, INC., MARIANO BORRUSO AND PLATING SYSTEMS, INC., PLAINTIFFS,
v.
ALFRED MICHAEL COLEMAN, GEORGE WAINWRIGHT, RICHARD LOGAN, A. MICHAEL COLEMAN & ASSOCIATES, INC., OMG FIDELITY, INC., JOHN REDO AND CHRIS VIDOLY, DEFENDANTS.



The opinion of the court was delivered by: Townes, United States District Judge

MEMORANDUM and ORDER

Plaintiffs, Utility Metal Research ("UMR"), Plating Systems, Inc. ("PSI"), and Mariano Borruso (collectively, "plaintiffs"), bring this action against defendants OMG Fidelity, Inc. ("OMG Fidelity"), John Rendo ("Rendo"), and Chris Vidoli ("Vidoli") (collectively, the "OMG defendants"), and A. Michael Coleman & Associates ("Coleman & Associates"), Alfred Michael Coleman ("Coleman"), George Wainwright ("Wainwright"), Richard Logan ("Logan") (collectively, the "Coleman defendants") (together, with OMG defendants, "defendants"), alleging defamation, tortious interference with contract, prima facie tort, negligence, and violations of the Federal Fair Debt Collection Practices Act and the New York General Business Law. Both the OMG defendants and the Coleman defendants now move to dismiss plaintiffs' complaint. For the reasons set forth below, OMG defendants' motion for summary judgment dismissing the complaint is granted in all respects, and Coleman defendants' motion for summary judgment dismissing the complaint is granted in part and denied in part.

BACKGROUND*fn1

UMR was formed by Mariano Borruso in 1990, and has a principal place of business at 14 Van Street, Staten Island, New York. Since the inception of UMR, Mr. Borruso has been the president, CEO and Secretary of the corporation. UMR has been inactive for the past few years, and was dissolved by proclamation on March 28, 2001. When it was active, UMR specialized in coordinating subcontractors in the installation of co-generation systems. PSI, a corporation engaged in the development of electroplating, and a manufacturer of chemicals for electroplating, shared its principal place of business with UMR at 14 Van Street, Staten Island, New York.

On multiple occasions during the years 2000 and 2001, OMG Fidelity, a corporation which sells plating chemicals, sold metal plating chemicals to UMR, and UMR then transferred these chemicals to PSI. The transactions between PSI and UMR for the transfer of ownership of the chemicals were non-cash transactions, and in lieu of cash, UMR was granted use of the services of PSI's personnel, location, electricity and utilities.

Sometime in and around 2000 or 2001, OMG Fidelity sold metal plating chemicals to UMR, and although such products were delivered without incident, UMR failed to pay for them. As a result, UMR was indebted to OMG Fidelity for approximately $72,000. OMG Fidelity tried to collect the debt on its own, but after several telephone conversations and an unsuccessful meeting with Mr. Borruso, UMR still failed to satisfy the debt. According to plaintiffs, after their inability to pay continued, John Rendo, comptroller of OMG Fidelity, told Mr. Borruso that he was going to use a collection agency that would make Borruso's "life miserable." OMG Fidelity then retained Coleman & Associates, a corporation engaged in the business of commercial debt collection. OMG Fidelity provided Coleman & Associates with information maintained in OMG Fidelity's business records, including copies of the pertinent invoices and contact information for UMR, PSI and Mr. Borruso, and requested that Coleman & Associates collect the debt. According to OMG Fidelity, Coleman & Associates was not given any other instructions.

Initially, Coleman & Associates succeeded in getting UMR to pay approximately $33,000 of its debt owed to OMG Fidelity, using a variety of techniques commonly used by collection agencies, including investigating the financial picture of the debtor and attempting to assist the debtor to obtain financing to pay off the debt. Unfortunately, according to the Coleman defendants, additional financing was not possible due to UMR's extremely poor financial condition and its past history of delinquency in paying its debts, which resulted in default judgments against it. A debt of $39, 430.34 still remained outstanding from UMR to OMG Fidelity after the payments were made. As a result, in or about September 2002, OMG Fidelity commenced a collection action against UMR in New York State Supreme Court (the "Collection Action"). UMR counterclaimed with allegations of unlawful practices in debt collection.

According to UMR, the Coleman defendants "embarked on a campaign of threats and harassment" in an attempt to collect the debt from UMR. Plaintiffs allege that the Coleman defendants contacted friends and colleagues of Mr. Borruso and told them that Mr. Borruso was a dishonest person and had substantial legal problems, and made other false and disparaging claims about him. According to plaintiffs, UMR and PSI lost nearly all of their customers because of defendants' behavior and, as a result, are now largely inoperative. In particular, plaintiffs note that UMR's contract with the Trump Organization was never fully paid, and there was a disruption to UMR's contract with Brooklyn Bagels as a result of defendants' actions.

In June 2002, plaintiffs' attorney contacted the Coleman defendants in writing, and asked for the harassment to stop. Plaintiffs claim they also sent these letters to the OMG defendants, but the wrongful activities continued. According to the OMG defendants, John Rendo contacted Coleman & Associates immediately after being informed of these practices. He spoke with Mr. Coleman and informed him that Mr. Borruso had complained that the Coleman defendants were acting inappropriately and harassing Mr. Borruso. The OMG defendants claim that Mr. Coleman assured Mr. Rendo that Coleman & Associates was not acting inappropriately.

On December 19, 2002, plaintiffs commenced separate actions against the Coleman defendants and the OMG defendants (the "Main Action") in New York State Supreme Court, each alleging defamation, tortious interference with contract, prima facie tort, negligence and unlawful practices in debt collection. The OMG defendants filed a notice of removal dated March 25, 2003, and the Main Action was removed to federal court pursuant to diversity jurisdiction, and the Collection Action was removed pursuant to supplemental jurisdiction. Plaintiffs filed the Amended Complaint on July 17, 2003.

DISCUSSION

A. Standard of Review and Choice of Law

The OMG defendants move to dismiss plaintiffs' complaint on a motion for summary judgment pursuant to Rule 56 (c). Summary judgment is generally appropriate where the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Viola v. Philips Med. Sys. of N. Am., 42 F.3d 712, 716 (2d Cir. 1994) (quoting Fed. R. Civ. P. 56(c)). The relevant governing law in each case determines which facts are material; "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed. 2d 202 (1986). No genuinely triable factual issue exists when the moving party demonstrates, on the basis of the pleadings and submitted evidence, and after drawing all inferences and resolving all ambiguities in favor of the non-movant, that no rational jury could find in the non-movant's favor. See Chertkova v. Conn. Gen. Life Ins. Co., 92 F.3d 81, 86 (2d Cir. 1996).

To defeat a summary judgment motion properly supported by affidavits, depositions, or other documentation, the non-movant must offer similar materials setting forth specific facts that show that there is a genuine issue of material fact to be tried. Rule v. Brine, Inc., 85 F.3d 1002, 1011 (2d Cir. 1996). The non-movant must present more than a "scintilla of evidence," Del. & Hudson Ry. Co. v. Consol. Rail Corp., 902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson, 477 U.S. at 252), or "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed. 2d 538 (1986), and cannot rely on the allegations in his or her pleadings, conclusory statements, or on mere assertions that affidavits supporting the motion are not credible. See Gottlieb v. County of Orange, 84 F.3d 511, 518 (2d Cir. 1996).

Although the OMG defendants frame their motion as one for summary judgment pursuant to Rule 56(c), the Coleman defendants move to dismiss their complaint pursuant to Rule 12(b)(6) or Rule 12(c). In evaluating a motion to dismiss a complaint under Rule 12(b)(6), the Court must determine whether the "factual allegations . . . raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly, - U.S. - , -, 127 S.Ct. 1955, 1965, 167 L.Ed. 2d 929 (2007) (internal citations omitted). However, if a party submits additional evidence outside of the allegations in the pleadings, the Court must "either exclude the additional material and decide the motion on the complaint alone or convert the motion to one for summary judgment under Fed. R. Civ. P. 56 and afford all parties the opportunity to present supporting material." Freidl v. City of New York, 210 F.3d 79, 83 (2d Cir. 2000) (quoting Fonte v. Bd. of Managers of Cont'l Towers Condo., 848 F.2d 24, 25 (2d Cir. 1988)).*fn2 While a district court ordinarily must give notice to the parties before converting a motion to dismiss pursuant to Rule 12(b)(6) into one for summary judgment," the central inquiry is whether the non-movant should reasonably have recognized the possibility that the motion might be converted into one for summary judgment or was taken by surprise and deprived of reasonable opportunity to meet facts outside the pleadings." Gurary v. Winehouse, 190 F.3d 37, 43 (2d Cir. 1999).

Here, plaintiffs have submitted affidavits and other supporting materials, and have captioned and framed both their response to the Coleman defendants' motion and their response to the OMG defendants' motion as responses to motions for summary judgment. In their response to the Coleman defendants' motion, plaintiffs extensively cite to deposition transcripts and other evidence obtained during discovery. It is clear that plaintiffs proceeded as if the Coleman defendants' motion was one for summary judgment. In addition, the Coleman defendants emphasized that their motion to dismiss is "connected at the hip" to the OMG defendants' motion, and stated "these motions ought to be considered together." Therefore, the Court will convert the Coleman defendants' motion to one for summary judgment and consider it in conjunction with the OMG defendants' motion for summary judgment.

Jurisdiction in this case is premised on diversity, and the parties both present arguments based on New York law, the law of the forum state. Accordingly, the Court will apply New York law. See, e.g., Konikoff v. Prudential Ins. Co. of Am., 234 F.3d 92, 98 (2d Cir. 2000) (court saw "no reason not to apply New York law" where "[t]he parties have clearly, if tacitly, agreed that New York law governs this litigation" and "in light of the plaintiff's residence in New York."); Tehran-Berkeley Civil and Environmental Engineers v. Tippetts-Abbett-McCarthy-Stratton, 888 F.2d 239, 242 (2d Cir. 1989) ("consent to use a forum's law is sufficient to establish choice of law"); Connecticut Indemnity Co. v. 21st Century Transport Co., Inc., 186 F.Supp.2d 264, 269 (E.D.N.Y. 2002) ("[T]he parties rely on New York law in their submissions, and, given the connections New York has to this lawsuit, there is no reason for the Court not to apply New York law.")

B. Plaintiff's Defamation Claim

Plaintiffs' Amended Complaint sets forth causes of action for defamation and defamation per se. "Defamation, consisting of the twin torts of libel and slander, is the invasion of the interest in a reputation and good name." Albert v. Loksen, 239 F.3d 256, 265 (2d Cir. 2001) (quoting Hogan v. Herald Co., 84 A.D.2d 470, 474 (4th Dep't), aff'd, 58 N.Y.2d 630 (1982). Generally, spoken defamatory words constitute slander, and written defamatory words constitute libel. Id., Albert v. Loksen at 265. ...


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