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Omni Consulting Group, Inc v. Marina Consulting

January 7, 2011

OMNI CONSULTING GROUP, INC., PLAINTIFF,
v.
MARINA CONSULTING, INC. AND PILGRIM'S PRIDE CORP., DEFENDANTS.



The opinion of the court was delivered by: Honorable Richard J. Arcara United States District Judge

DECISION AND ORDER

I. INTRODUCTION

Plaintiff Omni Consulting Group, Inc. commenced this action on July 19, 2001 against defendants Marina Consulting, Inc. ("Marina") and Pilgrim's Pride Corporation ("Pilgrim") alleging, inter alia, breach of contract, tortious interference with contractual relations, and civil conspiracy. On September 12, 2007, this Court granted partial summary judgment against Pilgrim, finding Pilgrim liable for breach of its contract with plaintiff. The case proceeded to a bench trial in June 2008 with respect to the following issues: damages regarding plaintiff's breach-of-contract claim against Pilgrim; liability and damages regarding plaintiff's breach-of-contract claim against Marina; and liability and damages regarding plaintiff's tortious-interference claim against Pilgrim.*fn1

Trial commenced on June 25, 2008. Marina failed to appear at trial. Plaintiff moved for default judgment against Marina, and the Court reserved decision. Following post-trial briefing and argument, the matter was deemed submitted in November 2008. However, on December 3, 2008, before this Court issued its bench trial ruling, Pilgrim filed a notice of suggestion of bankruptcy. The case was administratively closed on December 16, 2008, without prejudice to reopen when the bankruptcy concluded. Pilgrim remains in bankruptcy, but the Court reopened this case at the parties' request (see Dkt. No. 217) to determine what value, if any, would be assigned to plaintiff's claims for purposes of determining a liquidated amount in the bankruptcy proceedings.

Pursuant to Rule 52 of the Federal Rules of Civil Procedure, this Court now grants judgment in favor of plaintiff in the amount of $396,892.06 on its breach of contract claim against Pilgrim, grants default judgment in favor of plaintiff in the amount of $396,892.06 on its breach of contract claim against Marina, and grants judgment in favor of Pilgrim on plaintiff's tortious-interference claim.

II. BACKGROUND AND FINDINGS OF FACT

Plaintiff was a New York corporation that provided recruiting services to clients such as Pilgrim. Under a contract between plaintiff and Pilgrim called a Technical Services Agreement ("TSA"), plaintiff agreed to provide Pilgrim with a computer consultant, and Pilgrim agreed to pay $175.00 per hour for the consultant's services, plus expenses. That consultant was Marina, whose sole owner, operator, and employee was Robert Vance ("Vance").*fn2 Among other provisions of the TSA, Section 7 prohibited Pilgrim from hiring any of plaintiff's consultants without prior written consent. Appendix A to the TSA specified that the TSA renewed automatically each month, with Pilgrim required to provide a two-week notice of termination. Under the TSA, which was signed on January 2, 1998, Marina performed services for Pilgrim from January 5, 1998 through October 30, 1998.

In a separate agreement between plaintiff and Marina called the Master Agreement, Marina agreed to provide plaintiff with personnel (i.e., Vance) to serve plaintiff's clients. The parties signed the Master Agreement on December 31, 1997. Section 8 of the Master Agreement prohibited Marina from soliciting plaintiff's clients during the life of the contract plus 12 months after its termination. Appendix A of the Master Agreement specified that the Master Agreement renewed automatically each month, with Marina required to provide a two-week notice of termination. Plaintiff paid Marina $100.00 per hour worked, plus expenses.

Under the Master Agreement and the TSA, the relationship between plaintiff, Marina, and Pilgrim proceeded without incident until the fall of 1998.

Before then, Marina/Vance had been submitting to plaintiff weekly timesheets for work performed for Pilgrim. Plaintiff, in turn, would bill Pilgrim accordingly. In the fall of 1998, though, Vance decided that he wanted to "break" Marina's Master Agreement with plaintiff to eliminate plaintiff as a middleman. Doing so would mean that Vance would collect a higher portion of the hourly fee that he billed to Pilgrim or to others. Vance communicated his intention to Pilgrim. Pilgrim never saw the Master Agreement but knew generally that Vance had contractual non-compete obligations to plaintiff, obligations that it understood generally to be common in the computer consulting industry. Accordingly, Pilgrim informed Vance that if, on his own initiative, "he had worked out something where he could directly work for us" (Dkt. No. 196 at 57) then Pilgrim would hire him. Pilgrim neither discussed Vance's intentions with plaintiff nor inquired with plaintiff about the exact terms of the Master Agreement.*fn3 Without giving any notice of termination to plaintiff, Vance informed Pilgrim that he had indeed "worked things out" with plaintiff and could proceed to direct relationship with Pilgrim. Vance quietly stopped submitting timesheets to plaintiff after October 1998.

Starting in November 1998, Vance was providing services directly for Pilgrim without plaintiff's knowledge or involvement, in violation of Section 7 of the TSA. Under the agreement that Vance and Pilgrim entered, Pilgrim would pay Vance $125 per hour for his services. This new agreement created an incentive for each side: Vance would receive $25 per hour more than plaintiff was paying him initially, while Pilgrim reduced its expenses by $50 per hour by eliminating plaintiff. Vance contracted with Pilgrim from November 1998 to July 2000.

Plaintiff did not begin to realize that something went wrong in its relationship with Marina/Vance until the first week of November 1998 passed without a timesheet coming in from Vance. Joseph C. Bella, III ("Bella"), a former president and owner of plaintiff, called Pilgrim more than once in early November 1998 to reach Vance but could not connect with him.*fn4 On November 16, 1998, Pilgrim finally called Bella and informed him that Vance no longer worked there and that Pilgrim no longer needed him. (But see Pl. Ex. 7 (including invoices that Vance submitted to Pilgrim for time worked in November 1998).) Pilgrim's call was equivalent to a notice of termination or completion from Vance, meaning that the TSA and Master Agreement were in effect through November 30, 1998 and that the 12-month non-solicitation period in the Master Agreement began on November 30, 1998 and ended on November 30, 1999. The parties have stipulated (see Dkt. No. 177) that Vance worked for Pilgrim from November 1998 to November 1999 as follows:

YEAR MONTH HOURS

1998 November 158 1998 December 232 1999 January 238 1999 February 192 1999 March 212 1999 April 216 1999 May 262 1999 June 126 1999 July 181 1999 August 272 1999 ...


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