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Tort/Negligence – Breach of Fiduciary Duty – Damages – Interference with Contract – Trade Show

Teresa Bruno, Opinions Editor//February 5, 2018

Tort/Negligence – Breach of Fiduciary Duty – Damages – Interference with Contract – Trade Show

Teresa Bruno, Opinions Editor//February 5, 2018

Veer Right Management Group, Inc. v. Czarnowski Display Service, Inc. (Lawyers Weekly No. 020-009-18, 26 pp.) (Adam Conrad, J.) 2018 NCBC 6

Holding: The evidence shows that it was plaintiff’s own performance – not disparaging emails by its vice-president – that led the U.S. Postal Service to end plaintiff’s contract as a tradeshow supplier for the USPS. So, plaintiff has not shown any damages arising from its vice-president’s alleged breach of fiduciary duty.

The court grants defendants’ motion for summary judgment.

Breach of Fiduciary Duty

Plaintiff has failed to present evidence of an essential element of the tort of breach of fiduciary duty: that defendants’ actions proximately caused injury to plaintiff.

Even if defendant Jenkins breached his fiduciary duty by disparaging plaintiff’s founders to the USPS employee who managed the USPS’s contract with tradeshow suppliers (including plaintiff), the only alleged injury here is plaintiff’s loss of the profits that plaintiff would have received if the USPS had renewed its tradeshow contract. However, the USPS employees who participated in the decision to rebid plaintiff’s renewable tradeshow contract were underwhelmed by plaintiff’s responses during a contract review, were disappointed by plaintiff’s presentation at a supplier workshop, and called plaintiff’s response to a request for cost savings “relatively minimal.”

Plaintiff does not point to any evidence that the USPS’s decision was based on anything other than its own reasoned business judgment and plaintiff’s sub-par presentations. Therefore, plaintiff has not shown that defendants proximately caused the USPS not to exercise its renewal options for plaintiff’s contract.

Plaintiff also alleges that Jenkins covertly shared information with plaintiff’s subcontractor, defendant Czarnowski Display Service, which went on to win the tradeshow contract for itself after the USPS decided not to renew plaintiff’s contract. Plaintiff highlights a series of emails from Jenkins to Czarnowski that allegedly contain confidential information. However, only one of the emails was sent before the USPS decided not to exercise its renewal option, and there is no indication that this email (of which the USPS was unaware) bears any relationship to the USPS’s decision. Plaintiff does not argue that Czarnowski used any of the information in its bid.

Plaintiff suggests that it was hindered in its efforts to develop evidence because Jenkins erased his company computer before returning it, perhaps deleting incriminating emails and other evidence. The court cannot draw an inference in plaintiff’s favor from the absence of evidence. Plaintiff has not made a spoliation argument, nor did it move to compel additional discovery. Furthermore, plaintiff’s depositions of key USPS personnel failed to unearth any evidence that actions by defendants caused the decision not to renew plaintiff’s contract.

Tortious Interference

According to plaintiff, Czarnowski intentionally induced the USPS to put the tradeshow contract up for bid. However, all of the relevant evidence shows that the USPS decided not to renew plaintiff’s contract based on plaintiff’s underwhelming workshop presentations, disappointing cost savings proposal, and lengthy tenure as tradeshow contractor. No evidence tends to show that the USPS would have exercised its renewal option but for defendants’ alleged actions.

Plaintiff also maintains that Czarnowski interfered with Jenkins’s at-will employment by inducing Jenkins to “betray” plaintiff (by seeking to bring an end to the tradeshow contract) in return for a promise that Czarnowski would give Jenkins a job if Czarnowski obtained the tradeshow contract.

In response to the USPS’s decisions not to renew plaintiff’s tradeshow contract and to award the contract to Czarnowski, plaintiff could not afford to employ Jenkins. Tonia Miller, one of plaintiff’s founders and Jenkins’ sister-in-law, encouraged Jenkins to look elsewhere for employment, including with Czarnowski.

In other words, Jenkins resigned from plaintiff and began employment with Czarnowski as a direct result of the USPS’s decisions. Because there is no evidence that defendants caused the USPS to end plaintiff’s tradeshow contract, there is also no evidence that their actions caused harm to plaintiff for Jenkins’s departure following the loss of that contract.




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