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Silver v. Mendel

filed: January 18, 1990.


On Appeal From the United States District Court For the Eastern District of Pennsylvania, Civil Action No. 86-7104.

Higginbotham, Stapleton, and Rosenn, Circuit Judges.

Author: Stapleton


STAPLETON, Circuit Judge.


This is an appeal from a final order in a diversity case dismissing appellant Silver's complaint against appellees M. Mark Mendel, Daniel Murray, individually, and M. Mark Mendel, Ltd. ("the defendants"). We are presented with three principal issues: whether we have jurisdiction to review a non-final March 25, 1987 order dismissing counts I, II, V and VI*fn1 of the complaint;*fn2 whether Silver's claims of intentional interference with both existing and prospective contractual relations are barred by an absolute judicial privilege; and whether Silver states a claim for intentional infliction of severe emotional distress. We conclude that we have jurisdiction, that the judicial privilege does not bar the intentional interference claims, and that Silver's complaint does allege conduct sufficiently outrageous to state a claim under Pennsylvania law for intentional infliction of severe emotional distress.


In reviewing an order dismissing a complaint pursuant to Federal Rule of Civil Procedure 12 (b)(6), we must take as true all the factual allegations in the complaint, and construe the complaint liberally in the complainant's favor. Angelastro v. Prudential-Bache Securities Inc., 764 F.2d 939, 944 (3d Cir.), cert. denied, 474 U.S. 935, 88 L. Ed. 2d 274, 106 S. Ct. 267 (1985). The following narrative account reflects this perspective.

M. Mark Mendel, Ltd. is a legal service corporation incorporated under the laws of the Commonwealth of Pennsylvania. M. Mark Mendel, a Pennsylvania citizen, is Chairman of the Board and an owner of Barton Engineering ("Barton"); he is also a shareholder, officer, and director of Mendel, Ltd. Daniel Murray, a Pennsylvania citizen, is also an officer of Barton as well as being an attorney who is either a shareholder or employee of Mendel, Ltd.

Silver was the principal of a construction company ("the Construction Company") primarily engaged in the business of serving as general contractor for the building of nursing homes. In addition, Silver derived substantial income from consulting work he did individually for developers and owners of nursing homes and, because of his close identification with the Construction Company, he was often invited to participate in his individual capacity as an equity partner with these developers. These sources of income were independent of his income from the Construction Company.

One of the subcontractors hired by the Construction Company was Barton. In 1984, a series of disputes between Barton and the Construction Company arose. On June 29, 1984, Mendel met with Silver at his office and threatened to: destroy Silver's business; destroy his ability to earn a living; and have him physically injured. By letter dated July 2, 1984, Mendel confirmed some of these threats. Specifically, the letter threatened to: charge Silver with improper activity and manipulation on the drawdown of funds provided for the nursing home development by the U.S. Department of Housing and Urban Development; obtain a temporary restraining order on all of Silver's projects; request action from the U.S. Attorney; and seek the appointment of a receiver for the Construction Company. Mendel concluded his letter by stating that

[we] may not get paid in money, but we will get paid in the visceral good feeling that we have taken you out of the market and prevented you from further victimizing honest businessmen. If you think this letter was written in anger, it was not. It was written after careful deliberation and evaluation of what you people really appear to be doing.

29a. In a subsequent letter to appellant dated July 3, 1984, Mendel stated that "I assure you, and this is a threat, and don't kid yourself; your attorney may have told you I can't shut you down, but I'll shut you up and I'll finish you off in the building business. . . . You have only one single option and one only. It is my office or suffer the wrath and take your licking, which I assure you you are going to get." 31a; 32a. The purpose of these threats was to coerce Silver or the Construction Company into making the disputed payments to Barton.

The complaint also alleges that Mendel made good on his threats by causing Barton to file, without probable cause, a Petition for Involuntary Bankruptcy against the Construction Company. The petition was signed by Murray and filed by Mendel, Ltd. on or about December 28, 1984. Two of the creditors who appeared on the petition, Nester Brothers and R.J. Skelding Company had not authorized the Mendel firm or Barton to include them as petitioning creditors before the Bankruptcy Court. The petition was ultimately dismissed because the petitioners refused to post the approximately $850,000 bond set by the court. However, as a result of the filing of the petition, Dunn & Bradstreet, The Philadelphia Inquirer, Philadelphia Business Journal, and the Legal Intelligencer reported that the Construction Company was insolvent. The widespread publicity ensuing from the filing of the petition had dire consequences for both Silver and the Construction Company. Silver personally suffered the following financial injuries from the defendants' conduct: 1) the loss of a $100,000 development fee to be paid by Shermark Partnership to Silver ...

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