The opinion of the court was delivered by: Hon. Joseph H. Rodriguez
MEMORANDUM OPINION & ORDER
This matter is before the Court on cross-motions for summary judgment. Oral argument on the motions was held on December 11, 2007, and the record of that discussion is incorporated here by reference. For the reasons set forth below, each motion will be granted in part and denied in part such that summary judgment is granted in favor of the Defendants on the Complaint and in favor of the Plaintiff on the Counterclaims.
The Complaint in this matter was filed on June 2, 2005 by tire manufacturer and distributor Bridgestone/Firestone North American Tire, LLC ("BFNT") to remedy an allegedly fraudulent scheme devised by Defendants to induce BFNT's predecessor in interest to pay invoices that contained falsified and duplicative charges for vehicle tires and transportation of tires. Named as defendants are Frank LePore and his wife, Lorraine Furey, as well as a business owned by LePore, Pacific Trail Operations, Inc. ("Pacific Trail"). Jurisdiction of this Court is grounded on diversity of citizenship pursuant to 28 U.S.C. § 1332.
BFNT is the successor in interest to certain assets and liabilities formerly belonging to Bridgestone Retail & Commercial Operations, LLC ("BFRC"). (Compl. ¶ 8; Kenneth Weaver Dep., p. 23.) BFRC's multi-brand subsidiary operation, GCR Tire, has operated the commercial company stores, including a tire dealership owned and operated under the name "Firestone C&F" ("C&F") which sold tires to vehicle owners in the retail market in Davenport, Iowa. (Compl. at ¶¶ 8-10; Weaver Dep., p. 42; Frank Teten Dep., p. 9.) All of the operations of C&F were closed in July 2004 and the assets and liabilities of C&F were acquired by BFNT from BFRC. (Compl. at ¶8; John Taylor Dep., p. 132; Weaver Dep., p. 24.) Upon acquiring C&F, BFNT conducted a physical inventory and audit, and allegedly discovered that it had overpaid BFRC on the book value of C&F, because there was not sufficient physical inventory to justify the book value that BFNT paid BFRC. (Weaver Dep., p. 54-61.) Upon further investigation, BFNT determined that the shortfall in the perceived value appeared to have been caused by freight charges on certain tire deliveries. (Weaver Dep., p. 65.)
Englewood Tires Wholesale, Inc., owned by John Boyle, was an authorized wholesale and retail tire dealer with the non-exclusive right to purchase and re-sell Bridgestone/Firestone passenger and light truck tires, as well as other brands. (Compl. at ¶ 12; John Boyle Dep., p. 9.) Defendant Frank LePore was employed as a salesman and vice president of Englewood Tires, and was primarily responsible for wholesaling operations there before he ended his employ on March 24, 2004, purportedly because he was unhappy with his commission structure. (Compl. at ¶ 13; Boyle Dep., p. 10, 95-96; LePore Dep., p. 36-37.) As a salesman, LePore's responsibilities included negotiating purchases from tire manufacturers for Englewood Tires, and as a vice president, he supervised in-house sales and negotiated programs with manufacturers. (Boyle Dep.,. p. 32; Frank LePore Dep., p. 21, 46.) LePore also handled the C&F account as a salesman. (Boyle Dep., p. 14.)
Plaintiff has alleged that from 2002 through the middle of 2004, LePore had arranged for Englewood Tires to sell truckloads of tires to C&F, for which Englewood Tires issued invoices that stated the price of the tires sold and the applicable federal excise tax. (Compl. at ¶ 14.) The price of the tires was negotiated by LePore and John Taylor, the general manager of C&F. (LePore Dep., p. 72.) As a salesman, LePore did not have to get Boyle's approval before negotiating the price of tires with purchasers such as C&F. (Boyle Dep., p. 17.) The cost of transportation associated with those sales, including the cost of transporting the tires to C&F in Davenport, Iowa, was included in the unit price of the tires stated on the invoices. (Compl. at ¶ 14; Boyle Dep., p. 27, 45-46.) BFRC division GCR paid all invoices sent by Englewood Tires to C&F. (Compl. at ¶ 15; Teten Dep., p. 63; Weaver Dep., p. 136.)
The crux of the Complaint is that from February 2002 through June 2004 Defendants LePore and Furey caused Defendant Pacific Trail to issue numerous invoices to C&F for allegedly falsified freight charges associated with the sale of tires by Englewood Tires to C&F, with each invoice purportedly covering the transportation for one truckload of tires to C&F. (Compl. at ¶¶ 16, 19.)*fn1 It appears that Englewood and/or LePore sometimes purchased large numbers of Michelin truck and other tires from fleet owners*fn2 or other non-manufacturer secondary sources at prices lower than the dealers could purchase them from the manufacturers, and then resold the tires below the market price charged by the manufacturers. (Boyle Dep., p. 76-77.) As a customer of LePore's, C&F was therefore able to obtain tires at a much cheaper price through a proprietary deal with him. (LePore Dep., p. 76-77.) Utilizing this "gray market," and Pacific Trail, LePore apparently issued separate invoices to recoup approximately $10 per tire above the price at which Englewood Tires was willing to sell the tires. (Boyle Dep., p. 48-57.)
The Pacific Trail invoices were mailed with the Englewood invoices. (LePore Dep., p. 73.) Because it was unusual to receive two separate invoices, at one point Taylor questioned LePore about them. (Taylor Dep., p. 67.) LePore responded that the Pacific Trail invoices represented brokerage or trans-loading fees associated with the delivery of each truckload of tires to C&F. (LePore Dep., p. 93, 106-07.) In connection with this litigation, however, LePore has testified that the Pacific Trail invoices really were for LePore's "services" in "getting C&F the tires at the price they agreed to pay," or in the nature of a sales commission.*fn3 (LePore Dep., p. 91.) At the time, LePore neither informed Taylor that the Pacific Trail invoices were actually commission payments nor revealed that he owned Pacific Trail. (LePore Dep., p. 107, 109-110.)
Nonetheless, because the price was the same as what LePore originally quoted for the tires, all was well with Taylor. (Taylor Dep., p. 68.) Taylor testified that he did not care how he was billed for the tires, because the amounts on the two invoices added up to the agreed upon price. (Id.) Frank Teten, Taylor's boss, knew about the two invoices, (id.), and did not inquire further because C&F was getting the tires so cheaply, $60 per tire below market price. (Taylor Dep., p. 112; 81.) Taylor testified that after he left C&F, when he found out that the $10 per tire was for commission, he was surprised but also did not see a difference to C&F. (Taylor Dep., p. 83.)
In essence, then, Plaintiff alleges that LePore misrepresented to C&F that it was required to pay the Pacific Trail invoices in addition to the Englewood Tires invoices to receive the tires for which C&F had contracted, billing C&F about $265,000 for doing the work he was hired, and already paid, by Englewood Tires to do. Thus, Plaintiff contends that it has been damaged in that it was deceived into paying about $265,000 worth of Pacific Trail invoices for services that were never provided and never needed to be provided.
The first count of the Complaint states that the Pacific Trail invoices were fraudulent in that they contained falsified information to represent that Pacific Trail had incurred freight costs that it actually had not incurred, as the freight charges had already been billed by Englewood Tires to C&F, and had already been paid. (Compl. at ¶ 28.)
The second count of the Complaint states that the fraudulent acts of the three Defendants "constitute conversion," (Compl. at ¶ 33), and that Plaintiff, as the successor in interest to BFRC, has a right to the funds "stolen" by the Defendants which "consist of the wrongfully obtained payments for purported freight charges already paid" to Englewood Tires by BFRC, (Compl. at ¶ 34).
The third count of the Complaint is for conspiracy, stating that LePore and Furey conspired to perpetrate the fraud by misrepresenting Pacific Trail as a freight company and by issuing fraudulent invoices for payment by BFRC. (Compl. at ¶ 37.)
Defendants counterclaimed for defamation and tortious interference, contending that the Complaint set forth false statements of theft and fraud with the intent to damage the business reputation of LePore or Pacific Trail.
Summary Judgment Standard
"Summary judgment is proper if there is no genuine issue of material fact and if, viewing the facts in the light most favorable to the non-moving party, the moving party is entitled to judgment as a matter of law." Pearson v. Component Tech. Corp., 247 F.3d 471, 482 n.1 (3d Cir. 2001) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)); accord Fed. R. Civ. P. 56 (c). Thus, this Court will enter summary judgment only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that ...