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Betts Industries, Inc v. Raymond v. Heelan

December 12, 2011

BETTS INDUSTRIES, INC., APPELLANT
v.
RAYMOND V. HEELAN, JR. AND CAIRN L. BISHOP, APPELLEES



Appeal from the Order Entered January 7, 2011, in the Court of Common Pleas of Warren County, Civil Division, at No: AD 276 of 2010.

The opinion of the court was delivered by: Bowes, J.

J-A30008-11

BEFORE: BOWES, DONOHUE, and FREEDBERG, JJ.

OPINION BY BOWES, J.:

Betts Industries, Inc., ("Betts") appeals from the trial court's decision to grant Raymond V. Heelan, Jr. and Cairn L. Bishop's ("Appellees")

preliminary objection in the nature of a demurrer and to dismiss Betts's cause of action for wrongful use of civil proceedings. We reverse and remand for proceedings consistent with this opinion.

Betts manufactures products for the highway cargo tank industry. Appellees are president and vice president of Allegheny Valve and Coupling Inc. Allegheny Valve and Coupling Inc. previously comprised two separate entities, Allegheny Valve and Allegheny Coupling, which were formed by the same individual and subsequently merged. Betts and Allegheny Coupling and Allegheny Valve were engaged in a business relationship whereby the two Allegheny companies sold manufacturing products to Betts. Allegheny Coupling was a purchaser of industrial couplings and fittings and would resell those products. Similarly, its sister company, Allegheny Valve, marketed and resold valves. In 2006, Allegheny Coupling filed a federal cause of action against Betts asserting violations of the federal Lanham Trademark Act. The claims included allegations of federal trademark and trade dress violations as well as state law violations for theft of product, unjust enrichment, misappropriation of trade secrets, and breach of confidential relationship. Allegheny eventually withdrew its federal trade dress claims.

Ultimately, the federal court granted Betts's motion for summary judgment relative to Allegheny's federal trademark claim, dismissing it with prejudice. However, the federal court declined to address the state issues. Instead, the federal court dismissed the state claims without prejudice. Accordingly, Allegheny filed a complaint in state court raising the state law causes of action. Betts responded by simultaneously filing a counterclaim for wrongful use of civil proceedings, commonly known as a Dragonetti Act violation, against the corporate entity, and a separate cause of action against Appellees pursuant to the Dragonetti Act. This separate action is the one at issue herein.

Appellees countered by filing a preliminary objection in the nature of a demurrer, arguing that the Dragonetti action was premature. The trial court, relying on Robinson v. Robinson, 525 A.2d 367 (Pa.Super. 1987), held that the federal action was not terminated in favor of Betts because Allegheny had been permitted to file its state claims in state court. Betts timely appealed and raises the following issues for our consideration.

1. Whether the Trial Court erred in granting Defendant's demurrer and dismissing Plaintiff's action for wrongful use of civil proceedings pursuant to 42 Pa. Cons. Stat. §8351.

2. Whether the Trial Court erred in holding that the lawsuit filed by Allegheny Coupling Company ("Allegheny") against Betts Industries, Inc. ("Betts") in the United States District Court for the Western District of Pennsylvania, at Docket No. 06- 00076E, had not terminated in favor of Betts within the meaning of 42 Pa. Cons. Stat. §8351(a)(2), where the District Court entered summary judgment on the merits in favor of Betts on all claims asserted by Allegheny within its federal subject matter jurisdiction and dismissed these claims with prejudice.

3. Whether the Trial Court erred in holding that the lawsuit commenced by Allegheny against Betts in the United States District Court for the Western District of Pennsylvania, at Docket No. 06-00076E, had not terminated in favor of Betts where the federal trademark and trade dress infringement claims that the District Court dismissed with prejudice were separate and distinct from the state law claims concerning which the District Court declined to exercise supplemental jurisdiction.

Betts' brief at 3.

Preliminarily, we note that although Betts sets forth three issues, they each pertain to the sole position of whether the trial court properly dismissed its Dragonetti action based on its finding that a proceeding had not yet terminated ...


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