United States District Court, W.D. Pennsylvania
ANTHONY J. RAZZANO, Plaintiff,
VMI NUTRITION, INC., D/B/A GENYSIS BRAND SOLUTIONS, INC., AND JEFFERY REYNOLDS, INDIVIDUALLY AND AS A REGISTERED AGENT OF VMI NUTRITION, INC., D/B/A GENYSIS BRAND SOLUTIONS, INC. AND FEEL FIT ENTERPRISES LLC, Defendants.
MEMORANDUM OPINION AND ORDER
CYNTHIA REED EDDY UNITED STATES MAGISTRATE JUDGE.
before the court is a Motion to Dismiss (ECF No. 15) filed on
behalf of Defendants VMI Nutrition, Inc. d/b/a Genysis Brand
Solutions, Inc. (“VMI”), Jeffery Reynolds, and
Feel Fit Enterprises LLC. For the reasons stated herein, the
motion will be granted and the plaintiff will be granted
leave to amend.
STATEMENT OF FACTS
Anthony J. Razzano's Amended Complaint
(“Complaint”) (ECF No. 14) alleges as follows.
Exclusive Supplement, Inc., a sports supplement company,
issued one hundred shares of capital stock during its
inception, which were owned by Mark Mangieri. Amended
Complaint at ¶¶ 9, 10, 11. Plaintiff purchased
stock and entered into a Shareholder Buy/Sell Agreement with
Mangieri in June 2014, the combined effect of which was that
Plaintiff' acquired 35 shares of stock in Exclusive,
which stock had a minimum value of $390, 000.00. Id.
at ¶¶ 12, 14. Subsequently, Plaintiff left his job
as an accountant to become Exclusive's Chief Financial
Officer. Id. at ¶15. In August 2014, the Food
and Drug Administration (“FDA”) reinvestigated
Exclusive's prior non-compliance and issued 14 citations
for manufacturing and labeling noncompliance. Id. at
¶ 16-17. As a result, Mangieri resigned as Chief
Executive Officer; Plaintiff replaced him in that office.
Id. at ¶18. Thereafter, Exclusive and the FDA
met in Philadelphia and Plaintiff agreed to conduct an
investigation and provide a corrective action plan.
Id. at ¶¶ 19-20. Pursuant to that internal
investigation, Plaintiff found Mangieri did not know the
components of Exclusive products' flavoring system and
committed multiple FDA manufacturing guideline violations.
Id. at ¶ 22. Plaintiff obtained formulas for
Exclusive's products and presented them to Defendant VMI
in Salt Lake City, Utah to see if the latter could match the
products' flavoring system and cure the compliance
issues. Id. at ¶¶ 23-24. In December 2014,
Plaintiff terminated its prior manufacturer, Vitaquest, for
cause. Id. at ¶ 25. Thereafter, Exclusive and
VMI entered into a supply agreement. Id. at ¶
26 & Ex. A. Reynolds signed the Agreement as Chief
Executive Officer of VMI, and Razzano, as Chief Executive
Officer of Exclusive. (ECF No. 14-1 at 14).
March 7, 2015, Mangieri resigned as President of Exclusive
and Plaintiff was appointed President by unanimous consent of
the Board of Directors of Exclusive. Id. at ¶
28. Exclusive terminated Mangieri for cause and repurchased
Mangieri's 65 shares of Exclusive stock, thus leaving
Plaintiff as the sole individual shareholder of the issued
Exclusive stock. Id. at ¶¶ 29-30. Mangieri
sued Plaintiff, Exclusive, and others in the Court of Common
Pleas of Allegheny County. Id. at ¶ 31. After
cross motions for summary judgment were denied, Razzano
attempted to sell his 35 individual shares of stock.
Id. at ¶ 32.
the mismanagement during Mangieri's tenure at Exclusive,
Exclusive failed to pay numerous trade vendors, including
VMI. Id. at ¶ 33. Further, Exclusive failed to
service a loan with First National Bank, secured with its
intellectual property. Id. at ¶ 34.
July 2015, Plaintiff, Steven Andersen
(“Andersen”), Reynolds and Exclusive drafted a
letter of intent for Andersen and Reynolds (referred to
throughout Plaintiff's Complaint, as “Reynolds
Group”) to purchase Exclusive's outstanding debts
and assets. Id. at ¶ 35 & Ex. B. Plaintiff
rejected the proposed letter of intent by the Reynolds group
in favor of a different offer made by Afterglow Holding
Company Limited (“Afterglow”) to purchase
Plaintiff's stock for $500, 000 Id. at
¶¶ 36, 37 & Ex. C. Michael J. Tarutis signed
the letter of intent on behalf of Afterglow. The letter of
intent included a period of due diligence prior to the
purchase of sale and final approval of a definitive
alleges Tarutis on behalf of Afterglow and Reynolds
“had multiple conversations concerning the transaction
with Plaintiff and how it could be of benefit to each
party.” Id. at ¶ 38. On August 24, 2015
Shane Howell, Executive Vice President of VMI, sent an email
to Tarutis stating among other things, "[l]ooking
forward to working with you on this." Id. at
¶ 39. Mr. Howell also included information on VMI's
credit default insurance. Id. at ¶ 41.
Plaintiff alleges “[u]pon information and belief this
communication of credit default insurance dissuaded Tarutis
and Afterglow Holdings Limited from going through with the
stock purchase agreement and thus not showing up for the
rescheduled August 31, 2015 closing.” Id. at
further alleges “Defendants (Genysis/Reynolds)
communicated the existence of Genysis's credit default
insurance to dissuade Tarutis and Afterglow Holdings Limited
from closing on the Stock Purchase Agreement, thereby
guaranteeing the default of Exclusive, in an effort to
wrongfully receive compensation from a credit default
insurance carrier. Defendant Reynolds, individually and as
part of Defendant Genysis, planned to use the increased
liquidity from the insurance carrier to capitalize (in part)
Defendant Feel Fit and carry out the plan of acquiring the
intellectual property they sought in the July 31, 2015 letter
of intent proposed by the Reynolds Group.” Id.
at ¶ 42. Subsequently, Reynolds for his own personal
gain and on behalf of the newly capitalized Defendant Feel
Fit bought the Exclusive note from First National Bank that
was secured by all of Exclusive's assets including
Exclusive's intellectual property. Id. at ¶
43. Feel Fit foreclosed on that loan and now owns the
collateral, i.e., Exclusive's intellectual property.
Id. at ¶ 44. The Amended Complaint continues:
Upon information and belief, at all times during the planning
and execution of the above described interference, Defendant
Reynolds, acting in his own personal capacity and in a
corporate capacity for both Defendant Genysis and Defendant
Feel Fit, was physically present in Western Pennsylvania,
specifically the greater Pittsburgh area.” Id.
at ¶ 45.
Amended Complaint alleges a single count of intentional
interference with prospective business relations against all
defendants, under Pennsylvania law. As a result of this
interference Plaintiff seeks damages for the value of the
prospective stock purchase agreement, $500, 000, as well as
for the harm to his professional reputation and legal fees
incurred in the drafting of the letters of intent, which
would have been paid by the buyer Afterglow Holdings Limited.
Id. at ¶ 51-53.
diversity jurisdiction. 28 U.S.C. § 1332.
Motion to ...