Utopian v. Castleton State College

Vermont Superior Court
Filed 01/0 22
Washington nit

STATE OF VERMONT
SUPERIOR COURT CIVIL DIVISION
Washington Unit No. 21-CV-171

UTOPIAN WIRELESS CORPORATION, '

Plaintifl',

V.

CASTLETON STATE COLLEGE et al.,
Defendants.

RULING ON MR. ALCAMO’S MOTION TO DISMISS AND MOTION TO
STAY DISCOVERY AND UTOPIAN’S MOTION TO COMPEL DISCOVERY
In 2007, Plaintifi' Utopian Wireless Corporation leased three Educational Broadband
Spectrum (EBS) licenses, for an aggregate 30-year lease term, fi'om Defendant Vermont
State Colleges (VSC).1 In its amended complaint, Utopian alleges that VSC breached the
agreements in 2020 by unilaterally terminating them following communications with
Defendants Michael C. Alcamo and his business, M.C. Alcamo & Co., Inc. (collectively, Mr.
Alcamo), which specialize in the sale of EBS licenses. According to the complaint, Mr.
Alcamo induced VSC to hire him to sell the licenses under lease with inflated promises of
their value, intentionally inducing VSC to wrongfully terminate the leases with Utopian
and contract with Mr. Alcamo. Utopian claimed breach of contract (and related claims)
against VSC, tortious interference with contract against Mr. Alcamo, and civil conspiracy
“to thwart and usurp” the leases against all defendants.

Utopian and VSC have settled all claims between them, and Utopian has filed a
notice dismissal with prejudice of all College defendants. By its terms, the settlement
of
agreement does not apply to Mr. Alcamo. Thus, two claims remain in this case at this
point: tortious interference and civil conspiracy against Mr. Alcamo.

Mr. Alcamo has filed a Rule 12(b)(6) motion to dismiss for failure to state a claim.
He argues that, according to the facts as presented by him, he did not know that there was a
valid contractual arrangement at the time of his communications with VSC, Utopian has
not shown that he did anything improper in those communications, and that Mr. Alcamo
merely provided VSC nonactionable “honest advice” and an opinion as to the value of the
licenses, all of which are protected by his First Amendment rights. Mr. Alcamo further
argues that the facts—again, as presented by him—are insuficient to support a civil
conspiracy claim. He also argues that, in his individual (as opposed to corporate) capacity
he should be dismissed from this suit because anything he did personally that could have
been tortious was undertaken within the scope of his employment with the corporation.

l
For purposes of this decision, references to Vermont State Colleges includes Defendants Castleton State College,
Vermont Technical College, Lyndon State College, and Chancellor Sophie Zdamy.
In a supplemental filing, Mr. Alcamo argues that the settlement agreement between
Utopian and VSC somehow resolved Utopian’s claims against Mr. Alcamo, mooted them, or
both res judicata and collateral estoppel now bar them. He characterizes Utopian’s
litigation of this case notwithstanding the settlement with other parties as “absurd and
unfair,” “the epitome of bad faith and maliciousness,” “sophistry,” and “gamesmanship and
bad faith.” Because, in his view, the claims against him are necessarily meritless following
that settlement, he asked that the court stay discovery pending a decision on the motion to
dismiss?

Utopian has filed a motion to compel discovery, noting that its discovery requests
were delivered long ago, and Mr. Alcamo has never produced any such discovery or properly
objected to the requests (other than in the motion to stay, which the court has never
granted).

Utopian’s motion to dismiss

Utopian’s motion to dismiss for failure to state a claim is subject to Rule 12(b)(6).
The purpose of a Rule 12(b)(6) motion is to determine “whether the bare allegations of the
complaint are suficient to state a claim.” Kaplan v. Morgan Stanley & Co., Inc., 2009 VT
78, TI 7, 186 Vt. 605. Such motions are “‘not favored and rarely granted.’ This is especially
true ‘when the asserted theory of liability is novel or extreme,’ as such cases ‘should be
explored in the light of facts as developed by the evidence, and, generally, not dismissed
before trial because of mere novelty of the allegations.’” Alger v. Dep’t of Labor & Indus,
2006 VT 115, 1] 12, 181 Vt. 309 (citations omitted); see also Colby v. Umbrella, Inc., 2008 VT
20, 1] 13, 184 Vt. 1 (“The complaint is a bare bones statement that merely provides the
defendant with notice of the claims against it.”); Bock v. Gold, 2008 VT 81, {I 4, 184 Vt. 575
'

(“the threshold a plaintifl‘ must cross in order to meet our notice-pleading standard is
‘exceedingly low’”).

Despite this familiar standard, Mr. Alcamo filed an afidavit with his motion and
relies upon the factual allegations in it extensively in support of his dismissal arguments.
In support of this practice, he claims that his motion is a “speaking motion” that permits
additional evidence to be considered in support of dismissal, and he cites to the provision of
Rule 12(b) that would permit the court, in appropriate circumstances, to convert a motion to
dismiss into a motion for summary judgment. He does not explain why he did'not file a
motion for summary judgment if that is what he sought, and the court declines to convert
his motion otherwise.

Neither Vermont’s nor any other jurisdiction’s procedural rules of which the court is
aware would permit what Mr. Alcamo proposes, which appears to be intended to allow him
to develop the evidence for dismissal purposes but to prevent Utopian from doing so. The
American system of justice, however, is adversarial, not unilateral. The court will stick
with Vermont’s well-established Rule 12(b)(6) standard, focus on the allegations of the
complaint exclusively, and disregard the facts presented in Mr. Alcamo’s afidavit entirely.

2
He also asked the court to sanction Utopian with an assessment of fees and costs, evidently for pursuing
necessarily fi'ivolous litigation. Mr. Alcamo’s bluster aside, there is no basis for any such sanction.

2
Applying the correct standard resolves most factual arguments asserted in support
of dismissal in Utopian’s favor. With regard to tortious interference, the complaint does not
in some manner so fail to include allegations as to warrant dismissal. Three legal issues
are properly addressed here, however: (a) whether Mr. Alcamo in his individual capacity
cannot be liable as an employee, (b) whether the settlement bars either claim against Mr.
Alcamo, and (c) whether a viable claim for civil conspiracy has been pleaded.

Tort liability of an employee

Mr. Alcamo argues that he, individually, rather than his corporation, should be
dismissed fi‘om this case as all his actions were undertaken within the scope of his
employment. As a factual matter, that is not clear on the face of the complaint. As a legal
matter, Mr. Alcamo appears to be under the impression that an employee acting within the
scope of employment is immune fi'om tort liability, which can only be asserted against the
employer. The legal basis for this propositionis unclear as Mr. Alcamo cites none. The
general principle, in fact, is the opposite:

An agent is subject to liability to a third party harmed by the agent’s
tortious conduct. Unless an applicable statute provides otherwise, an actor
remains subject to liability although the actor acts as an agent or an
employee, with actual or apparent authority, or within the scope of
employment.

Restatement (Third) Of Agency § 7.01. Mr. Alcamo cites no such statute or other authority
for his contrary rule. Due to the inadequate briefing, the court declines to address this
issue further at this time.

The settlement agreement

By its terms, the settlement agreement is between Utopian and VSC. Mr. Alcamo is
not a party to it. In fact, he is expressly excluded fi'om the benefit of it, obviously to
preserve Utopian’s right to proceed against him. He nevertheless argues that the fact of
the agreement necessarily bars the claims against him.

The elements of a tortious interference claim are as follows: “(1) the existence of a
valid business relationship or expectancy; (2) knowledge by the interferer of the
relationship or expectancy; (3) an intentional act of interference on the part of the
interferer; (4) damage to the party whose relationship or expectancy was disrupted; and (5)
proof that the interference caused the harm sustained.” Skaskiw v. Vermont Agency of
Agric., 2014 VT 133, 1] 24, 198 Vt. 187 (citation omitted). Nothing about such a claim
requires a plaintifl' asserting it to sue the third party with whom a contract exists or
existed, and nothing about the claim requires such a plaintifi' to sue and not settle with
such a third party.

The same is true of Utopian’s civil conspiracy claim. The law simply does not
require a plaintiff to sue all joint tortfeasors and not settle with any lest the entire suit be
dismissed. As a general matter, “a plaintifi' does not release a directly liable party by
settling with another directly liable party.” Porter v. Kirkendoll, 449 P.3d 627, 632 (Wash.
2019). Mr. Alcamo does not explain why this case is any difl'erent.
3
The doctrines of res judicata and collateral estoppel, by their terms, simply do not
apply in these circumstances. “Res judicata ‘bars the litigation of a claim or defense if there
exists a final judgment in former litigation in which the ‘parties, subject matter and causes
of action are identical or substantially identical.” Lamb v. Geovjian, 165 Vt. 375, 379—80
(1996). There is no relevant former litigation that generated a final judgment binding
Utopian and Mr. Alcamo. While a settlement agreement can operate as a final judgment
for claim preclusion purposes, there obviously is no settlement agreement between Utopian
and Mr. Alcamo.

“Collateral estoppel applies when (1) preclusion is asserted against one who was a
in
party the prior action; (2) the same issue was raised in the prior action; (3) the issue was
resolved by a final judgment on the merits; (4) there was a full and fair opportunity to
litigate the issue in the prior action; and (5) applying preclusion is fair.” Trickett v. Ochs,
2003 VT 91, 11 10, 176 Vt. 89. Again, there was no prior action. There also was no “issue”
that Utopian had any full and fair opportunity to litigate. The issue that the settlement
resolved is whether the parties to it would resolve their dispute by agreement rather than
litigation. That “issue” is not a matter in dispute between Utopian and Mr. Alcamo.

To the extent that the thrust of Mr. Alcamo’s argument is that the settlement
agreement necessarily made Utopian whole (or better), and thus there can be no remaining
claim against Mr. Alcamo, that argument will rise or fall on the evidence. It is not a legal
question reasonably inferable from the face of the complaint. Again, the settlement
agreement does not address the claims against Mr. Alcamo. Nor does the settlement
agreement create some binding fiction or admission that VSC’s alleged breach of contract
simply never happened. Nor does tortious interference necessarily require proof of a breach
of contract at all. It requires proof of “damage to the party whose relationship or
expectancy was disrupted.”

Civil conspiracy

Mr. Alcamo argues extensively that the facts cannot support a civil conspiracy claim.
Much of that argumentation, however, is predicated on evidence that is not properly in the
record. More fundamentally, however, Mr. Alcamo argues that the pleadings are deficient.
With that, the court agrees.

Both parties rely on a Chittenden Civil Division decision as to what a civil
conspiracy claim actually is. That decision provides:

“A civil conspiracy is, fundamentally, an agreement to commit a tort.”
“It is a claim recognized under the common law of most states.” The Vermont
Supreme Court has not clearly articulated whether such a claim still exists in
our state, although it apparently did back in 1899. The fact that it is an open
question means that dismissal is inappropriate at this stage of the
proceedings.

Blackberry Corp. v. Coulter, No 953-10-19 Cncv, at 2—3 (Vt. Super. Ct. Jan. 15, 2020) (Toor,
J.) (citations omitted).
As far as the amended complaint goes, the underlying “tort” for which there may
have been any “agreement to commit” is identified solely as an attempt to “thwart and
usurp” Utopian’s leases with VSC. Nothing in the complaint provides any notice as to what
tort that thwarting and usurping would be if, it is anything other than VSC’s breach of
contract and Mr. Alcamo’s tortious interference with contract. The tortious interference
claim is separately asserted, of course. Alleging in a separate claim that, essentially, VSC
cooperated with Mr. Alcamo’s tortious interference would seem to add nothing to the
tortious interference claim itself. The conspiracy claim is completely subsumed by the
tortious interference claim. If it is difl'erent in any way, the complaint simply does not
provide fair notice of it. The conspiracy claim is dismissed on this basis.

Discovery

No reasonable basis for having failed to respond to Utopian’s discovery requests has
been ofl'ered, and certainly there is no basis for any further delay. Mr. Alcamo shall
respond to those requests promptly.

Order

For the foregoing reasons: (a) Mr. Alcamo’s motion to dismiss is granted in part and
denied in part; (b) Mr. Alcamo’s motion to stay discovery is denied; and (c) Utopian’s motion
to compel is granted.

SO ORDERED this 4th day of January, 2022.

Robert A. Mello
Superior judge