The opinion of the court was delivered by: David Alan Ezra United States District Judge
ORDER DENYING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT
On April 9, 2012, the Court heard Plaintiffs RLM Business Solutions, Inc. and Don Mastrangelo's Motion for Partial Summary Judgment. P. Adam Davis, Esq., appeared at the hearing on behalf of Plaintiffs; Lawrence Cohen, Esq., appeared at the hearing on behalf of Defendants. After reviewing the motion and the supporting and opposing memoranda, the Court DENIES Plaintiffs' Motion for Partial Summary Judgment ("Mot.," Doc. # 29).
This action arises out of a Private Label Agreement ("Contract") (Doc. # 29-12), entered into on August 20, 2008, between Defendant Procon Fleet Services, LLC ("Procon") (d/b/a VehiclePath, Inc.) and Hawaiian GPS, a sole proprietorship owned by Plaintiff Don Mastrangelo ("Mastrangelo").*fn1
The parties do not dispute that the Contract granted Mastrangelo the right to sell Procon's GPS devices in Hawaii in exchange for paying a monthly fee to Procon. (Mot. at 5--8.) The Contract included a provision allowing Procon to terminate the Contract without cause at any time with thirty days notice, or for cause if Hawaiian GPS failed to comply with the terms of the Contract or failed to pay any fees owed to Procon. (See Doc. # 29-12 ¶ 7.1.)
According to Plaintiffs, after Mastrangelo began selling Procon products, he "began to lose faith in Procon Products and Services." (Mot. at 11.) Beginning in mid-2010, Mastrangelo and his wife, Rachael Mastrangelo, began developing an "alternative vendor" called GPS Heroes. (Id.) The purpose of GPS Heroes was to "(1) improve product performance and customer service that was lacking by Procon and (2) insure that there would be no interruption in service resulting from Hawaiian GPS' financial condition" as well as to "increas[e] Hawaiian GPS' cashflow significantly, thereby placing Hawaiian GPS in a far better position to pay unpaid Contractual Fees owing to Procon." (Id. at 13.)
It is undisputed that Mastrangelo began to fall behind on his monthly contractual payments to Procon beginning in late 2010. (See id. at 12; Doc. # 33 at 8.) According to Plaintiffs, Mastrangelo and Procon entered into a "Workout Arrangement" on February 14, 2011, whereby Mastrangelo would pay Procon $5,000 per week to reduce his accruing balance. (Mot. at 12.)
Procon and Mastrangelo exchanged emails on May 20 and 21, 2011, discussing Mastrangelo's unpaid balance. (See Doc. # 29-2 at 5--8.) In one such email, Procon informs Mastrangelo that his unpaid balance is nearly $114,000, and states that "[t]his is fair notice to you that if you can't begin (starting in June) to make an additional 10K per month in payments that we will take over all your monthly service billing and keep all revenue and apply that against your balance." (Id. at 7.)
By the end of May 2011, the Mastrangelos had allegedly completed development of their GPS Heroes system. (Mot. at 13.) In June 2011, Rachael Mastrangelo registered RLM Business Solutions, Inc. ("RLM") as a sole proprietorship to serve as the owner and vendor of GPS Heroes. (Id. at 14.) On June 30, 2011, "cancellation notices" were purportedly submitted to Procon. (Id.) Plaintiffs contend that these notices show that a number of Mastrangelo's customers had stopped using Procon products and switched to the new GPS Heroes system. (Id.) On July 22, 2011, Mastrangelo sent all of his Hawaiian GPS customers an email introducing the new GPS Heroes System and describing it as "faster than our original system." (Doc. # 29-3 at 1.) The email notifies recipients that "we have decided to upgrade all of our customers to our new GPS Heroes system - at no cost to you" and notes that "we have complete control of this system (no mainland partner) which means that new features are easier to implement, and if any sort of failure occurs we can respond much faster." (Id.) The email further states that "we need to touch each of your vehicles and replace the units in them with a new one . . . ." (Id.)
On August 3, 2011, Procon notified Mastrangelo via email that the Contract was terminated for cause, effective immediately, "due to your unpaid balance and . . . refusal to pay after previous notice." (Doc. # 29-4.)
On that same day, Defendants also sent an email ("Email") to Mastrangelo's customers*fn2 , stating, "You may have already received notification from Don Mastrangelo company [sic] HawaiianGPS or Ready Set Go that the existing GPS tracking devices currently installed in your vehicles need to be replaced. This is false . . . ." (Doc. # 29-6.) The Email informed recipients that:
[O]ur company supplied Don's company with product and service but marketed under his own brand, we were the engine behind his name. Unfortunately Don did not live up to his agreement and has defaulted due to non-payment of your services that he has been billing and collecting from you. As a result he has left us with no alternative than to offer you service directly to insure you have continued use of the system and the technology that you have already invested in . . . . (Id.) The Email went on to offer customers the option of continuing to use Procon's products by logging in directly through Procon's website, Vehiclepath.com, and sending Procon a credit card authorization form. (Id.)
On August 5, 2011, Procon's counsel sent Mastrangelo a letter ("Letter") informing Mastrangelo that the Contract had been terminated on August 3, 2011 as a result of Mastrangelo's continued breach of the Contract. (Doc. # 29-5.) The Letter notes that Procon had previously notified Mastrangelo of his overdue balance on May 20, 2011, but that Mastrangelo continued to owe Defendants an unpaid balance. (Id.) The Letter then informs Mastrangelo that all of his customers were transferred to Procon, pursuant to Section 7.1 of the Contract. (Id.) Lastly, the letter demands that Mastrangelo immediately pay the full past amount due and that he cease and desist from interfering with the business relationship and contract that Procon has with its customers. (Id.)
On August 9, 2011, Procon sent another email to the customers containing a copy of the previous email for those who were "unfamiliar with what ha[d] transpired." (Doc. # 29-8.) The email goes on to offer lower rates and a lifetime warranty to incentivize customers to continue using Procon's products. (Id.)
Plaintiffs allege that Procon's Email to the customers and Letter to Mastrangelo "intentionally, maliciously, knowingly, recklessly and/or negligently made false representations of fact." (Id. ¶¶ 12, 15.) Plaintiffs further allege that Defendants knew these representations were false at the time they were made, and made them "for the purpose of improperly interfering with Plaintiffs' business relationships with their respective Customers[.]" (Id. ¶¶ 13, 16.) According to Plaintiffs, Procon wrote the Email "to harass and retaliate against Plaintiffs and to obtain said Customers on behalf of and for the sole benefit of Vehiclepath/Procon" and sent Mastrangelo the Letter "for the purpose of creating friction and tension between Plaintiffs and their respective Customers . . ." (Id. ¶ 16.) Finally, Plaintiffs allege that "[i]t is believed that most, if not all, of the Customers were contacted by one or more of the Defendants beginning on August 3, 2011" and that "[a]s of the date of filing hereof, these improper and defamatory communications continue." (Id. ¶ 17.)
Defendants, for their part, contend that Mastrangelo and his wife: concocted a scheme to create a new business entity intended to transfer Fleet Customers from Procon Fleet to their new entity which they named GPS Heroes. Utilizing Procon Fleet's business plans, products, pricing, processes, intellectual property, know-how, trade secrets, methods, disclosures, business, technical, financial and/or other information, Mastrangelo prepared to sell GPS services to Fleet Customers and therein induce those Fleet Customers to terminate their subscriptions to Procon Fleet internet and wireless-enabled monitoring and tracking devices. (Doc. # 33 at 8.) Defendants assert that "instead of making the monthly payments due and owing to Procon Fleet, Mastrangelo used the money he collected from the Fleet Customers to fund and operate GPS Heroes . . . ." (Id. at 9.) ...