# HIRTLE CALLAGHAN HOLDINGS INC. v. THOMPSON

> District Court, E.D. Pennsylvania · June 7, 2022

URL: https://www.frixlaw.com/law-library/cases/10403464

## Case

- **Court:** District Court, E.D. Pennsylvania
- **Decided:** June 7, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

HIRTLE CALLAGHAN HOLDINGS, :
INC, ET AL. :
: CIVIL ACTION
v. :
: NO. 18-2322
CURT R. THOMPSON, ET AL. :

MEMORANDUM

SURRICK, J. JUNE 7, 2022

Presently before the Court is Defendants’ Motion to Dismiss Certain Counts of Plaintiffs’
Amended Complaint (ECF No. 53) and Plaintiff’s opposition thereto (ECF No. 55). For the
following reasons, this Motion will be granted in part and denied in part. This matter involves an
alleged scheme by a former Hirtle employee, Curt Thompson, and his new employer, Global
Strategic Investment Solutions, LLC (GSIS), to poach Hirtle’s clients for GSIS’ benefit. This
poaching of clients was allegedly in violation of a series of non-solicitation and non-compete
agreements between Thompson and Hirtle which were agreed to by the parties while Thompson
was employed by Hirtle. After Hirtle amended its Complaint in this matter to include multiple
new tort claims, Defendants brought this Motion to Dismiss each of those claims. Defendants
move to dismiss the tort claims against Thompson based on the gist of the action doctrine. They
also move to dismiss the tort claims against all defendants based upon the statute of limitations.
This motion will be granted in part and denied in part. Each of the tort claims will be dismissed
against defendant Thompson, because they violate the gist of the action doctrine. The motion
will be denied as to the remaining counts against the other defendants because they do not violate
the applicable statute of limitations.
I. BACKGROUND
This matter stems from various contracts and agreements which arose out of Defendant
Curt Thompson’s employment with Plaintiff Hirtle. Thompson was employed by Plaintiff Hirtle
in 1994 and later became principally responsible for Hirtle’s Scottsdale Arizona office. (Am.

Compl. ¶ 17-18; ECF No. 52.)
A. The Agreements
On September 29, 2006, Hirtle and Thompson entered into a Stock Award Agreement
(SAA) which provided Thompson with 659 shares of non-voting common stock. (Id. at ¶ 20-
21.) In consideration for this stock, the SAA contained a provision that prohibited “Thompson
from soliciting Hirtle's customers for a competing business or interfering with, or attempting to
disrupt, the relationship between Hirtle and its customers during his employment and for
eighteen months following the termination of his employment with Hirtle.” (Id. at ¶ 23.) The
SAA also stated that “in the event that Thompson violates or breaches the confidentiality and/or

non-solicitation covenants in the [SAA], Hirtle is entitled to injunctive relief, as well as any other
relief available under the agreement, and the non-voting common stock awarded under the
agreement is forfeited without payment.” (Id. at ¶ 24.)
On February 28, 2011, Hirtle and Thompson entered into a Restricted Unit Award
Agreement (RSU Agreement), through which Thompson received 408 Restricted Stock Units,
each representing the right to receive one share of non-voting common stock. (Id. at ¶ 25.)
Again on March 12, 2012, Hirtle and Thompson entered into another RSU Agreement, whereby
Thomas received 1,117 Restricted Units, each representing the right to receive one non-voting
Class C Common Unit. (Id. at ¶ 26.) Each year from 2011 through 2017, Thompson entered
into an additional RSU Agreement with Hirtle. (Id. at ¶ 27.) Each of these agreements contained
identical or nearly identical restrictions on confidentiality, unfair competition, and non-
solicitation, and imposed on Thompson a fiduciary duty to Hirtle. (Id. at ¶ 27-28.) Pursuant to
these Agreements, Thompson was precluded from “directly or indirectly” soliciting, contacting,
or interfering with Hirtle’s clients during his employment and for a period of eighteen months

after his termination. (Id. at ¶ 29-30.)
B. The Allegedly Wrongful Conduct
In the fall of 2017, Thompson planned to leave Hirtle and join GSIS, a similar investment
advisor company, which was owned by Defendant Donald Callaghan, a former owner of Hirtle.
(Id. at ¶ 46-47.) Thompson and Callaghan allegedly agreed that Thompson would become joint
owner of GSIS, and that they would solicit and steal Hirtle’s clients to convert them to new
clients of GSIS. (Id. at ¶ 43-47.) While Thompson was still employed at Hirtle, he allegedly
provided GSIS his entire client list, and Defendants collectively drafted an email to Thompson’s
clients at Hirtle, which allegedly misrepresented the nature of Thompson’s non-solicitation and

confidentiality agreements. (Id. at ¶ 49-56.) After Thompson left Hirtle in January of 2018,
Defendants sent this mass email to Hirtle clients advising that Thompson was leaving Hirtle and
joining GSIS, without disclosing Thompson’s non-solicitation and confidentiality agreements.
(Id. at ¶ 66.) After this email was sent, Callaghan allegedly continued to indirectly solicit
Hirtle’s clients on behalf of GSIS and Thompson. (Id. at ¶ 76.) As a result of this scheme, GSIS
apparently went from having no regulatory assets under management in December of 2017 to
over $490 million in assets at the end of 2019, and over $710 million at the end of 2020. (Id. at ¶
87.) Plaintiff alleges that virtually all of these assets arose from Hirtle clients that were
wrongfully stolen by Defendants. (Id.) Hirtle alleges that these actions by Thompson are clear
violations of Thompson’s SAA and RSU Agreements, specifically the non-solicitation,
confidentiality, and fiduciary duty provisions.
C. The Claims and the Instant Motion
Plaintiff filed its original Complaint on June 4, 2018 asserting the following claims:
Count I (Declaratory Judgment), Count II (Breach of Contract), Count III (Permanent

Injunction), and Count IV (Misappropriation of Trade Secrets). Thereafter on August 18, 2021,
Plaintiff amended its Complaint to include the following additional tort claims: Count II (Breach
of Fiduciary Duty against Thompson, co-trustee Lisa Thompson, and the Trust), Count III
(Common Law Fraud/Concealment against Thompson, co-trustee Lisa Thompson, and the
Trust), Count IV (Tortious Interference with Non-Solicitation and Confidentiality Restrictions
against GSIS), Count V (Tortious Interference with Customer Relationships against GSIS,
Thompson, co-trustee Lisa Thompson, and the Trust), Count VI (Conversion of Business
Information against GSIS, Thompson, co-trustee Lisa Thompson, and the Trust), Count VII
(Common Law Unfair Competition against GSIS, Thompson, co-trustee Lisa Thompson, and the

Trust), Count VIII (Common Law Fraud against GSIS, Thompson, co-trustee Lisa Thompson,
and the Trust), Count IX (Common Law Negligent Misrepresentation against GSIS, Thompson,
co-trustee Lisa Thompson, and the Trust), Count X (Civil Conspiracy against GSIS, Thompson,
co-trustee Lisa Thompson, and the Trust), and Count XI (Aiding and Abetting Breach of
Fiduciarily Duty and Other Tortious Conduct against GSIS). Defendants now move to dismiss
each of these tort claims.
II. LEGAL STANDARD
To survive a motion to dismiss pursuant to Rule 12(b)(6), “a plaintiff must allege
‘enough facts to state a claim to relief that is plausible on its face.’” New Jersey Carpenters &
the Trustees Thereof v. Tishman Const. Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A complaint has facial
plausibility when there is enough factual content ‘that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (quoting Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009)). When considering a motion to dismiss, the Court must accept as true

all factual allegations in the plaintiff's complaint and construe the facts alleged in the light most
favorable to the plaintiff. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009)
(citing Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009)).
A complaint that merely alleges entitlement to relief, without alleging facts that show
entitlement, must be dismissed. See, id. at 211. Courts need not accept “[t]hreadbare recitals of
the elements of a cause of action, supported by mere conclusory statements . . .” Iqbal, 556 U.S.
at 678. “While legal conclusions can provide the framework of a complaint, they must be
supported by factual allegations.” Id. at 679. This “‘does not impose a probability requirement
at the pleading stage,’ but instead ‘simply calls for enough facts to raise a reasonable expectation

that discovery will reveal evidence of’ the necessary element.” Phillips v. Cnty. of Allegheny,
515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556).
III. DISCUSSION
Defendants move to dismiss a series of newly added tort claims in this matter based upon
two separate theories. First, Defendants move to dismiss Counts II (Breach of Fiduciary Duty),
III (Fraud and Concealment), V (Tortious Interference), VI (Conversion of Business
Information), VII (Unfair Competition), VIII (Fraud), IX (Negligent Misrepresentation), and X
(Civil Conspiracy) against Defendant Curt Thompson based upon the gist of the action doctrine.
In addition, Defendants move to dismiss all newly added counts (Counts II through XI) against
all defendants based upon Pennsylvania’s two-year statute of limitations. We will grant the
motion as to all counts against Defendant Thompson and will deny it as to all counts against the
other Defendants, as set forth below.
A. Dismissal Based Upon the Gist of the Action Doctrine
The gist of the action doctrine is “designed to maintain the conceptual distinction

between breach of contract claims and tort claims” by precluding plaintiffs from recasting
ordinary breach of contract claims into tort claims. Nova Design Techs., LTD v. Walters, 875 F.
Supp. 2d 458, 466 (E.D. Pa. 2012) (citing eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10,
14 (Pa. Super. Ct. 2002)).
Determination of whether the gist of the action doctrine applies “calls for a fact-intensive
judgment as to the true nature of a claim.” Milo, LLC v. Procaccino, No. 16-5759, 2020 U.S.
Dist. LEXIS 64122, at *21 (E.D. Pa. Apr. 13, 2020) (citing Williams v. Hilton Grp. PLC, 93 F.
App’x 384, 386 (3d Cir. 2004)). “To evaluate whether the gist of the action doctrine applies, a
court must identify the duty breached, because ‘the nature of the duty alleged to have been

breached . . . [is] the critical determinative factor in determining whether the claim is truly one in
tort, or for breach of contract.’” Downs v. Andrews, 639 F. App’x 816, 819 (3d Cir. 2016)
(quoting Bruno v. Erie Ins. Co., 106 A.3d 48, 68 (Pa. 2014)). Because the gist of the action
doctrine requires a fact-intensive analysis, courts are cautious about dismissing tort claims at the
motion to dismiss stage based upon this doctrine. Lindsley v. Am. Honda Motor Co., No. 16-
941, 2017 U.S. Dist. LEXIS 105586, at *24 (E.D. Pa. July 7, 2017) (citing Victor Buyck Steel
Construction v. Keystone Cement Co., No. 09-2941, 2010 U.S. Dist. LEXIS 30897, at *4 (E.D.
Pa. Mar. 30, 2010).
The mere existence of a contractual relationship between the parties, however, does not
automatically preclude one party from bringing a tort claim against the other. ATD-American
Co. v. Krueger Int’l, No. 12-32, 2012 U.S. Dist. LEXIS 55650, at *21 (E.D. Pa. Apr. 19, 2012).
When a plaintiff alleges claims that sound in both tort and contract, Pennsylvania courts will
examine the claims to determine whether the “gist” of the claims sound primarily in contract or

in tort. Id. When conducting this analysis, tort claims will be barred if: (1) they arise solely
from a contract between the parties, (2) the duties allegedly breached were created by the
contract itself; (3) the liability stems from a contract; or (4) the tort claim essentially duplicates a
breach of contract claim or the success of which is wholly dependent on the terms of a contract.
Id. (citing eToll, 811 A.2d at 19). If the duties which form the basis for the tort claim are
“intertwined” with the contractual obligations, then the claim sounds in contract. However, if
the duties are “collateral” to the contract, the claim sounds in tort. Id. at 22. If the court
determines that the gist of the action doctrine applies, the tort claims are barred.
Here, Defendants seek dismissal of all tort claims based upon this doctrine against

Defendant Thompson only.
1. Count II: Breach of Fiduciary Duty
A breach of fiduciary duty claim is barred by the gist of the action doctrine if the
fiduciary duty allegedly broken is based in the defendant’s contractual obligations. DePuy
Synthes Sales, Inc. v. Globus Med., Inc., 259 F. Supp. 3d 225, 234 (E.D. Pa. 2017) (citing Alpart
v. Gen. Land Partners, Inc., 574 F. Supp. 2d 491, 499 (E.D. Pa. 2008)). Typically, breach of
fiduciary duty claims are not barred under the gist of the action doctrine if the fiduciary duty
“goes beyond the particular obligations contained in the parties’ contract.” Id. at 235. However,
breach of fiduciary duty claims are barred by the doctrine if there are “no allegations of breach of
fiduciary duty. . . that transcend or exist outside of the parties’ contractual agreements.” Id.
Courts in this district have come out differently on breach of fiduciary duty claims under
the gist of the action doctrine based upon the different factual circumstances that each case
presents. For example, in Freedom Medical, the court held that the complaint sufficiently

alleged that defendant had a confidential relationship with his employer which could give rise to
independent fiduciary duties under Pennsylvania common law. Freedom Medical v. Gillespie,
634 F. Supp. 2d 490, 496 (E.D. Pa. 2007). In addition, we previously held in PNC Mortgage that
employees owe common law fiduciary duties to their employers, outside the existence of a
contract, which requires them to refrain from competing with their employer during the course of
their employment. PNC Mortg. v. Superior Morg. Corp., No. 09-5084, 2012 U.S. Dist. LEXIS
25276, at *79-80 (E.D. Pa. Feb. 27, 2012). Therefore, the gist of the action doctrine did not bar
plaintiff’s claim for breach of fiduciary duty in that matter because the parties’ obligations were
not defined by the terms of the employment contract, but rather by larger social policies (i.e., the

law of torts). Id. at 81.
However, courts in this district have dismissed breach of fiduciary duty claims based on
the gist of the action doctrine where the duties outlined in the contract are “inextricably
intertwined” with the alleged breaches of fiduciary duties. See DePuy, 250 F. Supp. 3d at 236;
Brown & Brown, Inc. v. Cola, 745 F. Supp. 2d 588, 621 (E.D. Pa. 2010). In DePuy, the Court
held that the gist of the action doctrine barred the plaintiff’s breach of fiduciary duty claim
because the actions that formed the basis of the breach were identical under both the breach of
contract and the breach of fiduciary duty claims. Id. The court reasoned that the alleged
violations mirrored each other almost identically and no breaches were identified that
“transcended” the breach of contract allegations. Id. Similarly, in Brown & Brown, the Court
held that the breaches were “inextricably intertwined” with the contractual obligations and the
complaint’s allegations showed that the source of the employees’ duties was the employment
contract. Brown & Brown, 745 F. Supp. at 621.
Finally, in Certainteed Ceilings the court dismissed plaintiff’s breach of fiduciary duty

claim because the conduct alleged under the breach of fiduciary duty and breach of contract
claims were identical. Certainteed Ceilings Corp. v. Aiken, No. 14-3925, 2015 U.S. Dist LEXIS
10881, at *29 (E.D. Pa. Jan. 29, 2015). Certainteed Ceilings is on all fours with this matter. The
court explained that the exact conduct plaintiff alleged as the breach of a fiduciary duty—
disclosing plaintiff’s confidential information and trade secrets—was contemplated in the non-
compete agreement. Id. The agreement broadly described defendant’s duties, defined the
confidential information at issue, and even extended that duty beyond termination of
employment. Id. In short, that plaintiff alleged no new facts for the breach of fiduciary duty
claim that transcended the employee’s obligations under the contract. Id. at 29-30. Therefore,

the defendant’s duty not to use or disclose the confidential information was grounded in his
contractual obligations and was “imposed by mutual consensus.” Id. at 30 (citing Brown &
Brown, 745 F. Supp at 621). For these reasons, the court dismissed the claim based upon the gist
of the action doctrine. Id.
The same is true here. The SAA and RSU Agreements explicitly stated that Thompson
had a fiduciary duty to Hirtle, which would be violated by the disclosure of confidential
information, including Hirtle’s client list, during or for eighteen months after termination.
Plaintiff alleges the exact same conduct to support both the breach of contract claim and the
breach of fiduciary claim: that Thompson disclosed client information and participated in a
scheme to poach Hirtle’s clients during and after his employment. This is the exact conduct
explicitly covered by the Agreements in this matter. (See Am. Compl. at ¶ 30 (“[Thompson] . . .
agrees that for the entire period of [his] service, and for a period of eighteen (18) months after
termination of [his] service . . . [Thompson] will not. . . directly or indirectly, solicit business
from or otherwise contact any Customer of the Company for the benefit of a Competing

Business or interfere with, or attempt to disrupt the relationship, contractual or otherwise,
between the Company and any of its customers.”).) Clearly, the duties that Plaintiff claims were
breached were imposed by “mutual consensus” and are therefore inextricably intertwined with
the Agreements between Hirtle and Thompson.
Plaintiff also alleges that Thompson was in a position of trust and confidence with Hirtle,
which, in other cases, has formed a separate basis for common law fiduciary duties. However,
this is inconsequential in this case. In Certainteed Ceilings, the court disregarded the fact that
plaintiff pled that defendant was in a position of trust and confidence with his employer because
plaintiff failed to allege facts to support this assertion. Certainteed Ceilings, 2015 U.S. Dist.

LEXIS 10881, at *31. Similarly here, Hirtle alleges no supporting facts for this assertion which
shows that Thompson had a separate common law fiduciary duty to his employer. In fact,
Thompson’s fiduciary duties to Hirtle are explicitly imposed by the Agreements themselves.
(See Am. Compl. at ¶ 29 (“The Confidential Information is the property of [Hirtle], and
[Thompson] agrees that the use, misappropriation or disclosure of the Confidential Information .
. . would constitute . . . a breach of [Thompson’s] fiduciary duty to [Hirtle].”).) Accordingly, the
basis for this action is the Agreements between Hirtle and Thompson, not common law torts or
broader social duties. Therefore, plaintiff’s breach of fiduciary duty claim is barred by the gist of
the action doctrine and will be dismissed.
2. Counts III, VII, & IX: Common Law Fraud, Fraudulent Concealment, and
Negligent Misrepresentation

Claims of fraud or fraudulent inducement are not automatically barred by the gist of the
action doctrine. Where claims of fraud are collateral to, rather than intertwined with, the
contractual obligations at play, the fraud claims are not barred. ATD-American Co. v. Krueger
Int'l, Inc., 2012 U.S. Dist. LEXIS 55650, at *26. However, where claims of fraud and
misrepresentation involve matters that became contractual duties, the claims are intertwined with
plaintiff’s obligations under the contract and are barred by the gist of the action doctrine. Bryn’s
Quality Plus, LLC v. Shaffer Builders, Inc., No. 07-2311, 2008 U.S. Dist. LEXIS 61713, at *12-
18 (E.D. Pa. Aug. 12, 2008); United States Claims, Inc. v. Saffren & Weinberg, LLP, No. 07-
0543, 2007 U.S. Dist. LEXIS 88022, at *11 (E.D. Pa. Nov. 29, 2007) (“[W]here the fraud or
negligent misrepresentation clearly arose from the contract, courts have been quick to apply the
gist of the action doctrine.”).
In arguing that these claims should not be dismissed, Hirtle cites to Norfolk S. Ry. Co. v.
Pittsburgh & W. Va. R.R., 870 F.3d 244 (3d Cir. 2017) for the proposition that fraud claims are
not barred by the gist of the action doctrine because they do not arise from the contractual
relationship. Rather, Hirtle asserts, fraud and misrepresentation claims arise from the
defendant’s independent fraudulent acts/omissions which are instead governed by the “broader
social duty owed to all individuals.” However, this proposition misstates the law and
misinterprets Norfolk. The facts in Norfolk are easily distinguishable from our matter. There,

defendant PWV entered into a lease with plaintiff Norfolk which required PWV to get the
consent of Norfolk before issuing stock. Id. at 247-49. During discussions to obtain plaintiff’s
consent, PWV assured Norfolk that the proposed document “contain[ed] all available
information of PWV’s plans at [that] point.” Id. at 256. However, the proposed document
omitted portions of PWV’s plans which had been previously discussed with Norfolk in detail.
Id. Based upon this false information, Norfolk issued its consent to PWV for the proposal. Id.
On summary judgment, PWV argued that the gist of the action doctrine precluded
Norfolk’s fraud claim because the cause of action was grounded in the contract. The district
court disagreed, holding that Norfolk’s claim did not arise out of the contractual relationship

between the parties, but rather from PWV’s fraudulent misrepresentations and omissions in
seeking Norfolk’s consent. Norfolk, 153 F. Supp. 3d at 815. The court explained, the contract
merely served as the vehicle which established the relationship between the parties during which
the fraud was committed and was therefore “collateral” to the fraud clam. Id. The contract
required PWV to seek consent from Norfolk and PWV complied with that requirement.
However, it procured that consent through fraudulent misrepresentations and omissions. Id.
Those misrepresentations and omissions distinguished Norfolk’s tort claim from his breach of
contract claim. Id. For these reasons, the Third Circuit affirmed that the gist of the action
doctrine did not bar Norfolk’s fraud claim. Norfolk, 870 F.3d at 256.

Unlike in Norfolk, this matter lacks any similar circumstances which may support a fraud
claim outside the bounds of the Agreements. Hirtle does not allege any fraudulent conduct or
misrepresentations that do not relate directly to duties outlined in the contract. The Agreements
in this matter do not serve solely as the “vehicle which established the relationship” between the
parties. The alleged acts and omissions which support the fraud and misrepresentation claims in
this matter are exactly the same as the acts and omissions which serve as the breach of the
parties’ Agreements. In other words, the claims of fraud and misrepresentation involve matters
which are the contractual duties set out under the Agreements, they are not “collateral to” them.
See Bryan’s Quality Plus, 2008 U.S. Dist. LEXIS 61713, at *12 (applying the gist of the action
doctrine where “defendants’ claims of fraud and misrepresentation involve[d] matters that
became contractual duties.”); Saffren & Weinberg, 2007 U.S. Dist. LEXIS 88022, at *11 (E.D.
Pa. Nov. 29, 2007) (“where the fraud or negligent misrepresentation clearly arose from the
contract, courts have been quick to apply the gist of the action doctrine.”). Thompson’s alleged
fraudulent conduct and misrepresentations are inextricably intertwined with his obligations under

the contract and, as such, the fraud, fraudulent concealment, and negligent misrepresentation
claims are duplicates of the breach of contract claim. Therefore, they are barred by the gist of
the action doctrine.
3. Count V: Tortious Interference with Customer Relationships
The gist of the action doctrine bars a tortious interference claim if it is not independent of
the breach of contract claim. DePuy, 259 F. Supp at 243 (Alpart v. Gen. Land Partners, Inc.,
574 F. Supp. 2d 491, 505 (E.D. Pa. 2008). A tortious interference claim will be dismissed if it is
“inextricably interwoven” with the contractual duties at issue in the case. Id.
Again, DePuy is factually similar and therefore instructive. In DePuy, plaintiff asserted

that defendants tortiously interfered with its customer relationships without justification with the
intent to injure plaintiff. DePuy, 259 F. Supp. at 243. However, defendants’ employment
agreement contained a specific provision in which defendants agreed not to “directly or
indirectly . . . engage in recruitment or solicitation of other employees of your [employer] or any
[company] to join a [competitor].” Id. The DePuy court held that the tortious interference claim
was “completely subsumed” by this provision of the contract and had no independent basis in
social policy. Id. Since defendants alleged interference in plaintiff’s business relations were
“inextricably interwoven” with their contractual duties, the gist of the action doctrine barred the
tortious interference claim. Id.
The same is true here. Hirtle alleges that Thompson purposefully interfered with Hirtle’s
pre-existing contractual relationships with individual and institutional clients that engaged Hirtle
to manage their assets. This is the exact same conduct which is prohibited by the SAA and RSU
Agreements between Thompson and Hirtle. In fact, Hirtle explicitly alleges the following in its
tortious interference claim:

At all relevant times, [Thompson was] aware of [Hirtle’s contractual relationship
with its clients], and aware that by virtue of, inter alia, the RSU Agreements,
Thompson was precluded from directly or indirectly (1) soliciting Hirtle clients
and/or contacting Hirtle clients personally and through Thompson’s partner as a
joint owner and new investment advisor of a “Competing Business”, (2) interfering
in any way with Hirtle’s client relationships, and (3) divulging to third parties
Hirtle’s confidential information for the benefit of his own competing enterprise.

. . . Based upon the conduct more fully described above, which included taking part
in the scheme . . . to knowingly, intentionally and maliciously violate the non-
solicitation and confidentiality restrictions to which Thompson was bound, in order
to harm Hirtle, Defendants named in this Count and their agents lacked privilege or
justification for their conduct.

(Am. Compl. at ¶ 120, 122.) Clearly, the tortious interference claim and the breach of
contract claim are “inextricably interwoven.” The Agreements cover the exact conduct
which is said to be the tortious interference with Hirtle’s business relations and Hirtle
even uses the Agreements to support its basis for this claim in the Complaint. Therefore,
the tortious interference claim is “completely subsumed” by the contract and the gist of
the action doctrine applies.
4. Count VI: Conversion of Business Information
Conversion claims have been dismissed by the gist of the action doctrine where the
alleged entitlement to the property at issue arises solely from the contract between the
parties. Brown & Brown, 745 F. Supp. at 622. However, when a plaintiff has an independent
property interest in the thing that is subject to the conversion claim, the gist of the action doctrine
does not bar the conversion claim, even when the property is also the subject of the
contract. Id. at 623.
In this matter, the “business information” that Thompson allegedly converted is
Thompson’s “customer list and details regarding their portfolios and assets under management
with Hirtle (such as each clients’ preferences, trading history, asset allocation, performance

history, tax status, and Hirtle fee rate).” (Am. Compl. at ¶ 127.) Therefore, the key question is
whether Hirtle has an independent property interest in its client lists and details regarding such
clients. A similar question is raised in Brown & Brown, which is cited by both Plaintiff and
Defendants as instructive here.
In Brown & Brown, the court differentiated between business information in which
plaintiff did and did not have an independent property interest. Brown & Brown, 745 F. Supp.
2d at 623-24. Specifically, the court held that plaintiff had a property interest in the allegedly
converted “documents, information, marketing materials, and promotional materials,” which
prevented the application of the gist of the action doctrine with respect to that “business

information.” Id. at 623. In contrast, the court held that to the extent plaintiff alleged that
defendants converted its “customers and business,” plaintiff had no express property interest in
these items outside of the non-solicitation employment agreements between the parties. Id. at
623-624. With respect to this portion of the claim, the court explained that the conversion of
customers and business was “inextricably intertwined” with the employment agreements and that
the gist of the action doctrine applied. Id.
Here, Hirtle alleges that the “business information” that has been converted by Thompson
is customer lists and details about such customers. Hirtle does not have an independent property
interest in these items outside of the non-solicitation agreement between Hirtle and Thompson.
See e.g., Brown & Brown, 745 F. Supp. 2d at 623 (citing Partners Coffee Co., LLC v. Oceana
Servs. & Prods. Co., No. 09-236, 2009 U.S. Dist LEXIS 113209, at *20 (W.D. Pa. Dec. 3, 2009)
(holding that “contacting customers” was intertwined with the terms of the contract and the gist
of the action doctrine barred the conversion claim as to that portion of the claim)). The
Agreements between Hirtle and Thompson here specifically addressed this issue by providing

that Thompson was prohibited from soliciting Hirtle’s customers during his employment and for
eighteen months afterward. Under these circumstances, like in Brown & Brown, Hirtle’s alleged
“conversion of customers and business is inextricably intertwined” with the non-solicitation
agreement. Therefore, the gist of the action doctrine applies and bars this claim.
5. Count VII: Unfair Competition
The tort of “unfair competition” may be recognized in Pennsylvania where there is
evidence of, among other things, “misrepresentation, tortious interference with contract,
improper inducement of another’s employees, and unlawful use of confidential
information.” Synthes, Inc. v. Emerge Med., Inc., No. 11-1566, 2012 U.S. Dist. LEXIS 134886,

at *24 (E.D. Pa. Sep. 19, 2012) (citing Synthes (U.S.A.) v. Globus Med., Inc., No. 04-1235, U.S.
Dist. LEXIS 19962, at *8 (E.D. Pa. Sept. 14, 2005). In this matter, Hirtle alleges the following
in its claim for unfair competition:
As set forth above, the conduct of Defendants named in this Count and their agents in
soliciting and inducing Thompson to join GSIS and violate his fiduciary duties and his non-
solicitation and confidentiality restrictions, for the purpose of having Thompson commit
wrongs such as disclosing Hirtle’s confidential information and enticing away Hirtle’s
customers, constitutes common law unfair competition.

(Am. Compl. at ¶ 133.) While the allegations set forth in the complaint do not even appear to be
directed at Defendant Thompson, but rather at Defendant GSIS, to the extent that they apply to
Thompson, the gist of the action doctrine bars this claim.
As is the case with the other causes of action addressed supra, a claim for unfair
competition must articulate a “broader set of wrongful acts” which would bring the claim beyond
the scope of the contract at issue. See, e.g., Cunningham Lindsey U.S., Inc. v. Bonnani, No. 18-
2528, 2014 U.S. Dist. LEXIS 55250, at *23 (M.D. Pa. Apr. 22, 2014). Where, by contrast, “the
purported misrepresentation extends beyond a failure to adhere to any provision of the contract,

[a] claim sounds primarily in tort and may be maintained concurrently with [a] breach of contract
action.” Sköld v. Galderma Labs., L.P., 99 F. Supp. 3d 585, 602 (E.D. Pa. 2015).
In this matter, it appears that Hirtle’s unfair competition claim is premised on
Thompson’s alleged breach of fiduciary duties and/or efforts to tortiously interfere with Hirtle’s
clients, as prohibited by the SAA and RSU Agreements. Because the allegations in the
complaint in support of Hirtle’s breach of fiduciary duty, tortious interference, and conversion
claims are duplicative of Hirtle’s breach of contract claim, the gist of the action barred each of
these tort claims, as discussed supra. As Hirtle’s unfair competition claim is premised on the
identical actions and allegations as the other tort claims, the unfair competition claim is also

barred by the gist of the action doctrine. Cf., Synthes, Inc. v. Emerge Med., Inc., 2012 U.S. Dist.
LEXIS 134886, at *46 (allowing unfair competition claim based on tortious interference and
conversion claims to proceed because the underlying claims were not barred by the gist of the
action doctrine). Hirtle has failed to articulate a “broader set of wrongful acts” which would
bring its unfair competition claim beyond the scope of the gist of the action doctrine. It’s unfair
competition claim is premised on the exact same conduct as the breach of fiduciary duty and
tortious interference claims, which have also been dismissed. There are simply no allegations
that transcend the Agreements between the parties. Therefore, Hirtle’s unfair competition claim
is also barred by the gist of the action doctrine.
6. Count X: Civil Conspiracy
A conversion claim, under Pennsylvania law, requires a viable distinct underlying tort as
a predicate for liability. In re Orthopedic Bone Screw Prods. Liab. Litig., 193 F.3d 781, 789 (3d
Cir. 1999); Accurso v. Infra-Red Servs., 23 F. Supp 3d 494, 513 (E.D. Pa. 2014). As each of the
underlying torts in this matter have been dismissed based upon the gist of the action doctrine,

Hirtle’s conspiracy claim no longer has a viable predicate for liability and therefore must also be
dismissed.
B. Dismissal Based Upon the Statute of Limitations
Pennsylvania imposes a two-year statute of limitations on tort claims. 42 Pa. C.S. §
5524. In this matter, the original Complaint was filed on June 4, 2018. Hirtle then amended its
Complaint on August 18, 2021. Though Defendants argue that these newly added claims are
time-barred, we agree with Hirtle that these claims relate back to the date of the original
complaint and are not barred by the statute of limitations.
When a party seeks leave to file an amended complaint adding a new claim after the

statute of limitations has expired, the requested leave may only be granted if the new claims or
parties relate back to the filing of the original complaint. Fed. R. Civ. P. 15(c); Estate of Grier v.
Univ. of Pa. Health Sys., No. 07-4224, 2009 U.S. Dist. LEXIS 48905, at *6 (E.D. Pa. June 11,
2009). Rule 15(c)(1)(B) requires that new claims arise out of the same transaction or occurrence
that gave rise to the claims contained in the original complaint. Id. The relevant question is
whether there is a common core of operative facts uniting the original and newly asserted claims.
Feldman v. Am. Asset Fin., LLC, 534 B.R. 627, 637 (E.D. Pa. 2015) (citing Mayle v. Felix, 545
U.S. 644, 659 (2005)).
In this matter, both the original claims and the newly added claims arise from the same
common core of operative facts. The original Complaint seeks recovery based upon the conduct
of Defendants Thompson and GSIS that led to Thompson leaving Hirtle, his partnership with
GSIS, and their alleged poaching of Hirtle’s clients in violation of Thompson’s SAA and RSU
Agreements with Hirtle. All of the new claims arise from these same facts. Therefore, the newly

added claims relate back to the original Complaint of June 4, 2018 and are not barred by the
statute of limitations.
IV. CONCLUSION
For the foregoing reasons, the motion is granted in part and denied in part. The motion is
granted as to Counts II (Breach of Fiduciary Duty), III (Fraud and Concealment), V (Tortious
Interference), VI (Conversion of Business Information), VII (Unfair Competition), VIII (Fraud),
IX (Negligent Misrepresentation), and X (Civil Conspiracy) against Defendant Curt Thompson.
The motion is denied as to all counts (Counts II through XI) against the remaining Defendants.

BY THE COURT:

/s/ R. Barclay Surrick
R. BARCLAY SURRICK, J.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10403464. Public record. Not legal advice.