United States District Court, D. Maryland
L. Hollander United States District Judge
Memorandum Opinion concerns a suit filed by Gennari
Consulting, Inc. (“Gennari”), plaintiff, on June
24, 2019, against defendants Wellington Corp., LLC
(“Wellington”) and its sole owner, Robert Kundel,
Jr. ECF 1 (the “Complaint”); id. ¶
8. Gennari alleges that defendants breached a profit-sharing
agreement with Gennari by terminating the agreement without
cause via an email to Gennari's owner, Matthew Gennari
(“Mr. Gennari”). Id. ¶¶ 6, 26.
Further, plaintiff asserts that defendants sought to
“cut Gennari off from all customers and vendors, with
respect to the sale of the Restorer product, which is the
subject of this dispute.” ECF 1 at 1.
Complaint, which is supported by several exhibits, contains
nine counts, as follows: “Breach of Contract”
against Wellington (Count I); “Civil Conspiracy”
against Wellington and Kundel (Count II); “Unjust
Enrichment” against Wellington (Count III);
“Tortious Interference with Contractual and Economic
Relationship” against Wellington and Kundel (Count IV);
“Conversion” against Wellington and Kundel (Count
V); “Fraud” against Wellington and Kundel (Count
VI); “Defamation” against Kundel (Count VII);
“Injurious Falsehood” against Wellington and
Kundel (Count VIII); and “Tortious Interference with
Prospective Advantage” against Wellington and Kundel
(Count IX). Plaintiff seeks a total of $81, 000, 000 in
compensatory damages, $105, 000, 000 in punitive damages, as
well as attorneys' fees, interest, and costs.
Id. ¶¶ 28‒75.
matter jurisdiction is premised on diversity of citizenship.
See Id. ¶ 4; 28 U.S.C. § 1332. Defendants
have moved to dismiss. ECF 4. Pursuant to Fed.R.Civ.P.
12(b)(2), they claim lack of personal jurisdiction. And,
pursuant to Fed.R.Civ.P. 12(b)(3), they claim improper venue.
The motion is supported by a memorandum of law (ECF 4-1)
(collectively, the “Motion”), and the affidavit
of Kundel (ECF 4-2). Gennari opposes the Motion (ECF 7, the
“Opposition”), supported by the affidavit of Mr.
Gennari. ECF 7-1. With their reply (ECF 10, the
“Reply”), defendants submitted another affidavit
from Kundel. ECF 10-1.
review of the submissions, this Court issued an Order asking
the parties to address the possible transfer of this case to
the Northern District of Ohio (ECF 12), where a related suit,
initiated by Wellington, is now pending. See ECF 11.
Wellington's response is docketed at ECF 13 (the
“Wellington Memoradum”). It is supported by
several exhibits. ECF 13-1 to ECF 13-3. Gennari's
response is docketed at ECF 14 (the “Gennari
Memorandum”), along with one exhibit. ECF 14-1.
hearing is necessary to resolve the Motion. See Local Rule
105.6. For the reasons that follow, I shall transfer the case
to the Northern District of Ohio, pursuant to 28 U.S.C.
§ 1404(a). Therefore, I shall deny the Motion as moot.
is a Maryland corporation with its principal place of
business in Cockeysville, Maryland. ECF 1, ¶
Wellington is an Ohio limited liability corporation with its
principal place of business in Vienna, Ohio. Id.
¶ 3. Kundel is the sole shareholder of Wellington and
its principal officer. Id. He is a citizen of Ohio. ECF
4-2, ¶¶ 1, 4.
alleges that Wellington does business throughout the United
States and “[w]orldwide.” ECF 1, ¶ 3.
Moreover, Gennari claims that this Court has subject matter
jurisdiction, and that venue is proper in this District,
because the contract in issue was executed in Maryland.
Id. ¶ 5. Gennari also avers that “the
course of dealings and business occurred in Maryland, and the
acts complained of by the Plaintiff arose and caused damage
to the Plaintiff in Maryland. . . .” Id.
2010, Mr. Gennari, a power tool executive, formed Gennari and
began working as a paid consultant with Jinding Electric Tool
Company (“Jinding”), located in Changzhou, China.
Id. ¶¶ 6, 7. Gennari manufactures for
Jinding “over one hundred million dollars in products
sold globally to Stanley Black & Decker”
(“SBD”). Id. at 7. Through May 2019,
Gennari worked as a consultant for Jinding “with
specific directives to grow” Wellington's power
tool business, until defendants caused Gennari's
“relationship [with Jinding] to end.”
recounts that defendants had invented “a crude non
commercially viable prototype, non-sellable power tool known
as the Rola-brader.” Id. ¶ 9. In February
2015, Wellington “reached out to Gennari via email at
the encouragement of John Cunningham from SBD who was the
President of consumer products of SBD and a lifelong friend
and colleague of [Mr.] Gennari, ” with the goal of
developing the “Rolabrader.” Id. ¶
11. Thereafter, Gennari sought “to get the product
designed, manufactured and sold globally.” Id.
¶ 12. Gennari introduced the Rolabrader to Jinding in
February 2015 and “drew up a Joint Development
Agreement. . . between Wellington and Jinding.”
Id. ¶ 13; see ECF 1-2 (the
“Agreement”). Kundel signed the Agreement for
Wellington on March 12, 2015, and Gennari signed it on May
14, 2015. ECF 1, ¶ 13.
Agreement does not specify where it was executed. Gennari
alleges that he executed the Agreement in Maryland. ECF 7-1
¶ 11. Kundel avers that he executed the Agreement in
Ohio. ECF 4-2, ¶ 15. And, it contains an Ohio
choice-of-law provision. ECF 1-2 at 3. The provision states,
id. ¶ 10: “This agreement will be
governed in all respects by the law of the State of
the Agreement, Wellington is required to pay 50% of all
design and tooling fees. Id. ¶ 13. However,
plaintiff claims Wellington has failed to do so. Id.
Moreover, Wellington “contributed no capital investment
in production inventory, ” which is “a value of
approximately” $1, 000, 000. Id. ¶ 14.
According to Gennari, it negotiated favorable terms with
Jinding to cover the project's costs because Wellington
had no funding. Id.
also claims that it “alone united the SBD sales,
marketing and engineering teams into the project.”
Id. ¶ 15. Further, Gennari maintains that it
“alone managed and perfected the design and product
development process between Jinding and SBD in both China and
Maryland, USA.” Id. Gennari allegedly made the
first presentation of the Rolabrader to SBD on or about April
11, 2016. Id. ¶ 16. The plan was for Jinding to
manufacture the product and for “SBD to source it and
sell it globally.” Id. Wellington was to
receive a 10% royalty. Id.
addition, Gennari alleges that it created a licensing
agreement “whereby Wellington would license the Porter
Cable brand from SBD and pay them a royalty. In turn,
Wellington would be responsible for all distribution.”
Id. Gennari claims that it “alone
secured a vendor, Lowes. . . .” Id. ¶ 17.
Gennari also claims that it “created the Restorer brand
name” because Lowes did not approve of “the
Rolabrader name.” Id. ¶ 18. Further,
plaintiff alleges that Wellington “later fraudulently
trademarked the Restorer brand solely in its own name without
giving joint credit to Gennari.” Id. According
to plaintiff, Gennari enlisted other companies to
“handle the e-commerce sales of the Restorer. . .
.” Id. ¶ 19.
August 2016, Wellington and Gennari entered into a
profit-sharing agreement, by which Wellington was to receive
65% of the profits and pay 65% of expenses, and Gennari's
share would be 35%. Id. ¶ 20; see ECF
1-1 (the “Profit Agreement”). The Profit
Agreement was to remain in effect for the duration of the
licensing agreement “with SBD for the Porter-Cable and
Black & Decker brands providing that Matthew Gennari is
openly and actively managing these . . . accounts.” ECF
Profit Agreement contains no choice of law provision, nor
does it specify where the contract was to be performed.
See Id. Gennari contends that the two companies
agreed to split the workload at the same percentages as the
profits and expenses. ECF 1, ¶ 22. Gennari also alleges
that it secured additional retailers for the Restorer,
including Home Depot, Walmart, and Amazon USA. Id.
¶ 21. Moreover, plaintiff “continued to manage
product development, marketing, finance, supply chain
management, sourcing, commercial execution and planning of
the Restorer project.” Id. ¶ 22.
to plaintiff, Kundel agreed to devote all of his time to the
Restorer project. Id. ¶ 20. Yet, he continued
to work on unrelated business matters. Id.
¶¶ 20, 22.
contends that in May 2017, it “reached out to
Wellington concerning the inequity of workload division,
” because plaintiff was “doing 95% of the work
rather than the agreed upon 35%.” Id. ¶
23. Gennari claims that it “built the Restorer project
from the ground up, with little to no involvement from
Wellington. Wellington and Kundel had little to no
interaction with the vendors, suppliers and manufacturers of
the Restorer project; never met with Jinding. . .and only
made one trip to SBD.” Id. Revenue
“doubled.” Id. ¶ 24. Further,
Gennari contends that in April 2019, it “received
confirmation from Lowe's” as to an agreement for
quantities of product recommended by Gennari. Id.
¶ 25. But, it “was forced to create and present
the [brand transition plan] on its own, to the supply base
without the help and assistance Wellington had
promised.” Id. ¶ 25.
10, 2019, Mr. Gennari received an “unexpected”
email from Wellington and Kundel (ECF 1-3 at 2),
“unilaterally terminating their long-standing
profit-sharing agreement, without notice, without cause, and
in breach of the profit-sharing agreement for the sole
purpose of diverting funds rightfully due and owing to
Gennari.” Id. ¶ 26. According to
plaintiff, the email was defamatory, and was sent to
Gennari's business contacts “for the sole purpose
of unlawfully destroying Gennari's business contacts and
eliminating it from the Restorer project so that Wellington
and Kundel would not have to pay Gennari its 35% of
email, Kundel stated that his intent was to “raise
funds to build the pastoral retreat center and be able to
pass down our company to our son, ” and he needed his
company “to be a transferrable entity.” ECF 1-3
at 2. As a result, he was “terminating [the] contract
between Wellington Corp LLC and Gennari Consulting. . .
.” Id. Notably, Kundel said: “[W]e can
no longer have financial ties between us and our companies .
. . [Wellington] will be working directly with Jinding and
all accounts.” Id.
and Kundel allegedly withheld receivables and “directed
all parties involved to disengage with Gennari. . . .”
ECF 1, ¶ 27. They also allegedly “refused to
release funds belonging to Gennari” and instructed
other parties “to remove Gennari's access to data
regarding the sales and expenses of the Restorer
addition to claiming breach of contract, Gennari alleges that
defendants engaged in defamatory and tortious conduct.
According to plaintiff, defendants “purposefully and
maliciously sabotag[ed] Plaintiffs [sic] business and
economic relationships.” ECF 1, ¶ 47(a). Further,
defendants tortiously interfered with plaintiff's
business by “[d]efaming and providing false information
about Gennari to Vendors, customers and manufacturers about
his position, employment and ability to actively participate
in the business, for the sole reason of damaging
Gennari's business and stealing business from Gennari for
personal financial gain, ” and making “defamatory
statements about Gennari's employment status, financial
abilities, business capacity and future viability, to
multiple individuals and businesses. . . .”
Id. ¶¶ 47, 59.
suit followed on June 24, 2019. Gennari attached to its
Complaint a copy of the Profit Agreement between itself and
Wellington/Kundel (ECF 1-1), the Agreement between
Wellington/Kundel and Jinding (ECF 1-2), and an email dated
May 10, 2019, from Mr. Gennari to Kundel, in reply to the
email sent on May 10, 2019, from Kundel to Mr. Gennari,
terminating the Profit Agreement. ECF 1-3.
import here, Wellington sued Gennari and Mr. Gennari in an
Ohio state court on June 3, 2019. ECF 4-2; see also
ECF 13-1. The suit alleges breach of contract by Gennari with
respect to the Profit Agreement, as well as tortious
interference with a business relationship. Id. As
noted, Gennari filed the case sub judice on June 24, 2019.
And, one day later, on June 25, 2019, Gennari and Mr. Gennari
removed the Ohio state case to the United States District
Court for the Northern District of Ohio. Id.
¶ 21; see Wellington Corp., LLC v. Gennari
Consulting Inc., et al., Case No.
4:19-cv-01464. Notably, on August 12, 2019, the Ohio
federal court denied the Gennaris' motion to dismiss for
lack of personal jurisdiction and improper venue. ECF 11-1 at
answer to the Ohio suit, Gennari raised, among others, the
following affirmative defenses: “Wellington's
claims are barred, in whole or in part, by Gennari
Consulting's compliance with contractual
obligations”; “Wellington's claims are
barred, in whole or in part, by Wellington's failure to
meet its conditions precedent for a claim on [sic] breach of
contract”; “Wellington's claims are barred by
Wellington's own breach of the [Profit] Agreement”;
“Wellington's claims are barred by its own
comparative and/or contributory negligence”; and
“Wellington's claims are barred, in whole or in
part, by the applicable doctrines of waiver, laches, unclean
hands, accord and satisfaction, and/or estoppel.” ECF
13-3 at 7‒8.
facts are discussed, infra.