MEMORANDUM
Furash & Company (“Furash”), a consulting firm which, during the events giving rise to this case, primarily served clients in the financial services business, filed this action against its former President and Chief Executive Officer, Kathleen McClave (“MeClave”), and a competitor, Towers, Perrin, Foster & Crosby, Inc. (“Towers”), a consulting firm that provides services to insurance, finance, banking and *51 other clients. Generally, Furash alleges that McClave and Towers, McClave’s pres•ent employer, deprived Furash of its busi..ness by inducing Furash’s current and prospective clients to transfer their business to Towers, by enticing Furash’s key employees to leave Furash and accept emplоyment at Towers, and by having McClave take files, customer lists, and other proprietary information and work product from Furash to Towers. The complaint includes claims against McClave individually for fraud and breach of fiduciary duty, and against Towers and McClave for intentional, and alternatively, negligent, interference with Furash’s contracts and prospective contractual relations, conspiracy, unfair competition, and conversion. McClave has also filed a.third party complaint and counterclaim relating to an unpaid bonus she claims she earned for her work at Furash in 1998. Pending are motions filed by eаch defendant for summary judgment on all claims, and a motion filed- by McClave for summary judgment on her third party complaint and counterclaim.
I.
The following facts are undisputed.
A. McClave’s Employment at Furash
McClave began working at Furash in 1983 and continued there until 1993, when she left for a position at the Wharton School, University of Pennsylvania. While at the Wharton School, McClave continued working part-time at Furash. In July 1996, she returned to Furash full time as the Vice Chairman and Co-Chief Operating Officer, jointly operating the company with Rolland Johannsen, Furash’s Chairman and Chief Operating Officer. Plaintiffs Consolidated Opposition to Defendants’ Motion for Summary Judgment, pp. 3-4 (“Pl.Opp’n”).
In December 1997, Furash’s owner, Headway Cаpital Industries, sold Furash to InterBank Communications Inc., part of a group of closely related companies owned or operated by Simon Hershon and Ehud Laska," known as the Interbank Companies (“Interbank”). In February 1998, after a three month transition period, Johannsen left Furash, and McClave became President and Chief Executive Officer. PI. Opp’n at 4. She served as President and Chief Executive Officer from January 1, 1998 until December 31, 1998 pursuant to a contract with Interbank. She continued working at Furash for a brief time in January 1999 after her contract expired. McClave’s contract with Interbank did not include a covenant not to compete. Contract Between McClave and Interbank, Def.’s Statement of Material Facts, Ex. A.
Sometime during the 1997-1999 period, Furash began experiencing financial difficulties, and Hershon and Laska directed McClave to attempt to find a company to purchase or merge with Furash. McClave spoke with a number of companies, including Towers, Speer and Associates, “Lee-Mack”, “AMS”, “Total Research”, “Dove”, and “Treasury Strategies”, but was unable to consummate a sale or merger. McClave Dep., PI. Opp’n, Ex. 1, p. 102-103. Plaintiff claims that, while meeting with these companies, McClave acted on her own behalf by seеking employment for herself outside of Furash, rather than seeking a partner or buyer, as Furash’s owners had directed.
B. McClave’s Employment Discussions with Toivers
In 1998, Towers decided to expand its financial consulting “Tillinghast”' subsidiary, by which McClave is now employed. McNees Dep., PI. Opp’n., Ex. 5, pp. 35-36. As a result of this decision, in May or June 1998, Don McNees, director of Towers’ banking, investment management, and securities practice, requested that an executive recruiter contact McClave regarding the possibility of employment at Towers. Id. at 31-32. McClave responded through the recruiter that she was not interested in being hired at that time, but that she *52 wanted to meet with Towers concerning a transaction with Furash.” Id. When McClave and McNees met in June 1998, McClave informed McNees of Furash’s interest in pursuing some type of acquisition or partnership with Towers, and McNees suggested that instead of a corporate transaction, McClave could leave Furash and join Towers. Later, in July 1998, McNees informed McClave of Towers’ final rejection of a deal with Furash. Id. at 34-35.
In September 1998, McClave and McNees again began discussing employment opportunities. In connection with his recruiting efforts, McNees gave McClave a set of guidelines entitled “INSTRUCTIONS TO GIVE A CANDIDATE FOR HIRE FROM A COMPETITOR.” The instructions listed the following:
Clients
• Should not tell clients he is leaving employer until he has told employer.
• Should not ask clients to follow him.
• Should cooperate with employer’s efforts/instructions regarding transitioning their clients to new employees to competitor.
® Should not tell or suggest to clients that they request their files or anything.
Information
• Should not take anything with him — originals or copies/software no client information no copies of work he has done no competitor information — regarding company, plans, financials
Employees
• Should not be the go-between between TP [Towers Perrin] and others at competitor.
• Should not encourage others to leave.
If asked about TP, should give them the name of someone at TP who they can call.
Def. Statement of Material Faсts, Ex. B. Discussions continued at an October 1998 lunch meeting where McClave met with McNees and Trida Guinn, McNees’ supervisor. Negotiations between McClave and Towers continued, and in early December 1998, Towers sent McClave a formal employment offer, which contained Towers’ standard covenant not to compete. Should McClave leave Towers, this non-compete clause would have prohibited her from competing against Towers for a period of time. Unwilling to accept the covenant, McClave proposed that certain companies, with which she had close relationships, bе excepted from the non-compete covenant. Towers agreed to a “carve-out” from the non-compete clause for these companies, all of which were Furash clients.
C. McClave’s Departure From Furash
On or about January 4, 1999, McClave notified Laska and Hershon that she was resigning her position at Furash for a position at Towers. In meetings on January 5, 1999, McClave, Laska, and Mary Beth Sullivan of Furash decided that they would delay announcing McClave’s resignation to the employees of Furash .to allow time to develop a transition strategy, and McClave agreed to remain in her position during that period. Three days later, Lаska asked Johannsen if he would return to Furash. Johannsen accepted the offer, and on January 15, 1999, he announced to the Furash staff that McClave was leaving the company. On or about January 19, 1999, he returned as Furash’s President and Chief Executive Officer.
After her departure, McClave retained her laptop computer and the data it contained, her rolodex, and three boxes of documents, which were at her home office. Upon Furash’s request, the computer was returned to Furash with the client-related data and files deleted. The- documents were also returned, with Towers’ in-house counsel retaining a copy of the documents.
D. McClave’s Discussions With Clients
On September 15, 1998, well before her departure, McClave began discussions on behalf of Furash with United Services *53 Automobile Association (“USAA”), an automobile and home insurance company, concerning a project involving the development of a branch distribution system for their savings bank business. Between September and December 1998, McClave, with the assistance of other Furash employees, including Rosemary King, worked to develop a proposal for USAA. In December 1998, USAA told McClave to proceed with the project, but no written contract between USAA and Furash was signed. At McClave’s direction, on December 30, 1998, an invoice was sent to USAA for an initial retainer in the amount of $70,000. Although USAA never paid this invoice, in January 1999, Fu-rash devoted billable time to the USAA project.
After McClave left for Towers, Johann-sen tried to convince USAA that Furash had the resources to continue fulfilling its needs. But USAA was insistent on McClave’s continued involvement. With Towers’ approval, Johannsen attempted to negotiate an arrangement whereby Fu-rash’s employee, King, would continue managing the day-to-day USAA business while McClave would handle high level client contacts. While these discussions occurred, however, King resigned from Furash to acсept employment with Towers. With King’s departure, Furash was unable to consummate an arrangement with USAA, and USAA retained Towers to finish the project.
In the Fall of 1998, McClave proposed a project to improve the performance of Fleet Bank’s (“Fleet”) retail delivery system. On behalf of Furash, McClave continued soliciting Fleet for projects through November and December. On January 11, 1999, seven days after McClave submitted her formal letter of resignation to Fu-rash, she sent a proposal to Fleet soliciting a project to enhance the bank’s sales processes and measure performancе. In the proposal, McClave set out Furash’s project with Fleet and represented that she would take personal responsibility for the project and that King would be responsible for day-to-day project management. Letter to Fleet, PI. Opp’n, Ex. 20. Fleet never signed a contract with Furash, and upon McClave’s departure, it ended its relationship with Furash. Fleet did not retain Towers for the proposed project.
II.
A. Breach of Fiduciary Duty (McClave)
Two cases,
Mercer Management Consulting v. Wilde,
Furash argues that McClave breached her duty of loyalty by allegedly: (1) violating her duty to disclose to Furash her plan to leave at the expiration of her *54 contract even though she had decided much earlier to resign and had informed Towers of her plan; (2) soliciting client work for herself rather than for Furash by inducing client loyalty to her personally rather than to the company; (3) prior to her leaving Furash, soliciting at least one Furash employee, Rosemary King; аnd (4) acting on her own behalf by discussing her potential employment opportunities with other companies in the course of discussing potential transaction opportunities for Furash. Furash submits evidence that during one such meeting with Speer and Associates, McClave discussed her short time commitment to Furash and offered to attract key Furash employees to that consulting firm. Speer Affidavit, ¶¶ 3, 4, PI. Opp., Ex. 29.
McClave disputes these claims and argues that she did not decide to leave Fu-rash until just before she notified the company of her departure. She also claims that the expiration date of her employment contract put Furash on notice of the possibility of her departure. McClave also disputes plaintiffs claim that she was soliciting work for herself when discussing projects with her clients. She asserts that the consulting business is built on personal contacts, and that her personal devotion to the client was necessary for Furash to secure its contracts with these companies. McClave claims that she did not improperly recruit Ms. King or any other Furash employee. She also contends that she never had improper discussions during her meetings with competitors.
The material facts of Furash’s claim for breach of fiduciary duty are largely in dispute. Plaintiff has set forth evidence of McClave’s involvement with King’s departure from Furash, McClave’s actions while searching for a buyer or partner for Fu-rash, her actions in soliciting work from clients, and the date of her decision to leave Furash. This evidence might lead a reasonable jury to find that these activities constitute a breach of fiduciary duty. Therefore, McClave’s motion for summary judgment on the breach of fiduciary duty claim is denied in an accompanying order.
B. Conspiracy (McClave and Towers)
Furash alleges that Towers and McClave conspired to breach McClave’s fiduciary duty by discussing and agreeing that McClave would impropеrly attract Furash’s clients to Towers. As evidence of this agreement, Furash refers to the following undisputed facts and evidence: (1) a letter Towers sent to McClave, which listed as one of her Preliminary Goals and Objectives that she “work to transfer existing client relationships in banking community and to develop new relationships with Tillinghast — Towers Perrin cornerstone clients in the banking sector.” PI. Opp’n, Ex. 9; (2) the fact that McClave’s first year compensation was based on the business she generated, including business from former Furash clients; (3) notes taken by a Towers employee, Susan Collins, during a conversation with Towers’ in-house counsel, which stated “will not put in writing ... conspiracy lawsuit.” PL’s Opp’n, Ex. 8; (4) the “carve out” for McClave’s previous clients in the non-compete provision of her contract with Towers; and (5) the fact that approximately 65% of McClave’s business in her first year at Towers was service to former Furash clients. PL Opp’n, Ex. 21.
Civil conspiracy requires an agreement between two or more parties to take part in an unlawful action or a lawful action in an unlawful manner, and an overt tortious act in furtherance of the agreement that causes injury.
Halberstam v. Welch,
Even if McClave breached her duty, a reasonable jury could not find Towers and McClave liable for civil conspiracy. The evidence Furash lists to support its claim for conspiracy is insufficient to show that Towers participated or induced any of McClave’s allegedly wrongful acts pursuant to an agreement. It might be reasonable for a jury to infer that Towers was aware that McClave had no non-compete agreement with Furash. But, the jury would also have to consider the fact strongly exculpatory of Towers, namely the several precautions specifically presented in the memorandum Towers gave McClave when discussions began. Def. Mot., Ex. B. Towers’ goals for McClave, her compensation formula, and the non-compete clause are merely circumstantial evidence which, even when considered collectively, would not lead a reasonable jury to conclude that Towers agreed to participate in the alleged wrongful acts. Likewise, Susan Collins’ notes are insufficient to persuade a reasonable trier of fact that any such agreement or relationship existed. An accompanying order grants defendants’ summary judgment motions on the conspiracy claim.
C. Fraud (McClave)
To prove civil fraud, a plaintiff must show a false representation of a material fact which is made with knowledge of the falsity with the intent to deceive on which the victim took action in justified reliance upon the misrepresentation.
Pyne v. Jamaica Nutrition Holdings, Ltd.,
McClave denies the facts alleged by Fu-rash and claims that she did not decide to join Towers until her contract with Furash expired, and that she announced her intention to leave in early January, only days after she had finally made her decision. Further, McClave claims that Furash’s reliance on her silence was unreasonable, given Furash’s knowledge that her contract with Interbank would expire at the end of December. McClave also asserts that Furash cannot show any actual damage from her alleged misrepresentations.
Furash has set forth numerous disputed facts that could lead a reasonable jury to find fraud on the part of McClave, including her alleged statements concerning her discussions with potential merger partners, the date of her decision to leave Furash for Towers, and her statements concerning the collectability of certain accounts receivable. Summary judgment on the fraud claim must be denied.
D. Intentional Interference with Fu-rash’s Contracts and Prospective Cоntractual Relations (McClave and Towers)
To sustain a claim for intentional interference with contract and busi
*56
ness relations Furash must establish (1) the existence of a business relationship; (2) defendants’ knowledge of the business relationship; (3) intentional interference with the relationship by defendants; and (4) resulting damages.
Mercer,
Furash claims that McClave, with the encouragement of Towers, improperly solicited employees and tried to ensure the loyalty of Furash’s clients, viz., USAA and Fleet, to her personally, not to Furash. Furash argues that it had a long history with consulting clients in the financial services market, that defendants were aware of those relationships, and that those rеlationships would have continued but for the defendants’ interference.
As discussed earlier, there is no evidence that Towers engaged in any intentional, wrongful conduct on its part that led to any breach of contract. However, the facts as to whether McClave improperly solicited clients for her personal benefit in order to interfere with Furash’s business relationships are largely in dispute. A reasonable jury might find that McClave’s alleged breach of fiduciary duty destroyed Furash’s client relationships. An accompanying order denies McClave’s motion for summary judgement on the tor-tious interference claims, and grаnts Towers’ motion.
E. Negligent Interference with Contract and Prospective Contractual Relations (McClave and Towers)
As an alternative to its claim for intentional interference, plaintiff contends that defendants negligently interfered with its contracts and prospective contractual relations. Plaintiff concedes that the District of Columbia has not explicitly recognized the tort of negligent interference with contract and prospective contractual relations. PL Opp’n at 64. Nonetheless, plaintiff states that other jurisdictions have recognized such a cause of action,
see, e.g., J’Aire Corp. v. Gregory,
Plaintiffs arguments are not persuasive. The District of Columbia has not authorized tort recovery for purely economic losses in a contract setting. Nor has the District recognized the specific tort of negligent interference with contract or prospective contractual relations.
See Robins Dry Dock & Repair Co. v. Flint,
One is not liable to another for pecuniary harm not deriving from physical *57 harm to the other, if that harm results from the actor’s negligently
(a) causing a third person not to perform a contract with the other, or
(b) interfering with the оther’s performance of his contract or making the performance more expensive or burdensome, or
(c) interfering with the other’s acquiring a contractual relation with a third person.
§ 766C. In an extended discussion on this Restatement section, the Third Circuit stated that “ ‘it is the character of the contract or prospective interest itself that has led courts to refuse to give the interest protection against negligent interference.’ ”
Getty Ref. and Mktg. Co. v. MT Fadi B,
The policy against recovery based on negligence is rooted at least in part on what Professor James has called the “pragmatic” objection, that while physical harm generally has limited effects, a chain reaction occurs when economic harm is done and may produce an unending sequence of financial effects best dealt with by insurance, or by contract, or by.other business planning devices. The cоurts have generally followed this policy and the rather limited and narrow exceptions have had virtually no impact on the law.
Id. (quoting W. Prosser & W. Keeton, The Law of Torts 1001 (5th Ed.1984)).
In light of the long history against recognition of the tort of negligent interference with contract or prospective contractual advantage and the reasons against such recognition, plaintiffs arguments and the facts of this case do not justify extension of liability for such a tort for the first time in this jurisdiction. Therefore, the defendants’ motions for summary judgment on this claim are granted in an accompanying order.
F. Unfair Competition
In essentially a restatement of Furash’s other claims, Furash claims that McClave engаged in unfair competition by soliciting Furash employees to join Towers and by developing customer relationships for herself and Towers while at Furash, and that Towers knowingly encouraged McClave’s actions. Unfair competition is not defined in terms of specific elements, but by the description of various acts that would constitute the tort if they resulted in damage.
Business Equip. Ctr. v. DeJur-Amsco Corp.,
Furash repeats the allegations presented in its claims for breach of fiduciary duty and interference with contract. For the reasons discussed in those sections, McClave’s motion for summary judgment is dеnied. Evidence of Towers’ involvement in McClave’s actions is conspicuously lacking; therefore, Towers’ motion is granted on the unfair competition claim.
*58 G. Conversion
Furash alleges that McClave and Towers converted its intellectual property because after her departure from Furash, McClave retained three boxes of Furash documents, a laptop containing Furash documents, and her rolodex. Furash claims that McClave kept these boxes, which contained a list of Furash’s revenues by client for 1993-1998, revenue projections for each of Furash’s consultants, business reports, minutes of board meetings, and USAA work rеports, after her departure from Furash. When Furash requested the return of the documents, McClave turned the documents over to Towers’ in-house legal department. The legal department copied the documents and returned McClave’s copy to Furash. McClave also turned her laptop over to Furash after a Towers’ information services employee deleted its files. McClave retained her rolodex.
Furash states that McClave’s release of this confidential information to Furash’s competitor, Towers, reduced the value of the confidential information and gave Towers the benefit of thе information. Furash contends that McClave used the confidential information in the documents and the computer.in her work for USAA while at Towers,'and that Towers used the information in McClave’s rolodex for marketing purposes, specifically, to conduct a mailing announcing McClave’s joining Towers.
Conversion is the unlawful exercise of ownership, dominion, or control over the personal property of another in denial or repudiation of that person’s rights thereto.
O’Callaghan v. District of Columbia,
McClave, who occasionally worked out of her home office, legitimately acquired the Furash documents. When requested, she returned the documents to Furash, with Towers’ in-house legal counsel keeping a copy in case of litigation. Although these documents were returned, Furash claims that the similarity of the Furash and Towers work product for USAA could lead to a reasonable inference that the documents, specifically the USAA work plan, were used by McClave for the benefit of Towers, in violation of Furash’s rights. PI. Opp. 58.
Although in possession of the documents, neither Towers nor McClave denied Furash’s rights to the information in the documents. For ought that appears, Fu-rash did not retain other copies of the files, and McClave’s possession of the documents did not interfere with Furash’s ability to obtain or conduct its business. Towers admits that it used the information in McClave’s rolodex to announce her joining Towers. The rolodex may have contained the addresses of clients with whom McClave had worked, but there is no evidence that thе names and addresses of the financial institutions could not have been found easily, nor is there evidence that *59 Furash did not retain the identical information in its customer list. While not necessary to this decision, it is arguable that McClave, rather than Furash, owned her rolodex and the information therein. It is clear that neither Towers’ use of the addresses in McClave’s rolodex in the announcement mailing nor its counsel’s retention of a copy of the documents in the case of litigation, without evidence of Towers’ use of the documents, amounts to conversion.
Finally, Furash’s claim that McClave and Towers converted the valuе of the USAA work plan also fails. There is no evidence to contradict King’s testimony that she recreated the work plan based on her knowledge of the project, nor is there evidence to contradict McClave’s testimony that she was given a copy of the work plan by USAA. Furash has not presented evidence to contradict these claims, and these explanations are not exclusive of each other. Defendants’ motions as to the conversion claim are granted in an accompanying order.
III.
McClave’s employment contract with Furash and the third party defendants, the Interbank Companies, entitled her to a bonus equal to “Five Percent (5%) of ... any and all revenues of Furash & Co. recognized by Furash during the period commencing January 1, 1998 and ending December 31, 1998 irrespective of the source of the business, minus One Million Dollars.” Def. Mot., Ex. A. The parties agree that McClave was not paid any bonus for 1998. In her motion for summary judgment on her third party complaint and counterclaim, McClave alleges that Furash realized revenues in 1998 of $3,300,987.75, and therefore, she is owed $115,049.38.
Under
Riggs,
no compensation is due an employee who has breached her fiduciary duty to her employer.