Michael Grasso v. Toby Katz ( 2023 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 22-2896
MICHAEL GRASSO,
Individually and trading as General Partner of GF 2014, L.P.,
Appellant
v.
TOBY KATZ
On Appeal from the United States
District Court for the Eastern District of Pennsylvania
(D.C. No. 2-21-cv-05472)
District Judge: Honorable Cynthia M. Rufe
Submitted Under Third Circuit L.A.R. 34.1(a)
June 23, 2023
Before: CHAGARES, Chief Judge, BIBAS, and MATEY, Circuit Judges.
(Opinion filed: July 19, 2023)
OPINION

This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7,
does not constitute binding precedent.
MATEY, Circuit Judge.
Marshall Katz obtained a $23 million default judgment against Joseph Grasso.
Joseph has not paid, Marshall has passed away, Toby Katz (Marshall’s widow) wants to
execute on the judgment, and Michael Grasso (Joseph’s father) opposes Toby’s efforts.1
But Michael cannot resort to the federal courts’ help as his tort claims do not plausibly
entitle him to relief, and his request for a declaratory judgment is unripe. So we will
affirm the District Court’s judgment.
I.
Twists and turns abound in this action, so we include only a summary. First, there
is the real estate. Before litigation on the default judgment began, Michael gifted Joseph
and his wife a 99% limited partnership interest in “a real estate holding company” named
“GF 2014.” App. 96 ¶ 53. Joseph and his wife took possession of the interest as tenants
by the entireties. Michael remains General Partner of GF 2014.
At the time of the transfer, GF 2014 owned several assets including a property
located at 649 Dodds Lane, Gladwyne, Pennsylvania (“Dodds Lane Property”). After a
gas leak destroyed a mansion on the Dodds Lane Property, GF 2014 filed an insurance
claim that Clarke & Cohen adjusted. The insurance company paid $3 million for the loss
and specified $120,375.92 as the “[u]ndisputed amount of second partial payment,”
although the record does not disclose whether Michael or GF 2014 ever received this
second payment. App. 117.
1
Given the shared last names among the family members relevant to this dispute,
this opinion follows the parties’ convention of using first names as descriptors.
2
Second, there are the subpoenas Toby issued to Michael’s adult family members
and entities connected to Joseph’s assets. One demand went to Clarke & Cohen, and
another to Fox & Roach, a real estate company hired by GF 2014 to sell the Dodds Lane
Property after the explosion.2
Michael, in his individual capacity and as General Partner of GF 2014, sued Toby.
After Toby removed to federal court, Michael filed an Amended Complaint bearing three
claims: abuse of process, tortious interference with existing and prospective business
relationships, and declaratory judgment. The District Court dismissed the abuse of
process and declaratory judgment claims for lack of subject matter jurisdiction under
Article III. It dismissed the tortious interference claim for failure to state a claim. And the
District Court dismissed all the claims with prejudice, concluding further amendments
would be futile.3
2
The sale was pending when Michael filed his Amended Complaint. The sale
closed for $2 million in February 2022 after briefing on the motion to dismiss had
concluded. Toby provided a certified public record confirming the sale and amount, facts
we may consider as a matter of judicial notice. See Fed. R. App. P. 10(a); Landy v. Fed.
Deposit Ins. Corp., 486 F.2d 139, 151 (3d Cir. 1973).
3
We have jurisdiction to review the District Court’s final judgment under 28
U.S.C. § 1291, although we cannot reach the merits if we determine the District Court
lacked subject matter jurisdiction under Article III. See Finkelman v. Nat’l Football
League, 810 F.3d 187, 192 n.31 (3d Cir. 2016). We exercise plenary review over the
District Court’s decision to dismiss Michael’s claims under Rules 12(b)(1) and 12(b)(6).
See id. at 192. And we review its decision to dismiss with prejudice for abuse of
discretion. See Ramsgate Ct. Townhome Ass’n v. West Chester Borough, 313 F.3d 157,
161 (3d Cir. 2002). We may affirm on any ground supported by the record, even if the
District Court’s judgment did not rest on this same ground. See Ridley Sch. Dist. v. M.R.,
680 F.3d 260, 282 & n.14 (3d Cir. 2012).
3
II.
A. Tort Claims
Toby argues Michael lacks standing to bring claims for abuse of process and
tortious interference. To establish standing and show that he has some “personal stake in
the case,” Michael must allege “(i) that he suffered an injury in fact that is concrete,
particularized, and actual or imminent; (ii) that the injury was likely caused by the
defendant; and (iii) that the injury would likely be redressed by judicial relief.”
TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2203 (2021) (cleaned up); see also
Clemens v. ExecuPharm Inc., 48 F.4th 146, 152 & n.3 (3d Cir. 2022). Because this case
is still at the pleading stage, Michael must allege facts, taken as true, that “plausibly,”
Thole v. U.S. Bank N.A., 140 S. Ct. 1615, 1621 (2020), demonstrate the elements of
“standing for each claim,” TransUnion, 141 S. Ct. at 2208.
1. Abuse of Process
Toby argues Michael failed to plead a legally protected interest because the
Amended Complaint omits allegations for one of the abuse-of-process elements: use of
“legal process against the plaintiff.” Rosen v. Am. Bank of Rolla, 627 A.2d 190, 192 (Pa.
Super. Ct. 1993) (emphasis added). But leaning this heavily on the “legally protected
interest” language “blend[s] standing and merits together in a manner that the Supreme
Court has exhaustively cautioned courts against.” Cottrell v. Alcon Lab’ys, 874 F.3d 154,
165 (3d Cir. 2017). “[A] valid claim for relief is not a prerequisite for standing,” id. at
166, otherwise every challenge under Federal Rule of Civil Procedure 12(b)(6) would
spiral “into an Article III standing evaluation,” id. at 164. So courts must “maintain [a]
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fundamental separation between standing and merits at the dismissal stage” by
“assum[ing] for the purposes of [a] standing inquiry that a plaintiff has stated valid legal
claims.” Id. at 162.
Assuming the validity of Michael’s claim leaves no doubt that he has asserted a
legally protected interest. The abuse of process tort traces to English common law and
guards against “the use of legal process, whether criminal or civil, against another to
accomplish a purpose for which it is not designed.” 1 William L. Prosser, Handbook of
the Law of Torts 892 (1941). Meaning the interest against abusive legal process has long
been considered judicially cognizable. See Cottrell, 874 F.3d at 164 (stating the
“common law” may itself create “legally protected interests”).
Michael’s allegations also establish an injury in fact that was “likely caused” by
Toby’s conduct and “would likely be redressed by judicial relief.” TransUnion, 141 S.
Ct. at 2203. The injury in fact is plain enough. Michael alleges he and GF 2014 incurred
“inordinate expenses associated with responding to [Toby’s] abusive process,” App. 98
¶ 72, and we have held that allegations of “tangible, economic harm . . . satisf[y] the
concreteness requirement.” Cottrell, 874 F.3d at 167. Michael has also alleged that he
and GF 2014 have already incurred these expenses, making the injury more than “merely
‘conjectural or hypothetical.’” Id. at 168 (quoting Spokeo, Inc. v. Robbins, 136 S. Ct.
1540, 1548 (2016)). Moreover, the expenses are fairly traceable to Toby’s subpoenas and
could be redressed by a favorable monetary award. See Clemens, 48 F.4th at 158. All
meaning that Michael has standing to pursue his abuse of process claim, and that it was
error for the District Court to conclude otherwise.
5
2. Tortious Interference
Like abuse of process, tortious interference enjoys a rich common law pedigree,
see 1 Prosser, supra, at 972, and Michael has satisfied the three “irreducible” elements of
standing for this claim, Spokeo, 136 S. Ct. at 1547. He has alleged a concrete injury in
fact by claiming that Toby’s subpoenas interfered with his and GF 2014’s relations with
Fox & Roach to the point that the firm “now refuses to engage in basic communication.”
App. 95 ¶ 50; see TransUnion, 141 S. Ct. at 2208 (stating that “reputational harm” can
qualify as a concrete injury in fact). And these reputational harms are fairly traceable to
Toby’s alleged interference, which could be redressed by a favorable decision awarding
monetary damages and injunctive relief. Accordingly, Michael has standing to bring his
tortious interference claim.
B. Declaratory Judgment Claim
Like any other type of claim, a “declaratory-judgment action[] must satisfy Article
III’s case-or-controversy requirement.” California v. Texas, 141 S. Ct. 2104, 2115
(2021). At a minimum, this means the dispute must be “‘definite and concrete, touching
the legal relations of parties having adverse legal interests’; and that it be ‘real and
substantial’ and ‘admi[t] of specific relief through a decree of a conclusive character, as
distinguished from an opinion advising what the law would be upon a hypothetical state
of facts.’” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (alteration in
original) (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240–41 (1937)). We
have cast these requirements in terms of ripeness, which “prevents courts from
6
‘entangling themselves in abstract agreements.’” Surrick v. Killion, 449 F.3d 520, 527
(3d Cir. 2006) (quoting Abbott Lab’ys v. Gardner, 387 U.S. 136, 148 (1967)).
As General Partner of GF 2014, Michael seeks a judgment “declaring that the
Entireties Interest [is] not subject to execution with respect to [Toby’s] judgment against
only Joseph.” App. 100 ¶ 83. This claim is unripe. “Adversity requires opposing legal
interests.” Lewis v. Alexander, 685 F.3d 325, 341 (3d Cir. 2012). And it is “a
‘fundamental restriction on our authority’ that ‘[i]n the ordinary course, a litigant must
assert his or her own legal rights and interests, and cannot rest a claim to relief on the
legal rights or interests of third parties.’” Hollingsworth v. Perry, 570 U.S. 693, 708
(2013) (alteration in original) (quoting Powers v. Ohio, 499 U.S. 400, 410 (1991)). But
Joseph and his wife own the Entireties Interest—it does not belong to Michael, even as
General Partner of GF 2014. App. 92 ¶ 26. Deeming their interest nonexecutable would
amount to an advisory opinion on the “legal rights or interests” of third parties.
Hollingsworth, 570 U.S. at 708. Something we cannot do.
Additionally, “[a] dispute is not ripe for judicial determination ‘if it rests upon
contingent future events that may not occur as anticipated, or indeed may not occur at
all.’” Wyatt, Virgin Islands, Inc. v. Gov’t of Virgin Islands, 385 F.3d 801, 806 (3d Cir.
2004) (citation omitted). “Claims based merely upon assumed potential invasions of
rights are not enough to warrant judicial intervention.” Id. (quoting Ashwander v. Tenn.
Valley Auth., 297 U.S. 288, 325 (1936)) (quotation marks omitted). Michael has not
alleged that Toby has attempted to execute on the Entireties Interest—much less that a
7
threat of execution is “imminent.” MedImmune, 549 U.S. at 128. For these reasons, the
District Court properly concluded that Michael’s declaratory judgment claim was unripe.
III.
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the
complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim for
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation
omitted). Though “we are required to accept as true all of the allegations in the complaint
and all reasonable inferences that can be drawn therefrom,” we “need not credit a
complaint’s ‘bald assertions’ or ‘legal conclusions’ when deciding a motion to dismiss.”
Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (citation omitted).
Neither of Michael’s remaining claims survive this standard. So we will remand for the
District Court to dismiss the abuse of process claim for failure to state a claim, and affirm
its dismissal of the tortious interference claim.
A. Abuse of Process
To state a claim for abuse of process under Pennsylvania law, the plaintiff must
allege that “the defendant (1) used a legal process against the plaintiff, (2) primarily to
accomplish a purpose for which the process was not designed[,] and (3) harm has been
caused to the plaintiff.” Rosen, 627 A.2d at 192. The first element is key to this appeal.
Michael does not challenge the subpoena Toby served on him; instead, he claims Toby
unlawfully subpoenaed other entities and individuals, such as Fox & Roach, Clarke &
Cohen, and family members. By challenging subpoenas issued to third parties instead of
8
himself, Toby claims Michael failed to allege the use of “legal process against the
plaintiff.” Response Br. 40.
Michael admits his claim does not stem from subpoenas that were “directed to or
served upon the plaintiff,” Reply Br. 2, but argues he may proceed anyway because he
was the “legal object” of the subpoenas sent to Fox & Roach and Clarke & Cohen,
Opening Br. 17–21. In making this argument, Michael primarily relies on two cases: Cruz
v. Princeton Insurance Co., 925 A.2d 853 (Pa. Super. Ct. 2007), rev’d on other grounds,
950 A.2d 269 (Pa. 2008) (per curiam); and Allied Medical Associates v. State Farm
Mutual Automobile Insurance Co., No. 08-cv-02434, 2008 WL 4771850 (E.D. Pa. Oct.
30, 2008). But we agree with the District Court: neither offer Michael a path forward.
Cruz allowed parents to bring an abuse of process claim against an attorney who
filed a petition to appoint a guardian ad litem for their minor son. 925 A.2d at 857. But
the petition in Cruz was “captioned against” the parents “in their own right” and “was
directed at [them] individually.” Id. And the Superior Court found “that the petition’s
undeniable aim was the removal of [the parents] as [the child’s] guardians.” Id. The same
cannot be said for Toby’s subpoenas to Clarke & Cohen and Fox & Roach. Those
subpoenas were directed solely to those entities and did not have the “undeniable aim” of
impacting Michael or GF 2014’s interests. Id. Michael also overreads Allied. That case
involved a defendant that served legal process on third parties to “obtain information”
from the plaintiff to “drive it out of business” by uncovering “reason[s] to avoid remitting
reimbursement payments.” 2008 WL 4771850, at *7–8. The Amended Complaint, by
9
contrast, does not allege Toby’s subpoenas to Fox & Roach and Clarke & Cohen sought
information from Michael or GF 2014.
Because Michael’s Amended Complaint fails to establish one of the elements for
abuse of process—the use of process against the plaintiff—we will remand for the
District Court to dismiss this claim under Rule 12(b)(6).
B. Tortious Interference
The District Court correctly dismissed Michael’s tortious interference claim under
Rule 12(b)(6). The Amended Complaint alleges two types of tortious interference:
interference with an existing contract and interference with prospective business. To
prevail on either type of claim under Pennsylvania law, the plaintiff must allege:
(1) the existence of a contractual or prospective contractual or economic
relationship between the plaintiff and a third party; (2) purposeful action by
the defendant, specifically intended to harm an existing relationship or
intended to prevent a prospective relation from occurring; (3) the absence of
privilege or justification on the part of the defendant; (4) legal damage to the
plaintiff as a result of the defendant’s conduct; and (5) for prospective
contracts, a reasonable likelihood that the relationship would have occurred
but for the defendant’s interference.
Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 212 (3d Cir. 2009). The
Amended Complaint falls short of plausibly alleging all of these elements.
1. Existing Contract
Michael identifies only one contract with which Toby allegedly interfered: GF
2014’s agreement with Fox & Roach to sell the Dodds Lane Property. Under
Pennsylvania law, “the plaintiff, as part of his prima facie case, [must] show that the
defendant’s conduct was not justified.” Id. at 214. But Toby issued the Fox & Roach
10
subpoena under Pennsylvania Rule of Civil Procedure 3117, which permits a plaintiff to
“take the testimony of any person” “for the purpose of discovery of assets of the
defendant.” Pennsylvania courts have held that Rule 3117 allows broad “discovery even
of persons known not to possess assets of the defendant where such discovery could
provide information which would be relevant to the plaintiff’s efforts to locate assets.”
PaineWebber, Inc. v. Devin, 658 A.2d 409, 415 (Pa. Super. Ct. 1995).
The Fox & Roach subpoena sought relevant information about Joseph’s assets.
Michael generally alleges that “[t]here is no information that can be obtained from Fox &
Roach that could in any way impact execution on the [Joseph] Grasso Judgment.” App.
96 ¶ 54. But this is a bare bones allegation premised on a legal conclusion—that the
Entireties Interest associated with the Dodds Lane Property is categorically exempt from
execution. Even assuming the legal conclusion is correct (an issue we do not address), the
Fox & Roach subpoena sought information about other assets possibly connected to
Joseph beyond the Dodds Lane Property.
2. Prospective Contracts
Michael finally alleges that Toby tortiously interfered with his and GF 2014’s
“prospective business relationships.” App. 98. Specifically, he claims he and GF 2014
“reasonably expected to continue to do business” with Fox & Roach and Clarke &
Cohen. App. 99 ¶ 76. Those relationships do not count. In Pennsylvania, a plaintiff
alleging tortious interference must “base [his] claim that there was a prospective
contractual relationship on something other than an existing or current relationship.”
Acumed, 561 F.3d at 213 (citing Phillips v. Selig, 959 A.2d 420, 429 (Pa. Super. Ct.
11
2008)). Because Michael roots his prospective contract expectations in the “mere hope
that there will be a future contract,” he cannot state a claim for tortious interference with
prospective business. Id.* * *
To sum up, Michael has standing to bring his tort claims but they fail on the
merits. So the District Court should have dismissed both for failure to state a claim under
Rule 12(b)(6). The District Court properly dismissed Michael’s declaratory judgment
claim on ripeness grounds.4 So we will affirm the District Court’s judgment, but remand
for the District Court to dismiss Michael’s abuse of process claim for failure to state a
claim under Rule 12(b)(6).
4
Seeing no abuse of discretion, we will affirm the District Court’s dismissal with
prejudice.
12