Goel v. Reichhold Chemicals ( 2000 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ANIL GOEL, 
Plaintiff-Appellant,
v.
REICHHOLD CHEMICALS,  No. 00-1128
INCORPORATED, a/k/a Reichhold,
Incorporated,
Defendant-Appellee.

Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
W. Earl Britt, Senior District Judge.
(CA-99-535-5-BR)
Argued: September 27, 2000
Decided: October 26, 2000
Before MOTZ and TRAXLER, Circuit Judges, and
Frederick P. STAMP, Jr., Chief United States District Judge
for the Northern District of West Virginia, sitting by designation.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Lisa Grafstein, GRAFSTEIN & WALCZYK, P.L.L.C.,
Raleigh, North Carolina, for Appellant. Lester Neal Ellis, Jr., HUN-
TON & WILLIAMS, Raleigh, North Carolina, for Appellee. ON
BRIEF: Edward McConnell, MCCONNELL LAW OFFICES, Mis-
2 GOEL v. REICHHOLD CHEMICALS, INC.
sion, Kansas, for Appellant. Matthew P. McGuire, Heather Bell
Adams, HUNTON & WILLIAMS, Raleigh, North Carolina; Joseph
M. Lischwe, REICHHOLD CHEMICALS, INC., Research Triangle
Park, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Anil Goel brought this diversity action for malicious prosecution
against Reichhold Chemicals, Inc. ("Reichhold"). Goel alleges that
Reichhold wrongfully and maliciously sued Goel for trade secret mis-
appropriation and breach of contract in an earlier state court action.
The district court granted Reichhold’s motion to dismiss, and this
appeal followed. We affirm.
I.
Because this is an appeal from a grant of Reichhold’s motion to
dismiss, we must read the complaint in the light most favorable to
Goel and take his factual allegations as true. See Chaudhry v. Mobil
Oil Corp., 186 F.3d 502, 504 (4th Cir. 1999).
In February 1990, Goel began working at Swift Adhesives, Inc.
("Swift"), a Chicago division of Reichhold. Goel, an expert in the
field of moisture-cured polyurethane adhesives, was hired as Vice
President of Research and Development. As a condition of employ-
ment, Goel signed a non-compete agreement.
In 1994, Reichhold moved the Swift operation to North Carolina,
phased out Goel’s position, and demoted Goel to the head of the
Automotive Adhesives Unit. In November 1994, while still employed
by Reichhold, Goel discussed the possibility of helping Imperial
GOEL v. REICHHOLD CHEMICALS, INC. 3
Adhesives, Inc. ("Imperial") develop moisture-cured reactive adhe-
sives. Goel and Imperial ultimately entered into a consulting agree-
ment that, according to Goel, was not to begin until January 1997,
after Goel left his employment with Reichhold. Goel, however, vis-
ited Imperial and discussed general requirements for initial product
development prior to January 1997.
In September 1996, an Imperial secretary, Janet Siler, told Reich-
hold officials that she suspected that a man named "Anil" was
engaged in improper conduct. Siler met with a Reichhold executive
to discuss the matter and entered into an agreement, through counsel,
to assist Reichhold in its efforts to investigate possible claims against
Goel and Imperial. Siler’s counsel subsequently contacted the Federal
Bureau of Investigation with information regarding possible trade
secret theft. After investigation, the FBI, on October 30, 1996, deter-
mined that the claims of trade secret misappropriation were unsub-
stantiated. Reichhold nevertheless brought immediate suit against
Imperial and terminated Goel, who never consulted for Imperial under
their agreement.1
On February 5, 1997, Reichhold also filed suit against Goel in
North Carolina state court seeking damages for the alleged disclosure
and misappropriation of trade secrets and fraudulent business
expenses. In response, Goel asserted counterclaims for tortious inter-
ference with contract, defamation, unpaid wages, unfair and deceptive
trade practices, and punitive damages. Following a bench trial, the
court awarded Reichhold $18,940 in damages on the fraud claim, and
Goel more than $2.8 million on the claims of tortious interference,
unpaid wages, and punitive damages. The parties have appealed those
rulings to the North Carolina Court of Appeals.
Soon after the judgments in the state court action, Goel filed the
instant suit in federal court. Goel alleges that as a result of Reich-
hold’s malicious prosecution of Goel in state court, he has sustained
"mental pain and suffering, fright, nervousness, indignity, humilia-
1
Indeed, at oral argument, Reichhold contended that Imperial withdrew
the consulting agreement shortly after being sued by Reichhold in Octo-
ber 1996 — three months prior to Reichhold’s initiation of its action
against Goel.
4 GOEL v. REICHHOLD CHEMICALS, INC.
tion, embarrassment, insult, damage to reputation, attorney’s fees,
costs of defense and lost business opportunities."
The district court granted Reichhold’s motion to dismiss on the
ground that Goel did not allege any "special damages" — e.g., inter-
ference with person or protected property interest — resulting from
the prior civil proceeding. It is well-established that allegation and
proof of special damages are essential elements of a malicious prose-
cution action under North Carolina law. See Stanback v. Stanback,
297 N.C. 181, 204, 254 S.E.2d 611, 626 (1979). The district court
found that Goel failed to allege that Reichhold’s previous suit caused
the loss of any protected property right; the lost business opportunities
did not rise to the level of special damages. Instead, the court found,
Goel alleged only damages that are normally faced in the ordinary
course of litigation, and are not "special" at all.
II.
We have reviewed the record, briefs, and applicable law, and con-
sidered the oral arguments of the parties, and we are persuaded that
the district court reached the correct result.2 We therefore affirm on
the reasoning of the district court. See Goel v. Reichhold Chemicals,
Inc., No. 5:99-CV-535-BR(2) (E.D.N.C. Dec. 18, 1999).
AFFIRMED
2
We need not and do not hold that loss of a contractual consulting
agreement can never amount to special damages under North Carolina
law, only that the facts alleged in this case simply cannot sustain a claim
for malicious prosecution.