Hemispherx Biopharma, Inc. v. Mid-South Capital, Inc.

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
Nos. 11-11618 & 11-11650
________________________
D. C. Docket No. 1:09-cv-003110-CAP
HEMISPHERX BIOPHARMA, INC., a Delaware corporation,
Plaintiff - Counter-Defendant - Appellee -
Cross-Appellant,
versus
MID-SOUTH CAPITAL, INC., a South Carolina Corporation,
Defendant - Counter Claimant - Appellant -
Cross-Appellee,
ADAM CABIBI, ROBERT ROSENSTEIN, Individually,
Defendants - Cross-Appellees,
THE SAGE GROUP, INC.,
Counter Defendant - Cross-Appellee.
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________________________
Appeals from the United States District Court
for the Northern District of Georgia
________________________
(August 14, 2012)
Before MARTIN, HILL and EBEL,* Circuit Judges.
EBEL, Circuit Judge:
During an eight-month period, Plaintiff and Counterclaim-Defendant
Hemispherx Biopharma, Inc. (“Hemispherx”) hired three different investment
brokers to raise capital for it. Hemispherx hired the first two brokers at a time
when it was difficult to sell Hemispherx’s stock. Months later, when market
forces made Hemispherx’s stock much more attractive, Hemispherx hired a third
broker, a heavy hitter in the industry, which was able very quickly to raise $31
million in capital for Hemispherx through stock sales.
All three brokers focused their capital-raising efforts on several of the same
prospective investors and, when several of those investors eventually purchased
Hemispherx stock, a dispute predictably arose as to which of the three brokers was
entitled to a commission on the stock sales. In this diversity action, governed by
Georgia law, the first investment broker Hemispherx hired, Defendant and
*
Honorable David M. Ebel, United States Circuit Judge for the United States Court of
Appeals for the Tenth Circuit, sitting by designation.
2
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Counterclaimant Mid-South Capital, Inc. (“Mid-South”), seeks to recover a
commission for its efforts in identifying those investors and introducing them to
Hemispherx. Hemispherx contends, instead, that Mid-South and its employees,
Defendants Robert Rosenstein and Adam Cabibi, tortiously interfered with
Hemispherx’s business relationship with its investors and with the third
investment broker who ultimately closed the stock deals at issue here. The district
court denied each party relief, granting judgment on the pleadings to Hemispherx
on Mid-South’s breach-of-contract claim, and summary judgment to Hemispherx
on Mid-South’s remaining claims and to Mid-South on Hemispherx’s intentional
interference with business relationships claim. Having jurisdiction under 28
U.S.C. § 1291, we AFFIRM the district court’s decision in part, REVERSE in
part, and REMAND this case to the district court for further proceedings.
I. BACKGROUND
A. The business relationship between Mid-South and Hemispherx
Hemispherx is a publicly-traded company researching and developing
treatments for viral diseases and cancers. In August 2008, Hemispherx needed to
raise between $4 and $6 million in capital. To that end, Hemispherx’s chief
executive officer (“CEO”), William Carter, M.D., met with Robert Rosenstein,
who had previously succeeded in raising capital for Hemispherx. Rosenstein
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worked for Mid-South.
During their discussions, Carter and Rosenstein strategized that, because
Hemispherx’s stock was not trading well at that time, Hemispherx would probably
have to raise capital through a loan arrangement, secured by all of Hemispherx’s
assets except its intellectual property and repayable in either cash or Hemispherx
stock, at the lender’s option—a secured convertible debenture. In order to pitch
such an investment opportunity to prospective investors, Rosenstein asked Carter
to send him information about Hemispherx and particularly about its assets.
Before sending Mid-South this information, however, Hemispherx asked for a
copy of Mid-South’s Engagement Letter. Rosenstein sent Hemispherx Mid-
South’s standard Engagement Letter in September 2008.
As the parties had previously discussed, the Engagement Letter discounted
Mid-South’s usual brokerage fee because Hemispherx was a previous customer of
Rosenstein. Therefore, the Engagement Letter stated that Hemispherx would pay
Mid-South cash in an amount equal to 5% of the capital raised from investors that
Mid-South identified or introduced to Hemispherx. Further, Hemispherx would
give Mid-South stock warrants—the right to buy Hemispherx stock at a set price
exercisable, in this case, within five years of issuance—in an amount equal to 5%
of the stock issued as part of the capital-raising transaction. The Engagement
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Letter additionally provided that Mid-South would act as Hemispherx’s broker on
a non-exclusive basis and that either party could terminate the agreement with
thirty days’ written notice to the other party. But even after the agreement
terminated, Hemispherx would be obligated to pay Mid-South a commission for at
least another two years on any transactions involving investors Mid-South had
identified or introduced to Hemispherx during the term of the agreement. These
terms were similar to engagement agreements used by other investment brokers.
Although Hemispherx had requested the Engagement Letter, no one ever
signed the Letter on Hemispherx’s behalf. Once Hemispherx received the Mid-
South Engagement Letter, however, in September 2008, Dr. Carter authorized
Rosenstein to begin seeking investors for Hemispherx. To facilitate Rosenstein’s
efforts, Hemispherx sent him a list of its assets, as well as other information
Rosenstein needed to pitch the opportunity to invest in Hemispherx to potential
investors. Rosenstein, aided by another Mid-South employee, Adam Cabibi, then
contacted a number of potential investors and began putting together several
proposed deals to present to Hemispherx.
The primary dispute in this litigation, discussed at length below, is the legal
status of the business relationship between Hemispherx and Mid-South. Briefly
summarized here, the parties’ positions regarding that relationship are these: Mid-
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South contends that, even though no one at Hemispherx ever signed the
Engagement Letter, Hemispherx, by its conduct, assented to the terms of that
agreement, or at least led Mid-South to believe Hemispherx had agreed to the
terms of the Engagement Letter. Hemispherx claims, instead, that it rejected the
terms of the Engagement Letter by not signing the agreement, although
Hemispherx apparently never voiced any disagreement to Mid-South. Hemispherx
contends that the parties had an “ad hoc arrangement” by which Hemispherx
agreed to pay Mid-South an unspecified commission, but only if Mid-South itself
closed an investment deal.
B. Mid-South pursues an investment deal involving Gemini Strategies LLC
To complicate matters further, on November 19, 2008, Dr. Carter sent Mid-
South a letter indicating that Hemispherx would pay Mid-South “a fee from a
financing which . . . is completed within the next 3 months” involving “any” of
five investors listed in the letter. (Doc. 127-11 at 4.) One of the listed investors
was Gemini Strategies LLC (“Gemini”). On November 25, 2008, Mid-South
submitted to Hemispherx an investment proposal from Gemini indicating that it
was willing to contribute $1 million dollars toward a $6.5 million loan-type
arrangement with Hemispherx. Mid-South then proceeded to negotiate with
another potential investor, Hudson Bay, to “fill out” Gemini’s proposed
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transaction. (Docs. 119 ¶ 5; 125-12 ¶ 5; 127-12 ¶ 14.) Mid-South, however, was
ultimately not able to close this, or any other, deal with any of the investors Dr.
Carter specified in his November 2008 letter.
C. Hemispherx hires a second investment broker, Cato Capital
Unbeknownst to Mid-South, on the same day that Dr. Carter sent his letter
to Mid-South promising to pay Mid-South a fee for any “financing . . . completed
within the next 3 months” involving any of five specified investors (Doc. 127-11
at 4), Hemispherx also engaged a second investment broker, Cato Capital
(“Cato”), to seek capital on Hemispherx’s behalf. Over the next few months, Cato
and Mid-South sought capital on Hemispherx’s behalf from some of the same
potential investors. In December 2008 and January 2009, Hemispherx, through its
investment advisor, Counterclaim- Defendant The Sage Group (“Sage”), and
Sage’s executive director Wayne Pambianchi, told Mid-South that Hemispherx
was “considering” retaining a second investment broker, and suggested ways to
calculate the commission, should one of the potential investors that had been
contacted by both brokers invest in Hemispherx. (Docs. 127-13 ¶ 16; 134-1 ¶ 16.)
Neither Cato nor Mid-South agreed to Pambianchi’s proposals, and the issue was
dropped. Each broker continued its own efforts to raise capital for Hemispherx.
D. Mid-South pursues an investment deal with Hudson Bay
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Although prospective investor Hudson Bay had initially proposed
completing Gemini’s proposed deal, in the spring of 2009 Hudson Bay suggested
instead that it finance its own deal with Hemispherx. Before negotiations began
on this proposal, Hemispherx’s attorney drafted a confidentiality agreement which
representatives of Hemispherx, Hudson Bay and Mid-South signed. Hemispherx
also paid for Hudson Bay to obtain an appraisal of Hemispherx’s assets. Then,
over the next few months, Hemispherx and Hudson Bay, facilitated by Mid-South,
continued negotiations for a loan-type transaction. These negotiations resulted in
Hemispherx sending Hudson Bay a proposal on April 7, 2009. Hudson Bay
countered with its own proposal on April 14, 2009, which Hemispherx found
unacceptable.
E. Hemispherx’s fortune turns
During the last week of April 2009, Hemispherx’s fortunes turned for the
better. An influenza outbreak caused heavy trading in Hemispherx’s stock
because Hemispherx had a potentially useful vaccine, increasing Hemispherx’s
stock price and making the stock much more attractive to investors. On April 27,
2009, Dr. Carter instructed Mid-South’s Cabibi to inform Hudson Bay that
Hemispherx wanted to start over with a new proposal from Hudson Bay, if Hudson
Bay was still interested in investing in Hemispherx. The deal Dr. Carter proposed
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involved Hudson Bay both making Hemispherx a $3 million loan and purchasing
$1 million in Hemispherx’s stock. Cabibi conveyed this offer to Hudson Bay.
At the same time, in late April, Mid-South solicited a term sheet from
Tailwind, an investment consortium. Hemispherx authorized Mid-South to obtain
a commitment from Tailwind to purchase $1 million in Hemispherx’s stock.
During Mid-South’s negotiations with Tailwind, two other potential investors with
which Mid-South had previously negotiated, Cranshire and Iroquois, stepped in
and offered to buy $1 million of Hemispherx stock. Mid-South also conveyed
Cranshire’s and Iroquois’s offers to Hemispherx.
F. Hemispherx engages a third investment broker, Rodman and Renshaw
As the price of Hemispherx’s stock continued to rise, a third investment
broker, Rodman and Renshaw LLC (“Rodman”), approached Hemispherx,
suggesting this would be an opportune time for Hemispherx to raise capital by
selling its stock. Rodman, which was a heavy hitter in the realm of biotechnology
investment, offered to broker these stock sales for Hemispherx.
Once Rodman approached Hemispherx about brokering the sale of
Hemispherx stock, Dr. Carter, in early May, contacted Mid-South’s Cabibi. The
parties dispute the exact message Carter conveyed to Cabibi. Mid-South contends
that Carter told Cabibi that Hemispherx was “temporarily suspend[ing]” Mid-
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South’s capital-raising activities and that Hemispherx was instead seeking a
“strategic investor” who would provide funding resulting in a deal that would be
“non-dilutive” to its current shareholders. (Docs. 124-3; 127-13 ¶ 25.) Mid-South
understood that to mean that Hemispherx was negotiating a partnership with
another pharmaceutical company which would not require Hemispherx to sell any
of its stock to private investors. Hemispherx, on the other hand, asserts that Dr.
Carter informed Cabibi that Mid-South was fired because it had been ineffectual in
raising capital for Hemispherx, and thus Mid-South should no longer seek capital
on Hemispherx’s behalf or otherwise act as its agent. Regardless of the message
conveyed, Mid-South, by no later than May 4, 2009, ceased its efforts to raise
capital for Hemispherx.
Hudson Bay, nevertheless, contacted Mid-South on May 8, proposing to
buy $5 million in Hemispherx stock. Mid-South immediately notified Hemispherx
of this offer. Also on May 8, Iroquois contacted Mid-South, seeking to increase
its proposed purchase of Hemispherx stock from $1 to $3 million. Mid-South
passed this offer along to Hemispherx, too, that same day.
Unbeknownst to Mid-South, however, Hemispherx was negotiating to retain
Rodman and, on Sunday, May 10, Hemispherx signed an engagement letter
making Rodman its exclusive investment broker for thirty days. The next day,
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May 11, Rodman closed a sale of Hemispherx stock to Hudson Bay and one other
investor, each paying $7.5 million. Within the next week, Rodman closed another
deal for the sale of Hemispherx stock to Cranshire and Iroquois. These stock
purchases raised a total of $31 million in capital for Hemispherx.
II. SUMMARY OF THE PARTIES’ CLAIMS AND THIS DECISION
Less than one month after Rodman brokered these stock deals, Hemispherx
sued Mid-South and its employees, Rosenstein and Cabibi. Hemispherx alleged
these defendants tortiously interfered with Hemispherx’s business relationship
with potential investors and with Rodman when, after Hemispherx had suspended
Mid-South’s capital-raising efforts, Mid-South nevertheless passed along to
Hemispherx the interest Hudson Bay, Cranshire, and Iroquois expressed in
purchasing Hemispherx stock.
Mid-South, in turn, asserted four counterclaims against Hemispherx,
seeking payment for its efforts in identifying and cultivating the investment of
Hudson Bay, Cranshire, and Iroquois in Hemispherx. Specifically, Mid-South
alleged counterclaims for breach of contract, promissory estoppel, quantum
meruit, and unjust enrichment. In addition, Mid-South alleged a fifth
counterclaim, against both Hemispherx and Hemispherx’s investment advisor
Sage, alleging fraud.
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These claims are governed by Georgia law. In applying Georgia law, we
endeavor here to decide the case the way the Georgia Supreme Court would. See
Three Palms Pointe, Inc. v. State Farm Fire & Cas. Co., 362 F.3d 1317, 1318 (11th
Cir. 2004) (per curiam); see also Ernie Haier Ford, Inc. v. Ford Motor Co., 260
F.3d 1285, 1290 (11th Cir. 2001).
At the outset of this litigation, the district court granted Hemispherx
judgment on the pleadings as to Mid-South’s breach-of-contract counterclaim.
See Fed. R. Civ. P. 12(c). In doing so, the district court concluded that Mid-
South’s allegations that Hemispherx breached the Engagement Letter failed, as a
matter of law, because Georgia’s statute of frauds prevented Mid-South from
enforcing the unsigned letter agreement against Hemispherx. Reviewing this
decision de novo, accepting as true the facts alleged, and viewing those facts in the
light most favorable to Mid-South, see Abdur-Rahman v. Walker, 567 F.3d 1278,
1280-81 (11th Cir. 2009), we reverse because Mid-South’s allegations implicate
an exception to the statute of frauds applicable when one party has performed
under the unsigned contract and the other party has accepted that performance.
After the parties completed discovery, the district court next entered
summary judgment in favor of Hemispherx and Sage on all of Mid-South’s
counterclaims. Summary judgment is appropriate only “if the movant shows that
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there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). We review the summary
judgment decision de novo, viewing the record in the light most favorable to the
non-moving party. See Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d
1292, 1314 (11th Cir. 2011).
Because we conclude that there remain disputed issues of material fact that
a jury must resolve as to the business relationship between Mid-South and
Hemispherx, we reverse summary judgment for Hemispherx on three of Mid-
South’s claims seeking to recover a commission under the equitable theories of
promissory estoppel, quantum meruit, and unjust enrichment. But we affirm
summary judgment for Hemispherx and Sage on Mid-South’s fraud claims, which
fail for several reasons.
Lastly, we affirm the district court’s decision to grant Mid-South summary
judgment on Hemispherx’s claim that Mid-South tortiously interfered with
Hemispherx’s business relationships. Hemispherx failed to produce any evidence
indicating that Mid-South was acting with malice and with an intent to injure
Hemispherx when, after Hemispherx terminated Mid-South’s efforts to raise
capital, Mid-South nonetheless conveyed to Hemispherx the interest Hudson Bay,
Cranshire, and Iroquois had expressed in purchasing Hemispherx stock.
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Below, we explain in greater detail the reasons for our decision. Because
Mid-South’s counterclaims drive this litigation, we consider them first.
III. MID-SOUTH’S BREACH-OF-CONTRACT CLAIM
Mid-South alleged that Hemispherx, by its conduct, agreed to the terms of
the unsigned Engagement Letter, and then breached that agreement by failing to
pay Mid-South a commission according to the agreement’s terms. The district
court granted Hemispherx judgment on the pleadings on this claim. Hemispherx
contends, on appeal, that Mid-South’s allegations failed as a matter of law because
they 1) failed adequately to state a claim that Hemispherx, by its conduct, assented
to the terms of the Engagement Letter, and 2) even if Hemispherx was alleged to
have assented to the Engagement Letter, that unsigned agreement was
unenforceable against Hemispherx under the Georgia statute of frauds.1 We
disagree with both contentions.
A. Mid-South adequately pled that Hemispherx assented, by its conduct, to
the Engagement Letter’s terms
Under Georgia law, a party’s conduct may bind him to the terms of a
contract, even if he does not sign the agreement. See Comvest, L.L.C. v.
1
The district court ruled only on the second argument, holding that the statute of frauds
prevented Mid-South from enforcing the unsigned Engagement Letter against Hemispherx. But
the panel must address both of Hemispherx’s arguments before the Court remands this claim to
the district court.
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Corporate Secs. Grp. Inc., 507 S.E.2d 21, 24-25 (Ga. Ct. App. 1998). Mid-South’s
allegations that that occurred here—that Hemispherx assented, by its conduct, to
the terms of the Engagement Letter—are sufficient to survive Hemispherx’s Rule
12(c) motion. See generally Thompson v. Floyd, 713 S.E.2d 883, 890 (Ga. Ct.
App. 2011) (considering circumstances surrounding the making of a contract in
order to determine if the parties mutually assented to agreement’s essential terms).
Mid-South alleged the following: Mid-South’s Rosenstein and
Hemispherx’s CEO, Dr. Carter, had preliminary discussions about Rosenstein
raising capital for Hemispherx. Before Hemispherx authorized Rosenstein to
begin soliciting potential investors, however, Hemispherx requested a copy of
Mid-South’s Engagement Letter. Only after Rosenstein sent Hemispherx the
Engagement Letter did Dr. Carter authorize Mid-South to seek investors for
Hemispherx. And only after receiving a copy of the Engagement Letter did
Hemispherx provide Mid-South with the information about Hemispherx that
Rosenstein needed to seek potential investors. Throughout the ensuing eight
months, Hemispherx then actively participated in Mid-South’s attempts to broker a
deal with several potential investors.
These allegations, only briefly summarized here, are sufficient to state a
plausible claim that Hemispherx assented, by its conduct, to the terms of the
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unsigned Mid-South Engagement Letter.
B. The statute of frauds does not foreclose enforcing the unsigned
Engagement Letter against Hemispherx
Hemispherx further argues that even if it assented to the terms of the
Engagement Letter, the statute of frauds bars Mid-South from enforcing that
unsigned agreement against Hemispherx. Georgia’s statute of frauds requires, in
pertinent part, that “[a]ny agreement that is not to be performed within one year
from [its] making” must be in writing and signed by the party against whom the
agreement is to be enforced. Ga. Code Ann. § 13-5-30(5). This statute applies
here because the Engagement Letter, by its terms, could not be performed within
one year. Instead, that agreement obligated Hemispherx to pay a commission on
any investment deal, occurring at least two years after the termination of the letter
agreement, if the deal involved investors Mid-South had identified or introduced
to Hemispherx during the term of the agreement.2 See Fowler v. Essex Co., 347
2
Specifically, this provision stated:
Notwithstanding any termination of this Engagement Letter pursuant to the
terms hereof or otherwise, the obligation to pay the Fees and Compensation described
in Section 2 shall survive any termination or expiration of the Agreement. It is
expressly understood and agreed by the parties hereto that any private financing of
equity or debt or other capital raising activity of [Hemispherx] within twenty four
(24) months of the termination or expiration of the Agreement, with any investors or
lenders to whom [Hemispherx] was Identified or Introduced by [Mid-South] while
the Agreement was in effect and disclosed to [Hemispherx] in writing, shall result
in such fees and compensation due and payable by [Hemispherx] to [Mid-South]
under the same terms of Section 2 above. Upon completion of the Offering, any
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S.E.2d 348, 349 (Ga. Ct. App. 1986) (holding that “[w]here the time within the
contract to be performed depends on some contingency,” the contract still falls
within § 13-5-30(5) “provided[] the contingency cannot happen within the year”)
(quotation marks omitted).
Nevertheless, Georgia law recognizes an exception to the statute of frauds
“where there has been performance on one side, accepted by the other in
accordance with the contract.” Ga. Code Ann. §13-5-31(2). Enforcing an
unsigned agreement under this exception is premised on estoppel principles. See
Nowell v. Mayor & Council of Monroe, 171 S.E. 136, 139 (Ga. 1933). The party
seeking to enforce an unsigned agreement under this exception, therefore, must
show “mutuality of action”; that is, that it performed one or more acts pursuant to
and in furtherance of the contract sought to be enforced, and the other party
accepted that performance pursuant to the agreement. See id. The act performed
must be consistent with the existence of a contract, inconsistent with the lack of a
future renegotiation, restructuring, revision or other amendment of such Offering by
and between [Hemispherx] and the investors in such Offering which results in the
receipt of any net new funds or commitment with respect thereto by [Hemispherx]
from such investor(s) within twenty four (24) months of the completion of the
Offering shall be deemed to be a new financing and shall result in additional fees and
compensation due and payable by [Hemispherx] to [Mid-South] under the terms of
Section 2 above.
(Doc. 49-2 at 5 ¶ 2(d).)
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contract, and essential to the contract, such that it resulted in both a loss or injury
to the party seeking to enforce the unsigned contract and a benefit to the other
party. See Hudson v. Venture Indus., Inc., 252 S.E.2d 606, 608 (Ga. 1979);
Golden v. Nat’l Serv. Indus., 435 S.E.2d 270, 271 (Ga. Ct. App. 1993). The
question of whether there has been part performance sufficient to warrant
application of this exception to the statute of frauds is generally one for the jury.
See Hathaway v. Bishop, 449 S.E.2d 318, 320 (Ga. Ct. App. 1994).
Accepting Mid-South’s allegations as true, the circumstances presented here
fall within this exception to the statute of frauds. The Engagement Letter provided
that Hemispherx was engaging Mid-South to act as its broker to solicit investors
for Hemispherx. After requesting and receiving the Engagement Letter,
Hemispherx formally authorized Mid-South to begin seeking such investors. The
Engagement Letter provided that, to facilitate its efforts in soliciting investors,
Hemispherx would provide Mid-South with accurate information about its
business and financial condition, and Mid-South would keep this information
confidential except as needed to solicit investors. After receiving the Engagement
Letter, Hemispherx provided Mid-South with the information it requested. The
Engagement Letter provided that Hemispherx would pay Mid-South a fee for
investments in Hemispherx from investors that Mid-South identified or introduced
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to Hemispherx. After sending Hemispherx the Engagement Letter, and after
Hemispherx authorized it to do so, Mid-South undertook efforts to identify
potential investors for Hemispherx, present investment proposals to Hemispherx,
and facilitate negotiations between the potential investors and Hemispherx.
Hemispherx, in turn, considered the proposals Mid-South presented to it, actively
participated in negotiations Mid-South arranged with these potential investors, and
paid for an appraisal of its assets requested by one of the identified potential
investors. These allegations, accepted as true, establish that Mid-South performed
according to the terms of the Engagement Letter, and that Hemispherx accepted
that performance, sufficient to invoke the relevant exception to the statute of
frauds.
The district court, in ruling to the contrary, concluded instead that “[t]he
actions that MidSouth took, such as compiling a list of investors and discussing
the Hemispherx investment opportunity with approximately forty investors, were
basic steps that any sales broker would take with or without a contract.” (Doc. 91
at 6.) But here our review is limited to Mid-South’s allegations, which do not
address the basic steps any sales broker would take, with or without a contract.
Furthermore, Mid-South sufficiently alleged that it did much more than simply
compile a list of potential investors and talk to them about investing in
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Hemispherx.
For these reasons, the district court erred in granting Hemispherx judgment
on the pleadings on Mid-South’s breach-of-contract claim.
IV. MID-SOUTH’S EQUITABLE CLAIMS FOR RECOVERING A
COMMISSION
Where a party cannot recover under a contract, Georgia law provides
alternative equitable theories of recovery, including promissory estoppel, quantum
meruit and unjust enrichment. See Goldstein v. Home Depot U.S.A., Inc., 609
F. Supp. 2d 1340, 1347 (N.D. Ga. 2009). Mid-South invokes each of these
equitable theories here as alternative means for recovering a commission from
Hemispherx. See id. (recognizing party can plead such equitable claims in the
alternative to a breach-of-contract claim where at least one party contests the
existence of a contract); see also Am. Casual Dining, L.P. v. Moe’s Sw. Grill,
L.L.C., 426 F. Supp. 2d 1356, 1371 (N.D. Ga. 2006). Although at trial Mid-South
cannot recover against Hemispherx under both its legal (breach-of-contract) and
its equitable claims, Mid-South can plead these claims in the alternative and then
elect at trial under which remedy it wants to proceed. See McBride v. Life Ins.
Co. of Va., 190 F. Supp. 2d 1366, 1378 (M.D. Ga. 2002) (applying Georgia law).
The district court granted Hemispherx summary judgment on each of these three
equitable claims.
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A. Promissory estoppel
Mid-South’s unsigned Engagement Letter provided that Hemispherx would
pay Mid-South a commission for “any investors Identified or Introduced” by Mid-
South, directly or indirectly, regardless of who closed the deal involving these
investors. (Doc. 49-2 at 4-5 ¶ 2(a).3) Mid-South asserts that, even if it is unable to
convince a jury that it had a binding contract with Hemispherx, in the form of the
unsigned Engagement Letter, Mid-South could still enforce the terms of that
agreement against Hemispherx under a promissory estoppel theory. Hemispherx
3
More specifically, this provision provided, in pertinent part, the following:
As compensation for services rendered and to be rendered hereunder by [Mid-South],
[Hemispherx] agrees to pay [Mid-South] as follows:
An amount in cash equal to:
1) Five percent (5%) of the principal amount Sold to any investors Identified
or Introduced by [Mid-South], with all such sums payable at the time of each closing
(a “Closing”) of the Placement (“Placement Fee”); . . . . Identified or Introduced
includes direct and indirect introductions by [Mid-South] or its agents and
representations including, without limitation, where a party introduced to
[Hemispherx] introduces another party to [Hemispherx] who then purchases the
securities sold pursuant to the Offering or introduces another investor who purchases
securities in the Offering, and so on. For greater clarity, in the event of a dispute as
to whether [Mid-South] Identified or Introduced an investor to [Hemispherx] in
connection with the Offering, the following question shall be answered: But for the
acts of [Mid-South], would the sale of the securities in the Offering have taken place?
If the answer to that question is “No”, then [Mid-South] shall be deemed to have
Identified or Introduced that purchaser for purposes of earning the Placement Fee.
The preceding test is not the exclusive test for determining whether the Placement
fee is earned by [Mid-South] but is only an example.
(Doc. 49-2 § 2(a); see also id. at 5 § 2(b) (providing for stock warrants as further compensation).)
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asserts that Mid-South’s promissory estoppel claim fails for two reasons: 1) there
is no evidence from which a jury could find that Hemispherx promised to pay
Mid-South a commission according to the terms of the unsigned Engagement
Letter and, 2) even if Hemispherx did make such a promise, it was unreasonable
for Mid-South to rely on such a substantial promise which was never reduced to a
signed writing. We reject both of Hemispherx’s contentions.
1. A jury could find that Hemispherx promised to pay Mid-South a
commission according to the terms of the Engagement Letter
For its promissory estoppel claim to survive summary judgment, Mid-South
first had to establish at least a genuine factual dispute as to whether Hemispherx
promised to pay Mid-South a commission pursuant to the terms of the Engagement
Letter. See Ga. Code Ann. § 13-3-44(a). “A promise is a manifestation of an
intention to act or refrain from acting in a specified way, so made as to justify a
promisee understanding that a commitment has been made.” DPLM, Ltd. v. J.H.
Harvey Co., 526 S.E.2d 409, 412 (Ga. Ct. App. 1999) (internal quotation marks
omitted; citing Georgia precedent quoting Restatement (Second) of Contracts,
§ 2(1).) A party’s conduct can result in a promise. See id. Whether a party made
a promise in a given case is generally a question of fact for the jury. See Jones v.
White, 717 S.E.2d 322, 329 (Ga. Ct. App. 2011). As previously discussed, Mid-
South sufficiently alleged that Hemispherx promised, by its conduct, to be bound
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by the terms of Mid-South’s Engagement Letter. See supra Section III(A). And,
viewing the summary judgment evidence in the light most favorable to Mid-South,
a jury could find those allegations to be true. Moreover, there is evidence, viewed
in the light most favorable to Mid-South, that indicated that, during their
preliminary talks, Mid-South’s Rosenstein and Hemispherx’s Carter discussed
Mid-South’s compensation as it was set forth in the Engagement Letter, and Carter
agreed to pay Mid-South accordingly. Thus, a jury could find, based on the
circumstances surrounding the parties’ relationship, that Hemispherx promised to
pay Mid-South according to the terms of the unsigned Engagement Letter.
2. A jury could find that Mid-South reasonably relied on Hemispherx’s
promise
Mid-South must also show that it reasonably relied on Hemispherx’s
promise to pay Mid-South a commission according to the terms of the Engagement
Letter. See Ga. Code Ann. § 13-3-44(a); see also Griffin v. State Bank of
Cochran, 718 S.E.2d 35, 42 (Ga. Ct. App. 2011). Generally, the issue of a party’s
reasonable reliance is also a question of fact for the jury. See Jones, 717 S.E.2d at
329. That is true here, where Mid-South’s evidence creates at least a triable issue
as to whether its reliance on Hemispherx’s promise was reasonable.
In concluding, instead, that Mid-South’s reliance was, as a matter of law,
unreasonable, the district court determined that the circumstances presented here
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were analogous to those addressed by this court in Johnson v. University Health
Services, Inc., 161 F.3d 1334 (11th Cir. 1998). But Johnson is distinguishable.
In Johnson, this court applied Georgia law to a promissory estoppel claim
asserted by an obstetrician, Dr. Cherie Johnson, who practiced at an Augusta,
Georgia, Hospital. Id. at 1336. According to Dr. Johnson, the hospital, through a
series of phone calls between Dr. Johnson and several hospital officials, offered to
contribute over $1 million to help finance Dr. Johnson’s practice outside the
hospital. Id. at 1337. We first rejected Dr. Johnson’s breach-of-contract claim
because the alleged oral agreement violated the statute of frauds. Id. at 1339-40.
Turning to Dr. Johnson’s promissory estoppel claim, this court held the
statute of frauds did not preclude that equitable claim. Id. at 1340. Nonetheless,
we upheld the entry of summary judgment for the hospital on Dr. Johnson’s
promissory estoppel claim. This court recognized that “[p]romises that do not
conform to the statute of frauds . . . will often be equally unenforceable under a
promissory estoppel theory [because] [p]romissory estoppel requires that reliance
on the promise be reasonable. [And] [i]t is usually unreasonable to rely on a
substantial promise that has not been reduced to writing.” Id. at 1340-41 (citation
omitted). This court then applied that rule in Johnson, where the doctor based her
claims that the hospital “offered her a complex, multi-faceted aid package worth
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over $1 million . . . solely on a series of telephone conversations [she had] with
low-ranking [hospital] officials.” Id. at 1341.
In light of the size of the aid package, the limited authority of the
persons with whom Dr. Johnson was speaking, and the somewhat
ambiguous nature of their conversations, it would have been patently
unreasonable for Dr. Johnson to act in reliance on the series of oral
representations that she claims constituted a promise of financial
assistance.
Id. at 1341; see also Reindel v. Mobile Content Network Co., 652 F. Supp. 2d
1278, 1291 (N.D. Ga. 2009) (applying Johnson to reject promissory estoppel claim
based on the “extraordinary” verbal promise to pay 5% of company’s stock).
The circumstances presented in Johnson, however, are distinguishable from
those presented in this case, viewed in the light most favorable to Mid-South.
First, while the doctor in Johnson relied on telephone conversations she had with
“low-ranking [hospital] officials,” 161 F.3d at 1341, Mid-South was instead
relying on promises made primarily by Hemispherx’s CEO, Dr. Carter. Second,
although the amount of fees Mid-South seeks to recover is substantial, those fees
are based upon a customary percentage used in the investment banking industry to
calculate fees. The terms of the agreements Hemispherx signed with the other two
investment brokers bear this out. Third, there was testimony from one of
Rodman’s employees that it was commonplace in the investment industry for
parties to agree upon the terms included in an engagement agreement, but not to
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sign that agreement until the investment deal was closed. In fact, Hemispherx
followed a similar course of dealing when Rosenstein previously raised capital for
it in 2003. At that time, Hemispherx signed a one-page agreement when it hired
Rosenstein and then signed a full engagement letter at the time the deal closed.
Further, Dr. Carter testified at his deposition that he generally did not sign a fee
agreement until he knew the terms of the investment deal to be closed. Viewing
this evidence in the light most favorable to Mid-South, these facts distinguish this
case from Johnson and would support a jury finding here that Mid-South
reasonably relied on Hemispherx’s promise to pay Mid-South a commission
according to the terms of the unsigned Engagement Letter.
3. Conclusion as to Mid-South’s promissory estoppel claim
Because there remain disputed issues of material fact that a jury must
resolve, regarding whether Hemispherx promised to pay Mid-South according to
the terms of the unsigned Engagement Letter and whether Mid-South reasonably
relied on that promise, we reverse summary judgment for Hemispherx on Mid-
South’s promissory estoppel claim.
B. Quantum meruit and unjust enrichment
Mid-South also seeks to recover a commission from Hemispherx under the
equitable theories of quantum meruit and unjust enrichment. These related
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equitable theories permit a party who cannot recover under a contract,
nevertheless, to receive compensation for performing a valuable service (quantum
meruit) or conferring a benefit on another (unjust enrichment). See Ga. Dep’t of
Cmty. Health v. Data Inquiry, LLC, 722 S.E.2d 403, 407 (Ga. Ct. App. 2012). The
parties agree that, to recover under either theory in this case, Mid-South must
establish, among other things, that it was the “procuring cause” of the May 2009
sales of Hemispherx stock to Hudson Bay, Cranshire, and Iroquois. See Amend v.
485 Properties, 627 S.E.2d 565, 567-68 (Ga. 2006) (quantum meruit). In granting
Hemispherx summary judgment on these claims, the district court concluded that
Mid-South failed to submit evidence from which a jury could find that it was the
procuring cause of these stock sales. We disagree.
There are two ways that Mid-South can establish that it was the procuring
cause: by showing that 1) at the time Rodman closed the stock sales for
Hemispherx, there were pending negotiations between Mid-South and these
investors, of which Hemispherx was aware; or that 2) Hemispherx interfered with
Mid-South’s efforts to close an investment deal for Hemispherx involving these
investors. See Centre Pointe Invs., Inc. v. Frank M. Darby Co., 549 S.E.2d 435,
438 (Ga. Ct. App. 2001). As to each, there remain disputed issues of fact that a
jury must resolve, precluding summary judgment.
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1. Pending negotiations
“To prove that it was the procuring cause . . . , a broker ordinarily must
show that there were negotiations still pending between the broker and the
prospective [investor] and that [the broker’s client] was aware that negotiations
were still pending at the time [the client] consummated the [investment deal].” Id.
(internal quotation marks omitted). The evidence, viewed in the light most
favorable to Mid-South, showed the following: In late April and early May 2009,
Mid-South was negotiating with Hudson Bay, Cranshire, and Iroquois, on
Hemispherx’s behalf, for investments that included the purchase of Hemispherx
stock. More specifically, at the end of April, Hemispherx proposed selling
$1 million in stock to Hudson Bay. At about the same time, Cranshire and
Iroquois proposed buying $1 million in Hemispherx stock. On May 8, Hudson
Bay proposed buying $5 million in stock. The same day, Cranshire proposed a
stock deal for $3 million. Just three days later, Rodman brokered the sale of
$15 million in stock to Hudson Bay and another investor. A week after that,
Rodman brokered a $16 million stock deal with Cranshire and Iroquois. At the
time Rodman brokered these stock sales, Hemispherx had not rejected the earlier
pending stock offers involving these potential investors which had been brought to
Hemispherx by Mid-South. This evidence is sufficient to create a triable issue as
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to whether Mid-South was the procuring cause of the May 2009 stock purchases
made by these three investors.
The district court concluded, to the contrary, that once Hemispherx notified
Mid-South, on May 4, to suspend its capital-raising efforts for Hemispherx, there
were, as a matter of law, no longer any negotiations pending between Mid-South
and these investors. But Mid-South’s evidence was sufficient to create a triable
issue of fact as to whether Hemispherx suspended Mid-South’s efforts to raise
capital in order to replace Mid-South in the negotiations with heavy hitter
Rodman. If so, a jury could find that Mid-South should still be deemed the
procuring agent of the deals closed by Rodman. Cf. Centre Pointe, 549 S.E.2d at
436-39 (holding evidence supported jury’s finding that broker was a procuring
cause for a commercial lease where broker brought landlord and tenant together
and facilitated their negotiations, but tenant terminated broker seven days before
agreeing to the lease, informing only the landlord and not the broker of the
termination).
This court, applying Florida law, reached a similar conclusion in BKR
Global, LLC v. FourWinds Capital Management, 661 F.3d 1134 (11th Cir. 2011).
In that case, FourWinds entered into a consulting agreement with BKR Global,
“an experienced timber investment consulting firm,” under which BKR agreed to
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seek investment opportunities for FourWinds in the timber industry. Id. at 1135-
36. BKR Global then introduced FourWinds to Nemus, and FourWinds and
Nemus began negotiating a deal. Id. at 1136. Soon thereafter FourWinds
terminated its consulting agreement with BKR Global. Id. A few weeks later,
FourWinds and Nemus closed an investment deal. Id. When BKR Global
demanded that FourWinds pay BKR Global a commission for introducing
FourWinds to Nemus, FourWinds refused to pay, stating that its deal with Nemus
was the result of a “cold-call[]” FourWinds had made on its own to Nemus. Id.
The “central issue” in BKR Global, as defined by the terms of the
consulting contract between FourWinds and BKR Global, was “whether
FourWinds pursued an investment opportunity that [BKR] introduced.” Id. at
1136 (internal quotation marks omitted). Recognizing that the questions of
“whether the investment opportunity pursued by FourWinds is covered by its
agreement with BKR” and “whether a broker is the ‘procuring cause’ of the
ultimate transaction between the two parties” are both questions of fact to be
resolved by a jury, id. at 1137, we held that the evidence “create[d] a triable issue
of fact as to whether the investment opportunity FourWinds pursued with Nemus
was materially different from that presented to it by BKR,” id. at 1136. Georgia
law would support applying the same reasoning here. See Centre Pointe, 549
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S.E.2d at 436-39.
2. Seller’s interference
The second way that Mid-South can establish that it was the procuring
cause of the May 2009 stock sales is to show that Hemispherx interfered with
Mid-South’s negotiations with Hudson Bay, Cranshire, and Iroquois for the sale of
Hemispherx stock.
[W]here [the client] knowingly interferes with the negotiations between
the [investors] and the broker, it becomes unnecessary to show
negotiations were pending when the [investment deal] was
consummated. . . . The broker can thus make out a prima facie case by
showing that negotiations for the [investment] were set on foot through
[its] efforts, that [the broker] performed every service required by his
employment which it was possible to perform, and that the failure on
[its] part to personally consummate the trade was due to the interference
of [the client].
Id. at 438 (internal quotation marks omitted). “Although a broker does not
establish he was the procuring cause by merely showing he first located the
ultimate [investor], a broker can make out a case if he can show interference by the
[client] and no abandonment of his efforts to effectuate the [investment].”
Perimeter Realty v. GAPI, Inc., 533 S.E.2d 136, 148 (Ga. Ct. App. 2000).
Again, viewing the evidence in the light most favorable to Mid-South, Mid-
South has established a triable issue of fact as to whether, without Hemispherx’s
interference, Mid-South would have closed the stock deals it was pursuing with
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Hudson Bay, Cranshire, and Iroquois at the time Hemispherx suspended Mid-
South’s efforts on its behalf and replaced Mid-South with Rodman. See Centre
Pointe, 549 S.E.2d at 438 (holding there was sufficient evidence for the jury to
find that the broker was the procuring cause of a lease where, among other things,
the timing and circumstances of the lease were suspicious, occurring just seven
days after the lessor terminated the broker); Perimeter Realty, 533 S.E.2d at 148
(holding summary judgment was not appropriate were the brokers’ efforts brought
principals together, after which the principals negotiated a sale, after telling the
brokers that there was nothing more for them to do); Bowers v. Greene, 458
S.E.2d 150, 152 (Ga. Ct. App. 1995) (holding summary judgment was
inappropriate on question of whether brokers were the procuring cause of a sale
they did not close, because jury could find brokers did not close the sale after the
owner directed them to cease their involvement in the sales). The district court
erred, therefore, in granting Hemispherx summary judgment on Mid-South’s
claims for quantum meruit and unjust enrichment.4
V. MID-SOUTH’S FRAUD CLAIMS
The district court did not err in granting Sage and Hemispherx summary
4
Before the district court, Hemispherx also argued that Mid-South’s unjust enrichment
claim failed as a matter of law because Mid-South did not establish that it conferred a benefit on
Hemispherx. Hemispherx does not reassert that argument on appeal, but we conclude, in any
event, that a jury could find that Mid-South did confer a benefit on Hemispherx.
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judgment on Mid-South’s fraud claims. Those claims fall into two categories:
1) misrepresentations Hemispherx and Sage purportedly made to Mid-South after
Hemispherx engaged the second broker, Cato, in November 2008; and
2) misrepresentations Hemispherx purportedly made to Mid-South when
Hemispherx suspended Mid-South’s capital-raising efforts in May 2009.
A. Misrepresentations Hemispherx and Sage made to Mid-South after
Hemispherx hired the second broker, Cato, in November 2008
Regarding Hemispherx’s hiring Cato, the evidence, viewed in the light most
favorable to Mid-South, established the following: After authorizing Mid-
South in September 2008 to act on a non-exclusive basis to seek investors on its
behalf, Hemispherx, unbeknownst to Mid-South, engaged a second broker, Cato,
on November 19, 2008. In December 2008 and January 2009, Hemispherx’s
financial advisor, Sage, through Wayne Pambianchi, engaged in several
communications with Mid-South, as well as Cato, regarding the payment of
commissions.
Through these communications, Pambianchi informed Mid-South’s Cabibi
that Hemispherx was “considering” engaging another investment broker (Doc.
127-6 ¶ 7), and Pambianchi asked Mid-South to provide him a list of investors
Mid-South had already contacted and for which Mid-South would claim a
commission. Cabibi provided Pambianchi with such a list in December 2008, and
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then, at Pambianchi’s request, updated that list on January 9, 2009.
Pambianchi apparently requested the same information from Cato. Cato’s
and Mid-South’s lists included several of the same potential investors, including
Hudson Bay, Cranshire, and Iroquois. “To avoid conflicts and respect everyone’s
efforts,” Pambianchi informed Mid-South that he had “annotated the list you sent.
There are a very few overlaps and where there are, I suggest a split, the % being
what I propose you get of your fees you would otherwise receive. I propose
eliminating a few, as I have done with the other group, because they seem more
engaged.” (Doc. 127-6 at 16.) Pambianchi, thus, crossed several potential
investors off each broker’s list and included percentages next to several other
listed investors.
Neither Mid-South nor Cato agreed with this proposal. But Mid-South
indicated to Pambianchi that he should do what was best for Hemispherx, and
suggested, twice, that Pambianchi arrange a conference call so Cato and Mid-
South could share information in order to close a deal for Hemispherx.
Pambianchi never responded to Mid-South and the matter of a possible fee dispute
between Cato and Mid-South was never raised again.
Before the district court, Mid-South, in support of its fraud claims, made a
variety of assertions. On appeal, however, Mid-South appears to argue only that
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Pambianchi misrepresented to Mid-South that it would earn a split commission for
investors both Mid-South and Cato had contacted, when in fact Hemispherx did
not intend to pay both brokers a split fee if an investor contacted by both
ultimately invested in Hemispherx.
Mid-South’s claim fails as a matter of law, for several reasons. A claim for
fraud requires proof of “1) a false representation or omission of material fact;
2) scienter; 3) intent to induce the party claiming fraud to act or refrain from
acting; 4) justifiable reliance; and 5) damages.” Collins v. Regions Bank, 639
S.E.2d 626, 628 (Ga. Ct. App. 2006). Here, it is not clear that Pambianchi made
the false statement Mid-South attributes to him. The excerpt from Pambianchi’s
deposition on which Mid-South relies to support this fraud claim indicates only
that, if an investor contacted by both Mid-South and Cato ultimately invested in
Hemispherx, Hemispherx would pay Cato a commission based on the percentage
of its involvement, but Pambianchi did not know what, if any, commission
Hemispherx would pay Mid-South because Pambianchi was unaware of the terms
of Hemispherx’s agreement with Mid-South. That is not surprising because, as
this lawsuit illustrates, Mid-South and Hemispherx themselves disagree as to the
terms of their business relationship.
Even if Pambianchi made the false representation Mid-South attributes to
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him, the undisputed evidence failed to establish that Mid-South ever relied upon
Pambianchi’s suggested fee split. Instead, the undisputed evidence indicated that
Mid-South never changed or altered any of its efforts to raise capital for
Hemispherx based on Pambianchi’s suggested fee split. Mid-South had already
been seeking investors for Hemispherx before Pambianchi raised the possibility of
a fee split, and Mid-South continued to do so after rejecting Pambianchi’s
suggestion.
Even if Mid-South did rely on Pambianchi’s suggested fee split, that
reliance would not have been justified because neither Mid-South nor Cato agreed
to Pambianchi’s suggestion, and the possible fee dispute between Mid-South and
Cato was never resolved. Finally, for similar reasons, Mid-South has failed to
show any harm from its reliance on Pambianchi’s suggested fee split. A fee
dispute never arose between Mid-South and Cato.5 Further, Mid-South has not
shown that it continued its efforts to seek investors for Hemispherx based on
anything Pambianchi said. Rather, Mid-South was already engaged in seeking
investors for Hemispherx before Pambianchi initiated his December 2008 and
5
Cato has, however, sued Hemispherx in federal district court in Delaware, also seeking
to recover a commission on the stock sales Rodman brokered with Hudson Bay, Cranshire, and
Iroquois. See Cato Capital LLC v. Hemispherx Biopharma Inc., No. 1:09-cv-00549-GMS
(D. Del.). Currently, that litigation is at the summary judgment stage, with several summary
judgment motions at issue.
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January 2009 communications with Mid-South, and Mid-South did not alter its
capital-raising efforts after Pambianchi’s suggested a fee split.
Mid-South also may be arguing, on appeal, that Pambianchi’s statement
about splitting a fee indicated to Mid-South more generally that it would be paid a
commission for any investor it introduced to Hemispherx, when in fact
Hemispherx did not intend to pay Mid-South a fee. But there is no evidence in the
record that Hemispherx did not intend to pay Mid-South any commission at that
time. For these reasons, the district court did not err in granting Hemispherx and
Sage summary judgment on this fraud claim.
B. Misrepresentations Hemispherx made to Mid-South when it informed
Mid-South to cease its capital-raising activities on Hemispherx’s behalf
In another fraud claim asserted against Hemispherx, Mid-South alleged the
following: On May 4, 2009, Dr. Carter, on Hemispherx’s behalf, misrepresented to
Mid-South that Hemispherx was suspending Mid-South’s efforts to raise capital
for Hemispherx because Hemispherx instead “was attempting to close a ‘strategic
alliance’ with another pharmaceutical company that would result in raising all the
capital needed and would be non-dilutive of existing shares.” (Doc. 49 ¶ 97.)
This was untrue. Hemispherx, instead, intended to hire Rodman exclusively to
sell Hemispherx’s stock. Mid-South relied upon Dr. Carter’s misrepresentation to
its detriment “by refraining from actively seeking additional offers and/or
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enhancements or changes in terms to the offers previously made by Cranshire,
Iroquois and Hudson Bay.” (Id. ¶ 99.)
The district court correctly concluded that the evidence did not establish
that what Dr. Carter told Mid-South was false. Dr. Carter, in his deposition,
testified that, at this time, Hemispherx had discussion with several pharmaceutical
companies about licensing agreements that, though “marginally dilutive,” would
raise capital and not involve the sale of Hemispherx stock. (Doc. 124-4 at38-39.)
A jury, nevertheless, could find that, although the reason Dr. Carter told
Mid-South to cease its capital-raising efforts was not false, it was also not the real
reason Hemispherx wanted Mid-South to stop its capital-raising activities for
Hemispherx. Even so, Mid-South has failed to establish that the reason Dr. Carter
gave Mid-South to explain why Hemispherx wanted Mid-South to stop seeking
capital for it was material or that Mid-South justifiably relied on that stated reason
to its detriment. Said another way, Mid-South failed to establish that, had
Hemispherx informed Mid-South of the real reason Hemispherx wanted Mid-
South to cease its capital-raising activities, because Hemispherx intended to hire
Rodman, a heavy hitter, to broker the sale of its stock instead, that Mid-South
would have disregarded Hemispherx’s instructions to cease seeking capital and
would have continued trying to raise capital for Hemispherx. For these reasons,
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therefore, the district court did not err in granting Hemispherx summary judgment
on this fraud claim.6
VI. HEMISPHERX’S CLAIM THAT MID-SOUTH AND ITS EMPLOYEES
INTENTIONALLY INTERFERED WITH HEMISPHERX’S BUSINESS
RELATIONSHIPS
Hemispherx alleged that Mid-South, Rosenstein, and Cabibi (“Mid-South
Defendants”) tortiously interfered with Hemispherx’s business relationship with
its potential investors and with Rodman. The district court correctly concluded
that the Mid-South Defendants were entitled to summary judgment on this claim
because Hemispherx failed to assert any evidence on which a jury could find that
Mid-South had acted with malice and with the intent to injure Hemispherx. See
State Farm Mut. Auto. Ins. Co. v. Hernandez Auto Painting & Body Works, Inc.,
719 S.E.2d 597, 600 (Ga. Ct. App. 2011) (recognizing this as an element of a
tortious interference claim); see also White v. Shamrock Bldg. Sys., Inc., 669
S.E.2d 168, 173-74 (Ga. Ct. App. 2008) (noting malice, in this context, “means
any unauthorized interference or interference without legal justification or
excuse”). Viewed in the light most favorable to Hemispherx, the evidence
indicated only that, after Dr. Carter fired Mid-South as its investment broker,
6
For these same reasons, Mid-South failed to support its fraud claim with sufficient
specificity to create a triable issue of fact sufficient to survive summary judgment. See McLean
v. Haden, 448 S.E.2d 69, 70 (Ga. Ct. App. 1994).
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Hudson Bay, with which Mid-South had been negotiating on Hemispherx’s behalf,
conveyed to Mid-South’s Cabibi an offer to buy Hemispherx stock. Cabibi
listened to that offer and passed it on to Hemispherx. That conduct, as a matter of
Georgia law, does not constitute an intentional interference with Hemispherx’s
business relationships.
VIII. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s decision granting
summary judgment to Mid-South on Hemispherx’s tortious interference claim.
We also AFFIRM summary judgment for Hemispherx and Sage on Mid-South’s
fraud claims. But we REVERSE judgment entered on the pleadings for
Hemispherx on Mid-South’s breach-of-contract claim, and we REVERSE
summary judgment for Hemispherx on Mid-South’s promissory estoppel, quantum
meruit, and unjust enrichment claims, and REMAND these claims to the district
court for proceedings consistent with this decision.
40