Evoqua Water Technologies LLC v. Matthew Moriarty

Supreme Court of Rhode Island·Decided April 29, 2025·No. 2023-0250-Appeal.·Published

Opinion

Supreme Court

No. 2023-250-Appeal.

(PC 18-7572)

Evoqua Water Technologies LLC, et al. :

v. :

Matthew Moriarty et al. :

NOTICE: This opinion is subject to formal revision before publication in the Rhode Island Reporter. Readers are requested to notify the Opinion Analyst, Supreme Court of Rhode Island, 250 Benefit Street, Providence, Rhode Island 02903, at Telephone (401) 222-3258 or Email opinionanalyst@courts.ri.gov, of any typographical or other formal errors in order that corrections may be made before the opinion is published.

Supreme Court

No. 2023-250-Appeal.

(PC 18-7572)

Evoqua Water Technologies LLC, et al. :

v. :

Matthew Moriarty et al. :

Present: Suttell, C.J., Goldberg, Robinson, Lynch Prata, and Long, JJ.

OPINION

Justice Long, for the Court. The defendant, Matthew Moriarty (defendant or Mr. Moriarty), appeals from a Superior Court order and judgment dismissing his amended counterclaim, which sought declaratory relief and tort damages against Evoqua Water Technologies LLC and Neptune-Benson, LLC (Evoqua and Neptune- Benson, together, plaintiffs). The trial justice granted the plaintiffs’ motion to dismiss all but one counterclaim on the basis of the litigation privilege; the remaining count was dismissed by stipulation of the parties. We affirm the Superior Court’s order and judgment dismissing Mr. Moriarty’s amended counterclaim.

Facts and Procedural History The facts of this case flow from Mr. Moriarty’s employment with non-party Neptune-Benson, Inc. (NBI) and, later, Evoqua. NBI hired Mr. Moriarty in February

2010 as an inside sales representative; and Mr. Moriarty signed a Non-Disclosure, Non-Solicit, and Non-Compete Agreement (the 2010 agreement) that same month. The substantive terms in the 2010 agreement are not disputed. The 2010 agreement barred Mr. Moriarty from engaging in a competing business that marketed, designed, developed, or sold any competing products, and prevented him from soliciting either employees or customers of NBI away from NBI upon his departure. The noncompetition and nonsolicitation provisions in the 2010 agreement were valid for twenty-four months after the end of Mr. Moriarty’s employment.

Evoqua agreed to purchase Neptune-Benson in April 2016. Evoqua hired Mr.

Moriarty in January 2017 after the dissolution of a corporate entity formerly known as NBI. The plaintiffs commenced the underlying action against Mr. Moriarty in October 2018. They sought declaratory relief and asserted causes of action for breach of contract, breach of the duty of loyalty, unfair competition, misappropriation of trade secrets, conversion, civil conspiracy, and tortious interference with business relations, among others, stemming from Mr. Moriarty’s alleged violations of the 2010 agreement. The plaintiffs contemporaneously sought injunctive relief to prohibit Mr. Moriarty’s continued alleged violations of the 2010 agreement, and in January 2019 a justice of the Superior Court held a preliminary injunction hearing. At the hearing, Kenneth Rodi (Mr. Rodi), a former Evoqua executive, testified that “when Evoqua purchased the stock of Neptune-Benson in

April of 2016 * * * all liabilities and contracts transferred,” including all employment contracts. Mr. Moriarty alleges that, when he testified at the preliminary injunction hearing, Mr. Rodi was referring to NBI.

The trial justice granted the preliminary injunction in May 2019. In addition to ruling that Evoqua had standing to challenge Mr. Moriarty’s alleged violations of the 2010 agreement, the trial justice’s order enjoined Mr. Moriarty from “engaging in any activities that violate [the 2010 agreement]” until June 2020—when the 2010 agreement expired.

Mr. Moriarty never appealed the preliminary injunction. Instead, in February 2022, counsel for Mr. Moriarty deposed Mr. Rodi as part of the ongoing litigation. At that deposition, Mr. Rodi testified that the corporate entity formerly known as NBI was neither sold nor merged with Evoqua and that, consequently, none of the assets or contracts of the corporate entity formerly known as NBI transferred to Evoqua upon its acquisition of Neptune-Benson. The defendant alleges that this testimony is contrary to his testimony at the hearing on the preliminary injunction.

On the basis of the perceived contradictions between Mr. Rodi’s testimony at the preliminary injunction hearing and at his deposition, Mr. Moriarty filed an amended counterclaim asserting that Mr. Rodi had given false and fraudulent hearing testimony to obtain an injunction, thereby restricting “[Mr.] Moriarty’s ability to be gainfully employed in the only industry he has worked [in] since

graduating college.” Mr. Moriarty asserted nine causes of action: intentional infliction of emotional distress arising from the “severe and outrageous misconduct” of Mr. Rodi’s perjurious testimony which caused emotional and pecuniary distress (count 1); negligent infliction of emotional distress arising from the same (count 2); a declaratory judgment that the 2010 agreement is unenforceable as neither plaintiff was a party, nor successor to a party to the 2010 agreement (count 3); a further declaratory judgment regarding a secrecy agreement referenced in the underlying complaint (count 4); constructive discharge triggered by the illegal trade practices employed by Evoqua which forced him to resign (count 5); negligent misrepresentation by Mr. Rodi concerning the circumstances surrounding the acquisition of Neptune-Benson (count 6); fraudulent misrepresentation arising from the same (count 7); interference with prospective contractual relations caused by the injunction (count 8); and interference with prospective economic advantages caused by the same (count 9).

The plaintiffs filed a motion to dismiss Mr. Moriarty’s amended counterclaim.

In their motion, plaintiffs asserted that counts 1, 2, and 6 through 9 were based on statements made during the preliminary injunction hearing and were therefore barred by the litigation privilege; that counts 1, 2, 6, and 7 should be dismissed because they were brought outside the statute of limitations for tort claims; and that counts 1 through 3 and 5 through 9 each fail to state a claim upon which relief could be

granted. Mr. Moriarty opposed the motion to dismiss, arguing that the trial court should not apply a blanket privilege barring his claims related to Mr. Rodi’s testimony because the Court should undertake a case-by-case-review, and assess the public policy implications, of applying the litigation privilege to his allegations. Furthermore, he argued that his claims were not barred by the statute of limitations and did not fail to state a claim for relief.

The plaintiffs’ motion to dismiss was heard before a justice of the Superior Court on November 21, 2022. At the hearing, the trial justice granted the motion to dismiss. The trial justice explained her reasoning from the bench and cited Ims v. Town of Portsmouth, 32 A.3d 914 (R.I. 2011), for the proposition that “[a]n absolute privilege is afforded in the context of judicial proceedings to encourage witnesses to come forward and speak freely about civil or criminal matters.” Ims, 32 A.3d at 928. The court was not persuaded by Mr. Moriarty’s claim that the privilege required a case-by-case analysis; instead, in the trial justice’s view, the “absolute privilege” required dismissal of all of the counts contested in Mr. Moriarty’s amended counterclaim because they were based on Mr. Rodi’s privileged testimony at the preliminary injunction hearing.

The trial justice entered an order dismissing counts 1 through 3 and 5 through 9 of the amended counterclaim on December 15, 2022. The parties dismissed by stipulation the underlying action and count 4 of Mr. Moriarty’s amended

counterclaim, and the Superior Court thereafter entered judgment for plaintiffs. Mr. Moriarty filed a notice of appeal on April 20, 2023.

Standard of Review

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