Implied Compensation, Conversion of Corporate Funds, and Limits on Federal Anti‑Suit Power: A Commentary on Orkin v. Albert

Implied Compensation, Conversion of Corporate Funds, and Limits on Federal Anti‑Suit Power: A Commentary on Orkin v. Albert

I. Introduction

Orkin v. Albert, a December 11, 2025 decision of the U.S. Court of Appeals for the First Circuit, arises from a family business gone wrong. Siblings Wayne Orkin and Lisa Albert informally operated an online merchant–services business under the name Boost Web SEO, Inc. (“Boost Web”) for nearly a decade without stock, corporate formalities, written compensation agreements, or a clear ownership structure. When their relationship collapsed, the absence of basic documentation forced both the district court and the First Circuit to reconstruct the parties’ rights from conduct and implied understandings.

The decision is important on several fronts:

  • Defamation (Massachusetts law): The court clarifies that the harm element focuses on whether a statement could damage reputation, not whether it in fact did so, and holds that an email stating the company was “experiencing fraudulent activities with a Wayne Orkin” and that it was a “civil and criminal matter” unambiguously imputes criminal conduct and is defamation per se.
  • Conversion and Implied Compensation (Florida law): Applying the internal-affairs doctrine, the court uses Florida law to distinguish between:
    • Conversion of corporate receivables diverted by an officer who lacked authority; and
    • Use of corporate funds for “personal” expenses where a long-standing course of conduct created an implied-in-fact right to compensation.
  • Contract Interpretation and Residuals Ownership (Ohio law): The court treats an ambiguously drafted “Consent to Assignment Agreement” as an effective assignment of residual income to Boost Web, using extensive extrinsic evidence of the parties’ conduct.
  • Civil Contempt and the Anti-Injunction Act (federal law): The court vacates a civil-contempt order and a permanent injunction that barred a parallel Florida ownership action, emphasizing that:
    • Contempt requires a clear and unambiguous prior order; and
    • The relitigation exception to the Anti‑Injunction Act applies only to issues actually decided by the federal court.

The opinion is a cautionary tale for closely held and family-owned corporations that operate informally and a significant clarification of several doctrinal points in defamation, conversion, implied contracts, and federal–state comity.

II. Summary of the First Circuit’s Opinion

The First Circuit (Judge Kayatta, joined by Judges Montecalvo and Lynch) affirmed in part, vacated in part, and remanded the district court’s judgment.

A. Defamation Claim

  • The district court had rejected Orkin’s defamation claim against Lisa Albert based on her April 29, 2021 email to CardConnect (the payment processor), reasoning that:
    • the email did not actually damage his reputation; and
    • it did not charge him with a crime and therefore was not actionable per se.
  • The First Circuit held this was legal error:
    • Massachusetts law requires that a statement could damage reputation, not that it did in fact do so.
    • Reading the email in context, it unambiguously imputes criminal fraud and is defamation per se, actionable without proof of economic loss.
  • However, the panel left unresolved whether the statement was true or published with “actual malice.” It vacated the judgment on the defamation claim and remanded for fact-finding on truth, fault, and any non-economic damages.

B. Conversion Claim (Boost Web v. Orkin)

Boost Web prevailed at trial on two conversion theories under Florida law:

  1. Orkin’s diversion of $234,941.60 in residuals from CardConnect to a third-party entity (MKY) that then funneled the funds to him personally.
  2. Orkin’s use of $403,827.91 of Boost Web funds in 2020–2021 that he could not document as business expenses (and which were reported to him on Forms 1099).

The First Circuit held:

  • Redirected Residuals:
    • Affirmed the finding of conversion.
    • Held Orkin lacked authority to redirect corporate receivables to himself, especially where the court credited that he acted in retaliation, not in Boost Web’s interests.
    • Rejected Orkin’s arguments that the residuals were not “specifically identifiable” or that Boost Web had no ownership interest in them.
  • Personal Expenditures:
    • Vacated the conversion judgment as to the full $403,827.91.
    • Found clear error in the district court’s conclusion that Orkin had no right to use any funds as compensation:
      • For years, Orkin ran the business and used company funds for personal expenses.
      • Albert knew, accountants reconciled, and Boost Web issued W‑2s treating some of those amounts as wages.
      • This long course of conduct created an implied-in-fact contract entitling Orkin to “some level of recompense.”
    • Remanded for the district court to determine:
      • What level of compensation was “reasonable” for Orkin’s services; and
      • Whether any excess above that figure was subject to a conversion claim (with associated issues such as identifiability and any required demand and refusal).

C. Consent to Assignment and Ownership of Residuals

  • Under a 2014 “Consent to Assignment Agreement,” PTMS (Orkin’s entity) purported to assign residuals from CardConnect to Boost Web.
  • Orkin later argued the agreement was invalid or did not cover post‑2014 merchants.
  • Applying Ohio law (per a choice-of-law clause), the First Circuit:
    • Rejected Orkin’s attack on the assignment’s validity.
    • Found the agreement ambiguous as to what accounts were covered, due in part to missing attachments.
    • Used the parties’ subsequent conduct (seven years of paying all residuals to Boost Web) to conclude that the residuals belonged to Boost Web.

D. Contempt and Injunction

  • Civil Contempt:
    • The district court held Orkin in civil contempt and imposed monetary sanctions based on:
      • Repeated communications by Orkin’s counsel to CardConnect urging it not to release escrowed residuals to Boost Web despite the court’s order; and
      • Orkin’s filing of a Florida state-court action seeking a declaration that he owned Boost Web.
    • The First Circuit:
      • Agreed that Orkin clearly violated the order by urging CardConnect to disregard the direction to pay funds to Boost Web.
      • Held, however, that the April 11 decision did not clearly resolve ownership of Boost Web, so initiating the Florida ownership action could not be a clear violation.
      • Vacated the contempt order in its entirety and remanded for reconsideration limited to the conduct that did clearly violate the court’s orders.
  • Permanent Injunction (Anti‑Injunction Act):
    • The district court permanently enjoined Orkin from litigating the Florida action under the “relitigation” exception to the Anti‑Injunction Act, 28 U.S.C. § 2283.
    • The First Circuit vacated the injunction, holding:
      • The federal court had not actually decided who owned Boost Web, so there was no issue previously adjudicated that could be protected by the relitigation exception.
      • Ordinary res judicata and preclusion defenses should be left to the state court, absent “unusual circumstances,” which were not present.

The panel concluded by emphasizing that the question of who owns Boost Web is “all-important,” and urged that this be definitively resolved on remand (or in the Florida action), since the answer largely dictates how meaningful the remaining disputes about compensation and conversion actually are.

III. Factual and Procedural Background

A. The Business Arrangement

  • Wayne Orkin operated a business called Pass Thru Merchant Services (“PTMS”) from the Dominican Republic.
  • In 2011, PTMS entered into an independent contractor agreement with CardConnect (a payment processor), under which PTMS:
    • originated merchant accounts; and
    • received 80% of CardConnect’s net income (residuals) from those merchants.
  • In 2013, needing a U.S. corporation to receive residuals, Orkin asked his sister Lisa Albert to incorporate Boost Web in Florida:
    • Articles listed Albert as registered agent, incorporator, and sole initial officer/director.
    • No stock was issued, no president formally elected, and no written agreement on ownership or compensation was ever made.
    • Albert opened Boost Web’s bank account and gave both siblings signing authority; Orkin ran all day‑to‑day business.
  • In 2014, a “Consent to Assignment Agreement” among PTMS, CardConnect, and Boost Web shifted PTMS’s right to residuals to Boost Web.
    • From 2014 until April 2021, CardConnect paid all residuals on both pre‑ and post‑2014 merchant accounts to Boost Web.
    • By 2021, residuals were roughly $35,000–$50,000 per month.

B. The Breakdown in 2021

  • In April 2021:
    • Albert discovered her personal credit card, which Orkin used for Boost Web expenses, was maxed out (~$26,000) and that the Boost Web account was overdrawn.
    • She revoked Orkin’s signing authority and card access.
    • Albert emailed CardConnect, identifying herself as Boost Web’s “president” and stating that:
      • Boost Web had been experiencing “fraudulent activities with a Wayne Orkin”; and
      • It was a “civil and criminal matter . . . being pursued” and that Orkin was “not an authorized representative.”
  • In response, Orkin:
    • Entered into a “Residual Redirection Application and Agreement” on behalf of PTMS with CardConnect, directing future residuals to MKY FTS Sales, LLC (“MKY”), an entity owned by his friend.
    • MKY paid the redirected residuals into an account controlled by Orkin personally.
  • When Boost Web, through counsel, later asserted its entitlement to the residuals, CardConnect stopped paying MKY and escrowed nearly $1 million in residuals.

C. Expense Disputes and Tax Reporting

  • Historically, Orkin used Boost Web funds to pay both business and personal expenses, then:
    • Accountants would reconcile year-end records, classifying expenses as business or personal.
    • Boost Web would treat Orkin’s personal expenses as income (wages), issuing W‑2s or 1099s as appropriate.
  • In 2020 and 2021:
    • Accountants requested receipts and documentation to determine which expenses were business-related.
    • Orkin did not provide adequate documentation, despite repeated requests and a court order.
    • Accountants therefore issued Forms 1099 totaling $403,827.91 to Orkin, reflecting unsubstantiated expenditures that could not be treated as business expenses.

D. Litigation in Massachusetts and Florida

  • Massachusetts Action:
    • May 2021 – Orkin and his father sued Albert and her son Ian in Massachusetts state court (removed to the District of Massachusetts), asserting defamation, breach of fiduciary duty, breach of contract, unjust enrichment, and interference claims.
    • Boost Web intervened and cross-claimed against Orkin for conversion.
    • After partial summary judgment, a bench trial was held on:
      • Orkin’s defamation and several other tort/contract claims; and
      • Boost Web’s conversion claim.
    • The district court:
      • Rejected all of Orkin’s claims.
      • Found Orkin liable to Boost Web for:
        • $403,827.91 in misappropriated “personal expenses”; and
        • $234,941.60 in redirected residuals.
      • Ordered CardConnect to pay escrowed residuals to Boost Web and awarded prejudgment interest.
  • Post‑Judgment Maneuvers:
    • While appealing and seeking a stay, Orkin’s counsel repeatedly contacted CardConnect insisting that:
      • The judgment was not final; and
      • CardConnect should not release escrowed residuals to Boost Web.
    • Orkin also filed a new Florida state-court action seeking:
      • A declaration that he owned Boost Web; and
      • An injunction preserving its assets.
    • He did not inform the Florida court of the Massachusetts federal case, nor the district court of the Florida action.
  • Contempt and Injunction Below:
    • The district court:
      • Denied a stay, directed CardConnect to pay Boost Web, and later held Orkin in civil contempt for:
        • “Harassing” CardConnect by urging non-compliance; and
        • Pursuing the Florida action to “get another bite at the apple.”
      • Imposed monetary sanctions payable to the court and to Boost Web’s counsel.
      • Converted a TRO into a permanent injunction enjoining Orkin from litigating the Florida action or any other action that “relitigate[s]” ownership or other decided issues, invoking the Anti‑Injunction Act’s relitigation exception.
    • Orkin appealed the merits judgment, the contempt order, and the permanent injunction; the appeals were consolidated.

IV. Defamation: Imputations of Criminal Fraud and the “Could Damage” Standard

A. The Governing Massachusetts Law

Under Massachusetts law, a defamation plaintiff must show:

  1. A statement, concerning the plaintiff, published to a third party;
  2. The statement was “defamatory such that it could damage the plaintiff’s reputation in the community”;
  3. Fault by the defendant in making the statement; and
  4. Either:
    • Economic loss was caused; or
    • The statement is of a type actionable without proof of economic loss (defamation per se).

See Shay v. Walters, 702 F.3d 76, 81 (1st Cir. 2012). Whether language is capable of a defamatory meaning is a threshold legal question for the court, assessed from the perspective of a reasonable reader in context. See Amrak Prods., Inc. v. Morton, 410 F.3d 69, 72–73 (1st Cir. 2005); Foley v. Lowell Sun, 533 N.E.2d 196 (Mass. 1989).

Certain categories of statements are defamation per se, meaning the plaintiff need not prove economic loss. One such category is an imputation of crime. See Jones v. Taibbi, 512 N.E.2d 260, 264 (Mass. 1987); Restatement (Second) of Torts § 571.

B. The District Court’s Error: “Could Damage” vs. “Did Damage”

The district court recited the correct standard (“could damage”) but then applied a different one, concluding Orkin had no defamation claim because CardConnect continued to do business with him and thus the email “did not damage his reputation in the community.”

The First Circuit stresses that the harm element looks to the general tendency of the language to cause reputational harm, not proof of actual harm in the specific audience. It cites the Restatement: “To be defamatory, it is not necessary that the communication actually cause harm.” Restatement (Second) of Torts § 559 cmt. d.

This articulation matters practically:

  • Defamation claims do not fail simply because a particular recipient continues the relationship anyway.
  • Evidence that a publisher or recipient did not act on the statement may be relevant to damages or causation, but it does not negate the defamatory character of the words.

C. Interpreting the Email: An Unambiguous Imputation of Criminal Fraud

Albert’s email to CardConnect stated that:

  • “We have been experiencing fraudulent activities with a Wayne Orkin”; and
  • “This is currently a civil and criminal matter that is being pursued.”

The First Circuit rejects the district court’s attempt to read this as a mere statement of intent to take legal action. Taking the email as a whole and in context, the court concludes:

  • “Experiencing fraudulent activities with [X]” is, for a reasonable reader, the equivalent of saying “X has engaged in fraud.”
  • Calling the situation a “criminal matter . . . being pursued” reinforces that these are not mere suspicions or disputes but allegations of criminal wrongdoing.
  • The passive voice (“being pursued”) does not change the meaning: the natural takeaway is that some authority (law enforcement, regulators, or counsel) is pursuing criminal charges or investigation against Orkin.

Accordingly, the court holds that the email “unambiguously imputes to [Orkin] a criminal offense.” Under Massachusetts law:

  • This is defamation per se (Jones v. Taibbi), and
  • The usual requirement to prove economic loss does not apply (Ravnikar v. Bogojavlensky, 782 N.E.2d 508 (Mass. 2003)).

Albert’s attempt to analogize to Phelan v. May Dep’t Stores Co., 819 N.E.2d 550 (Mass. 2004), where “ambiguous conduct” did not clearly convey criminal behavior, fails because here the words themselves, not ambiguous nonverbal behavior, unmistakably allege criminal fraud.

D. Truth, Actual Malice, and the Defense on Remand

Under Massachusetts law, a defendant may avoid liability either by proving:

  • Truth (or “substantial truth”); or
  • That, even if the statement is true, it was not written with “actual malice” as that term is used in Mass. Gen. Laws ch. 231, § 92 (for written defamation where truth is asserted as a defense).

The district court found the email “materially true,” but that finding was built on its erroneous reading of the email as merely expressing Albert’s “truthful intent to take action,” not as an accusation of criminal fraud. The trial court never determined whether Orkin had actually engaged in criminal fraud.

The First Circuit therefore:

  • Vacates the judgment on Orkin’s defamation claim;
  • Holds as a matter of law that the email:
    • Concerns Orkin;
    • Was published to a third party; and
    • Is defamatory per se (imputation of crime), thus actionable without proof of economic loss.
  • Remands for the factfinder to decide:
    • Whether the allegation of criminal fraud was true or substantially true; and
    • If not true, whether Albert was at fault (at least negligent) in making the accusation, and what non-economic harm (e.g., emotional distress, reputational damage) flows from it.

E. Simplifying the Key Defamation Concepts

  • Defamation per se: Certain statements (e.g., imputing a crime, serious sexual misconduct, or “loathsome” disease) are considered so inherently harmful that the law presumes general damages (harm to reputation) without the need to prove specific economic loss.
  • “Could damage” vs “did damage”: The focus is on tendency, not proof of actual harm. A plaintiff still must prove some legally cognizable harm (often presumed for per se categories) but not that every audience member believed the allegation or changed their behavior.
  • Material truth: A statement need not be literally true in every detail; it is enough that the “gist” or “sting” is true. But here the “sting” is an accusation of criminal fraud, not simply that a dispute exists.

V. Conversion and Implied Compensation in a Closely Held Florida Corporation

A. Choice of Law and the Internal-Affairs Doctrine

Because the suit was in federal court on diversity jurisdiction, the First Circuit applied Massachusetts choice-of-law rules. For corporate “internal affairs,” Massachusetts follows the internal-affairs doctrine, applying the law of the state of incorporation. See Harrison v. NetCentric Corp., 744 N.E.2d 622, 628 (Mass. 2001); Mariasch v. Gillette Co., 521 F.3d 68 (1st Cir. 2008).

Boost Web is a Florida corporation. The court therefore applied Florida law to the conversion claims because they implicate the internal allocation of rights between corporate participants (officers/directors vs. the corporation), a classic internal-affairs problem. See also JLA Inv. S.A. v. Computershare Tr. Co., N.A., 2017 WL 354008 (D. Mass. 2017).

B. Conversion of Money and the “Specific Fund” Requirement

Under Florida law, conversion is “an unauthorized act which deprives another of his property permanently or for an indefinite time.” Marine Transp. Servs. Sea‑Barge Grp., Inc. v. Python High Performance Marine Corp., 16 F.3d 1133, 1140 (11th Cir. 1994).

Where the alleged converted property is money, Florida decisions have sometimes required that the money constitute a specifically identifiable fund (e.g., a particular segregated account) in order to distinguish a genuine conversion from a mere failure to pay a debt under a contract. See, e.g., Douglas v. Braman Porsche Audi, Inc., 451 So. 2d 1038 (Fla. Dist. Ct. App. 1984).

The First Circuit, relying on Florida and Eleventh Circuit precedents, clarifies that the “specific fund” requirement is fundamentally about preventing contract claims from being recast as conversion claims:

  • Transcapital Bank v. Shadowbrook at Vero, LLC, 226 So. 3d 856 (Fla. Dist. Ct. App. 2017): Where the parties have a contractual relationship, a plaintiff may convert money only if the claim is independent of the contract.
  • Frayman v. Douglas Elliman Realty, LLC, 515 F. Supp. 3d 1262 (S.D. Fla. 2021): The identifiability requirement is used to ensure that “the claimant is not merely transforming a contract dispute into a conversion claim.”
  • Bel‑Bel Int’l Corp. v. Commercial Bank of Homestead, 162 F.3d 1101, 1109 (11th Cir. 1998): Where there is no contractual relationship between the parties, the “specific fund” caselaw is “not the type of claim to which the specific fund requirement was intended to apply.”
  • Zinn v. Zinn, 549 So. 2d 1141 (Fla. Dist. Ct. App. 1989): Similarly treats specific-fund cases as inapplicable where defendants had no contractual obligations to plaintiffs.

In Orkin, this distinction is crucial:

  • For the redirected residuals: Orkin had no contract with Boost Web regarding those residuals; the complaint was that he interfered with the corporation’s receivables from CardConnect. This is not a contract claim in disguise, so the “specific fund” requirement does not apply.
  • For personal expenses: Because there may have been an (implied) contractual understanding about Orkin’s right to use company funds as compensation, the court leaves open on remand whether any “excess” above reasonable compensation is properly treated as conversion or as breach of contract damages—with the specific-fund doctrine potentially relevant to that analysis.

C. The Redirected Residuals: Authority, Ownership, and Conversion

1. Lack of Authority to Redirect Corporate Receivables

Orkin argued that because he ran Boost Web’s day-to-day business, he had implied or apparent authority to redirect residuals. The First Circuit did not need to determine the outer scope of his ordinary authority because the record showed:

  • Orkin’s motive in executing the Redirection Agreement was retaliatory: he admitted he wanted to ensure “Boost would not receive the revenues.”
  • Residuals were diverted to MKY, which then transferred them to Orkin’s personal account.

Agency is a question of fact under Florida law (Kobel v. Schlosser, 614 So. 2d 6 (Fla. Dist. Ct. App. 1993)), reviewed for clear error. The district court was entitled to disbelieve Orkin’s self-serving claim that he acted for Boost Web’s benefit, and instead find that:

  • Even if Orkin had authority to act on Boost Web’s behalf in general, diverting corporate income to himself personally, in retaliation, exceeded any such authority.

That unauthorized redirection satisfied the “unauthorized act” element of conversion.

2. Did Boost Web Own the Residuals?

Orkin also argued that Boost Web did not own the residuals, especially those stemming from merchants originated after the 2014 Consent Agreement. The court applied Ohio law under the agreement’s choice-of-law clause and addressed two issues:

  • Validity of the Assignment:
    • Despite the title “Consent to Assignment,” the agreement’s “Assignment” clause provided that residuals “shall be paid to [Boost Web]” from a specified effective date onward, and the document sometimes referred to itself as “this Assignment.”
    • Even if the drafting was imprecise, the parties’ subsequent conduct—seven years of routing all residuals to Boost Web without objection—confirmed that the assignment was understood as effective. Orkin himself consistently treated Boost Web as entitled to the residuals until the 2021 dispute.
  • Scope of the Assignment (Pre‑ vs. Post‑2014 Merchants):
    • The agreement was ambiguous because:
      • Attachments listing specific “Merchants Assigned” were missing; and
      • Some provisions addressed only merchants originated by PTMS, while Orkin testified PTMS did no business after the assignment and Boost Web handled new accounts.
    • Under Ohio law, ambiguous contracts may be interpreted in light of extrinsic evidence, including the parties’ own performance. See Envision Waste Servs., LLC v. Cnty. of Medina, 83 N.E.3d 270, 276 (Ohio Ct. App. 2017); Lutz v. Chesapeake Appalachia, L.L.C., 71 N.E.3d 1010, 1012 (Ohio 2016).
    • For seven years, CardConnect paid all residuals (from pre‑ and post‑2014 merchants) to Boost Web; Orkin accepted this; Boost Web used the funds as corporate revenue.
    • This course of performance showed that all residuals at issue were treated as belonging to Boost Web.

Thus, Boost Web had a sufficient ownership interest in the residuals, and Orkin’s unauthorized redirection of those funds constituted conversion.

D. The “Personal Expenses” and Implied-In-Fact Compensation

1. The District Court’s Reasoning

The district court held that:

  • Orkin had no agreement (express or implied) with Albert or Boost Web about compensation or use of corporate funds for personal expenses.
  • Because he could not document his expenditures as business expenses, all $403,827.91 constituted converted corporate funds used for personal/non‑Boost Web purposes.

The court viewed the absence of detailed, written terms as fatal to finding any enforceable contract or right to compensation.

2. The First Circuit’s Reversal: A Clear Case of Implied Compensation

Florida recognizes contracts implied in fact, which arise from the parties’ conduct and circumstances rather than explicit words. See F.H. Paschen, S.N. Nielsen & Assocs. LLC v. B&B Site Dev., Inc., 311 So. 3d 39, 48 (Fla. Dist. Ct. App. 2021); Com. P’ship 8098 Ltd. v. Equity Contracting Co., 695 So. 2d 383, 386 (Fla. Dist. Ct. App. 1997).

A classic situation is where:

  • One party performs services for another with the other’s knowledge and under circumstances where both reasonably understand compensation is expected; and
  • The law then implies a promise to pay the reasonable value of those services, even if price terms were never fixed in writing.

The First Circuit finds that the undisputed evidence here is a textbook implied-in-fact arrangement:

  • Orkin “ran all of the day-to-day business affairs of Boost Web” for years and generated all of its business.
  • He routinely used corporate funds for personal expenses; Albert knew this and allowed it:
    • Accountants reconciled expenses; personal items were treated as Orkin’s income.
    • Boost Web issued W‑2s in 2018–2019 to Orkin reflecting this compensation structure.
  • Albert signed tax returns and other documents incorporating this understanding; she did not object until the 2021 falling out.

In Judge Kayatta’s words:

“These circumstances fairly raise the unrefuted inference that both parties understood and intended some compensation be paid to Orkin. . . . What else could it be? Certainly not a conversion, given Albert’s repeated acquiescence.”

The panel emphasizes that to insist on a specific, formal agreement about amount or method of compensation in this context misunderstands implied-in-fact contracts:

  • By definition, implied contracts lack fully specified written terms; courts look to conduct and then supply missing details (e.g., a reasonable price) as needed.
  • Florida law allows courts to determine reasonable compensation where essential terms like price are unclear. See Com. P’ship 8098, 695 So. 2d at 386; Focus Mgmt. Grp. USA, Inc. v. King, 171 F. Supp. 3d 1291 (M.D. Fla. 2016) (recognizing price as typically essential but subject to implied-in-fact principles).
  • Equity and fairness are central: “[C]onsiderations of equity and morality play a large part in the process of finding a promise by inference of fact.” Magwood v. Tate, 835 So. 2d 1241, 1243 (Fla. Dist. Ct. App. 2003) (quoting Corbin).

The court also highlights the inequitable practical result of Albert’s position: if Orkin had no right to any compensation, then:

  • He would have worked for years generating significant revenue while receiving no wages; and
  • All net profits would belong to Boost Web, which Albert claims to own outright.

The court notes that such a result is “difficult to justify” and inconsistent with the parties’ own treatment of Orkin’s withdrawals as wages in prior years.

3. Scope of the Remand on Personal Expenses

The First Circuit:

  • Affirms the factual finding that Orkin withdrew $403,827.91 from Boost Web accounts in 2020–2021 that he cannot substantiate as business expenses (this is a damages-related factual finding, reviewed for clear error).
  • Vacates the legal conclusion that all such withdrawals were unauthorized and thus constituted conversion.
  • Remands with instructions that the district court:
    • Determine a reasonable amount of compensation for Orkin’s services under the implied-in-fact arrangement; and
    • Then determine whether any excess above that amount:
      • Is sufficiently identifiable and otherwise satisfies the elements of conversion; or
      • Is better treated as breach-of-contract or unjust-enrichment damages.

E. Demand and Refusal in Florida Conversion Law

Florida sometimes requires proof that the plaintiff demanded return of property and the defendant refused, but only where those facts are necessary to show an otherwise lawful possession became wrongful.

  • Fla. Dep’t of Ins. v. Debenture Guar., 921 F. Supp. 750, 757 (M.D. Fla. 1996): demand and refusal are unnecessary where other evidence shows wrongful dominion.
  • Goodrich v. Malowney, 157 So. 2d 829, 832 (Fla. Dist. Ct. App. 1963): demand and refusal are only a method of proving conversion, not an element where conversion is otherwise shown.

The First Circuit notes these principles and leaves it to the district court, on remand, to evaluate whether any improperly retained “excess” compensation required a demand and refusal, particularly if Orkin’s initial possession of funds was arguably authorized as part of the compensation arrangement.

F. Simplifying Key Corporate/Conversion Concepts

  • Internal-Affairs Doctrine: Conflicts rule that issues concerning internal corporate relationships (shareholders, directors, officers) are governed by the law of the state of incorporation—in this case, Florida.
  • Conversion of Money: While conversion traditionally concerns chattels, modern law (including Florida’s) permits conversion of money where:
    • It is specific enough (e.g., particular bank account or payment stream); and
    • The claim is not just nonpayment of a general debt under a contract.
  • Implied-in-Fact Contract: A real contract inferred from conduct and the surrounding circumstances, where the parties’ behavior shows mutual assent even though they never reduced terms to writing.

VI. Civil Contempt and the Anti‑Injunction Act

A. Civil Contempt: Need for Clear and Unambiguous Orders

To support a civil contempt finding, the movant must prove by clear and convincing evidence that:

  1. The alleged contemnor had notice he was within the order’s ambit;
  2. The order was “clear and unambiguous” in what it required or forbade;
  3. The contemnor had the ability to comply; and
  4. The order was in fact violated.

See United States v. Saccoccia, 433 F.3d 19, 27 (1st Cir. 2005); Project B.A.S.I.C. v. Kemp, 947 F.2d 11, 16 (1st Cir. 1991).

An order is only “clear and unambiguous” if one can “ascertain from the four corners of the order precisely what acts are forbidden.” Goya Foods, Inc. v. Wallack Mgmt. Co., 290 F.3d 63, 76 (1st Cir. 2002) (quoting Gilday v. Dubois, 124 F.3d 277, 282 (1st Cir. 1997)). Ambiguities are resolved in favor of the accused contemnor. NBA Props., Inc. v. Gold, 895 F.2d 30, 32 (1st Cir. 1990).

1. Clear Violation: Interfering with the Order to Pay Boost Web

The April 11 and May 2 orders:

  • Declared that the residuals held by CardConnect “belong to Boost Web”; and
  • Directed CardConnect to transfer those funds to Boost Web’s bank account (or as Boost Web directed).

Orkin’s counsel repeatedly wrote to CardConnect after these orders, urging it not to release the money and suggesting potential liability if it complied. That conduct plainly sought to frustrate compliance with the court’s directive and fell within the orders’ clear ambit.

2. No Clear Violation: Litigating Ownership in Florida

The district court also treated Orkin’s filing and prosecution of the Florida ownership action as contempt of the April 11 decision, on the premise that it had already decided that Albert owned Boost Web (as incorporator/director) and that ownership was therefore res judicata.

The First Circuit disagrees:

  • The April 11 decision made factual findings about:
    • Albert’s status as incorporator and registered agent;
    • Her designation as “officer/director” in Florida filings; and
    • The absence of formal shareholders or issued stock.
  • It did not, however, explicitly (or by necessary implication) resolve the ultimate legal question of who owns Boost Web under Florida law (including possible concepts such as equitable ownership or constructive trust).
  • Thus, initiating a Florida action to decide corporate ownership could not clearly violate any express federal order.

Because the contempt order rested in part on conduct that did not violate a clear and unambiguous directive, the First Circuit vacated the entire contempt order and remanded for the district court to reconsider contempt and sanctions limited to the CardConnect communications.

B. Anti‑Injunction Act and the Relitigation Exception

The Anti‑Injunction Act, 28 U.S.C. § 2283, bars federal courts from enjoining ongoing state proceedings except where expressly authorized by Congress, necessary in aid of its jurisdiction, or “to protect or effectuate its judgments” (the relitigation exception).

The relitigation exception permits a federal court to protect a prior federal judgment by preventing a losing party from relitigating issues actually decided. However:

  • “An essential prerequisite” is that the issues the federal injunction would shield have “actually been decided” in the federal case. Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 148 (1988).
  • Courts must “assess[] the precise state of the record and what the earlier federal order actually said,” not the district court’s later recollection of what it intended. Id.

Here, the district court permanently enjoined Orkin from prosecuting the Florida action, concluding that:

  • It had already determined that Albert, as incorporator/director, was entitled to all of Boost Web’s assets; and
  • Any claim of ownership by Orkin was barred by res judicata and thus could not be pursued in state court.

The First Circuit held this was an abuse of discretion:

  • The earlier federal judgment did not actually decide ownership of Boost Web.
  • There was therefore no decided issue for the relitigation exception to “protect or effectuate.”
  • Whether Albert or Boost Web can assert res judicata or preclusion defenses in the Florida action is a question primarily for the Florida court, absent “unusual circumstances.” See Aristud‑González v. Gov. Dev. Bank for P.R., 501 F.3d 24, 27–28 (1st Cir. 2007).
  • No such unusual circumstances were identified; concerns about inconsistent decisions or duplicative litigation are not, by themselves, enough to override comity and federalism concerns. See Atl. Coast Line R.R. Co. v. Bhd. of Locomotive Eng’rs, 398 U.S. 281 (1970).

As a result, the First Circuit vacated the permanent injunction and allowed the Florida action to proceed.

VII. Centrality of Ownership and the Court’s Practical Guidance

The opinion closes by underscoring that the parties (and the trial court) have been “litigating with the cart in front of the horse.” The ownership of Boost Web is the linchpin:

  • If Orkin is the (or a substantial) owner:
    • The dispute over his “conversion” of corporate funds may largely collapse into an accounting among owners; and
    • Redirected residuals might still be problematic, but the overall framing shifts from an employee misappropriating funds to an owner self-dealing.
  • If Albert is the sole owner:
    • Orkin plainly must receive some fair compensation for his many years of work—the First Circuit all but demands it; and
    • The core issues become:
      • How much compensation he is entitled to; and
      • Whether amounts above that threshold are recoverable as conversion or contract damages.

The First Circuit expressly states that “any outcome that leaves Orkin with no rights to either wages or the benefits of ownership would be difficult to justify on the record as it stands.”

On remand, the district court is free—and implicitly encouraged—to make explicit findings and legal conclusions on ownership under Florida law, which will then anchor the resolution of the remaining claims and remedies.

VIII. Broader Impact and Practical Lessons

A. For Family and Closely Held Businesses

  • Corporate Formalities Matter: Operating for years without:
    • Issuing stock;
    • Electing officers;
    • Documenting ownership percentages; or
    • Formalizing compensation arrangements
    invites litigation where courts must reconstruct rights from behavior and tax forms.
  • Course of Dealing Can Create Legal Rights: Longstanding practices (e.g., an officer using company funds for personal expenses that are treated as wages) can crystallize into implied-in-fact contracts that are legally enforceable even if no one signed anything.
  • Ownership vs. Compensation: This decision shows courts will resist outcomes that:
    • Treat a key contributor as neither an owner nor an employee with wage rights, while a passive sibling claims all corporate value.
    • Invite parties to retroactively recharacterize years of acquiesced conduct as “conversion” once relationships sour.

B. For Litigators and Courts

  • Defamation Pleading in Massachusetts:
    • Plaintiffs should emphasize the “could damage” standard and identify per se categories where economic loss need not be pled or proved.
    • Defendants should carefully assess whether statements, read in context, imply crime; an “I’m going to sue you” email is very different from “we are experiencing fraudulent activities with [X]” and calling it a “criminal matter.”
  • Conversion vs. Contract (Florida law):
    • When pleading conversion of money, counsel must:
      • Identify whether the relationship is contractual; and
      • If so, show how the conversion claim is independent, with a specific fund if required.
    • When no contract exists between the converter and victim (e.g., a corporate insider diverting corporate receivables), courts may allow conversion without the “specific fund” limitation.
  • Implied Contracts and Equity:
    • Courts should be alert to implied-in-fact rights where conduct, tax treatment, and mutual expectations clearly demonstrate a compensation arrangement.
    • Where detail is lacking, it is often more equitable to:
      • Recognize an implied right to reasonable compensation; and then
      • Determine whether any excess is actionable, rather than denying any right to compensation altogether.
  • Civil Contempt and Anti‑Suit Injunctions:
    • Trial courts must draft orders with precision; vague or incomplete resolutions of critical issues (like corporate ownership) cannot support contempt or Anti‑Injunction Act relief.
    • Even when a litigant’s motives are questionable, federal courts must respect the limits of § 2283 and generally leave preclusion defenses to be asserted in state court.

C. Multi‑Jurisdictional Business Disputes

Orkin v. Albert is also a primer on multi-jurisdictional analysis:

  • Massachusetts conflicts law sends:
    • Defamation to Massachusetts substantive law; but
    • Corporate internal-affairs issues (conversion between insiders and the corporation) to Florida law.
  • Contract choice-of-law clauses (Ohio for the Consent Agreement) are respected for interpreting the scope and validity of assignments, though not necessarily for all related corporate or tort issues.
  • Federal law (Anti‑Injunction Act, contempt standards) sets procedural boundaries on how aggressively a federal court may control related proceedings in other jurisdictions.

IX. Conclusion

Orkin v. Albert is a dense and instructive appellate opinion that:

  • Clarifies Massachusetts defamation law by reinforcing that:
    • The “could damage” standard governs the defamatory nature of a statement; and
    • Accusations of criminal fraud in a business communication are defamation per se, actionable without economic loss.
  • Develops Florida conversion and contract principles by:
    • Limiting the “specific fund” requirement to contract-dressed-as-conversion cases; and
    • Recognizing an implied-in-fact right to compensation based on a long course of dealing between corporate participants.
  • Applies Ohio contract law sensibly to uphold an ambiguous assignment via the parties’ own performance.
  • Reinforces federal doctrines of contempt and the Anti‑Injunction Act, demanding clarity in prior orders and restraint in enjoining state-court proceedings.

Above all, the case illustrates how, in the absence of corporate formalities and written agreements, courts will look to conduct, tax reporting, and equity to construct rights and obligations. It serves as both a doctrinal guide and a practical warning: informal family business arrangements may “work” in good times, but when relationships break down, the law will step in—often imperfectly—to supply the contract the parties never wrote.

Case Details

Year: 2025
Court: Court of Appeals for the First Circuit

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