SRVR, LLC v. Neidoni

Filing 18

MEMORANDUM OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS Signed by Judge Claria Horn Boom on 1/13/2020 - Defendant Neidoni's Motion to Dismiss [R. 9 ] is DENIED. (KD)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
SRVR, LLC,

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Plaintiff,
v.
FLORIN NEIDONI,
Defendant.

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Civil Action No. 3:18-CV-050-CHB
MEMORANDUM OPINION AND
ORDER DENYING DEFENDANT’S
MOTION TO DISMISS

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This matter is before the Court on Defendant Florin Neidoni’s (“Neidoni”) Motion to
Dismiss. [R. 9] Neidoni seeks dismissal of Plaintiff SRVR LLC’s (“SRVR”) claims pursuant to
Fed. R. Civ. P. 12(b)(6) for failing to state a claim upon which relief can be granted. SRVR
responded to Neidoni’s motion [R. 12], and Defendant filed his brief in reply. [R. 13] This
matter, being fully briefed, is now ripe for review. For the reasons stated herein, the Court will
DENY Defendant’s Motion.
I.

Background Facts
SRVR, LLC is a telecommunications company with one sole member, Daniel Popa

(“Daniel”). [R. 1 p. 1] SRVR is one of many companies Daniel Popa owned with his former
wife, Lucia Popa (“Lucia”). [R. 9-2 pp. 2–3] When the two divorced, they divided up their
various companies; some were majority owned by Daniel, others by Lucia. [R. 9-1 p. 4]
Predictably, this led to ongoing litigation between the Popas and others involved with the
companies that took place in Jefferson Circuit Court, and on September 29, 2015 the parties to
that litigation entered into a Settlement Agreement (“Settlement Agreement” or “Agreement”).

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[R. 9-1 p. 5; R. 11] This Agreement provided that Daniel would purchase all of Lucia’s
ownership interests in their various companies, including her and her associates’ interests in
SRVR. [Id.] Defendant Neidoni was not a party to this Settlement Agreement, nor was he a
party to the state court litigation. [R. 9-1; R. 11] Unfortunately for all involved, this Settlement
Agreement was not the end of litigation between the parties. Daniel filed a Second Amended
Complaint [R. 9-1] against the parties to the Settlement Agreement resulting in further litigation.
[R. 9-2]
In this case, SRVR claims that Florin Neidoni, the company’s former co-Chief Executive
Officer, broke an alleged contract and violated his fiduciary duties to the company by failing to
repay SRVR for his tuition expenses at the Kellogg School of Management at Northwestern
University. [R. 1 pp. 2–4] Presumably as an alternative to its contract claim, SRVR also claims
that Neidoni has been unjustly enriched from the agreement. [Id. p. 3] SRVR claims that the
parties had an agreement that SRVR would lend Neidoni money to cover costs and expenses for
participating in Kellogg’s MBA program. [Id. p. 2] The purported agreement stated that Neidoni
would have to repay SRVR unless he remained employed as the co-CEO for at least three years
after completing the program. [Id.] Neidoni graduated from the program in June, 2015. [Id. p. 3]
In its Complaint, SRVR claims that “Neidoni left SRVR’s employment in September 2015,” [Id.
(emphasis added)] and that he left “after the 2015 Settlement Agreement was executed.” [R. 12
p. 9] Coincidentally, this was the first day that Daniel was the sole member of SRVR. Even
more coincidentally, or perhaps not, Neidoni is now the current husband of Lucia Popa, Daniel’s
ex-wife. [R. 9 p. 2] Now Plaintiff claims that after leaving SRVR, Neidoni has failed to repay
any of the money SRVR lent him for his participation in the MBA program. [R. 1 p. 2]

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II.

Standard of Review
A.

Conversion of Motion to Dismiss to a Motion for Summary Judgment

The Court cannot address all the arguments in Neidoni’s Motion to Dismiss without
converting the Motion to one for summary judgment. Neidoni’s Motion raises the affirmative
defenses of claim preclusion, release based on the purported Settlement Agreement between him
and SRVR, and a forum selection clause within that Agreement. [R. 9 pp. 1–2] A motion to
dismiss may be granted on the basis of an affirmative defense if the facts conclusively establish
the defense as a matter of law. In re McKenzie, 716 F.3d 404, 412 (6th Cir. 2013). Courts are
typically reluctant to grant motions to dismiss based on an affirmative defense unless the plaintiff
has anticipated the defense and explicitly addressed it in the pleadings. Pfeil v. State St. Bank &
Tr. Co., 671 F.3d 585, 599 (6th Cir. 2012). “In fact, we only address affirmative defenses on
Rule 12(b)(6) motions where the plaintiff’s own allegations show that a defense exists and
legally defeats the claim for relief.” Lockhart v. Holiday Inn Exp. Southwind, 531 F. App’x 544,
547 (6th Cir. 2013) (quoting Marsh v. Genentech, Inc., 693 F.3d 546, 554–55 (6th Cir. 2012))
(internal quotations omitted).
When reviewing a motion to dismiss, a district court may not consider matters other than
the complaint and its attachments without converting the motion to dismiss into a motion for
summary judgment. Buck v. Thomas M. Cooley Law School, 597 F.3d 812, 816 (6th Cir. 2010)
(citing Winget v. JP Morgan Chase Bank, 537 F.2d 565, 576 (6th Cir. 2008)). When a party asks
the Court to consider matters outside the pleadings when considering a motion under Fed. R.
Civ. P. 12(b)(6), the Court must treat the motion as one for summary judgment under Rule 56.
Fed. R. Civ P. 12(d). There are some exceptions to this general rule: district courts may consider
public records, matters of which a court can take judicial notice, and letter decisions of

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government agencies. Jackson v. City of Columbus, 194 F.3d 737, 745 (6th Cir. 1999) (internal
quotations omitted). Among the things of which a district court may take judicial notice are
other court proceedings. Buck, 597 F.3d at 816. As support for his claim preclusion defense,
Neidoni has attached a copy of a state court complaint and a state court order. [R. 9-1; R. 9-2]
To support his release and venue defenses, Neidoni filed a copy of the Settlement Agreement.
[R. 11] While the Court may consider the state court filings without converting Neidoni’s
Motion to a motion for summary judgment, it cannot do so with the Settlement Agreement.
To convert a motion under Rule 12 to a motion for summary judgment under Rule 56,
“[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to
the motion.” Fed. R. Civ. P. 12(d). However, notice of such a conversion is only required where
one party is “likely to be surprised by the proceedings,” which necessarily depends on the facts
and circumstances of the particular case. Wysocki v. International Business Machine Corp., 607
F.3d 1102, 1105 (6th Cir. 2010) (quoting Salehpour v. Univ. of Tenn., 159 F.3d 199, 204 (6th
Cir. 1998)). In this case neither party will be surprised by the Court converting this motion.
Neidoni filed the Settlement Agreement and based most of his arguments on its contents. SRVR
addressed all of those arguments in its Response, and referenced provisions within the Settlement
Agreement as well. Therefore, the Court will convert Neidoni’s Motion to Dismiss [R. 9] into a
motion for summary judgment under Rule 12(d).
B.

Standard

Summary judgment is proper where “the movant shows that 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). When determining a motion for summary judgment, a court must construe the evidence
and draw all reasonable inferences from the underlying facts in favor of the nonmoving party.

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Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Lindsay v.
Yates, 578 F.3d 407, 414 (6th Cir. 2009). The court may not “weigh the evidence and determine
the truth of the matter” at the summary judgment stage. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 265 (1986). When considering summary judgment, “[t]he mere existence of a scintilla
of evidence in support of the plaintiff’s position will be insufficient; there must be evidence on
which the jury could reasonably find for the plaintiff.” Id. at 252. The initial burden of
establishing no genuine dispute of material fact rests with the moving party. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). The Court “need consider only the cited materials, but it may
consider other materials in the record.” Fed. R. Civ. P. 56(c)(3). If the moving party satisfies this
burden, the burden then shifts to the nonmoving party to produce “specific facts” showing a
“genuine issue” for trial. Id. at 324. Where “a party fails to properly support an assertion of fact
or fails to properly address another party’s assertion of fact,” the Court may treat that fact as
undisputed. Fed. R. Civ. P. 56(e).
A fact is “material” if the underlying substantive law identifies the fact as critical.
Anderson, 477 U.S. at 248. Thus, “[o]nly disputes over facts that might affect the outcome of the
suit under the governing law will properly preclude the entry of summary judgment. Factual
disputes that are irrelevant or unnecessary will not be counted.” Id. A “genuine” issue exists if
“there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that
party.” Id. at 249.
III.

Discussion
A.

Claim Preclusion

Plaintiff’s claims are not barred by claim preclusion. The purpose of claim preclusion is
to prevent repetitious actions. Harrod v. Irvine, 283 S.W.3d 246, 250 (Ky. App. 2009). Under

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Kentucky law, claim preclusion, or res judicata, requires that “(1) there must be an identity of the
parties between the two actions; (2) there must be an identity of the two causes of action; and (3)
the prior action must have been decided on the merits.” Miller v. Admin. Office of Courts, 361
S.W.3d 867, 872 (Ky. 2011). Neidoni argues that SRVR already litigated its claims in Kentucky
state court, where there has been ongoing litigation between Daniel Popa, the sole member of
SRVR, and various parties involved with the Settlement Agreement. [R. 9 pp. 6–7] However,
Neidoni was not a party in that litigation. Nor was he a party to the Settlement Agreement.
Instead, he claims that he was a beneficiary to the Settlement Agreement and this by itself is
sufficient for finding that the parties are identical. [R. 9 p. 7] He cites no legal authority for this
proposition, and the Court has not found any to support the claim.
The causes of action in the cases are different as well. Plaintiff accurately states that
Kentucky courts follow the Restatement’s approach to determining the identity of the causes of
action, and that this hinges on whether the controversy arises from the same transactional
nucleus of facts. See Coomer v. CSX Transp., Inc., 319 S.W.3d 366, 371 n.9 (Ky. 2010); Yeoman
v. Commonwealth, Health Policy Bd., 983 S.W.2d 459, 464–65 (Ky. 1998). However, the facts
underlying the claims in the state court litigation are not the same as in this action. The prior
state court litigation addressed whether the parties to that suit (Lucia Popa and other associates of
companies that were transferred to Daniel Popa) misled Daniel leading up to the Settlement
Agreement, particularly surrounding the companies’ tax liability, and thus breached the
representations and warranties provision of that Agreement. [R. 9-1 p. 6; R. 9-2 pp. 4–5] By
contrast, SRVR’s claims in this case relate to actions taken after the Settlement Agreement, with
a party not involved in the Agreement, and do not claim a breach of the Agreement. The claimed
loan taken by Neidoni did not become payable until after the Settlement Agreement was reached,

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so there would have been nothing about it to misrepresent at the time of the Agreement. [R. 12 p.
3] As will be discussed in more detail below, unlike Daniel Popa’s claims in the state court
action, SRVR’s claims against Neidoni are not covered by the Settlement Agreement. Moreover,
no debt owed by Neidoni is ever mentioned in the state court action. While the claims do, at a
general level, involve “transactions between and among the transfer companies, including
SRVR, and its former employees,” this is too broad a categorization to find the causes of action
identical for purposes of claim preclusion. Finally, the Court need not consider whether the
judgment was a final judgment on the merits since Neidoni’s argument fails the first two
requirements of a claim preclusion defense.
B.

Settlement Agreement

Defendant Neidoni also asserts that the Settlement Agreement [R. 11] provides an
affirmative defense to SRVR’s claims in three ways. First, Neidoni argues that Section 5.08 of
the Settlement Agreement released him, along with all former employees of companies that were
parties to the Agreement, from claims against them. [R. 9 p. 1] Next, he claims that Section 3.02
of the Settlement Agreement provides the exclusive process and remedy for SRVR in this case.
[Id. pp. 2–3] Finally, he argues that Section 11.04, a forum selection clause in the Agreement,
mandates that this action be brought in Kentucky state court. [Id. p. 4]
All of these arguments must be evaluated against the backdrop of the fact that Section
9.14 of the Settlement Agreement explicitly disclaimed any third party beneficiaries, or giving
“any rights or benefits upon any person or entity other than the parties hereto and their respective
successors and permitted assigns.” [R. 11 p. 61 § 9.14] Additionally, Neidoni was not a party to
the Settlement Agreement, did not sign the Agreement, and was only mentioned in the

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Agreement oncein a provision exempting him from the Settlement Agreement’s non-compete
agreement. [R. 11 p. 34 § 4.03]
1.

Release of Claims

Neidoni argues that in the Settlement Agreement’s release clause, Section 5.08, SRVR
released all potential claims it had against him including those in the Complaint. [R. 9 pp. 3−4]
Section 5.08 of the Agreement provides that:
In consideration of the commitments set forth in this Agreement, each of the
Transferring Parties, each of the Transfer Companies, and Daniel, except for the
obligations provided in this Agreement, hereby release and forever discharge each
other, and each other’s attorneys, agents, employees, and contractors, from any and
all past, present, and future Claims, whatsoever, whether such Claims are known or
unknown, foreseen or unforeseen, developed or undeveloped, discoverable or
presently incapable of being discovered, relating in any way to any act or omission
that occurred or should have occurred on or before the date of this Agreement,
including, but not limited to: (a) all Claims asserted in any Lawsuit involving the
parties; and (b) all Claims that could have been asserted in any lawsuit involving
the parties. The parties agree that the releases contained in this Section 5.08 shall
be construed in the broadest sense possible, whereby each party signing this
Agreement is releasing all other parties signing this Agreement (as well as the other
referenced individuals) for any actions or inactions on or prior to the date of this
Agreement that could result or have resulted in damages, judgments, demands, or
causes of action of any kind or nature relating in any way to the parties’ respective
business relationships associated with the Transfer Companies.
[R. 11 p. 40 §5.08] Neidoni claims that through this provision SRVR has released him of the
claims it brings in this action. [R. 9 p. 3] However, the release does no such thing, as neither
Neidoni nor SRVR’s claims against him are within the scope of the release. To interpret the
Settlement Agreement, the Court must begin by examining the plain language of the instrument.
Kentucky Shakespeare Festival, Inc. v. Dunaway, 490 S.W.3d 691, 694 (Ky. 2016) “[I]n the
absence of ambiguity, a written instrument will be enforced strictly according to its terms, and a
court will interpret the contract’s terms by assigning language its ordinary meaning.” Wehr

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Constructors, Inc., v. Assurance Company of America, 384 S.W.3d 680, 687 (Ky. 2012) (internal
quotations omitted).
First, Neidoni is not among the parties covered by the release. Neidoni is not a named
party to the Settlement Agreement and is not a “Transferring Part[y]” under the Agreement, so
the release is inapplicable to him in that manner. [R. 11 p. 4] Neidoni claims that Section 5.08
releases any claims against him because he was an employee of SRVR, one of the named parties
to the Agreement. [R. 9 p. 3] However, the Agreement provides that the Transferring Parties
“release and forever discharge each other, and each other’s . . . employees.” Plaintiff correctly
identifies the fact that under a natural reading, this release does not apply to a Transferring
Parties’ own employees and Neidoni was an employee of SRVR at the time the Settlement
Agreement was signed. [R. 12 p. 9; R. 13 p. 2] As SRVR’s claim against Neidoni is one against
its own former employee, the release under Section 5.08 does not apply.
Section 5.08 is also inapplicable because the claim itself is outside the scope of the
release. The release applies to claims based on acts “relating in any way to any act or omission
that occurred or should have occurred on or before the date of this Agreement.” [R. 11 p. 40
§5.08.] (emphasis added) Moreover, it released the signing parties and other referenced
individuals “for any actions or inactions on or prior to the date of this Agreement that could
result or have resulted in . . . causes of action.” [Id.] (emphasis added) Both parties agree that
Neidoni did not leave SRVR until after the Settlement Agreement was signed. [R. 12 p. 9; R. 13
p. 2] Therefore, the alleged loan did not accrue until Neidoni left, which occurred after the
Settlement Agreement, meaning that SRVR had no claim against Neidoni that it could have
released until after the Agreement. [R. 1 p. 2; R. 12 p. 9]

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As Section 5.08 of the Settlement Agreement does not apply to Neidoni or SRVR’s
claims against him, SRVR has not released him from those claims.
2.

Loan Receivables

Neidoni next claims that Section 3.02 of the Settlement Agreement provides the
exclusive process for which the parties to the Agreement must follow if they discover
outstanding loan receivables like the one at issue in this case. [R. 9 pp. 2–3; R. 13 p. 3]
Neidoni’s alleged agreement with SRVR is not listed as an outstanding loan receivable in the
Settlement Agreement. However, Section 3.02, in relevant part, provides that:
In the event there are any other current outstanding loan receivables owed to the
Transfer Companies, which are discovered by Daniel within three (3) years of
Closing, then the Transferring Parties shall receive written notice of same and have
ten (10) business days to object or take the matter to the Court. If there is no
objection or the Court rules in favor of Daniel, then such amounts of such
outstanding loans shall be automatically deducted from the current Installment
Payments, so that the Installment Payments shall be eliminated until such time as
the loan amounts have been paid, and such reduction in the Installment Payments
shall not constitute a breach of this Agreement by Daniel.
[R. 11. P. 29 § 3.02] Even ignoring the fact that Neidoni was not a party to the Settlement
Agreement and his purported loan agreement with SRVR is likely be outside the scope of the
provision, it still is inapplicable in this case. Section 3.02 is quite clear that it applies to current
outstanding loan receivables, not future ones. The Settlement Agreement was signed September
29, 2015, [R. 11 p. 4], and Neidoni did not cease working at SRVR until after the Agreement. [R.
12 p. 9; R. 13 p. 2] According to the Complaint, Neidoni did not owe SRVR anything until he
broke his agreement with it by failing to work for SRVR for three years after finishing his MBA
program at Northwestern. [R. 1 p. 2] Therefore, his debt to SRVR would not have been a
“current” outstanding loan receivable at the time of the Settlement Agreement.

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3.

Choice of Venue

Finally, Neidoni claims that the Settlement Agreement’s forum selection clause mandates
that SRVR bring this action in Jefferson County Circuit Court in the case that led to the
Settlement Agreement in the first place. [R. 9 p. 4] The Agreement provides that:
With regard to any judicial action for any remedy under this Agreement, or to
enforce any judgment relating thereto, each of the parties hereto hereby irrevocably
and unconditionally submits to the exclusive jurisdiction of the Court, which shall
maintain continuing jurisdiction to enforce this Agreement as part of a judgment
incorporating same in Case No. 13-CI-002337.
[R. 11 p. 64 § 11.04] SRVR’s claim against Neidoni is not one covered by the Settlement
Agreement and as such the forum selection clause in inapplicable. First, Neidoni is not a party to
the Settlement Agreement or the underlying state court action. Any attempt to enforce the forum
selection clause by Neidoni would have to be under a third party beneficiary theory, and the
Agreement explicitly disclaims any third party beneficiaries. [R. 11 p. 61 § 9.14] Second, the
venue provision applies to “any judicial action for any remedy under this Agreement, or to
enforce any judgment relating thereto.” [Id.] Neidoni has failed to show that SRVR’s claim
seeks a remedy under the Settlement Agreement. The claim is not a loan receivable under
Section 3.02, and Neidoni has not identified any other portion of the Agreement that would cover
this claim. Consequently, the forum selection clause is inapplicable to this case.
C.

New Arguments in the Reply Brief

In his Reply brief, Neidoni raises, but fails to develop, new arguments for why SRVR’s
claims should be dismissed. It is generally inappropriate to raise new issues in a reply brief
because the non-moving party will not have a chance to respond. See, e.g., Ryan v. Hazel Park,
279 F. App’x 335, 339 (6th Cir. 2008) (“Generally, this Court has found that an issue raised for
the first time in a reply to a response brief in the district court is waived. . . .”) (internal quotation

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marks and citation omitted); U.S. v. Jerkins, 871 F.2d 598, 602 n.3 (6th Cir. 1989). Neidondi
first points out that the alleged contract between himself and SRVR would have to be in writing
due to the statute of frauds. [R. 13 p. 1] Kentucky law requires contracts that cannot be
completed within one year to be in writing. KRS 371.010(7). This contract does seem to fall
under the statute of frauds, and SRVR has not attached the contract to its Complaint. Insofar as
the Court denies Neidoni’s Motion, it does so without prejudice to any statute of frauds defenses
Neidoni may assert.
Neidoni next claims that Plaintiff’s unjust enrichment claims are not cognizable if there is
an actual contract. [R. 13 p. 2] Kentucky law does provide that “unjust enrichment is
unavailable when the terms of an express contract control.” Furlong Dev. Co. v. GeorgetownScott Cty. Planning & Zoning Comm’n, 504 S.W.3d 34, 40 (Ky. 2016). However, this is merely
an alternative pleading. Fed. R. Civ. P. 8(d) allows for alternative or even inconsistent
pleadings. Therefore, at this point in the litigation, there are no grounds for dismissing Plaintiff’s
unjust enrichment claims.
The Court makes no ruling as to the sufficiency of Plaintiff’s pleadings regarding its
fiduciary duty claims. Neidoni has not challenged their adequacy in his Motion to Dismiss or in
his Reply, and the Court makes no ruling on this issue. Finally, because Defendant first raised
this issue in his Reply brief, the Court also makes no ruling on the sufficiency of the pleadings
regarding punitive damages.
IV.

Conclusion
For these reasons, the Court treats Neidoni’s Motion [R. 9] as a motion for summary

judgment and denies the Motion. Accordingly, and the Court being otherwise sufficiently
advised,

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IT IS HEREBY ORDERED as follows:
1.

Defendant Neidoni’s Motion to Dismiss [R. 9] is DENIED.

This the 13th day of January, 2020.

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