Aker Solutions Inc. v. Shamrock Energy Solutions, LLC et al

Filing 40

ORDER AND REASONS granting in part and denying in part Shamrock's 12 , 36 Motions to Dismiss; denying Trahan's 37 Motion to Dismiss First Amended Complaint. All claims other than Aker's alter ego claims against Shamrock survive. Signed by Judge Jane Triche Milazzo. (ecm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

AKER SOLUTIONS, INC.

CIVIL ACTION

VERSUS

NO: 16-2560

SHAMROCK ENERGY
SOLUTIONS, LLC ET AL

SECTION: “H”(4)

ORDER & REASONS
Before the Court are three related Motions to Dismiss: Defendant
Shamrock Energy Solutions, LLC’s (“Shamrock”) Motion to Dismiss (Doc. 12),
Defendant Shamrock’s Motion to Dismiss First Amended Complaint (Doc. 36),
and Defendant Jeffrey Trahan’s Motion to Dismiss First Amended Complaint
(Doc. 37). For the following reasons, Shamrock’s Motions are GRANTED IN
PART and DENIED IN PART and Trahan’s Motion is DENIED.
BACKGROUND
This is a breach of contract action. Pursuant to a September 14, 2014
Master Service Contract, (“MSC”), Plaintiff Aker Solutions, Inc. (“Aker”)
provided Defendant Samurai International Petroleum, LLC (“SIPCO”) with
early-phase field development engineering for offshore oil work at the Trident
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Field in the Gulf of Mexico. Aker submitted four invoices to SIPCO totaling
$1,780,144.19. It contends that none of these invoices were paid, prompting
the instant lawsuit. In its Complaint and First Amended Complaint, Aker
alleges that SIPCO and Shamrock are a single business enterprise rendering
Shamrock liable on the contract. Aker also alleges that SIPCO is the alter ego
of both Shamrock and Trahan, rendering them liable on the contract.
Defendant Shamrock filed a Motion to Dismiss on May 13, 2016 arguing
that the factual allegations of the Complaint support neither its alter ego nor
its single business enterprise claims against Shamrock.

In addition to

opposing this Motion, Aker responded by filing a First Amended Complaint,
which asserts new factual allegations relative to this issue and added the alter
ego allegations against Trahan. Shamrock responded with a second Motion to
Dismiss, arguing that the factual allegations relative to single business
enterprise and alter ego remain insufficient. Following the First Amended
Complain, Trahan filed a Motion to Dismiss seeking dismissal of the alter ego
claims against him.
LEGAL STANDARD
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead
enough facts “to state a claim to relief that is plausible on its face.”1 A claim is
“plausible on its face” when the pleaded facts allow the court to “[d]raw the
reasonable inference that the defendant is liable for the misconduct alleged.”2
A court must accept the complaint’s factual allegations as true and must “draw

Ashcroft v. Iqbal, 556 U.S. 662, 667 (2009) (quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 547 (2007)).
2 Id.
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all reasonable inferences in the plaintiff’s favor.”3

The Court need not,

however, accept as true legal conclusions couched as factual allegations.4
To be legally sufficient, a complaint must establish more than a “sheer
possibility” that the plaintiff’s claims are true.5 “A pleading that offers ‘labels
and conclusions’ or ‘a formulaic recitation of the elements of a cause of action’”
will not suffice.6

Rather, the complaint must contain enough factual

allegations to raise a reasonable expectation that discovery will reveal evidence
of each element of the plaintiffs’ claim.7
LAW AND ANALYSIS
As noted above, Shamrock seeks dismissal of the single business
enterprise and alter ego claims against it, while Trahan seeks dismissal of the
alter ego claims against him. The Court will separately address the single
business enterprise and alter ego claims.
I. Single Business Enterprise
Shamrock avers that the allegations of the Complaint and the First
Amended Complaint are insufficient to support a single business enterprise
cause of action against it. Generally speaking, “[c]orporations function as
distinct legal entities, separate from the individuals who own them, and their
shareholders are not generally liable for the debts of the corporation.”8 If,
however, a group of affiliated corporations constitutes a single business
enterprise, “a court may disregard the concept of corporate separateness and
extend liability to each of the affiliated corporations for the purpose of

Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).
Iqbal, 556 U.S. at 667.
5 Id.
6 Id. at 678 (quoting Twombly, 550 U.S. at 555).
7 Lormand, 565 F.3d at 255–57.
8 Hollowell v. Orleans Regional Hosp. LLC, 217 F.3d 379, 385 (5th Cir. 2000).
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preventing fraud or achieving equity.”9 “This exception, called the ‘single
business entity,’ occurs when a corporation is found to be the ‘alter ego, agent,
tool or instrumentality of another corporation.’”10 Louisiana appellate courts
have identified 18 factors to be used in analyzing whether two entities
constitute a single business enterprise:
1. corporations with identity or substantial identity of ownership,
that is, ownership of sufficient stock to give actual working control;
2. common directors or officers;
3. unified administrative control of corporations whose business
functions are similar or supplementary;
4. directors and officers of one corporation act independently in the
interest of that corporation;
5. corporation financing another corporation;
6. inadequate capitalization (“thin incorporation”);
7. corporation causing the incorporation of another affiliated
corporation;
8. corporation paying the salaries and other expenses or losses of
another corporation;
9. receiving no business other than that given to it by its affiliated
corporations;
10. corporation using the property of another corporation as its
own;
11. noncompliance with corporate formalities;
12. common employees;
13. services rendered by the employees of one corporation on behalf
of another corporation;
14. common offices;
15. centralized accounting;
16. undocumented transfers of funds between corporations;
17. unclear allocation of profits and losses between corporations;
and

In re Ark-La-Tex Timber Co., Inc., 482 F.3d 319, 335 (5th Cir. 2007) (collecting
cases) (internal quotation marks omitted).
10 Dishon v. Ponthie, 918 So. 2d 1132, 1135 (La. App. 3 Cir. 2005), writ denied, 927
So. 2d 317 (La. 2006) (quoting Green v. Champion Insurance Co., 577 So.2d 249 (La. App. 1
Cir.), writ denied, 580 So. 2d 668 (La.1991)).
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18. excessive fragmentation of a single enterprise into separate
corporations.11
In utilizing this list, Louisiana courts have cautioned that this list of factors is
“illustrative and is not intended as an exhaustive list of relevant factors.” 12
Furthermore, “[n]o one factor is dispositive of the issue of ‘single business
enterprise.”13
Shamrock argues that Aker fails to plead most of the above elements and
that it does not provide factual support for its claims. The Court has reviewed
Aker’s Complaint and First Amended Complaint and disagrees. The abovereferenced list of factors is illustrative—a plaintiff need not plead facts to
support all 18 factors.

Shamrock would have the Court subject Aker’s

complaint to a stringent review that is not appropriate on a 12(b)(6) motion to
dismiss. At this stage in the proceedings, Aker need only assert facts that, if
accepted as true, raise the reasonable hope or expectation that discovery would
reveal relevant evidence of each element of a claim.14 Aker has alleged that
Trahan is the sole member of both Shamrock and SIPCO, and that he exercises
administrative control over both companies. It further alleges that the two
companies share the same Houma and Houston offices and that they share
common employees. Aker alleges that the circumstances surrounding the
transactions at issue, whereby Shamrock employees acted on behalf of SIPCO
in negotiating the contract, supports its contention that SIPCO and Shamrock
represent the fragmentation of a single enterprise. The Court finds that these
allegations are sufficient to support a single business enterprise claim at this

Green v. Champion Ins. Co., 577 So. 2d 249, 257–58 (La.. App. 1 Cir. 1991), writ
denied, 580 So. 2d 668 (La. 1991); see also Lee v. Clinical Research Center of Fla., 889 So. 2d
317, 322 (La App. 4 Cir. 2004).
12 Green, 577 So. 2d at 258.
13 Id.
14 Lormand, 565 F.3d at 258.
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stage; accordingly, Aker’s motion is denied with respect to the single business
enterprise claims against Shamrock.
II. Alter Ego Claims
Aker also alleges that SIPCO is the alter ego of both Shamrock and
Trahan.

Both Defendants argue that Aker’s alter ego claims should be

dismissed as unsupported by sufficient factual allegations. As a general rule,
corporations are distinct legal entities separate from the individuals who
comprise them, and shareholder are not liable for corporate debts.15 In limited
circumstances, however, a court may ignore the corporate fiction and hold
individual shareholders liable where the corporation is found to simply be the
alter ego of the shareholder.16 To prove alter ego liability, a plaintiff must
“prov[e] that the shareholders disregarded the corporate entity to such an
extent that it ceased to become distinguishable from themselves.” 17

The

Louisiana Supreme Court has delineated several factors relevant to an alter
ego analysis:
Some of the factors courts consider when determining whether to apply
the alter ego doctrine include, but are not limited to: 1) commingling of
corporate and shareholder funds; 2) failure to follow statutory
formalities for incorporating and transacting corporate affairs; 3)
undercapitalization; 4) failure to provide separate bank accounts and
bookkeeping records; and 5) failure to hold regular shareholder and
director meetings.18
In light of these standards, the Court will separately analyze the sufficiency of
the alter ego allegations against Shamrock and Trahan.

Riggins v. Dixie Shoring Co., 590 So. 2d 1164, 1167 (La. 1991).
Id.
17 Id.
18 Id.
15
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A. Shamrock
Shamrock argues that the alter ego claims against it should be dismissed
because Aker has not alleged that Shamrock was a shareholder of SIPCO. This
Court agrees. The alter ego doctrine may only be applied to officers, directors,
or shareholders of a corporation.19 Without the allegation of such a legal
relationship between SIPCO and Shamrock, Aker’s alter ego claims against
Shamrock are insufficient as a matter of law and must be dismissed.
B. Trahan
Trahan also argues that the alter ego claims against him are insufficient
and should be dismissed. Unlike the alter ego claims against Shamrock, Aker
has alleged that Trahan is the President, CEO, and sole member of SIPCO.
Trahan contends, however, that Aker’s First Amended Complaint is deficient
because it only alleges one element of an alter ego claim: undercapitalization.
Aker responds, arguing that it has raised sufficient allegations against Trahan
to warrant discovery, pointing to its allegations that he is SIPCO’s sole member
and failed to properly capitalize it. It further alleges that Trahan treated
SIPCO as an extension of himself, controlling its decisions and improperly
siphoning cash from it. On examination of the First Amended Complaint, the
Court finds that, viewed in the light most favorable to the Plaintiff, these
allegations are sufficient to indicate that discovery may uncover sufficient
evidence that Trahan treated SIPCO as his alter ego. Accordingly, Trahan’s
Motion is denied.

Andretti Sports Mktg. Louisiana, LLC v. Nola Motorsports Host Comm., Inc., 147
F. Supp. 3d 537, 563 (E.D. La. 2015); Riggins v. Dixie Shoring Co., 577 So. 2d 1060, 1065
(La. App. 4 Cir. 1991), reversed on other grounds, 590 So. 2d 1164 (La. 1991).
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CONCLUSION
For the forgoing reasons, Defendant Shamrock Energy Solutions,
LLC’s (“Shamrock”) Motion to Dismiss (Doc. 12) and Motion to Dismiss First
Amended Complaint (Doc. 36) are GRANTED IN PART and DENIED IN
PART, and Defendant Jeffrey Trahan’s Motion to Dismiss First Amended
Complaint (Doc. 37) is DENIED. All claims other than Aker’s alter ego claims
against Shamrock survive.
New Orleans, Louisiana this 30th day of August, 2016.

____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

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