Landry v. PosiGen, Inc. et al
ORDER AND REASONS: IT IS ORDERED that Defendants' 29 motion to dismiss the amended complaint is GRANTED IN PART and DENIED IN PART. IT IS FURTHER ORDERED that Defendants' 5 motion to dismiss the petition for damages is DISMISSED AS MOOT. IT IS FURTHER ORDERED that Defendants' 4 motion to strike is GRANTED IN PART and DENIED IN PART. Signed by Judge Ivan L.R. Lemelle on 2/7/2018. (jls)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
LOGAN LANDRY, ET AL.
POSIGEN, INC., ET AL.
ORDER AND REASONS
There are three pending motions in this case. Defendants filed
a motion to strike certain paragraphs from Plaintiff Logan Landry’s
original petition for damages (Rec. Doc. 1-1). Rec. Doc. 4. Landry
timely filed an opposition. Rec. Doc. 14. Defendants also filed a
motion to dismiss Landry’s petition for damages. Rec. Doc. 5.
Landry again timely filed an opposition. Rec. Doc. 13. Landry,
along with Plaintiff BLG Innovative Solutions, LLC, then filed an
amended complaint. Rec. Doc. 12. Defendants filed a motion to
dismiss the amended complaint. Rec. Doc. 29. Plaintiffs Landry and
BLG filed an opposition. Rec. Doc. 33. Defendants then sought, and
were granted, leave to file a reply. Rec. Doc. 38.
For the reasons discussed below,
IT IS ORDERED that Defendants’ motion to dismiss the amended
complaint (Rec. Doc. 29) is GRANTED IN PART and DENIED IN PART.
IT IS FURTHER ORDERED that Defendants’ motion to dismiss the
petition for damages (Rec. Doc. 5) is DISMISSED AS MOOT.
IT IS FURTHER ORDERED that Defendants’ motion to strike (Rec.
Doc. 4) is GRANTED IN PART and DENIED IN PART.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This case stems from a dispute between Plaintiff Logan Landry
and Defendant PosiGen1 over whether PosiGen violated Landry’s
employment contract by failing to pay bonuses, award stock options,
and allow Landry to work out of a satellite office. See Rec. Doc.
12 ¶¶ 45-70, 84-105. But Plaintiffs Landry and BLG Innovative
Solutions, LLC claim that this is not just an employment dispute.
Plaintiffs have also brought federal Racketeer Influenced and
Corrupt Organizations (RICO) claims, alleging that the violations
of Landry’s employment contract are one part of a larger scheme to
defraud that is currently being carried out by Defendant Thomas
Neyhart, a PosiGen executive and partial owner. See id. ¶¶ 14-70.
PosiGen is a solar energy company. See id. ¶ 14. It purchases
equipment that produces solar energy, leases that equipment to
residential customers, and installs the equipment at customers’
contractor’s license, which Neyhart obtained in 2011 for Green
Grants, a predecessor to PosiGen. See id. ¶ 20. The license
application asked whether any principal of the applicant had been
convicted of a crime. See id. ¶ 21. Neyhart was a principal of
The defendants in this case include five related entities: PosiGen, Inc.;
PosiGen, LLC; PosiGen GP, LLC; PosiGen Energy Efficiency of Louisiana, LLC;
PosiGen of Louisiana, LLC. See Rec. Doc. 12 ¶¶ 6-10. Landry’s employment
contract was signed by Defendant Thomas Neyhart on behalf of PosiGen of
Louisiana, LLC. Id. at 10. But the contract states that Landry will “serve as
the Regional Director of Operations for [PosiGen of Louisiana, LLC] and its
affiliates . . . .” Id. at 2. Therefore, except where otherwise appropriate,
the Court will refer to the five PosiGen Defendants, collectively, as PosiGen.
Green Grants and had previously pled guilty to battery, but Neyhart
did not disclose this information on the application. See id. ¶¶
19, 21. Neyhart submitted the application by mail. See id. ¶ 22.
PosiGen has multiple streams of income. See id. ¶¶ 17, 2526. Customers who lease solar equipment make monthly payments to
PosiGen. See id. ¶ 17. PosiGen also obtains tax credits from
federal and state government programs created to encourage solar
energy production. See id. ¶¶ 25-26. The tax credits are paid per
completed installation of solar equipment. See id. ¶ 27. To receive
the credit, applicants must submit a packet of information to the
relevant tax authority for each completed installation. See id.
Beginning in 2012, and continuing today, Neyhart allegedly
installations that were still in progress and others that were
never completed. See id. ¶¶ 31-36. Plaintiffs also allege that
Song Yi, PosiGen’s CFO, knew of Neyhart’s scheme and aided Neyhart
in submitting the fraudulent applications. See id. ¶¶ 31, 81. On
according to the complaint, Neyhart normally caused PosiGen to
prematurely submit tax credit applications for 75 to 80 of those
scheduled installations. See id. ¶¶ 30, 34. To hide the fact that
installations than it actually completes, Neyhart purportedly
manipulate inventory records. See id. ¶ 42.
In 2014, Neyhart approached Landry about purchasing BLG’s
assets, including BLG’s customer list. See id. ¶¶ 47, 49. PosiGen
and BLG were business competitors and Landry was a majority owner
of BLG. See id. ¶¶ 45, 46. Landry and Neyhart reached a deal,
through negotiations over the phone and by mail, in which BLG would
sell its assets to PosiGen, and PosiGen would pay BLG cash and
hire Landry. See id. ¶¶ 51-52, 56-57, 62. Landry agreed to sell
BLG’s assets for a below-market cash price in exchange for more
generous compensation while employed at PosiGen, including annual
bonuses, stock options, and the opportunity to work out of an
office near his home. See id. Neyhart allegedly did not intend to
honor these generous compensation terms when he agreed to purchase
BLG’s assets for a below-market price. See id. ¶ 65. PosiGen
ultimately failed to pay annual bonuses, award stock options, or
allow Landry to work from an office near his home. See id. ¶¶ 8687.
Landry resigned from PosiGen in August 2016 and filed the
instant lawsuit in August 2017. Id. ¶ 70. The lawsuit asserts two
federal RICO claims against Neyhart and various state law claims
against Neyhart and PosiGen.
Rec. Doc. 12. After Landry
initiated the lawsuit, PosiGen repeatedly contacted Landry and
Landry’s current employer to urge Landry to stop the instant legal
proceedings. See id. ¶¶ 117-126. Counsel for Neyhart also contacted
Landry’s current employer with similar requests. See id. ¶ 127.
LAW AND ANALYSIS
A. Motion to dismiss
To survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a plaintiff’s complaint “must contain ‘enough
facts to state a claim to relief that is plausible on its face.’”2
Varela v. Gonzalez, 773 F.3d 704, 707 (5th Cir. 2014) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When
deciding whether a plaintiff has met his burden, a court “accept[s]
all well-pleaded factual allegations as true and interpret[s] the
complaint in the light most favorable to the plaintiff, but
‘[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements’ cannot establish facial
plausibility.” Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d
512, 520 (5th Cir. 2016)(quoting Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009))(some internal citations and quotation marks omitted).
Defendants filed a motion to dismiss Plaintiffs’ petition for damages, which
Defendants had previously removed from state court. See Rec. Doc. 5. Plaintiffs
then filed an amended complaint, which stated anew their claims against
Defendants. See Rec. Doc. 12. “An amended complaint supersedes the original
complaint and renders it of no legal effect unless the amended complaint
specifically refers to and adopts or incorporates by reference the earlier
pleading.” King v. Dogan, 31 F.3d 344, 346 (5th Cir. 1994). That being said, a
defendant who has filed an initial motion to dismiss does not need to file
another motion to dismiss when a plaintiff amends a complaint. See 6 Wright &
Miller, Federal Practice and Procedure § 1476 (2005). But here, Defendants filed
a second motion to dismiss directed at the amended complaint. See Rec. Doc. 29.
Therefore, because Plaintiffs’ petition for damages has “no legal effect” and
Defendants have filed a motion to dismiss Plaintiffs’ amended complaint,
Defendants’ initial motion to dismiss (Rec. Doc. 5) is moot.
1. Federal Law Claims
Federal law prohibits “any person employed by or associated
with any enterprise engaged in . . . interstate . . . commerce, to
conduct or participate, directly or indirectly, in the conduct of
activity . . . .” 18 U.S.C. § 1962(c). It also makes it “unlawful
for any person to conspire to” commit a RICO violation. Id.
enforcement. “Any person injured in his business or property by
reason of a [RICO] violation . . . may sue therefor . . . and shall
recover threefold the damages he sustains and the cost of the suit,
including a reasonable attorney’s fee . . . .” Id. § 1964(c).
Plaintiffs allege that Neyhart (1) violated 18 U.S.C. § 1962(c) by
using his position as an executive at PosiGen to engage in a longrunning scheme to defraud and (2) violated 18 U.S.C. § 1962(d) by
conspiring with the PosiGen CFO to carry out the scheme to defraud.
See Rec. Doc. 12 ¶¶ 14-70, 80-83.
RICO claims that sound in fraud are subject to the heightened
pleading standard set out in Federal Rule of Civil Procedure 9.
See Tel-Phonic Servs., Inc. v. TBS Int’l, Inc., 975 F.2d 1134,
1138-39 (5th Cir. 1992). Rule 9 requires a plaintiff who “alleg[es]
fraud” to “state with particularity the circumstances constituting
fraud . . . ,” but allows “[m]alice, intent, knowledge, and other
conditions of a person’s mind [to] be alleged generally.” Fed. R.
Civ. P. 9(b). To meet this burden, a plaintiff must plead “the
representations, as well as the identity of the person making the
misrepresentation and what he obtained thereby.” Tel-Phonic, 975
F.2d at 1139. That being said, the burden under Rule 9(b) is
“relaxed” “when the facts relating to the alleged fraud are
peculiarly within the perpetrator’s knowledge,” in which case,
plaintiff sets forth the factual basis for his belief.” U.S. ex
rel. Russell v. Epic Healthcare Mgmt. Grp., 193 F.3d 304, 308 (5th
Cir. 1999) abrogated on other grounds by U.S. ex rel. Eisenstein
v. City of New York, 556 U.S. 928 (2009).
To state a civil RICO claim under 18 U.S.C. § 1962(c),
Plaintiffs must plead a (1) RICO person, (2) RICO enterprise, and
[their] business or property by reason of a [RICO] violation
. . . .” 18 U.S.C. § 1964(c). Defendants do not contest the first
two elements. See Rec. Doc. 29-1 at 11-12. Plaintiffs allege that
Louisiana, LLC, is the RICO “enterprise.”3 See Rec. Doc. 12 ¶¶ 5-
To plead a claim under 18 U.S.C. § 1962(c), the RICO person must be “employed
by or associated with [the RICO] enterprise . . . .” Plaintiffs have plead that
Neyhart is the President and partial owner of PosiGen of Louisiana, LLC. See
Rec. Doc. 12 ¶ 5. Defendants do not contest the sufficiency of this allegation.
6. A “person” “includes any individual . . . capable of holding a
legal or beneficial interest in property.” 18 U.S.C. § 1961(3).
Plaintiffs have pled that Neyhart is an individual who holds
interests in property. See, e.g., Rec. Doc. 12 ¶ 5. An “enterprise”
“includes any . . . partnership, corporation, association, or
other legal entity . . . .” 18 U.S.C. § 1961(4). Plaintiffs have
pled that PosiGen of Louisiana is a limited liability company.
See, e.g., Rec. Doc. 12 ¶ 6. Therefore, Plaintiffs have met their
burden with respect to the first two elements of their RICO claims.
The third element is more hotly debated. A “pattern of
racketeering activity” “requires at least two acts of racketeering
activity” to occur within ten years of each other. 18 U.S.C.
frequency of predicate acts, “a plaintiff . . . must [also] show
that the racketeering predicates are related, and that they amount
to or pose a threat of continued criminal activity.” H.J., Inc. v.
Nw. Bell Tel. Co., 492 U.S. 229, 239 (1989). Plaintiffs allege
that Neyhart has engaged in a “pattern of racketeering activity”
since 2011 by committing various acts of mail and wire fraud when
obtaining a contractor’s license, applying for tax rebates, and
purchasing BLG’s assets. See Rec. Doc. 12 ¶¶ 19-70.
Mail4 and wire5 fraud are acts of racketeering activity, see
18 U.S.C. § 1961(1)(B), but Defendants argue that Plaintiffs’
complaint does not satisfy the heightened pleading standards of
Federal Rule of Civil Procedure 9(b), see Rec. Docs. 29-1 at 1213, 30-31; 38 at 10-11. “Mail fraud . . . occurs whenever a person,
‘having devised or intending to devise any scheme or artifice to
defraud,’ uses the mail ‘for the purpose of executing such scheme
or artifice or attempting to do so.’” Bridge v. Phoenix Bond &
Indem. Co., 553 U.S. 639, 647 (2008) (quoting 18 U.S.C. § 1341).
“The gravamen of the offense is the scheme to defraud, and any
mailing that is incident to an essential part of the scheme
satisfies the mailing element, even if the mailing itself contains
no false information.”6 Bridge, 553 U.S. at 647 (internal citation
and quotation marks omitted). Wire fraud shares the same structure
as mail fraud, the only difference being the use of wires instead
of the mail. See, e.g., Carpenter v. United States, 484 U.S. 19,
25 n.6 (1987); United States v. Mills, 199 F.3d 184, 188 (5th Cir.
“A scheme to defraud is measured by a nontechnical standard,
rooted in notions of moral uprightness, fundamental honesty, fair
See 18 U.S.C. § 1341.
See 18 U.S.C. § 1343.
6 Defendants assert that Plaintiffs must also plead reliance on each instance
of mail and wire fraud, see Rec. Docs. 29-1 at 13; 38 at 2, but the Supreme
Court has expressly rejected such a requirement, see Bridge, 553 U.S. at 64750.
play, and right dealing.” Robinson v. Standard Mortg. Corp., 191
F. Supp. 3d 630, 639 (E.D. La. 2016)(citing United States v. Bruce,
488 F.2d 1224, 1229 (5th Cir. 1973)). “Although this standard is
misrepresentations or omissions reasonably calculated to deceive
persons of ordinary prudence and comprehension.” Robinson, 191 F.
Supp. 3d at 639-40 (citing United States v. Netterville, 553 F.2d
903, 909 (5th Cir. 1977)).
Plaintiffs’ allegations of mail and wire fraud are barely
sufficient to meet the heightened pleading requirements of Rule
9(b), given that some of the details of Neyhart’s alleged scheme
are inaccessible to Plaintiffs absent discovery. Plaintiffs divide
the scheme into three parts: the fraudulent acquisition of a
contractor’s license, the fraudulent receipt of tax credits, and
the fraudulent purchase of BLG’s assets. With respect to the first
part, Plaintiffs allege that, in 2011, Neyhart lied about a 2002
criminal conviction on question six of an application for a
contractor’s license, which was necessary for the operation of
Neyhart’s business. See Rec. Doc. 12 ¶¶ 19-22.
With respect to the second part, Plaintiffs allege that, since
2012, Neyhart has directed employees of PosiGen of Louisiana to
submit inaccurate applications for tax credits to federal and state
authorities. See Rec. Doc. 12 at 5-8. Plaintiffs allege the type
of inaccurate information sent to the IRS, when during the month
the information is sent, the department at PosiGen of Louisiana
that transmits the information, a reasoned estimate of the number
of inaccurate submissions per month, and the various means by which
Neyhart prevented others from learning of his scheme to defraud.
authorities are addressed in a single sentence that contains no
detail. See id. ¶ 41. Even when Rule 9 is relaxed, and a plaintiff
may plead fraud on information and belief, a plaintiff must plead
facts to suggest that information and belief is reasonable. See
U.S. ex rel Russell, 193 F.3d at 308. The allegations about the
Plaintiffs’ RICO claims must proceed based solely on the alleged
fraud against the federal tax credit program.
Finally, with respect to the third part, Plaintiffs allege
that, in 2014, Neyhart made material untrue representations to
Landry in order to acquire BLG’s assets for a below-market price.
See Rec. Doc. 12 ¶¶ 45-70. Specifically, Plaintiffs identify
bonuses, award stock options, and allow Landry to primarily work
from an office in Houma, Louisiana. See id. ¶¶ 51-54. Throughout,
Plaintiffs identify uses of mail and wires to facilitate this
scheme to defraud. See, e.g., id. ¶¶ 22, 33, 56-57. As required,
Plaintiff’s amended complaint sets out the who, what, when, where,
why, and how of Neyhart’s alleged scheme. See Tel-Phonic, 975 F.2d
at 1139. These allegations meet the requirements of Rule 9(b) with
respect to Plaintiffs’ allegations of mail and wire fraud. See id.
(holding that a pleading sufficiently stated claim for mail fraud
under Rule 9(b) because the pleading stated that defendant wrote
a letter on a certain date containing false representations meant
to induce plaintiffs to act).
Having pled the requisite number and frequency of predicate
RICO acts, Plaintiffs must also plead that the predicate acts are
related and continuous. Predicate acts are related when they “have
the same or similar purposes, results, participants, victims or
distinguishing characteristics and are not isolated events.” H.J.
Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 240 (1989). Without citing
any case law, Defendants argue that the alleged predicate acts are
not related. See Rec. Docs. 29-1 at 14-16, 38 at 1-3. But as
Plaintiffs point out, the three alleged predicate acts share many
similarities. See Rec. Doc. 33 at 6-7. All advance the purported
goal of increasing the value of PosiGen of Louisiana to its
shareholders. All were committed by or at the direction of Neyhart.
All were facilitated by dishonest representations to innocent
third parties. These similarities are sufficient to meet the low
bar of the relatedness test, especially at the motion to dismiss
stage. See In re Burzynski, 989 F.2d 733, 742 (5th Cir. 1993);
Abell v. Potomac Ins. Co., 946 F.2d 1160, 1167-68 (5th Cir. 1991);
Landry v. Air Pilots Ass’n Int’l AFL-CIO, 901 F.2d 404, 433 (5th
Cir. 1990); Allstate Ins. Co. v. Benhamou, 190 F. Supp. 3d. 631,
662 (S.D. Tex. 2016).
The continuity requirement, which “is both a closed- and openended concept,” is met by “a closed period of repeated conduct, or
. . . past conduct that by its nature projects into the future
with a threat of repetition.” H.J. Inc., 492 U.S. at 241-42. “The
continuity requirement . . . is satisfied where it is shown that
the predicates are a regular way of doing business (in the sense
that it is not a business that exists for criminal purposes), or
of conducting or participating in an ongoing and legitimate RICO
‘enterprise.’” Id. at 242-43. Plaintiffs argue that the fraudulent
tax scheme and fraudulent purchase of BLG’s assets are part of
Neyhart’s ongoing use of PosiGen of Louisiana to enrich that
proceedings because they allege that the predicate acts are part
of PosiGen’s ongoing business practices. See id. at 249-50.
Defendants argue that even if Plaintiffs sufficiently plead
a pattern of racketeering activity, the pattern is not sufficiently
distinct from the RICO enterprise. See Rec. Docs. 29-1 at 18-19;
38 at 4. But contrary to Defendants’ assertion, Plaintiffs do not
allege that PosiGen of Louisiana is a fraudulent enterprise, only
that Neyhart conducts some of the company’s business fraudulently.
See Rec. Doc. 12 ¶ 30. Plaintiffs acknowledge that some of PosiGen
Therefore, Plaintiffs have sufficiently pled the three core RICO
elements, (1) a RICO person, (2) a RICO enterprise, and (3) a
As discussed previously, a plaintiff can bring a civil RICO
claim when he has been “injured in his business or property by
. . . .”
Plaintiffs claim that they suffered financial injury when Neyhart
fraudulently purchased BLG’s assets at a below-market price and
fraudulently negotiated Landry’s employment contract. Rec. Doc. 12
¶ 77. Defendants do not dispute that Plaintiffs have alleged a
financial loss. See Rec. Doc. 29-1 at 17. Rather, Defendants
activities. See Rec. Docs. 29-1 at 17-18, 38 at 3-4.
As discussed above, Plaintiffs have adequately pled, albeit
minimally, that Neyhart’s allegedly fraudulent purchase of BLG’s
assets and negotiation of Landry’s employment contract are part of
a pattern of racketeering activity. Plaintiffs also pled that they
lost money by relying on Neyhart’s fraudulent representations when
agreeing to the asset sale and employment contract. Plaintiffs
have sufficiently pled but for and proximate causation because
purchase of BLG’s assets and fraudulent negotiation of Landry’s
Allstate Inc. Co. v. Plambeck, 802 F.3d 665, 676-77 (5th Cir.
2015). As a result, Plaintiffs have adequately pled a civil RICO
violation under 18 U.S.C. § 1962(c).
Plaintiffs also allege that Neyhart was part of a RICO
conspiracy with PosiGen CFO Song Yi. See Rec. Doc. 12 ¶ 81
(referring to a violation of 18 U.S.C. § 1962(d)). But while
Plaintiffs state that Yi “agreed with the objectives of [Neyhart’s]
schemes and agreed to assist him in carrying them out[,]” the
amended complaint sets out no facts to support this assertion. See
Rec. Doc. 12 ¶¶ 80-83. Plaintiffs only offer that “Neyhart and Yi
had a close working and business relationship” such that they
. . .
Louisiana. Rec. Doc. 12 ¶ 81. But these facts do not support the
assertion that Neyhart and Yi knowingly reached an agreement to
commit the predicate offenses. The facts describe the CEO and CFO
of a company working together, as intended, to carry out the
company’s business. Therefore, Plaintiffs fail to state a claim
under 18 U.S.C. § 1962(d) for conspiracy to commit a RICO offense.
See Bell Atlantic, 550 U.S. 556-57 (“The need at the pleading stage
for allegations plausibly suggesting (not merely consistent with)
agreement reflects the threshold requirement of Rule 8(a)(2) that
the ‘plain statement’ possess enough heft to ‘sho[w] that the
pleader is entitled to relief.’”).
2. State law claims
Plaintiffs assert a variety of state law claims, each of which
will be addressed in turn. First, Plaintiffs allege that Defendants
breached Landry’s employment contract by moving Landry’s office
from Houma to New Orleans, failing to pay annual bonuses, and
refusing to award stock options. Rec. Doc. 12 ¶¶ 84, 86, 87. “The
essential elements of a breach of contract claim are (1) the
obligor's undertaking an obligation to perform, (2) the obligor
failed to perform the obligation (the breach), and (3) the failure
to perform resulted in damages to the obligee.” Favrot v. Favrot,
10-0986 pp. 14-15 (La. App. 4 Cir. 2/9/11); 68 So. 3d 1099, 110809. Plaintiffs’ amended complaint states that the parties signed
an employment contract obligating Defendants to pay Landry a salary
of $175,000 per year for two years, make Landry eligible for a
bonus program, enroll Landry in a stock option program starting in
January 2015, and allow Landry to work from an office in Houma.
See Rec. Docs. 12 ¶¶ 84; 12-1 at 2-3. Plaintiffs allege that
Defendants then breached the employment contract. Rec. Doc. 12 ¶¶
86, 87. Plaintiffs claim damages from this breach in that Landry
is owed unpaid bonuses, due stock options, and suffered added
stress and expense from his elongated commute. Rec. Doc. 12 ¶¶ 86,
However Landry’s employment contract, which was attached as
an exhibit to the amended complaint, does not mention Landry’s
eligibility for bonus payments. See Rec. Doc. 12-1. Therefore,
because the employment contract does not obligate Defendants to
pay Landry bonuses, Plaintiffs cannot base their breach of contract
claim on unpaid bonuses. Regardless, Plaintiffs adequately state
a claim for breach of contract based on the unawarded stock options
and the change in Landry’s office location. Plaintiffs also attempt
to bring a claim for breach of the covenant of good faith and fair
dealing. Rec. Doc. 12 ¶ 108. But while a defendant’s bad faith
actions may be relevant for determining damages, there is no
independent claim for acting in bad faith. See Favrot, 68 So. 3d
enriched when they failed to pay Landry bonuses that he was due
under his employment contract. Rec. Doc. 12 ¶¶ 84, 87, 109. In
Louisiana, “[a] person who has been enriched without cause at the
expense of another person is bound to compensate that person.” La.
Civ. Code art. 2298. But that “remedy . . . is subsidiary and shall
not be available if the law provides another remedy for the
impoverishment . . . .” Id. In this same case, Plaintiffs seek
payment of the same allegedly unpaid bonuses under breach of
contract and detrimental reliance theories. See Rec. Doc. 12 at ¶¶
84, 107. Regardless of whether Plaintiffs will succeed on these
precludes Plaintiffs from stating a claim for unjust enrichment.
See Walters v. MedSouth Record Mgmt., LLC, 10-0352, pp. 2-3 (La.
6/4/10); 38 So. 3d 241, 242.
fiduciary duty to Landry “by withholding monies known to be owed
to [him].” Rec. Doc. 12 ¶ 110. “As a basic proposition, for a
fiduciary duty to exist, there must be a fiduciary relationship
between the parties.” Scheffler v. Adams and Reese, LLP, 06-1774,
characteristic of a fiduciary relationship . . . is the special
relationship of confidence or trust imposed by one in another who
undertakes to act primarily for the benefit of the principal in a
particular endeavor.” Scheffler, 950 So. 2d at 648. An employer
does not normally owe a fiduciary duty to an employee. See Safford
v. PaineWebber, Inc., 730 F. Supp. 15, 18-19 (E.D. La. 1990).
relationship between PosiGen and Landry was marked by a notable
amount of trust or confidence. Plaintiffs have therefore failed to
state a claim for breach of fiduciary duty.
Fourth, Plaintiffs allege that Defendants committed the tort
of intentional infliction of emotional distress by repeatedly
asking Landry to take unethical and illegal actions to advance the
fraudulent tax rebate scheme. Rec. Doc. 12 ¶¶ 97, 112. To state a
claim for intentional infliction of emotional distress, Plaintiffs
must show “(1) that the conduct of [Neyhart] was extreme and
outrageous; (2) that the emotional distress suffered by [Landry]
was severe; and (3) that [Neyhart] desired to inflict severe
emotional distress or knew that severe emotional distress would be
certain or substantially certain to result from his conduct.” White
v. Monsanto Co., 585 So. 2d 1205, 1209 (La. 1991).
Plaintiffs have not met their burden. Plaintiffs do not even
state that Landry suffered severe emotional distress from the
repeated requests for him to participate in the tax rebate scheme.
See Rec. Doc. 12 ¶ 97. Therefore, Plaintiffs certainly fail to
state facts sufficient to plead such a claim. Nor do plaintiffs
plead any facts about Neyhart’s intent or state of mind when making
these allegedly distressing requests. See id. Plaintiffs have
therefore failed to state a claim for intentional infliction of
Fifth, Plaintiffs allege that, under a theory of detrimental
reliance, Landry is owed damages for Defendants’ failure to honor
the terms of Landry’s employment contract. Id. ¶ 114. In Louisiana,
“[a] party may be obligated by a promise when he knew or should
have known that the promise would induce the other party to rely
on it to his detriment and the other party was reasonable in so
relying.” La. Civ. Code art. 1967. To state a claim for detrimental
reliance, Plaintiffs must allege “(1) a representation by conduct
or word; (2) justifiable reliance; and (3) a change in position to
one's detriment because of the reliance.” La. Office of Risk Mgmt.
v. Richard, 13-0890 p. 5 (La. 10/15/13); 125 So. 3d 398, 402.
Plaintiffs have met their burden. They allege that Landry was
promised payment of performance bonuses, awards of stock options,
and the ability to work from Houma. Rec. Doc. 12 ¶ 84, 86. They
allege that Landry relied on these promises when deciding to sign
the employment contract and sell BLG’s assets. Rec. Doc. 12 ¶ 61.
compensation and work location were reasonable in the context of
the larger negotiation between Landry and Defendants, especially
those promises that were confirmed in the written employment
Finally, Plaintiffs plead a change in position by
alleging that, in reliance on Defendants’ promises, Landry entered
As discussed previously, Landry’s employment contract does not entitle Landry
to performance bonuses. See Rec. Doc. 12-1. However, Plaintiffs plead various
other times when Landry was promised bonus payments. See Rec. Doc. 12 ¶¶ 87,
98. Plaintiffs allege that some of these payments were made after Landry’s
employment contract had expired, when Landry could have left PosiGen without
repercussion. See id. Plaintiffs allege that Landry chose to stay at PosiGen
and earn less money because of these promises, which were at least partially
confirmed in writing. See Rec. Doc. 12 ¶¶ 87-88, 98-99. Therefore, while Landry
cannot rely on the employment contract to support a claim for unpaid bonuses,
Plaintiffs still state a claim for detrimental reliance based on Landry’s
reasonable reliance on subsequent promises. See Suire v. Lafayette City-Par.
Consol. Gov’t, 2004-1459, p. 31 (La. 4/12/05); 907 So. 2d 37, 59
(“Significantly, to prevail on a detrimental reliance claim, Louisiana law does
not require proof of a formal, valid, and enforceable contract.”).
provisions and sold BLG’s assets for a below-market price. Rec.
Doc. 12 ¶¶ 61, 63.
representation that Landry could participate in a PosiGen stock
option program induced Landry to sell BLG’s assets to PosiGen at
a below-market rate. Rec. Doc. 20 ¶ 115. The prescriptive period
for a delictual action like fraudulent inducement is one year from
when Landry learned that he would not be able to participate in a
stock option program.
La. Civ. Code art. 3492. Landry’s
employment contract stated that the stock option program would be
created on January 1, 2015. Rec. Doc. 12-1 at 3. Therefore, Landry
learned that Defendants’ representations were false no later than
inducement claim until August 8, 2017, long after the prescriptive
period had elapsed. Plaintiffs have therefore failed to state a
claim for fraudulent inducement.
Seventh, Plaintiffs allege that Defendants’ communications
with Landry and Landry’s current employer violated the Louisiana
interference with Landry’s employment. Rec. Doc. 12 ¶¶ 117-30.
Plaintiffs need to allege damages to state either claim.8 See 9 to
Plaintiffs acknowledge in their opposition memorandum that the same would be
true if, as Plaintiffs suddenly assert, Virginia law were applicable. See Rec.
Doc. 33 at 23 (citing Dunlap v. Cottman Transmission Sys., LLC, 754 S.E.2d 313,
5 Fashions, Inc. v. Spurney, 538 So. 2d 228, 234 (La. 1989)
(LUTPA). But Plaintiffs’ complaint does not allege that Landry has
suffered damages from Defendants’ communications with Landry’s
current employer. Therefore, Plaintiffs have failed to state a
claim either under LUTPA or for intentional interference with
conspiracy is not an independent cause of action in Louisiana. See
Ross v. Conoco, Inc., 02-0299, pp. 7-8 (La. 10/15/02); 828 So. 2d
546, 551-52. Rather, Louisiana imposes in solido liability on those
who conspire “to commit an intentional or willful act . . . .” La.
Civ. Code art. 2324. Therefore, Plaintiffs cannot state a standalone claim for conspiracy.
B. Motion to strike
Under Federal Rule of Civil Procedure 12(f), a party may move
to strike “any redundant, immaterial, impertinent, or scandalous
matter” from a pleading. Granting a motion to strike “is a drastic
remedy to be resorted to only when required for the purposes of
justice.” Augustus v. Bd. of Pub. Instruction, 306 F.2d 862, 868
(5th Cir. 1962). As a result, a “motion to strike should be granted
only when the pleading to be stricken has no possible relation to
the controversy.” Id. Here, Defendants seek to strike various
impertinent, or scandalous.9 See Rec. Doc. 4-1 at 4-10.
Neyhart was convicted of a felony, but did not disclose the
conviction on an application for a state contractor’s license (see
Rec. Docs. 1-1 ¶¶ 36-39; 12 ¶¶ 19-22); (2) Defendants were large
contributors to political candidates in Louisiana in 2014 (see
Rec. Doc. 1-1 ¶ 40); (3) Defendants had been previously sued for
racial discrimination and failure to pay employee bonuses (see
Rec. Docs. 1-1 ¶¶ 30-35; 12 ¶¶ 92-96); (4) Neyhart operated PosiGen
fraudulently (see Rec. Docs. 1-1 ¶¶ 26-28; 12 ¶¶ 25-44); and (5)
Neyhart was a large minority owner of Posigen (see Rec. Docs. 1-1
¶¶ 19-20; 12 ¶ 5).
The allegation about Defendants’ political contributions is
omitted from Plaintiffs’ amended complaint, compare Rec. Doc. 1-1
with Rec. Doc. 12, indicating that it is immaterial to Plaintiffs’
claims. Therefore, the allegations about political contributions
(Rec. Doc. 1-1 ¶ 40) may be stricken as wholly unrelated to the
Plaintiffs’ allegation that Defendants were previously sued for
racial discrimination (see Rec. Docs. 1-1 ¶ 30; 12 ¶ 89) has no
Plaintiffs filed their amended complaint (Rec. Doc. 12) after Defendants filed
their motion to strike (Rec. Doc. 4). The Court considered Defendants’ motion
to strike as it applied to Plaintiffs’ original and amended pleadings.
connection to Plaintiffs’ claims, which center on Defendants’
allegedly fraudulent behavior. See Augustus, 306 F.2d at 868.
contracts all directly relate to Plaintiffs’ claims—especially
negotiation of Landry’s employment contract. See, e.g., Rec. Doc.
12 ¶¶ 45-70. Therefore, these allegations are neither immaterial
nor impertinent. See United States v. Coney, 689 F.3d 365, 379-80
(5th Cir. 2012); Hoffman v. Bailey, No. 13-5153, 2017 WL 1969540,
at *8 (E.D. La. 2017). Given that these allegations are closely
scandalous to merit striking them from Plaintiffs’ pleadings. See
Coney, 689 F.3d at 379-80 (explaining that even pleadings that
“might offend the sensibilities” of a defendant “are not scandalous
[when] they are directly relevant to the controversy at issue and
are minimally supported in the record”).
New Orleans, Louisiana, this 7th day of February, 2018.
SENIOR UNITED STATES DISTRICT JUDGE
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