Redbird Business Group, LLC et al v. Harrison
Filing
198
AMENDED OPINION AND ORDER by Magistrate Judge Jason A. Robertson. (jpc, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF OKLAHOMA
REDBIRD BUSINESS GROUP, LLC;
REDBIRD BIOSCIENCE OKLAHOMA,
LLC; and RB REALTYCO, LLC,
Plaintiffs and
Counter-Defendants,
v.
MATTHEW HARRISON,
Defendant and
Counter-Claimant.
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Case No. CIV-20-098-JAR
AMENDED1
OPINION AND ORDER
This action and the claims asserted by each side in it stems
from an employment agreement between Redbird Business Group, LLC,
Redbird
Bioscience
Oklahoma,
LLC,
and
RB
Realtyco,
LLC
(collectively referred to hereinafter as “Redbird”) and Matthew
Harrison
(“Harrison”)
and
the
representations
or
misrepresentations arising both before and after the agreement was
signed.
Beginning on July 11, 2022 and continuing through July 14,
2022, this Court conducted a non-jury bench trial with regard to
1 This Amended Opinion and Order is entered to correct the omission of
Counterclaimant’s claim for breach of a guarantee agreement by RB RealtyCo,
LLC. To that end, amendments have been made to ¶33 of the Findings of Fact and
¶¶K, L, and N of the Conclusions of Law. Additionally, footnote 4 has been
modified to correctly reflect the claims which are moot.
Further, the
concluding order paragraph has been modified to include the breach of guarantee
claim.
the outstanding issues in dispute in this action.
presentation
of
evidence,
the
parties
were
After the
afforded
the
opportunity to file proposed findings of fact and conclusions of
law, which were submitted in a timely manner in September of 2022.
This Court has considered all of the evidence presented by way of
live testimony, depositions, exhibits and stipulations as well as
the parties’ proposed findings and conclusions in the formulation
of this Order.
After said consideration, this Court hereby enters
the following findings of fact and conclusions of law in conformity
with Fed. R. Civ. P. 52:
FINDINGS OF FACT
1.
Redbird was a venture founded in 2018 by William Thurman
(“Thurman”) and Dr. Nimesh Patel (“Patel”), a medical doctor.
(Tr. 59: 16-17; 340: 9-10). Redbird operates a medical marijuana
growing and sales facility in Stillwell, Oklahoma.
25).
(Tr. 64: 24-
The Oklahoma license to sell medical marijuana is held by
Mariteq LLC.
Thurman.
service
(Tr. 65: 1-7).
Mariteq LLC is wholly owned by
Redbird Bioscience Oklahoma, LLC is a professional
company
providing
high-level
consultants
that
have
particular expertise in different matters to the Mariteq entities.
(Tr. 424: 8-15).
RB RealtyCo, LLC owns the real property located
in Stillwell, Oklahoma used in the operation of the business.
(Tr. 65: 8-10, 17-19).
Redbird Business Group, LLC is a holding
2
company, owning a majority interest in the units of RB RealtyCo
and Redbird Bioscience.
(Tr. 422: 18-25; 423: 1-2). In turn,
Redbird Ventures, LLC is a manager of Redbird Business Group, LLC,
holding a controlling interest in that entity.
(Tr. 423: 4-10).
Thurman owns 50% of the units of Redbird Ventures through BTX7
Holdings, Inc. and Patel owns 50% of the units of Redbird Ventures
through DK&S, LLC.
2.
(Tr. 423: 11-15).
Thurman founded Redbird.
(Tr. 340: 9-10).
decisionmaker or manager of Redbird.
Thurman is the
(Tr. 341: 18-19).
Feedback
is provided to Thurman through a board of managers comprised of
five or six individuals.
(Tr. 342: 6-8).
However, decision
making to commit any of the Redbird entities lies with Thurman.
(Tr. 342: 9-13).
Thurman makes the day-to-day business decisions
for
entities.
the
Redbird
(Tr.
342:
14-18).
He
exercises
“autocratic control” and makes all the decisions for Redbird.
(Tr. 181: 17-23).
3.
Bill Brewer (“Brewer”) with Brewer Attorneys & Counselors
(“BAC”) is an attorney who previously represented Thurman in a
dispute in a business venture.
Thurman considered Brewer a close
friend and trusted him as an advisor and lawyer.
(Tr. 63:9-18).
Brewer was one of the larger shareholders in Redbird, having been
granted shares without a cash contribution with Thurman and Patel.
3
(Tr. 68: 14-18).
Brewer held the shares or units through a
Delaware LLC, BCM, LLC.
4.
(PreTrial Order, p. 5, Fact No. 27).
On August 21, 2018, Thurman and Mariteq, LLC entered into an
engagement agreement with BAC (the “BAC Agreement”) “to formally
retain the firm to provide public affairs and general advisory
services” to the Redbird venture.
(Def. Exh. No. 1; Pl. Exh. No.
8).
5.
Harrison began working for BAC in New York City, New York in
2008 after graduating from Boston University with a Bachelor of
Science in Management.
(PreTrial Order, p. 4, Fact No. 16).
He
was employed from August of 2008 until May or June of 2011.
(PreTrial Order, p. 4, Fact No. 17).
York University Stern School
graduated
in
2013
with
Harrison then attended New
of Business
a
master’s
Administration. (PreTrial Order,
from 2011 until he
degree
p. 5, Fact
in
Business
No. 21).
After
graduating, Harrison returned to BAC as a Consultant in August
2013. (PreTrial Order, p. 5, Fact No. 22).
Between August 2013
and January 31, 2020, Harrison was an employee of BAC.
He worked
as a consultant delivering BAC’s services to Redbird pursuant to
the BAC Agreement from when he was assigned in 2018 until lateJanuary
2020.
(PreTrial
Order,
p.
5,
Fact
Nos.
23,
26).
Harrison, who eventually attained the title of as the Director of
4
Consulting at BAC, was assigned by Brewer to provide advisory and
business
consulting
services
to
Redbird
pursuant
to
the
BAC
Agreement, including helping Redbird with their public relations,
working with Redbird’s outside public relations firm, arranging
meetings with supply companies and potential investors, assisting
Redbird staff with financial modeling and analysis, advising on
strategic business decisions and preparing investor presentations.
(PreTrial Order p. 4, Fact No. 8).
6.
Brewer
introduced
Harrison
to
Thurman.
(Tr.
74:
1-2).
Brewer described Harrison as one of the “top young people in his
firm” and spoke of his close relationship with Harrison’s family,
including his father, Tom Harrison.
7.
(Tr. 74:16-25; 75:1).
Thurman was told by Brewer that Harrison “would be, . . .,
his conduit, his liaison, . . . he would be the man that he put in
place to work with us on his behalf, to help us, advise us, and
assist us not only in our communication back to Bill Brewer and as
he tried to stay what we call "line of sight" -- good line of sight
on everything and that he would -- he had a lot of great qualities
and
capabilities
business.”
8.
to
assist
us
as
we
tried
to
develop
this
(Tr. 76:22-25; 77:1-4).
Thurman acknowledged that both he and Brewer were very busy
and Harrison acted as a “go between”.
5
As Thurman explained, “by
having a talented individual that -- that sits between us, it makes
it efficient for us to communicate and -- bidirectionally and to
keep line of sight and everybody's finger on the pulse of what's
going on.”
(Tr. 78:1-11).
This alleviated the need for Thurman
to speak directly to Brewer.
9.
Thurman considered Harrison to be “talented” and that they
“worked well together.”
10.
(Tr. 78:12-17).
(Tr. 78:22-23).
Once Harrison was assigned to Redbird, he was considered by
Thurman to be “a senior advisor, really, pursuant to his role at
Brewer.
He was in advising me on any -- anything I needed to, if
I needed to communicate or -- we were looking for talent and
capital.
Those were our two priorities, and -- and he dove in. .
. . he wasn't in Oklahoma, so, . . ., I didn't have him there on
sight daily, but I'd call him and, you know, go through the
challenges in trying to find capital and talent, and he was there
to help us and. . . .”
Harrison remained officed in New York
while providing services for Redbird.
11.
(Tr. 79:11-20).
Thurman and Redbird were constantly looking for “capital and
talent” since the cannabis business they strove to begin required
considerable capital infusion and talent was difficult to attract
or “pretty thin” since the new industry was previously associated
with criminality.
(Tr. 79:25; 80:1-24).
6
Although Thurman ran
Redbird, he and Patel assumed they could recruit individuals from
larger companies to operate the business but this turned out to be
a “bad assumption” as there was “no talent pool” from which to
draw. (Tr. 80:25; 81:1-20).
12.
In the Spring of 2019, Thurman began looking for executive
staff to assume some of the day-to-day operations of Redbird and
expressed that need to Harrison to get his help.
(Tr. 90:1-18).
Conversations turned to Harrison possibly taking a “leadership
role” in Redbird.
13.
(Tr. 91:8-25; 92:1-21).
Less formal discussions became more formal when Thurman and
Harrison
began
discussing
operating officer (“COO”).
Harrison
assuming
a
role
as
chief
Thurman informed Harrison that the COO
job would be “awful” because “[i]t's a fist in the boot, and all
roads lead to you.”
(Tr. 94:7-17).
continued
interest
Redbird.
14.
to
express
in
Nevertheless, Harrison
full-time
employment
with
(Tr. 94:18-21).
Thurman testified that he believed at first that Harrison was
an attorney with BAC.
As such, he stated that it was “[Brewer’s]
table” and “that, you know, I'm not going to be perceived to be
recruiting out of Bill's firm; and that, whatever we do, you know,
Bill is going to have to bless this.”
(Tr. 95:2-7).
Thurman
stated Harrison responded, “Of course.”
(Tr. 96:6-8).
Thurman
7
believed that the “intrinsic rules” of business would require the
Brewer be informed of Harrison’s discussions to take over as COO
at Redbird.
15.
(Tr. 98:7-23).
Thurman and Patel discussed Harrison assuming the role of COO
and determined to make a formal offer to him.
Patel e-mailed
Harrison to state, among other things, “We are also considering
all board meetings to be held [in Dallas at Brewer’s offices] and
subsequently would love for you to take an active roll as a COO as
we expand market share not only across Oklahoma but other states
as well.
Let us know your availability tomorrow for a conference
call between Bill, myself and you.”
16.
(Pl. Exh No. 55).
Thurman stated that he believed Brewer had been informed of
the content of the e-mail including Harrison’s anticipated role
and the plan to use Brewer’s offices in Dallas from which to
operate Redbird. (Tr. 105:25; 106:1-17).
Thurman testified that
he learned, however, in late January of 2020 that Harrison had not
communicated this information to Brewer.
(Tr. 106:18-25; 107:1-
5).
17.
For
his
part,
Harrison
told
Redbird’s
representatives,
including Thurman, that he would not tell Brewer or BAC about the
employment with Redbird until he had final signed agreements for
him to assume the CEO position because of the tenuous nature of
8
Redbird’s business.
(Tr. 594:6-13; 595:23-25,596:1-17; 597:11-
13; 598:24-25, 599:1-17).
It was not clear to Harrison that
Redbird would be in a financial position to hire a full time CEO.
(Tr. 594:18-24).
Harrison wanted to have agreements finalized
and “everything buttoned up” before resigning his position with
BAC.
(Tr. 596:5-15).
He requested several provisions in the
Agreement to insure he was compensated in the event Redbird’s
business failed before he resigned his position with BAC.
604:14-607:12).
(Tr.
Thurman testified that Redbird was in a dire
financial position because traditional banking lending was not
available to businesses engaged in cannabis.
(Tr. 127:17-25,
128:1-11).
18.
Discussions
continued
with
Harrison
into
June
of
2019
concerning his assumption of a leadership role at Redbird, except
he proposed that he be named chief executive officer (“CEO”) rather
than
COO.
(Tr.
108:17-21).
Negotiations
continued
between
Harrison, Patel, and Joe Byars (“Byars”), general counsel for
Redbird
concerning
Harrison’s
employment
with
Redbird.
(Tr.
113:17-23).
19.
Harrison introduced his father, Tom Harrison, to Thurman.
Thurman knew Tom Harrison had connections in the cannabis industry,
including with Merida Capital, a provider of capital to cannabis
9
businesses.
(Tr. 116:7-22).
Thurman spoke with Tom Harrison on
the telephone and they briefly touched upon Harrison becoming CEO
of Redbird. (Tr. 116:23-25; 117:1-2).
They discussed Harrison
taking a leadership role with Redbird. (Tr. 117:3-22).
They also
discussed Merida Capital’s potential investment in Redbird.
117:23-25; 118:1-13).
(Tr.
Later, Thurman met with Harrison and Tom
Harrison for dinner and they discussed Harrison’s leadership role
with Redbird.
Thurman and Patel had traveled to New York to meet
with Brewer and investment banks.
Thurman testified Harrison told
him Brewer was unavailable and suggested this was an untruth,
unbeknownst to him at the time.
20.
(Tr. 133:2-135:16).
Among Merida’s portfolio companies was a digital marketing
and media firm known as MediaJel.
Harrison urged Redbird to cancel
its contract with its current company Studio Flight in favor of a
contract with MediaJel.
Redbird contracted with MediaJel and
cancelled its contract with Studio Flight.
192, 197).
(Pl. Exh. No. 158,
Redbird later cancelled the contract with MediaJel,
not due to the quality of their work but the poor value of their
work because they were such an expensive firm.
(Weinstein Depo.
117:18-23).
21.
In July of 2019, Harrison requested that Redbird use his
personal g-mail address as opposed to his BAC firm e-mail address
10
for any communication related to his potential employment as CEO.
(Def. Exh. No. 11).
He specifically e-mailed Thurman and Byars
from his personal e-mail account, stating “[p]lease just use this
e-mail
address
agreements.”
for
Id.
anything
involving
redbird
employment
Despite Thurman’s dismissal of his frequent
use of e-mails, he did in fact recognize Harrison’s personal gmail address and its use by the Board of Redbird.
116; see e.g. Def. Exh. Nos. 51.
(Pl. Exh. No.
Harrison testified that Thurman
switched the e-mail address which he used to communicate with him.
(Tr. 632:21-25).
Thurman acknowledged the possibility he did so.
(Tr. 286:22-287:4).
22.
On August 9, 2019, Harrison e-mailed Thurman regarding the
employment agreement that they were negotiating for Harrison to
become Redbird’s CEO.
He wrote, “[c]an you sign on behalf of RB
then send/scan to me for signature?
I might need to move my start
date back a few days so I can give Brewer the full 2 weeks notice
period.
Does that work for you?”
(Def. Exh. No. 12).
Thurman
responded stating, “No problem, I’ll get it done this evening.”
Id.
23.
On August 8, 2019, Harrison spoke with Thurman and Patel by
phone about finalizing the employment agreement.
(Tr. 599:5-17).
Harrison told Thurman and Patel, “I would like to get this done so
11
that
I
can
finally
tell
responded, “That’s good.
much
longer.”
(Tr.
Brewer.”
(Tr.
599:7-10).
Thurman
I don’t want to operate in the shadows
599:11-12).
Harrison
understood
this
statement to mean that they knew they were not bringing the
Harrison’s employment with Redbird to the attention of Brewer or
BAC until the documents were finalized.
(Tr. 599:13-17; 600:1-
14).
24.
On
August
employment
9,
2019,
agreement
agreements.
but
Harrison
did
and
not
Redbird
agree
(Pl. Exh. Nos. 106, 108).
on
finalized
the
unit
the
grant
On August 13, 2019,
Harrison sent a text message to Thurman stating, “I sent over
revisions to the share grant agreement, as we discussed.
get [Byars] to knock it out today?
Can we
Brewer is finally back in the
office and I’d like to button everything up before I formally
resign.
Start date is still 8/26, so that’s not moving.”
Exh. No. 15).
(Def.
Harrison also e-mailed Byars about the status of
his unit grant agreements, stating, “I’d like to finalized this
last piece so I can formally resign.”
25.
(Def. Exh. No. 25).
In August of 2019, Redbird’s board was considering deferring
Harrison’s start date and was reviewing the unit agreements.
During the call with Harrison, board member Michael Butler asked
Harrison if he had told Brewer that he was leaving to join Redbird,
12
and Harrison told them he had not told them.
Harrison testified
Butler stated, “Good, because if we end up postponing your start
date, you won’t be out of a job.”
26.
Harrison
also
testified
(Tr. 600:25-601:4).
that
when
Redbird’s
financial
statements were being circulated, the drafts included Harrison’s
position as CEO and his compensation.
When asked whether the
statements should be sent to Harrison’s BAC e-mail address, Thurman
responded, “Good God, no.
Send it to his g-mail.”
27.
That’s got his information in there.
(Tr. 601:17-19).
Harrison repeatedly reminded Byars to send communications
related to his employment agreement and unit grant agreements to
his g-mail address.
(Tr. Def. Exh. Nos. 27, 28, 173; Tr. 597:15-
598:23).
28.
In January of 2020, Harrison also expressed concern Thurman
would refer to him as a “will be CEO” in front of investment
bankers from Dallas meeting Harrison and Thurman at a facility in
Stillwell,
Oklahoma.
He
asked
Thurman
to
refrain
from
the
reference stating, “Please don’t make any comment about me becoming
the CEO.
I know these bankers are from Dallas.
Bill Brewer.
25).
I just don’t want any issue with that.”
Thurman responded, “I got it.
(Tr. 602:1-2).
13
They may know
(Tr. 602:22-
Nothing to worry about.”
29.
Stacy
In communications with Redbird’s new Chief Operating Officer,
Wright
(“Wright”),
Harrison
testified
that
he
informed
Wright that he was not telling anyone at the Brewer firm he was
leaving until the agreements were finalized.
(Tr. 603:9-23).
Wright acknowledged that he had done the same with his employer.
(Tr. 603:20-23).
In a text message, Wright stated, “How are things
going on your exit?
Stealth mode?” to which Harrison responded,
“I gave my resignation notice on Thursday.”
s***.
How did Bill take it?
Brewer.”
Wright responded, “Oh
Harrison stated, “A little
surprised, but overall seemed happy for the opportunity.”
30.
A formal employment agreement for Harrison to become CEO of
Redbird dated January 15, 2020 was signed by all parties, including
Harrison and Patel and Thurman for Redbird Bioscience Oklahoma,
LLC, Redbird Business Group, LLC, RB Realty Co, LLC and Redbird
Ventures, LLC.
(the “Agreement”) (Pl. Exh. No. 1).
The Agreement
provides that Redbird Bioscience Oklahoma, LLC “desires to employ
[Harrison] as Chief Executive Officer, and [Harrison] desires to
accept such employment” with a start date of February 3, 2020 and
a term of three years to February 3, 2023.
By its terms, the
Agreement is governed by the laws of the State of New York.
31.
The Agreement provides the following:
Superseding
Agreement.
This
Agreement
constitutes the entire agreement between the
14
parties and contains all the agreements
between them with respect to the subject
matter hereof. It also supersedes any and all
other agreements or contracts, either oral or
written, between the parties with respect to
the subject matter hereof.
(Pl. Exh. No. 1, ¶15).
32.
The
Agreement
also
contains
a
warranty
clause,
which
provides:
12. Representation and Warranty. Executive
represents and warrants that he is not a party
to any non-compete, restrictive covenant or
related contractual limitation that would
interfere with or hinder his ability to
undertake the obligations and expectations of
employment with the Company.
(Pl. Exh. No. 1, ¶12).
33.
The Agreement sets out that RB RealtyCo would act as a
guarantor
for
the
payments
required
under
the
Agreement.
Specifically, the Agreement provides:
(b) Absolute and Unconditional Guarantee of
Payments to Executive.
RB RealtyCo LLC
(“Guarantor”)
hereby
absolutely
and
unconditionally guarantees all payments to
Executive required by this Agreement, and
Guarantor will be directly liable to Executive
for all such payments. Guarantor agrees that
(a)
this
guarantee
is
absolute
and
unconditional under New York law, (b) this
guarantee is enforceable despite any other
circumstance which might otherwise constitute
a defense, and (c) Guarantor is not relying on
any representations in making this guarantee.
(Pl. Exh. No. 1, ¶6(b)).
15
34.
Harrison also entered into a Restricted Unit Grant Agreements
(“RUGA”) with Redbird Bioscience Oklahoma, LLC (Pl. Exh. No. 2);
Redbird Business Group, LLC (Pl. Exh. No. 3); and RB RealtyCo, LLC
(Pl. Exh. No. 4).
The RUGAs provided for the granting of varying
numbers of Profit Units to Harrison in each entity, estimating the
fair market value of each grant.
35.
Each
RUGA
contains
an
Id.
“Entire
Agreement”
clause
provides:
This Agreement, including any Exhibits and
Schedules attached hereto, together with any
agreements
referred
to
herein
and
any
consulting,
employment,
confidentiality
and/or
restrictive
covenant
agreement(s)
entered into between the Grantee and the
Company or any Affiliate of the Company,
contain the entire agreement among the parties
hereto with respect to the Company and
supersede all prior agreements, covenants,
arrangements,
letters,
communications,
representations or warranties, whether oral or
written, by any party hereto with respect to
the Company or its business. No party shall be
bound by any condition, definition, warranty
or representation, unless and only to the
extent (i) expressly set forth or provided for
in this Agreement or in any other agreement
entered into by a party on or subsequent to
the date hereof, set forth in writing and
signed by the party to be bound thereby, or
(ii) this Agreement (including the Exhibits
and
Schedules
hereto),
or
such
other
agreements, are amended pursuant to their
terms.
This Agreement expressly supersedes
and bars extra contractual statements and
promises of any kind.
16
which
(Pl. Exh. No. 2, 3 and 4 § 7.7).
36.
The Agreement and the RUGAs were finalized fully executed on
January 22, 2020 with Redbird’s board approving the same.
561:18-562:10).
agreements.
(Tr.
Thurman testified that he never read any of the
(Tr. 129:21-23).
When asked why he did not instruct
Byars to include a provision in the agreements for Brewer to be
informed of Harrison’s employment, Thurman stated,
I don't -- I didn't even interact. Why would
I care? I assumed it was already a known fact.
Why -- that would have been presumed that I
questioned or doubted Mr. Brewer's appointment
of Mr. Harrison and the whole construct that
we existed in. I did not doubt it or be -or it -- was not concerned with it at all. I
had -- honestly, when I look back at some of
this stuff, and I see where the -- our board
members and Michael Butler -- this was
distributed to relatively small figures within
our company. Michael Butler played a small
advisory role to the board. I don't -- I don't
look at who all's on these email threads. I'm
busy. I assumed Brewer was on there or in -somewhere through Matt Harrison -- that Bill
Brewer would certainly have line of sight when
all of -- when Joe is calling Nimesh and Dr.
Hird and all the board members together to
review this, that -- that certainly would rise
to the occasion that Bill Brewer would have
specific exposure to that.
(Tr. 121:18-122:10).
37.
At all times relevant to the facts of this action, Thurman
and Byars were able to contact Brewer about their intent to engage
17
Harrison as the CEO of Redbird.
427:14-428:18).
(Tr. 60:10-14; 61:19-63:18;
Thurman stated that, in hindsight, he “should
have” called Brewer about the employment of Harrison by Redbird,
but “it really wasn’t front and center for me.”
(Tr. 281:14-23).
Byars could have contacted Brewer to determine if he was aware of
Harrison’s employment with Redbird.
(Tr. 555:19-556:10).
He
speaks directly with Brewer every two months about Redbird without
using any “conduit.”
38.
(Tr. 550:1-16; 555:19-556:10).
On January 23, 2020, Harrison met with Brewer in person at
BAC’s office in New York to resign from his position from the firm.
(Tr. 607:13-16).
In the meeting, Harrison told Brewer about the
CEO position at Redbird.
(Tr.
607:17-19).
In response, Brewer
said that is sounded like a good opportunity, giving credit to
Thurman for spotting the opportunity, telling Harrison, “We’ve had
a really good run.”
39.
(Tr. 608:6-12).
Harrison texted Thurman to tell him he spoke with Brewer.
(Tr. 608:13-25).
Harrison wrote, “I just spoke with brewer.
happy for me and the opportunity.
He’s
He gave you credit for spotting
the opportunity and sticking with it because it sounds like it’s
at a really great place and ready to take off.”
No. 18).
Id.; Def. Exh.
Thurman and Harrison spoke soon thereafter, with Thurman
expressing
that
he
was
relieved
18
that
Brewer
was
happy
with
Harrison’s opportunity with Redbird.
40.
(Tr. 151:18-19).
On January 24, 2020, Brewer tried to call Thurman but spoke
with Byars.
Byars texted Thurman and stated that he received a
call from Brewer who “wants to know what’s going on.”
No. 193).
(Pl. Exh.
He texted that “it appears Matt had not spoken with
him, and he indicated that he would have wanted a call from you
about a job offer to Matt.”
Id.
Thurman responded with an
indecipherable expletive laden expression of displeasure.
41.
Id.
On January 27, 2020, Harrison spoke with Byars and Thurman.
Byars told Harrision “that he had received a call from Bill Brewer
on Friday, that Bill Brewer was upset that I was joining Redbird,
and that he was trying to get in touch with Bill Thurman so that
he could stop it from happening.”
(Tr. 617:4-9).
Thurman told
Harrison “that he had just spoken with Bill Brewer, that Bill
Brewer wanted to hit the pause button on me joining Redbird.”
(Tr. 617:10-14).
42.
On January 28, 2020, Brewer told Thurman that he wanted to
meet with him in New York.
Thurman called Patel, told him to
cancel his clinic, and that they had an emergency to meet with
Brewer in New York.
43.
(Tr. 400:6-24).
On January 29, 2020, Thurman and Patel met with Brewer in
Brewer’s offices.
Harrison was surprised to see them and greeted
19
them in a conference room.
room.
44.
Brewer ordered Harrison out of the
(Tr. 618:8-13).
Thurman and Patel met with Brewer.
Brewer told them he was
shocked that they offered Harrison a job and he was not informed
of it.
(Tr. 403:18-21).
He also stated that Harrison’s contracts
were not theirs to deal with.
(Tr. 243:7-12).
Brewer told them
he would deal with Harrison and determine what was to be done next.
(Tr. 243:13-15).
45.
After the meeting with Brewer, Thurman and Patel met Harrison
on the sidewalk down the street from Brewer’s office. (PreTrial
Order Fact No. 45).
Exh. No. 20).
Harrison recorded the conversation.
(Def.
Thurman told Harrison about the meeting with Brewer
and that he was upset that they did not tell him about the CEO
position earlier.
Id.
Thurman said he tried to give Brewer
“context” for why they did not tell Brewer about the CEO position
earlier.
He explained to Brewer that “this thing was hour-by-
hour” and it was only in the last six weeks that they started to
see the “light at the end of the tunnel.”
46.
Id.
Thurman told Brewer that “Matt has been very effective and
been wonderful to work with,” ”the higher level side of this with
the public relations to grow the branding . . . intellectual side
of it
. . . has been cultivated very, very thoughtfully and
20
nicely, “ and “we are in a positions to take full advantage of
it.”
Id.
Thurman also stated, “we’re happy working with you,
that you’ve done great work, that this public relations, all of
the panache and national branding design that we need to lift up
out of the clouds, that you are exceptional at it.
nothing but good time working together.”
Id.
And we’ve had
Patel stated that
they told Brewer, “Matt’s been great working with and we realize
what he’s done for us.”
47.
Id.
Thurman encouraged Harrison to “mend fences” with Brewer.
Thurman hoped they could move forward with Harrison as CEO or some
other working arrangement with “possibly to things working out for
everybody.”
(Tr. 241:5-8).
Thurman stated that he would keep the
conversation between the three of them.
48.
On
January
entitled,
30,
2020,
Byers
“Rescission/Withdrawal
Restricted Unit Agreements.”
(Def. Exh. No. 20).
e-mailed
of
Harrison
Employment
a
letter
Agreement
and
(PreTrial Order Fact No. 46).
The
letter stated, “Given the circumstances which have come to light
over the past few days, the management team has determined that it
is not in the best interests of Redbird to proceed with plans for
your prospective employment.”
(PreTrial Order Fact No. 47).
Redbird did not seek board approval from its board before sending
this letter to Harrison.
(Bintliff Depo. 58:5-9).
21
Harrison
responded to the letter the next day through counsel, rejected the
attempted recission, and asked Redbird to provide the basis for
the recission.
(Def. Exh. No. 31).
On February 5, 2020, Redbird
responded that the agreements were obtained through “fraudulent
and dishonest conduct” without identifying the basis for the fraud
allegation.
49.
On
(Def. Exh. No. 32).
February
12,
2020,
Redbird
filed
this
action
for
declaratory judgment in the District Court in and for Adair County,
Oklahoma.
The action was removed to this Court on April 2, 2020.
Redbird asserts claims for (1) a declaratory judgment that the
Agreement and RUGAs were procured by Harrison’s fraud and are,
therefore, null and void; (2) a declaratory judgment the Agreement
and RUGAs were properly rescinded because Harrison breached the
warranty contained in the agreements that he was not under a
contractual limitation which would prevent his employment with
Redbird; and (3) unspecified damages.
(Third Amended Complaint
filed September 11, 2020 (Docket Entry #27)).
50.
Harrison answered and asserted counterclaims for (1)
breach of contract; (2) breach of good faith and fair dealing; (3)
promissory
estoppel;
and
(4)
breach
of
guaranty.
(Amended
Counterclaim filed September 25, 2020 (Docket Entry #29)).
CONCLUSIONS OF LAW
22
A.
Redbird Bioscience Oklahoma, LLC is an Oklahoma Limited
Liability Company organized under the laws of the State of Oklahoma
with its principal place of business is in Adair County, Oklahoma.
It employs the managers of Redbird’s business.
RB RealtyCo, LLC
is an Oklahoma Limited Liability Company organized under the laws
of the State of Oklahoma, and its principal place of business is
in Adair County, Oklahoma.
Delaware
Limited
Liability
Redbird Business Group LLC is a
Company
that
business within the State of Oklahoma.
is
authorized
to
do
At the time this action
was filed, Matthew Harrison was a resident of the State of New
York.
Complete
parties.
diversity
of
citizenship
exists
between
the
The amount in controversy is in excess of $75,000.00
exclusive of interest and costs.
B.
The parties indicated in the Joint Status Report filed
August 28, 2020 (Docket Entry #22) that they did not seek a jury
trial of the disputed issues in this case.
Plaintiff reserved the
right to request a jury trial in the same Report but never
exercised that reservation.
C.
The parties filed signed consent forms indicating that
they consented to the jurisdiction of the undersigned United States
Magistrate Judge to preside over this case to final judgment,
including the non-jury bench trial of the case.
23
28 U.S.C. §
636(c)(1).
United States District Judge Ronald A. White to whom
this case was assigned when the consents were submitted to the
Clerk of the Court executed and entered an Order of Consent to
Proceed Before a Magistrate Judge on June 14, 2022 (Docket Entry
#137), reassigning the
possesses
subject
the
matter
jurisdiction.
appropriate
of
this
jurisdiction
action,
which
18 U.S.C. § 1332(a)(1).
in this District.
D.
case to the undersigned.
over
is
the
based
This Court
parties
in
and
diversity
Further, venue is proper
28 U.S.C. § 1391(b).
Any finding of fact which is more appropriately described
as a conclusion of law shall stand as such.
Similarly, any
conclusion of law which might be considered as a finding of fact
will be so deemed.
E.
Under New York law which governs the agreements at issue
in this case, Redbird which asserts a fraud in the inducement
claim2 must prove that (1) Harrison made a misrepresentation or a
material omission of fact; (2) which was false and known to be
false by Harrison; (3) which was made for the purpose of inducing
Redbird to rely upon it; (4) justifiable reliance of Redbird on
the misrepresentation or material omission; and (5) injury.
Hogan
2 While the relief sought by Redbird is one for a declaratory judgment, it must
prove the elements of the underlying claims which allegedly justifies the
declaration.
24
Willig, PLLC v. Kahn, 44 N.Y.S.3d 321, 323–24 (App. Div. 2016)
quoting Pasternack v. Laboratory Corp. of Am. Holdings, 27 N.Y.3d
817, 827 (Ct. App. 2016), rearg. denied 28 N.Y.3d 956.
“In
addition to the elements for fraudulent inducement, a cause of
action for fraudulent concealment also requires a duty on the part
of the defendant to disclose material information and the failure
to do so.”
Id. citing Mandarin Trading Ltd. v. Wildenstein, 16
N.Y.3d 173, 178 (Ct. App. 2011).
Redbird bears the burden of proving each of the elements of
its fraud in the inducement claim by clear and convincing evidence.
Hidden Pond Schodack, LLC v. Hidden Pond Homes, Inc., 138 N.Y.S.3d
215, 219 (App. Div. 2020).
“The clear and convincing evidence
standard requires the party bearing the burden of proof to ‘adduce
evidence that makes it highly probable that what he or she claims
is what actually happened.’” Currie v. McTague, 921 N.Y.S.2d 364,
366 (App. Div. 2011) quoting Krol v. Eckman, 681 N.Y.S.2d 885 (App.
Div. 1998).
F.
Upon a thorough review of the evidence and the reasonable
inferences drawn therefrom, this Court concludes that Redbird did
not meet this high burden of proving its fraud claim.
It is not
clear that Harrison misrepresented to Redbird, generally, and
Thurman, Patel, and Byars, specifically, that he would advise
25
Brewer of his negotiations, potential employment with Redbird, or
realized employment with Redbird.
The mix of communications
indicating that Thurman, in particular, as well as Byars during
the employment contract negotiations with Harrison as reflected in
the Findings of Fact above knew or certainly had strong indications
that
Harrison
was
not
informing
opportunity with Redbird.
Brewer
of
his
employment
Thurman, Patel, and Byars testimony
that keeping Brewer advised was a precursor or a condition of
Harrison’s employment represents an attempt to remedy an afterthe-fact realization brought about by Brewer’s unexpected and
surprising adverse reaction to Harrison’s employment by Redbird
after Harrison’s resignation.
Several facts stand out to this
Court as persuasive on this issue – (1) if prior notification of
Redbird’s
offer
to
Harrison
was
such
an
essential
term,
it
confounds reason that the term would not have been expressly stated
in either the Agreement or a prior writing, signed by all parties.
Redbird’s insistence otherwise is expressly rejected.; (2) if
prior
notification
was
a
condition
precedent
to
Harrison’s
employment, the close relationship and communications
between
Thurman or Byars with Brewer would have surely caused the matter
to be raised during the months of negotiations for Harrison’s
employment;
(3)
none
of
the
numerous
26
communications
between
Harrison and one of the principals for Redbird expressly told
Harrison that Brewer must be informed before any contract can be
negotiated and signed; and (5) Harrison’s position that he could
not leave his job at BAC without having the documents finalized
for his employment with Redbird and, therefore, he could not inform
Brewer of his intent to resign is credible on its face.
No intent
to defraud Redbird can be ascertained with clear and convincing
evidence from this position.
While Redbird insists that the
requirement for Brewer’s “blessing” did not need to be expressly
put in a document or discussed further by the parties because it
was a known fact, it is apparent from the dispute represented here
and the evidence presented at trial that this was not the case.
“Vague and indefinite” statements cannot form the basis of a fraud
claim.
Van Kleeck v. Hammond, 811 N.Y.S.2d 452, 454-55 (App. Div.
2006).
G.
A duty to speak can arise when a fiduciary relationship
exists between the parties or when one party has superior knowledge
over the other.
disclose
that
Redbird contends that Harrison owed it a duty to
he
had
negotiations with it.
not
informed
Brewer
of
the
employment
“A fiduciary relationship only arises when
one has reposed trust and confidence in the integrity and fidelity
of another who thereby gains influence or assumes control and
27
responsibility.”
Laikin v. Vaid, 2001 WL 1682873, at *2 (N.Y.
Sup. Ct. Oct. 10, 2001) citing Board of Managers of Fairways at
North Hills Condominium v. Fairway at North Hills, 603 N.Y.S.2d
867 (Sup. Ct. 1993).
Harrison was an employee of BAC providing
consulting services for Redbird.
Redbird
appeared
to
consider
While Thurman and others at
Harrison
quite
capable
and
intelligent, nothing but a typical services type agreement between
BAC and Redbird existed.
with Redbird.
Harrison was merely a contractor working
The employment relationship between Harrison and
Redbird was the very subject matter of this dispute and the
approval of someone outside of that relationship was allegedly
required by Redbird before Harrison could act on the employment
opportunity.
Such a relationship cannot be characterized as
fiduciary.
H.
A duty can also arise when one party has superior
knowledge than the other, not readily available to the other, which
creates disparate bargaining power because one is acting on the
basis of mistaken knowledge.
Aaron Ferer & Sons Ltd. v. Chase
Manhattan Bank, Nat. Ass’n, 731 F.2d 112, 123 (2d Cir. 1984).
Such is not the case here.
Redbird and its principals could have
readily informed Brewer of the negotiations with Harrison at any
time.
They were on an equal knowledge footing with Harrison.
28
No
duty arose from any superior knowledge.
For similar reasons, the remaining elements for fraud have
not been proved.
Harrison did not make any false statement for
the purpose of inducing Redbird to rely upon it.
Any ostensible
reliance upon Harrison having informed Brewer was not justifiable
because
it
was
readily
verifiable
with
Brewer.
Moreover,
Redbird’s position that an agency relationship existed between
Harrison and BAC upon which it could rely to believe Brewer had
been informed is nonsensical having previously argued that a
fiduciary relationship existed between Harrison and Redbird.
AS
an alternative theory, the agency allegation also fails as Redbird
had a duty to determine if Harrison was actually acting on behalf
of BAC in the transaction with him.
Hefferman v. Marine Midland
Bank, 701 N.Y.S.2d 4, 5-6 (App. Div. 1999).
Redbird failed to do
so.
Having
failed
to
prove
the
required
elements
under
the
heightened standard of clear and convincing evidence, Redbird’s
fraud claim, and its associated request for declaratory judgment,
fails.3
I.
Redbird also asserts a claim for breach of warranty which
3 To the extent Redbird also alleges Harrison committed fraud in the transaction
involving Merida Capital and MediaJel, the contention is specifically rejected
as having no support in the facts, relying upon supposition and speculation as
to the parties’ motivations.
29
relates to Paragraph 12 of the Agreement.
This claim has no merit.
Harrison was an employee at will with BAC with no contract and was
not subject to any of the referenced non-compete type restrictions.
Any
attempt
exploration
to
of
impose
a
duty
Redbird’s
of
disclosure
employment
of
through
Harrison’s
the
“related
contractual limitation” language in paragraph 12 is unavailing.
Indeed,
this
is
part
of
the
problem
with
the
foundation
of
Redbird’s claim – the contract between Harrison and Redbird did
not contain any requirement of disclosure to Brewer.
As a result,
this Court finds that the restrictions contained in paragraph 12
have no application to the allegations in this case.
J.
Redbird also clings to New York common law for a duty of
loyalty that Harrison owed BAC or Brewer.
exist,
it
is
questionable
standing to assert it.
whether
Redbird
If such a duty did
has
the
requisite
But, even if it was able to enforce this
duty, New York law would not have precluded Harrison from exploring
employment with Redbird.
See Abraham Zion Corp. v. Lebow, 593
F.Supp. 551, 571 (S.D.N.Y. 1984).
Redbird’s breach of warranty
and associate request for declaratory judgment fails.
K.
This Court now turns to Harrison’s counterclaims.
In
order to prevail on his claim for breach of contract, Harrison
must demonstrate by a preponderance of the evidence that (1) a
30
contract exists; (2) Harrison performed in accordance with the
contract; (3) Redbird breached its contractual obligations.
34-
06 73, LLC v. Seneca Ins. Co., 39 N.Y.3d 44, 52 (Ct. App. 2022).
In this case, the Agreement, including RB RealtyCo’s guaranty, and
RUGAs were signed by all parties.
Harrison resigned his position
with BAC and was ready, willing, and able to begin work as
Redbird’s CEO.
Redbird, in turn, breached the Agreement and RUGAs
by rescinding the agreements and declining to allow Harrison to
take office on January 30, 2020.
Harrison rejected the attempt
to rescind and stated that he intended to take over as CEO by
letter dated January 31, 2020.
On February 5, 2020, Redbird
confirmed that it would rescind the agreements and Harrison did
not have employment.
Clearly, Redbird breached the Agreement and
the RUGAs.
pay
L.
RB RealtyCo failed to “absolutely and unconditionally”
the
amounts
Agreement.
due
Harrison
Consequently,
RB
upon
Redbird’s
RealtyCo
breached
breach
the
of
the
guarantee
portion of the Agreement.
M.
Harrison’s damages for breach of an employment contract
under New York law “are measured, prima facie, by the wages that
would have been paid during the remainder of the contract term.”
Rebh v. Lake George Ventures Inc., 660 N.Y.S.2d 901, 902 (App.
31
Div. 1997).
Harrison contends that he is due the salary and
severance he would have received if Redbird had terminated the
agreement without cause on sixty days’ notice on Harrison’s start
date.
(Pl. Exh. No. 1, § 8(a)(i)).
This position is reasonable
and supported by the Agreement between the parties.
Harrison
would be due $375,000.00 (severance of one year’s salary) and
$62,500.00 (two months’ salary for compensation during the sixtyday notice period for termination).
N.
RB RealtyCo is also liable for this amount representing
the payments due under the Agreement pursuant to the guarantee it
provided to Harrison.
This is not to say that Harrison may recover
the amount awarded in the Judgment from Redbird and the same amount
again
through
the
guarantee
from
RB
RealtyCo.
Harrison
is
entitled to a single recovery.
O.
problem.
The damages for the breach of the RUGAs pose a different
The parties have vastly different views on the value
of these agreements.
Harrison seeks specific performance to take
possession of the vested units granted to him under the RUGAs.
Harrison proposes that he be awarded the units he would have
received within the first two months of his employment presuming
the sixty-day notice period for termination was exercised.
This
would result in an award of 50% immediately on the Grant Date of
32
February 2, 2020 and 2.77% for each of the two months he would
have been employed before the sixty-day notice of termination was
exercised for a total of 55.56% of each grant.
Specific performance of uncertainly valued stock options has
been utilized for awarding employee benefits.
v.
Doubleclick,
Inc.,
714
N.Y.S.2d
34,35
See e.g. TaChotani
(App.
Div.
2000).
Obviously, the RUGAs were essential to Harrison’s decision to
resign from BAC since the employment arrangement with Redbird could
not become effective until both the Agreement and the RUGAs were
executed.
As
a
result,
Harrison’s
performance of the RUGAs is well-taken.
request
for
specific
Harrison’s proposal for
the award of the RUGAs will be granted and the units will be
granted in the percentages outlined.4
P.
relief
Harrison includes a request for attorney’s fees in his
sought.
Any
claim
by
Harrison
to
an
entitlement
to
reimbursement for attorney’s fees shall be addressed by separate
motion.
IT IS THEREFORE ORDERED, ADJUDGED, and DECREED that judgment
4 Harrison states in his Proposed Findings of Fact and Conclusions of Law that
the additional claims for breach of the covenant of good faith and fair dealing
and promissory estoppel need not be addressed, if he prevails on the breach of
contract claim.
Since the damages for such additional claims would be
duplicative of the damages awarded under the breach of contract claim, this
Court finds it redundant to address those additional avenues for relief and
will not do so further.
33
is entered in favor of the Defendant, Matthew Harrison, and against
the Plaintiffs, Redbird Business Group, LLC, Redbird Bioscience
Oklahoma, LLC, and RB Realtyco, LLC on the claims asserted by
Plaintiffs in this action.
IT IS FURTHER ORDERED, ADJUDGED, and DECREED that judgment is
entered in favor of the Counterclaimant, Matthew Harrison, and
against the Counterclaim Defendants, Redbird Business Group, LLC,
Redbird
Bioscience
Oklahoma,
LLC,
and
RB
RealtyCo,
Counterclaimant’s claim for breach of contract.
LLC
on
Judgment is
entered in favor of Counterclaimant, Matthew Harrison, and against
Counterclaim Defendant RB RealtyCo, LLC for breach of the guarantee
agreement.
Damages are awarded in the Counterclaimant’s favor in
the amount of $437,500.00 and Counterclaimant is awarded specific
performance in the assignment of the unit grants in the percentages
set out herein.
A separate judgment shall issue forthwith.
IT IS SO ORDERED this 27th day of March, 2024.
JASON A. ROBERTSON
UNITED STATES MAGISTRATE JUDGE
34
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