5J OILFIELD SERVICES, LLC v. PECHA ET AL

Filing 30

MEMORANDUM OPINION AND ORDER denying without prejudice 3 Motion for Preliminary Injunction; denying without prejudice 22 Motion for Expedited Discovery; and requiring Plaintiff to supplement the record regarding the citizenship of the members of the LLC's on or before April 1, 2013, as explained therein.. Signed by Judge Terrence F. McVerry on 3/22/13. (mh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
5J OILFIELD SERVICES, LLC,
Plaintiff,
v
CHAD PECHA, MEREDITH BOYD, CPMB
CONSULTING, LLC, AUTUMN R. ANDREIS,
GARY A. ANDREIS, JR., AND ULTIMATE
LANDSCAPING & CONTRACTING, LLC
d/b/a/ ULC OIL & GAS FIELD SERVICES,
LLC.
Defendants.

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MEMORANDUM OPINION AND ORDER OF COURT
Pending before the Court is PLAINTIFF 5J OILFIELD SERVICES, LLC’S (“5J”)
MOTION TO PERMIT EXPEDITED DISCOVERY (Document No. 22), with brief in support.
No attorney has entered an appearance on behalf of Defendants Pecha, Boyd or CPMB
Consulting, LLC (“CPMB”) and those Defendants have not responded to the motion.1 Counsel
for Defendants Autumn and Gary Andreis and Ultimate Landscaping and Contracting, LLC
(“Ultimate Landscaping”) (collectively, the “Ultimate Landscaping Defendants”) filed a joint
response and brief in opposition to the motion. Plaintiff (“5J”) filed a reply brief and the motion
is ripe for disposition. Also pending before the Court is PLAINTIFF, 5J OILFIELD SERVICES,
LLC’S MOTION FOR A TEMPORARY RESTRAINING ORDER AND/OR PRELIMINARY
INJUNCTION (Document No. 3). 2

Pecha, Boyd and CPMB have been served.
Although Judge Conti denied Plaintiff’s motion for an ex parte temporary restraining order
(“TRO”), she did not resolve Plaintiff’s alternative request for a preliminary injunction (“PI”).
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Factual and Procedural Background
As an initial matter, several of the parties on both sides of this case are Limited Liability
Companies (“LLC’s”). The Complaint does not set forth the citizenship of the LLC’s, which is
determined by that of each of its members. If any one of the LLC members is another LLC, the
chain is “traced through however many layers of partners or members there may be.” Zambelli
Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 420 (3d Cir. 2010). The Complaint primarily asserts
state law claims for breach of fiduciary duty, fraud, civil conspiracy, breach of duty of good faith
and fair dealing, tortious interference with contract, business disparagement and usurpation of
business opportunity. Federal question jurisdiction pursuant to 28 U.S.C. § 1331 is premised
only on the RICO claims in Counts X-XIII. Plaintiff must supplement the record to reflect the
citizenship of each LLC, so that the Court will know whether it has diversity jurisdiction over the
state law claims and may evaluate whether or not to exercise supplemental jurisdiction over
those claims.
Plaintiff 5J is in the business of contracting with oil companies to provide services such
as transportation of equipment. Defendants Pecha and Boyd, until very recently, were employed
by 5J as Terminal Manager and Vice President of Operations, respectively. On February 27,
2013, the date of the TRO proceeding before Judge Conti, Pecha and Boyd were fired. See
RICO Case Statement at 15. CPMB is allegedly a company formed by Pecha and Boyd.
Ultimate Landscaping is a subcontractor of 5J. Autumn and Gary Andreis are executives of
Ultimate Landscaping.
Plaintiff alleges that Defendants engaged in a conspiracy to defraud it by inflating bills
for services allegedly provided.

The details of the alleged scheme are not fully described.

Pecha and Boyd, in their respective positions at 5J, had authority to approve invoices from

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subcontractors such as Ultimate Landscaping. In essence, 5J alleges that over an 18-month
period Ultimate Landscaping paid Pecha and Boyd to approve inflated invoices and/or send presigned/pre-approved invoices which Ultimate Landscaping could use to insert unjustified
charges. There are only two specific allegations regarding this scheme: (1) a check for $3,000
from Ultimate Landscaping to CPMB on April 30, 2011; and (2) an alleged telephone call in the
Fall of 2011 in which Pecha and Boyd offered a payment of $2,000 to an unnamed 5J employee.
Complaint ¶¶ 23, 25. 5J fears that its business will be harmed because inflated charges will be
passed on to its customers and that Defendants will destroy documents to cover up the alleged
fraud. However, these allegations are purely speculative and are unsupported by any facts
regarding conduct since 2011.
On February 27, 2013 Judge Conti held an ex parte evidentiary hearing and argument and
denied 5J’s motion for a TRO. Judge Conti explained that Plaintiff had failed to demonstrate
any irreparable harm to justify TRO relief and that 5J was essentially seeking to recover money
damages while acknowledging that Pecha and Boyd were being fired. Nevertheless, Judge Conti
entered a “preservation order” to prevent Defendants from destroying any documentation related
to this case. This motion for expedited discovery followed.

Legal Analysis
Plaintiff 5J requests permission to engage in expedited discovery in an effort to develop
the facts necessary to support its motion for preliminary injunctive relief. Although 5J
characterizes its motion as merely preserving the status quo, the relief it seeks is not so limited.
Specifically, Plaintiff suggests an aggressive schedule for exchange of initial disclosures,
interrogatories and document requests, depositions, e-discovery, and unspecified third-party

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discovery. In addition, Plaintiff seeks authorization for its forensic accountant “to have access to
all of the Defendants’ records relevant to their dealings with the Plaintiff.”
The Ultimate Landscaping Defendants oppose expedited discovery and contend that
Plaintiff has not alleged a cognizable claim. Defense counsel characterizes this as a “slap suit”
and objects that Plaintiff has refused to provide the exhibit(s) which demonstrate the alleged
fraud. Defendants also note that they are owed $1,500,000 by 5J for completed work and intend
to pursue a counterclaim. Defendants contend that this litigation should proceed according to the
standard rules of civil procedure and represent that they will preserve all records in the interim.
The Court recognizes that it has discretion to order expedited discovery. See, e.g.,
Barbieri v. Wells Fargo & Co., 2012 WL 3089373 (E.D. Pa. 2012); Fed. R. Civ. P. 26(d), (f).
However, it concludes that expedited discovery does not appear to be warranted under the facts
and circumstances of this case.
As an initial matter, the Court has significant concerns regarding its subject-matter
jurisdiction. The alleged fraudulent scheme has not been pled with any degree of particularity.
See Fed. R. Civ. P. 9(b). Thus, the Complaint does not appear to meet the pleading standards for
civil RICO claims. See, e.g., In re Insurance Brokerage Antitrust Litigation, 618 F.3d 300 (3d
Cir. 2010); Grant v. Turner, 2012 WL 5928145 at *3 (3d Cir. Nov. 27, 2012) (Slip Copy). As
noted above, the RICO claims are the only basis for federal question jurisdiction and the
citizenship of the members of the LLC’s is unknown, such that diversity jurisdiction may not
exist. In sum, the Court is reluctant to authorize expedited discovery until the issues of subjectmatter jurisdiction and whether Plaintiff has stated a valid federal claim have been resolved.
Moreover, the Court concludes that 5J has failed to demonstrate any irreparable harm or
exigent circumstances. A “preservation order” is now in place. Pecha and Boyd, the former 5J

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employees who were allegedly integral to the scheme, have been fired. Plaintiff has not
explained why injunctive relief is necessary to prevent future harm to its business. There has
been no showing of imminent harm. The only actions specifically pled in the Complaint (or
referenced in the TRO/PI motion, RICO case statement, or TRO hearing) occurred in 2011.
Thus, Plaintiff has not met the standard for obtaining injunctive relief, upon which the request
for expedited discovery is predicated. See, e.g., Barbieri, 2012 WL 3089373 at *4 (bald legal
accusations of fraud do not suffice to obtain expedited discovery).

Conclusion
In accordance with the foregoing, PLAINTIFF 5J OILFIELD SERVICES, LLC’S
MOTION TO PERMIT EXPEDITED DISCOVERY (Document No. 22) and PLAINTIFF, 5J
OILFIELD SERVICES, LLC’S MOTION FOR A TEMPORARY RESTRAINING ORDER
AND/OR PRELIMINARY INJUNCTION (Document No. 3) will be DENIED WITHOUT
PREJUDICE.
An appropriate Order follows.

McVerry, J.

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
5J OILFIELD SERVICES, LLC,
Plaintiff,
v
CHAD PECHA, MEREDITH BOYD, CPMB
CONSULTING, LLC, AUTUMN R. ANDREIS,
GARY A. ANDREIS, JR., AND ULTIMATE
LANDSCAPING & CONTRACTING, LLC
d/b/a/ ULC OIL & GAS FIELD SERVICES,
LLC.
Defendants.

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ORDER OF COURT
AND NOW, this 22ND day of March 2013, in accordance with the foregoing
Memorandum Opinion, it is hereby ORDERED, ADJUDGED and DECREED that PLAINTIFF
5J OILFIELD SERVICES, LLC’S MOTION TO PERMIT EXPEDITED DISCOVERY
(Document No. 22) is DENIED WITHOUT PREJUDICE; and PLAINTIFF, 5J OILFIELD
SERVICES, LLC’S MOTION FOR A TEMPORARY RESTRAINING ORDER AND/OR
PRELIMINARY INJUNCTION (Document No. 3) is DENIED WITHOUT PREJUDICE.
On or before April 1, 2013, Plaintiff shall supplement the record to reflect the citizenship
of each LLC party.

BY THE COURT:
s/Terrence F. McVerry
United States District Judge

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cc:

Frank C. Botta
Email: [e-mail]
Carolyn Batz McGee
Email: [e-mail]
William H. Difenderfer
Email: [e-mail]
Brendan A. O'Donnell
Email: [e-mail]
Brian A. Lawton
Email: [e-mail]
John M. Smith
Email: [e-mail]
James R. Jeffries
Email: [e-mail]

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