Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Sticker Synergy Corporation v. Gwyn

United States District Court, E.D. Louisiana

July 6, 2015

BRUCE GWYN, et al., Section:



This litigation arises from a dispute regarding Plaintiffs Sticker Synergy Corporation's and Baker Energy LLC's (collectively, "Plaintiffs") investment in two oil wells in northern Louisiana. Plaintiffs assert that Defendants made false statements in the course of obtaining their investment in these wells, and have failed to properly make payments on their interest in the wells after securing their investment. Presently before the Court is Plaintiffs' "Motion for Remand and for Attorney's Fees."[1] Having considered the motion, the opposition, the record, and the applicable law, the Court will grant the motion in part and deny the motion in part.

I. Background

A. Factual Background

In their state court petition, Plaintiffs contend that in July 2012, Defendant Richard Weyand corresponded with them in order to obtain their investment in (1) two oil wells located in northern Louisiana and (2) stock in Defendant Treaty Energy, Corporation.[2] Plaintiffs aver that Weyand, who is "believed" to have been paid for his work on the investments in question, shared various documents with them, represented himself as Defendants' investment banker, and coordinated a meeting between Plaintiffs and Defendants.[3] Plaintiffs further maintain that Defendants Vincent Reid and Ronald Lee Blackburn participated in meetings with them regarding these investments.[4] According to Plaintiffs, Defendants represented that the two oil wells in question were "currently producing, " and could be expected to realize a return of between $3, 000 and $4, 000 per month in the near future.[5] Further, Plaintiffs contend, Defendants represented that the price of Treaty stock was expected to increase more than fifty cents per share.[6] Plaintiffs contend that they each paid $65, 000 to Defendant Rampant Leon to purchase a working interest in the wells.[7] According to Plaintiffs, Sticker also paid $65, 000 to purchase shares of treaty stock, while Baker paid $10, 000 for a smaller number of shares.[8]

Plaintiffs aver that Defendants' representations regarding the returns on Treaty stock proved untrue, as did certain representations made by Reid and Blackburn regarding payment from production of the wells and the use of production-enhancing equipment at the wells.[9] Plaintiffs maintain that Reid and Blackburn knew that their representations were false, and in fact had no intention of paying them as provided in their investment contracts.[10] Indeed, Plaintiffs contend, they have only received $700 in payment based upon their working interest in the wells, notwithstanding Defendants' representations that the wells have been in production and generating income.[11] Plaintiffs argue that Defendants have offered untrue justifications for their delay in making payments to them, and have further misrepresented that the price of Treaty stock would rise.[12]

Therefore, Plaintiffs maintain, Defendants have misrepresented and omitted material facts in order to secure their investment and to induce them to hold the investments.[13] In doing so, Plaintiffs assert, Defendants Reid, Blackburn, Weyand, and Bruce Gwyn (who was allegedly the President and Chief Operating Officer of Treaty at all relevant times[14]) acted beyond the scope of their authority as agents of Defendants Rampant Leon, Treaty, or RLFC Buckelew Energy, which is alleged to be a Louisiana LLC established to conduct business related to the wells at issue here.[15]

B. Procedural Background

On July 24, 2014, Plaintiffs filed a verified petition in the Civil District for the Parish of Orleans, asserting claims for fraudulent inducement to contract, violation of Louisiana securities laws, and breach of contract.[16] Weyand removed the action to this Court on November 3, 2014, alleging that removal was proper because Plaintiffs had fraudulently joined or misjoined their claims against him with their claims against the other defendants, and because this Court has diversity jurisdiction over Plaintiffs' claims against him.[17]

On November 5, 2014, Blackburn filed a "Motion to Dismiss Under Rule 9(b) and Rule 12(b)(6) of the Federal Rules of Civil Procedure and the Private Securities Litigation Reform Act of 1995."[18] Plaintiffs filed the instant"Motion for Remand and for Attorney's Fees" on November 7, 2014.[19] On November 19, 2014, Weyand filed a "Rule 9(b) F.R.C.P. and State Law Pleading Objections to Pleading Defects in Plaintiffs' Original Petition [and] Rule 12, F.R.C.P. Defenses and Motions and Memorandum in Support Thereof."[20] Weyand filed an opposition to the motion to remand on December 2, 2014.[21]

On January 12, 2015, Plaintiffs filed a "Motion to Continue, " requesting that the hearing on Blackburn's motion to dismiss be continued until the Court addressed the pending motion to remand.[22] On January 13, 2015, Plaintiffs filed a combined opposition to both motions to dismiss, requesting leave of Court to supplement the opposition in the event that the Court denied the pending motion to remand.[23] Also on January 13, 2015, Plaintiffs filed a "Motion to Amend, " requesting leave of Court to amend their motion to continue so that it also requested that the hearing on Weyand's pending motion be continued.[24] On January 14, 2014, the Court granted Plaintiffs' motion to continue, deferring the submission of Weyand's motion until the Court ruled on the motion to remand.[25] On January 16, 2015, the Court granted Plaintiffs' motion to amend, deferring the submission of both Weyand's motion and Blackburn's motion until the Court ruled on the motion to remand.[26]

II. Parties' Arguments

A. Weyand's "Notice of Removal" [27]

In his "Notice of Removal, " Weyand asserts that this litigation was properly removed because Plaintiffs "did not properly join the local defendants to the Plaintiffs' claims against [him]."[28] Therefore, Weyand asserts, the Court should disregard the citizenship of these defendants for diversity purposes pursuant to the "doctrines of fraudulent joinder and fraudulent misjoinder."[29] Citing and applying the Eleventh Circuit's Tapscott v. MS Dealer Service Corp . decision, [30] which he calls the "leading case in the nation on the subject of fraudulent misjoinder, " Weyand contends that Louisiana's joinder rules should apply here, and that misjoinder has occurred under these rules, because Plaintiffs' claims against him "are not within the jurisdiction of any Louisiana state court."[31] Specifically, Weyand argues that Louisiana courts lack personal jurisdiction over him, because: (1) he has never entered Louisiana to meet with Plaintiffs in connection with the transaction at issue here; (2) he communicated with James Sticker Jr. only by telephone and e-mail before the transactions occurred, and was located in Texas when he did so; (3) he "has never communicated" with Sticker Synergy Corporation or Baker Energy, or with Gavin Baker, who verified Plaintiffs' state court petition; (4) he did not communicate with James Sticker, Jr., Sticker Synergy Corporation, Gavin Baker, or Baker Energy LLC "at any time" regarding their potential purchase of Treaty stock; (5) he has never maintained a personal office in Louisiana, and has not had regular and systematic contacts with the state for about 44 years.[32]

Weyand asserts that the misjoinder asserted here is "egregious and fraudulent, " because Plaintiffs' verified petition alleges that Louisiana state courts have personal jurisdiction over him, on the basis that he "personally came into Orleans Parish" and committed the misconduct alleged in the petition.[33] Weyand maintains that these allegations, and in particular the allegation in Section 12 of the petition that "the facts and circumstances giving rise to this action took place in Orleans Parish... [are] simply false, " and therefore amount to a "fraudulent allegation of jurisdictional facts."[34] In these circumstances, Weyand argues, this Court should "pierce the pleadings" and allow discovery on the issue of "fraudulent joinder/misjoinder, " so that it may thereafter resolve the issue using summary judgment-type evidence.[35]

B. Plaintiffs' "Motion for Remand and Attorney's Fees" [36]

In their "Motion for Remand and for Attorney's Fees, " Plaintiffs argue that "there is no reasonable basis to support removing this case, " because Plaintiffs and "at least five out of the seven defendants" are domiciled in Louisiana, and because Plaintiffs' state court petition "only states Louisiana causes of action."[37] Plaintiffs further maintain that removal of this case was "dilatory, evasive, and improper, " warranting the imposition of attorney's fees pursuant to 28 U.S.C. § 1447(c).[38]

1. Subject Matter Jurisdiction

According to Plaintiffs, Defendants Blackburn, Gwyn, and Reid are Louisiana domiciliaries, while Rampant Leon and RLFC Buckelew are Louisiana entities.[39] Further, Plaintiffs maintain, Treaty is a Nevada corporation with its principal place of business in Louisiana.[40] Plaintiffs aver that because they are themselves domiciled in Louisiana, and because these defendants are also citizens of Louisiana, complete diversity of citizenship is lacking here. Plaintiffs further contend that their case presents no federal question, because they have asserted only state law claims.[41]

2. Fraudulent Joinder

Plaintiffs further argue that the Louisiana defendants in this case have not been "fraudulently misjoined" to defeat removal, because their complaint "allege[s] violations of Louisiana law that lead to joint, solidary, and personal liability against the Louisiana defendants and Weyand."[42] According to Plaintiffs, their petition asserts causes of action against all defendants, including a cause of action pursuant to LA. REV. STAT. § 51:712, the violation of which exposes defendants to joint and several liability.[43] Plaintiffs characterize Weyand's asserted basis for removal as "remarkable, " on the grounds that their petition alleges Weyand's "material participation" in the investment transaction at issue here.[44] Specifically, Plaintiffs contend, their petition alleges that Weyand was "the salesman" in the transaction by virtue of his providing documents related to the wells, his equity interests in the entities involved, and his role in setting up and "materially participating" in a New Orleans meeting regarding the investment.[45]

Plaintiffs further maintain that a claim of "improper joinder" is "by definition" concerned with the joinder of an in-state party, whereas Weyand here argues that he was improperly joined because he was an out-of-state party.[46] Plaintiffs contend that notwithstanding this "basic problem, " Weyand has not carried his "heavy burden" of showing improper joinder, because he argues only that Louisiana state courts lack personal jurisdiction over him.[47] Plaintiffs argue that Weyand's argument on this point is unavailing, because he "admits to having direct contact" with James Kenneth Sticker in Louisiana via telephone and e-mail before the transactions at issue occurred.[48] Plaintiffs maintain that this communication was purposefully directed toward Louisiana, and that their claims arise out of those activities, giving Louisiana courts personal jurisdiction over Weyand.[49]

Plaintiffs additionally argue that although Weyand denies his involvement in "any meeting with Plaintiffs and Defendants, " he nonetheless admits to corresponding via e-mail with Sticker regarding the meeting in New Orleans.[50] According to Plaintiffs, this correspondence prevents Weyand from carrying his burden of showing that he was fraudulently joined, and also establishes the minimum contacts necessary to establish personal jurisdiction in Louisiana courts.[51] Plaintiffs further maintain that Louisiana courts' exercise of personal jurisdiction over Weyand will not offend traditional notions of fair play and substantial justice, because: (1) Louisiana has a "strong interest in adjudicating this suit between Louisiana plaintiffs" seeking damages "for actions and omissions that occurred in Louisiana;" (2) "Louisiana has a strong interest in discouraging securities fraud;" and (3) Defendants, Weyand included, "had fair warning that they might eventually be sued in Louisiana and be subject to its jurisdiction" when they accepted investment funds from Louisiana domiciliaries.[52]

3. Jurisdictional Discovery

Plaintiffs next argue that jurisdictional discovery is not necessary here, and characterize "Weyand's request for discovery on the issue of his own contact" with Louisiana as "bizarre."[53] According to Plaintiffs, jurisdictional discovery may be appropriate where a diverse defendant requires evidence related to a non-diverse defendant, but is not warranted here, because Plaintiffs' verified petition alleges ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.