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CEH Energy, LLC, v. Kean Miller LLP

United States District Court, E.D. Louisiana

November 20, 2017

CEH ENERGY, LLC ET AL.
v.
KEAN MILLER LLP ET AL.

         SECTION "L" (2)

          ORDER & REASONS

         Before the Court are Defendants Stephen Hanemann and Kean Miller's Motions to Dismiss. R. Docs. 27, 29. Plaintiffs oppose the motions. R. Doc. 31. The Court held oral argument on this matter on November 15, 2017. Having considered the parties' arguments, submissions, and the applicable law, the Court now issues this Order and Reasons.

         I. BACKGROUND

         This lawsuit arises from the representation by Defendants of Plaintiffs when they invested in Louisiana oil prospects. Plaintiff CEH Energy, LLC (“CEH Energy”) is a Delaware corporation, wholly owned and created by Plaintiff Shenzhen Careall Investment Holdings Group Co., Ltd. (“Careall”), for the purpose of investing in Louisiana oil prospects. R. Doc. 1 at 1-2. Plaintiffs invested a total of $2.1 million in two oil prospects. R. Doc. 1 at 5. The oil prospects were owned by Intrepid Drilling, LLC (“Intrepid”), which is owned by Bill Simmons. R. Doc. 1 at 2. Plaintiffs allege that the investments were fraudulent. R. Doc. 1 at 25-26. Plaintiffs have filed a lawsuit in federal court in Mississippi against Intrepid and Bill Simmons claiming that these defendants failed to disclose material omissions, including a $205 million outstanding RICO judgment, and defrauded Plaintiffs. R. Doc. 1 at 5, 10-11.

         Defendants in the present lawsuit are Kean Miller LLP (“Kean Miller”) and Stephen Hanemann. R. Doc. 1. Stephen Hanemann is a partner at Kean Miller. R. Doc. 1 at 3. Stephen Hanemann was engaged by Plaintiffs, at the suggestion of Bill Simmons, to represent them regarding their investments in Louisiana oil prospects. R. Doc. 1 at 2-3. Plaintiffs allege that Kean Miller and Stephen Hanemann already were, and had been, representing Intrepid and Bill Simmons. R. Doc. 1 at 4. Plaintiffs allege that Kean Miller and Stephen Hanemann had a conflict of interest, failed to disclose material omissions regarding the investment, and breached their fiduciary duties. R. Doc. 1 at 5-6, 30.

         Plaintiffs claim that had they known about the conflict of interest they would have hired different representation. R. Doc. 1 at 7. Plaintiffs further allege that competent counsel would have discovered and/or disclosed the judgments against Intrepid and Bill Simmons and therefore, Plaintiffs would not have made the oil prospect investments. R. Doc. 1 at 7. Plaintiffs bring the following claims against Kean Miller and Stephen Hanemann: breach of fiduciary duty, conspiracy, conversion, negligent misrepresentation, unjust enrichment, violation of Louisiana Unfair Trade Practices Act (“LUTPA”), detrimental reliance, and fraud. R. Doc. 1 at 39-48. Plaintiffs request damages in the amount of their investment as well as attorney fees. R. Doc. 1 at 39-48.

         II. PENDING MOTIONS

         Defendant Stephen Hanemann moves to dismiss for failure to state a claim upon which relief can be granted. R. Doc. 27. Defendant argues that each claim made by Plaintiff is insufficient or barred by preemption or estoppel. R. Doc. 27-1 at 1-2. Therefore, Defendant asks that the Court dismiss Plaintiffs' claims against him. R. Doc. 27.

         Defendant Kean Miller also moves to dismiss all of Plaintiffs' claims against it for failure to state claims upon which relief can be granted. R. Doc. 29. Defendant avers that Plaintiffs' claims are either barred by res judicata, perempted, and/or not well pleaded. R. Doc. 29-1 at 1. Defendant also alleges that Plaintiffs had decided to invest in the oil prospects before contacting Kean Miller and Stephen Hanemann and that Plaintiffs' retention of Defendants was limited to reviewing the agreement to participate in the oil prospects. R. Doc. 29-1 at 2-3.

         Plaintiffs respond in opposition to Defendants' motions. R. Doc. 31. Plaintiffs allege that all of their claims are timely. R. Doc. 31-1 at 11. Plaintiffs submit that all of their claims are based on alleged fraudulent actions by the Defendants and so are not perempted because they fall into an exception. R. Doc. 31-1 at 11-12. Plaintiffs allege that, because the fraud exception applies, normal prescriptive periods apply to their claims. R. Doc. 31-1 at 13. Plaintiffs allege that all relevant actions of Defendants took place within the prescriptive periods and even if they did not, the claims would not be prescribed because they relate back to the complaint filed in Mississippi court. R. Doc. 31-1 at 16. Plaintiffs claim that they are not suing for malpractice but rather all of their claims are based on Defendants' alleged fraud. R. Doc. 31-1 at 21.

         III.LAW & ANALYSIS

         a. Motion to Dismiss Standard

         The Federal Rules of Civil Procedure permit a defendant to seek a dismissal of a complaint based on the “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A complaint should not be dismissed for failure to state a claim “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 47 (1957). Generally, when evaluating a motion to dismiss pursuant to Rule 12(b)(6), the court should not look past the pleadings.

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The district court must construe facts in the light most favorable to the nonmoving party and must accept as true all factual allegations contained in the complaint. Ashcroft, 556 U.S. at 678. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. ...


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