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Landry v. Posigen, Inc.

United States District Court, E.D. Louisiana

February 7, 2018

LOGAN LANDRY, ET AL.
v.
POSIGEN, INC., ET AL.

         SECTION “B” (5)

          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 PosiGen[1] 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' homes. See Id. ¶¶ 14, 17. This work sometimes requires a 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 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, 25-26. 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 caused PosiGen to submit tax credit applications for some 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 average, PosiGen schedules 150 installations per month and, 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 PosiGen is submitting tax credit applications for more installations than it actually completes, Neyhart purportedly causes PosiGen employees to conceal excess inventory and 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. ¶¶ 86-87.

         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. See 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).

         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 such enterprise's affairs through a pattern of racketeering activity . . . .” 18 U.S.C. § 1962(c). It also makes it “unlawful for any person to conspire to” commit a RICO violation. Id. § 1962(d). The law creates a private civil remedy to aid 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 ...


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