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Blank v. Broadsword Group, LLC

United States District Court, E.D. Missouri, Eastern Division

August 3, 2015

MICHAEL HENRY BLANK, Plaintiff,
v.
BROADSWORD GROUP, LLC, Defendant.

MEMORANDUM AND ORDER

DAVID D. NOCE, Magistrate Judge.

This action is before the court on the motion of defendant Broadsword Group, LLC to dismiss plaintiff's claims under Federal Rule of Civil Procedure 12(b)(1). (Doc. 51.) In the alternative, defendant argues that Counts V, VI, and VII of plaintiff's second amended complaint (Doc. 48) should be dismissed under Federal Rule of Civil Procedure 12(b)(6). The plaintiff has also filed a motion to amend the complaint a third time. (Doc. 57.) The parties have consented to the exercise of plenary authority by the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Doc. 12.) These issues have been fully briefed.

I. BACKGROUND

On September 9, 2014, plaintiff commenced this action against defendants Broadsword Group, LLC and Sharps Rifle Company, Inc. Plaintiff filed his first amended complaint on October 30, 2014, (Doc. 15) and parties agreed to a partial settlement and dismissal on April 9, 2015. (Doc. 37.) Plaintiff retained counsel and filed a second amended complaint, which dismissed Sharps Rifle Company, Inc. as a named defendant. (Docs. 50, 49.) Plaintiff filed a motion to amend his complaint a third time on June 26, 2015, which this court denied. According to plaintiff's alleged facts, the following occurred.

Plaintiff was the founder and majority owner of Sharps Rifle Company, LLC, an LLC in Montana, from 2007 to 2011. (Doc. 48 ¶ 3) Sharps, LLC was transferred to Sharps Rifle Company, Inc. ("Sharps"), a Wyoming corporation in 2011. (Id. at ¶ 4.) In early November 2012, plaintiff met with Mr. Jay Johnston and spoke about Johnston acquiring an ownership interest in Sharps, as well as, acquiring trademarks, patents, inventions, and ideas for inventions then owned by plaintiff. (Id. at ¶¶ 5-6.) On November 9, 2012, Mr. Jay Lesser, representing Johnston, contacted plaintiff and offered a minimum 10% stake in the new company if plaintiff assisted Johnston in acquiring the trademarks, patents, inventions, and other previously discussed items that plaintiff owned. (Id at ¶¶ 7-8.) Plaintiff contacted Johnston on November 9, 2012, and accepted the offer presented to him by Lesser on Johnston's behalf. (Id. ¶ 9.) This oral agreement is referred to as the "Ownership Contract" by plaintiff. (Id.) Johnston formed Broadsword Group, LLC as a Wyoming LLC on December 26, 2012. (Id. ¶ 10.)

Johnston sent plaintiff a letter containing a written offer of employment ("Employment Contract") on January 4, 2013 offering employment as "Chief Armorer" at a salary of $60, 000 per year with a possible year-end performance bonus. (Id. ¶ 11.) In this letter, there was no mention of the previous oral ownership contract. (Id.) Plaintiff was actually paid a salary of $75, 000 per year. (Id. at ¶ 15.) The Employment Contract provided that termination could only be done with thirty days' notice, unless done "for cause". (Id. at ¶ 13.) The Employment Contract did not mention Broadsword acquiring the intellectual property, trademarks, patents, inventions, or ideas for inventions currently owned or that might be developed by plaintiff. (Id. at ¶ 14.) Plaintiff spoke with Johnston regarding this letter on January 4, 2014, and Johnston stated that actual salaries, commission, etc. would be firmed up in February. (Id. ¶ 12.) Plaintiff signed this Employment Contract on January 5, 2013, based on Johnston's January 4, 2015 representation. (Id. ¶ 12.)

Between January 5 and February 11, 2013, Lesser and Johnston confirmed to plaintiff that the agreement for a 10% ownership share of Broadsword would still be honored. (Id. at ¶ 16.) On February 11 and 20, 2013, plaintiff assigned to Sharps several trademarks plaintiff held either personally or in the name of companies in which plaintiff was the sole owner, because plaintiff believed he would be receiving a 10% interest in Broadsword. (Id. at ¶¶ 17-18.) On February 24, 2013, plaintiff released Sharps from any and all claims he had and gave up his equity ownership interest. This allowed Broadsword to acquire 100% ownership in Sharps sometime subsequent to February 24, 2013. (Id. at ¶¶ 19-20.) On March 19, 2013, Johnston told plaintiff that Broadsword was working on putting the 10% ownership interest into written form, which never happened. (Id. at ¶ 21.)

Following Broadsword's acquisition of Sharps, plaintiff continued to design and develop inventions, some of which were patented, and some of which are only potential patents. (Id. ¶ 22.) Plaintiff provided these inventions and patents, per the oral ownership contract, to Broadsword and Sharps. (Id. at ¶ 22.) On August 7, 2013, Johnston orally confirmed to plaintiff, again, that he was to receive 10% ownership in Broadsword in return for his trademarks, patents, inventions, and products.

On March 6, 2014, plaintiff was told by Lesser and Johnston that he was terminated effective March 7, 2014. On March 7, 2014, plaintiff came to work and was told to turn in his keys and vacate the premises. Plaintiff was not provided 30 days notice prior to the termination, nor was he paid after March 7, 2014. (Id. at ¶¶ 25-27.) A March 7, 2014 email from Lesser to plaintiff stated plaintiff's termination was not "for cause." (Id. at ¶ 27.)

On March 17, 2014, plaintiff received a letter from Broadsword stating he was terminated as of March 7, 2014. (Id. at ¶ 28.) The letter offered payment of plaintiff's salary through April 7, 2014, if he would waive any claim for further compensation or other expectation of remuneration related to plaintiff's employment at Broadsword. (Id.) The letter also stated plaintiff would have to help in the filing of patents for some of the products plaintiff brought to Broadsword. (Id.) Plaintiff did not sign the letter and has not received any salary or other payments from Broadsword as of March 7, 2014. (Id at ¶ 29.)

Plaintiff alleges a breach of ownership contract in Count I. (Id. at 8.) In Count II plaintiff alleges that Broadsword breached the ownership contract. (Id. at 9.) In Count III plaintiff alleges that he detrimentally relied on defendant's promises. (Id. at 10-12.) In Count IV plaintiff alleges that defendant breached the employment contract. (Id. at 12-13.) In Count V plaintiff alleges a breach of implied covenant of good faith and fair dealing. (Id. at 13-15.) In Count VI plaintiff alleges defendant intentionally inflicted emotional distress. (Id. at 16-17.) In Count VII plaintiff alleges defendant committed fraud. (Id. at 17-18.)

Plaintiff seeks damages for the breach of ownership contract through traditional damages, specific performance, and promissory estoppel. (Id. at 8-12.) Plaintiff seeks significant damages for the breach of employment contract, implied covenant of good faith, intentional infliction of emotional distress, and fraud. (Id. at 12-18.) Plaintiff also seeks reasonable attorney's fees and costs regarding each claim. (Id. at 8-18.)

Defendant has filed a counterclaim against plaintiff alleging breach of the employment contract. Defendant seeks either the fair market value of all Broadsword property still maintained by plaintiff in violation of the employment contract, or specific performance. (Doc. 53 at 15-16.)

II. MOTION TO AMEND

Plaintiff argues that his motion to amend merely clarifies the subject matter jurisdiction of the court, because that jurisdiction "could have been pled more fully and more clearly" in the second amended complaint. (Doc. 57 ¶ 4.) Defendant argues that the court already granted plaintiff two opportunities to amend his complaint (Docs. 15, 48), and this third amended complaint comes eight months into the case. Furthermore, defendant argues, the motion to amend this complaint comes only after defendant filed a motion to dismiss based on a lack of subject matter jurisdiction. (Doc. 59.) Finally, if, as plaintiff states, the second amended complaint sufficiently pled subject matter jurisdiction then this amended pleading is superfluous. (Id.)

A. Legal Standard

Motions to amend a complaint are left to the discretion of the district court. Popalii v. Corr. Med. Servs., 512 F.3d 488, 487 (8th Cir. 2008). "Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts." 28 U.S.C. § 1653. A district court can "remedy inadequate jurisdiction allegations, " it cannot remedy "defective jurisdictional facts." Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 831 n.5 (1989); TKE Enters., Inc. v. Crack Team, U.S.A., Inc., No. 4:11 CV 1435 HEA, 2013 WL 1883072, at *2 (E.D. Mo. May 6, 2013). Amendments to cure jurisdiction may be allowed as late as on appeal of an order of dismissal. See Wierman ...


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