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Bordeaux Capital Inc. v. United States Methanol Corp.

United States District Court, S.D. West Virginia, Charleston Division

May 10, 2019




         Plaintiff Bordeaux Capital, Inc. (“BCI”) brings this action against Defendants United States Methanol Corporation (“USM Corp.”), U.S. Methanol, LLC (“USM LLC”), and Petrochemical Holdings Corporation (“PHC”) (collectively, “Defendants”). Before the Court is USM LLC's Motion to Dismiss Counts IV and V of the Complaint. (ECF No. 9.) For the reasons discussed herein, the Court DENIES the motion.

         I. BACKGROUND

         The following facts are drawn from the Complaint and, for purposes of resolving the pending motion, are presumed to be true. In November of 2015, USM Corp. retained BCI to perform investment banking services in connection with USM Corp.'s acquisition, relocation, and operation of methanol plants from Brazil and Slovenia to West Virginia (the “Project”). (ECF No. 1 at 3 ¶ 12.) On January 13, 2016, USM Corp. executed a formal engagement letter (the “Engagement Letter”) with BCI, obligating “USM Corp. and its successors” to compensate BCI for its “services in connection with the Project.” (Id. ¶ 13.)

         As a result of BCI's work under the Engagement Letter, KKCG made “an equity investment in, and a capital commitment to, USM Corp. . . . or a company related to or affiliated with” USM Corp. (Id. at 5 ¶ 18.) On February 6, 2016, USM Corp. and KKCG entered into an equity term sheet “that contemplated USM Corp. and KKCG forming a ‘special purpose entity'” to fulfill the Project. (Id. ¶ 19.) KKCG is believed to have closed on its equity investment on or about February 26, 2016. (Id. ¶ 20.)

         Thereafter, USM LLC registered in the State of Delaware as a limited liability corporation and, later, in West Virginia as a foreign corporation, also doing business as “US Methanol.” (Id. ¶ 21.) On the same day, KKCG registered with the West Virginia Secretary of State's Office as the manager of USM LLC and listed the same business address as USM LLC. (Id. ¶ 22.) “KKCG instructed BCI to use ‘a new entity, U.S. Methanol LLC (Delaware)'” as a “prospective contracting party” but, otherwise, “did not explain the relationship between USM LLC and USM Corp.” (Id. at 7 ¶ 32.) Despite the apparent creation of a new entity, no distinction was drawn between USM Corp. and USM LLC. (Id. at 8 ¶ 35.)

         On March 11, 2016, BCI issued an invoice to USM Corp. for its services. (Id. at 5 ¶ 23.) USM Corp. made partial payments on the invoice. (Id. at 8 ¶¶ 37, 39.) However, the CEO of both USM Corp. and USM LLC continued to use BCI's services under the Engagement Letter, and, accordingly, BCI performed its obligations entitling it to additional payment under the agreement. (Id. at 7 ¶ 31.) On September 6, 2017, KKCG and/or USM LLC notified BCI that they no longer required its services and terminated the Engagement Letter. Nonetheless, they did not dispute the March 2016 invoice and additional fees and assured that outstanding amounts owed would be paid. (Id. at 9 ¶ 41.) Later, when BCI inquired into the outstanding payments, USM LLC instructed BCI “that [its] only recourse was against USM Corp., which by that time was nothing more than a shell company.” (Id. at 2 ¶ 9.)

         Based on these alleged facts, BSI contends that “USM Corp. and USM LLC secretly and intentionally conspired to, and did, arrange their affairs so that all or substantially all of USM Corp.'s assets, including its intellectual property, business plan, bids, rights, employees, prospects and opportunities, including the Project, were transferred from USM Corp. (or PHC) to USM LLC (the ‘Secret Agreement') for less than fair value, with the intention of leaving USM Corp. (now PHC) a shell company.” (Id. at 6 ¶ 24.) BCI asserts five causes of action against Defendants for breach of contract, unjust enrichment, quantum meruit, intentional tort/fraud, and violation of the West Virginia Uniform Voidable Transactions Act, W.Va. Code § 40-1A-1, et. seq. (“WVUVTA”), (id. at 9-14 ¶¶ 43-62), for which it seeks compensatory and punitive damages, pre- and post-judgment interest, attorney fees and costs, and any other relief justified, (id. at 15).

         USM LLC filed its Motion to Dismiss on September 27, 2018, arguing that Counts IV and V of the Complaint should be dismissed because Count IV fails to plead fraud with specificity and Count V under the WVUVTA does not identify a transaction covered by the Act. (ECF No. 9.) BCI responded to the motion on October 26, 2018. (ECF No. 14.) USM LLC did not file a reply in support of their motion. As the time period for filing a reply has elapsed, the Motion to Dismiss is ripe for adjudication.


         In general, a pleading must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); see McCleary-Evans v. Md. Dep't of Transp., State Highway Admin., 780 F.3d 582, 585 (4th Cir. 2015) (stating that this requirement exists “to give the defendant fair notice of what the . . . claim is and the grounds upon which it rests” (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007))). To withstand a motion to dismiss made pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must plead enough facts “to state a claim to relief that is plausible on its face.” Wikimedia Found. v. Nat'l Sec. Agency, 857 F.3d 193, 208 (4th Cir. 2017) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “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.” Iqbal, 556 U.S. at 678. Stated another way, the factual allegations in the complaint “must be sufficient ‘to raise a right to relief above the speculative level.'” Woods v. City of Greensboro, 855 F.3d 639, 647 (4th Cir. 2017) (quoting Twombly, 550 U.S. at 555). Well-pleaded factual allegations are required; labels, conclusions, and a “formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555; see also King v. Rubenstein, 825 F.3d 206, 214 (4th Cir. 2016) (“Bare legal conclusions ‘are not entitled to the assumption of truth' and are insufficient to state a claim.” (quoting Iqbal, 556 U.S. at 679)).

         In evaluating the sufficiency of a complaint, the Court first “identif[ies] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Iqbal, 556 U.S. at 679. The Court then “assume[s] the[] veracity” of the complaint's “well-pleaded factual allegations” and “determine[s] whether they plausibly give rise to an entitlement to relief.” Id. Review of the complaint is “a context-specific task that requires [the Court] to draw on its judicial experience and common sense.” Id. “[T]o satisfy the plausibility standard, a plaintiff is not required to plead factual allegations in great detail, but the allegations must contain sufficient factual heft to allow a court, drawing on judicial experience and common sense, to infer more than the mere possibility of that which is alleged.” Nanni v. Aberdeen Marketplace, Inc., 878 F.3d 447, 452 (4th Cir. 2017) (internal quotation marks omitted).


         USM LLC challenges Counts IV and V of BCI's Complaint. First, it argues that Count IV, alleging fraud, must be dismissed because BCI's claim is not alleged with specificity as to “the time, place, and contents of the false representation, as well as the identity of the person making the misrepresentation and what he obtained thereby.” (ECF No. 10 at 2 (citing McCauley v. Home Loan Inv. Bank F. S.B., 710 F.3d 551, 559 (4th Cir. 2013) (internal quotation omitted)).) USM LLC further argues that Count V, ...

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