Overseas Lease Grp., Inc. v. Plocher Constr. Co.

OVERSEAS LEASE GROUP, INC.; E. GEORGE BADCOCK, III;and HIGHLAND TH, LLC, Plaintiffs, v. PLOCHER CONSTRUCTION COMPANY, INC.; SCOTT PLOCHER;THE CITY OF TERRE HAUTE; THE CITY OF TERRE HAUTE WASTE WATER UTILITIES;BOARD OF PUIBLIC WORKS AND SAFETY; TERRE HAUTE DEWATERING COMPANY, LLC,and M. NOAH SODREL, Defendants.

Civil Action No. 17-4917 (JMV)(MF)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

November 27, 2018

Not for Publication

OPINION

John Michael Vazquez, U.S.D.J.

In this case, Plaintiffs allege a massive fraud in connection with an Indiana project aimed at turning sludge into diesel fuel. Currently pending before the Court is Defendants' motion to dismiss Plaintiffs' Amended Complaint ("FAC"). Plaintiffs are Overseas Lease Group, Inc. ("OLG"); Highland TH, LLC ("Highland"); and E. George Badcock, III ("Badcock") (collectively "Plaintiffs"). Defendants consist of (1) the City of Terre Haute ("Terre Haute"), The City of Terre Haute Wastewater Utilities ("Terre Haute Wastewater Utilities"), and Board of Public Works and Safety ("Terre Haute Board") (collectively the "Terre Haute Defendants"); (2) Plocher Construction Company, Inc. ("Plocher") and Scott Plocher ("S. Plocher") (collectively the "Plocher Defendants"); and (3) Terre Haute Dewatering Company, LLC ("THDC") and M. Noah Sodrel ("Sodrel") (collectively the "THDC Defendants"). The Court uses "Defendants" when referring to all Defendants collectively.

The Court reviewed the parties' submissions,¹ and decided the motion without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R. 78.1(b). For the following reasons, Defendants' Motions to Dismiss is GRANTED and the matter is DISMISSED with prejudice.

Before turning to its analysis, the Court notes that it is utterly dismayed with the opposition brief filed by Plaintiffs. The Terre Haute Defendants, the Plocher Defendants, and the THDC Defendants each submitted briefs totaling over 75 pages in support of their motions to dismiss. Each brief raised sound and legitimate arguments with supporting authority. In opposition, Plaintiffs submitted one 22-page brief addressing all three motions. Plaintiffs' opposition devoted a mere seven pages to actual legal argument and analysis.

The opposition also casts unwarranted aspersions on counsel for Defendants, accusing counsel of "chicanery" and ethical violations, among other things. Opp. at 19. Moreover, the opposition is severely lacking in any substantive analysis, instead relying on conclusory statements and hyperbole. The opposition often fails to even make plausible assertions, as would be necessaryfor the filing a complaint in federal court. Because the opposition's analysis is so plainly deficient, the Court recounts the arguments here.

First, the THDC Defendants argue, among other things, that Plaintiffs fail to make plausible allegations as to the THDC Defendants and notes that they are only mentioned briefly in the FAC. Plaintiffs do not address this argument at all, other than to indicate in conclusory terms that the FAC is plausibly pled. Opp. at 14-16.

Second, all Defendants make credible arguments concerning the Court's personal jurisdiction, which is in no way evident from the face of the FAC. In response, Plaintiffs indicate that "[a]s an undisputed factual matter, all the defendants knew their dealings would profoundly affect a deeply New Jersey-connected entity and that their misconduct would severely damage New Jersey entities and people." Opp. at 16 (emphases added). Defendants do strongly dispute that there is a New Jersey connection here; otherwise, they would not have made the personal jurisdiction argument. Furthermore, there is one entity, OLG-not multiple entities or any individuals-in the FAC that allegedly has a principal place of business in New Jersey. As to the personal jurisdiction argument, Plaintiffs also rely on conclusory statements such as "[t]he relevant law more than adequately supports the assertion of personal jurisdiction as to all defendants[.]" Id. Plaintiffs continue that "'[f]air play and substantial justice' clearly sweep all of these major defendants into New Jersey. The argument is not only conclusory but also the wrong standard for determining personal jurisdiction. Opp. at 17.

Third, all Defendants make credible arguments as to proper venue, and again, it is in no way evident from the face of the FAC that the District of New Jersey is the proper venue. In response, Plaintiffs assert that "[a]s the [FAC] articulates, these New Jersey-based Plaintiffs made crucial decisions and undertook substantial conduct in New Jersey." Opp. at 18. This is anunmistakably erroneous recitation of Plaintiffs' own FAC. As noted, the FAC refers to one Plaintiff, not multiple, having a principal place of business in New Jersey. The FAC does not refer to any conduct, much less substantial conduct, as having occurred in New Jersey. Given that the Plaintiffs are referring to their own FAC, the Court finds this assertion to be made without a good faith basis. Also, Plaintiffs argue that New Jersey is "the only place" where the injury took place. Opp. at 18. This is not evident from the face of the FAC and is also not the proper venue standard.

Fourth, Defendants make arguments concerning res judicata in light of a decision and order in the US District Court for the Southern District of Indiana, Highland TH, LLC v. City of Terre Haute, 2016 WL 2866052 (S.D. Ind. May 17, 2016), amended in part, adhered to in part, 2016 WL 4206011 (S.D. Ind. Aug. 10, 2016) (the "Indiana Federal Action"). The Plocher Defendants also argue that the matter is barred because it has been arbitrated and subject to a final order in federal court in Missouri. Plaintiffs' argument that their claims made "in the Indiana federal court were specifically preserved without prejudice for further litigation" is a clear misstatement, as certain claims were dismissed with prejudice. Opp. at 4. As to the Plocher Defendants, the complaint was dismissed without prejudice. Importantly, the Southern District of Indiana dismissed the complaint against the Plocher Defendants so that the parties could proceed to a contractually-agreed upon arbitration. The Court deems Plaintiffs' argument to be made without a good faith basis. Ironically, it is also on this point that Plaintiffs accused defense counsel of chicanery and ethical violations.

As to the arbitration argument, Plaintiffs deem it to be "blatant nonsense" and continue that "there are no written, enforceable written (sic) contracts requiring arbitration. The Plocher arbitration was merely a self-styled debt collection proceeding." Opp. at 20. Given the fact that there was a written contract with an arbitration clause and that an actual binding arbitration didoccur, the Court once again finds this argument was apparently made without a good faith basis by Plaintiffs. The argument is particularly troubling given that the District Judge in the Indiana Federal Action found that there was a binding arbitration clause that encompassed Plaintiffs' claims.

Finally, Defendants argue that the FAC does not plausibly set forth a cause of action under New Jersey Consumer Fraud Act ("NJCFA"), among other things, Plaintiffs are not "consumers," and the property at issue is not subject to the NJCFA. Yet again, Plaintiffs completely fail to address the merits of the arguments. Instead, Plaintiffs indicate that the NJCFA should be liberally construed; that the NJCFA protects "the interests of New Jersey residents"; and that if Defendants do not like the NJCFA, they should ask the New Jersey legislature to change the law. Opp. at 21.

I. BACKGROUND

A. Factual Background²

Plaintiff OLG, a business that provides complex leasing services to a variety of organizations, is incorporated under the laws of Delaware. FAC ¶ 7. OLG's principal place of business is in Parsippany, New Jersey-this is the only reference to New Jersey in the FAC. Id. Plaintiff Highland is a Delaware limited liability company that was acquired by OLG. Id. ¶ 8. Plaintiff Badcock, a citizen of Florida, is the President and Chief Executive Officer of OLG. Id. ¶ 9. Defendant Plocher is an Illinois corporation that does general construction in several areas of the United States. Id. ¶ 10. Defendants. Plocher is a citizen of Illinois. Id. ¶ 11. Defendant Terre Haute is an Indiana municipal corporation and a citizen of Indiana. Id. ¶ 12. Defendant Terre Haute Wastewater Utilities, an agency and subdivision of Terre Haute, is a citizen of Indiana. Id.¶ 13. Defendant Terre Haute Board is also a citizen of Indiana and is an agency and subdivision of Terre Haute created under Indiana law and controlled by Terre Haute and Mayor Duke Bennett ("Mayor Bennett"). Id. ¶ 14. Defendant THDC is an Indiana limited liability company owned and controlled by Defendant Sodrel, an Indiana citizen. Id. ¶¶ 16-17.

On July 15, 2014, the Terre Haute Defendants and non-party Powerdyne Terre Haute Holdings LLC ("Powerdyne") entered into a Purchase and Sale Agreement ("Agreement"). Id. ¶ 18. The Terre Haute Defendants contracted to buy renewable diesel fuel from Powerdyne and to deliver waste-activated sludge and other biological material to Powerdyne to produce diesel fuel. Id. ¶ 19. The Terre Haute Defendants agreed to make 240 consecutive monthly payments of $719,326.58 each for de-watering service, for a total of approximately $ 172 million. Id. ¶ 20. De-watering is a process of removing water from the waste-activated sludge through centrifugation to produce renewable diesel fuel. Id.

Plaintiffs claim that Powerdyne, owned by Geoffrey Hirson, was a shell entity with no business, no assets, and few employees and was run from a car wash. Id. ¶¶ 22, 25. Plaintiffs further allege that Terre Haute Defendants knew, when the Agreement was executed, that they did not have the funds to fulfill their part of the contract and that the Terre Haute Defendants also had no reasonable expectation that they...