Sahagen v. Lora

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PETER SAHAGEN, et al., Plaintiffs, v. BRIAN M. LORA, et al., Defendants.

No. 21-CV-220-NDF

United States District Court, District of Wyoming

February 6, 2023

ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

NANCY D. FREUDENTHAL, UNITED STATES SENIOR DISTRICT JUDGE

Defendants Brian Lora and Real Social Equity Corp., (“RSE Corp.”) move for partial summary judgment on the claims against them by Plaintiffs Peter Sahagen and the Trustees of the Impact Housing Foundation Trust (“Trust”) Carole Mapleback and Christian Moore. ECF 27, 28. Plaintiffs filed their opposition to the motion, ECF 32, and Defendants have replied. ECF 42. As follows, the motion is GRANTED in part and DENIED in part.

I. Facts

Plaintiffs bring claims for: 1. immediate preliminary injunction;^[1] 2. fraud in the inducement and intentional misrepresentation; 3. breach of the covenant of good faith and fair dealing; 4. harassment and assault; 5. punitive damages; 7. declaratory judgment regarding intellectual property ownership; and 8 establishment of a constructive trust.^[2]Verified Second Amended Complaint, ECF 9.

By way of background, the allegations in this case concern intellectual property (“IP”) developed by Plaintiff Sahagen and a business plan that he asserts Defendant Lora agreed to implement. Second Amended Complaint ECF 9. The business plan consisted of a three-tiered structure of ownership and control to commercialize the IP. Id. A charitable trust would be the top tier - Plaintiffs assert this is Plaintiff Trust. The middle tier would be Social Benefit CoFounder Holdings, LLC (“Holdings, LLC”), which is not a party to the suit. The bottom tier would be the operating company, Defendant RSE Corp. Id.

At the heart of the case is Plaintiffs' claim that Plaintiff Sahagen was fraudulently induced by Defendant Lora into assigning his IP to the middle tier: Holdings, LLC. Id. at ¶ 59.

In its motion, Defendants assert the following material facts which are listed together with Plaintiffs' contentions.

1. Plaintiff Peter Sahagen is the creator of certain IP in the form of patents and patent applications related to the real estate and mortgage markets. (Lora Aff. ¶ 4; Defs.' Ex. A, IP Assignment to Holdings, LLC). The IP is designed to allow non-related individuals to work together to purchase homes and build equity. (Lora Aff. ¶ 4).

Plaintiffs agree with these facts.

2. In September 2020, Sahagen met Brian Lora and began to urge Lora to invest in the IP so that it could be developed into a commercially available product. (Lora Aff. ¶ 5). Lora had made his career in the technology industry and specifically had worked as a Certified Technology Officer in the financial services and banking industries. (Lora Aff. ¶ 6).

Plaintiffs dispute these stated facts and contend that Peter Sahagen did not “begin to urge Lora to invest in the IP.” (See Sahagen Aff. ¶¶ 49-50).

3. Ultimately Lora agreed to invest $600,000.00 of his own money into the IP and became the lead investor and CEO of RSE Corp. (Lora Aff. ¶¶ 5, 7, Exhibit B). As a result, Sahagen executed an assignment of the IP to Lora irrevocably assigning the IP. (Lora Aff. ¶ 7, Defs.' Ex. A).

Plaintiffs dispute these stated facts and assert that Peter Sahagen never “executed an assignment of his Social Equity IP to Lora irrevocably assigning the IP” because he “executed [the] 4/1/21 IP ASSIGNMENT to [Holdings, LLC] not to Brian Lora.” (See Sahagen Aff. ¶ 66.)

4. The IP Assignment was the only agreement between Defendants and Sahagen and includes the totality of their commitments to one another. (Lora Aff. ¶ 7).

Plaintiffs dispute these stated facts and assert “that the IP ASSIGNMENT is not the ‘only agreement between Defendants and Sahagen and includes the totality of their commitments to one another,' because "[t]here were six (6) basic agreements [he] made with Brian Lora when [they] met in person in Costa Rica in early November 2020." See Sahagen Aff. ¶¶ 18; 19-21, 24-26, 28-31, 44-45, 48, 5163, 70, 73-74.

5. Significantly, Sahagen has never held any interest in RSE Corp. He has not been a shareholder, officer, director or even an employee. (Lora Aff. ¶ 8). Sahagen has not invested a single dollar in RSE Corp. (Lora Aff. ¶ 8). Other than RSE Corp.'s ownership of the IP he developed, Sahagen has never had any formal role whatsoever in RSE Corp. (Lora Aff. ¶ 8).

Plaintiffs dispute all of these stated facts. (Sahagen Aff. ¶¶ 6-8, 10-15, 20-21, 24, 26, 28-29, 48, 62, 72, 74.) The Court has reviewed Plaintiffs' cited materials which state that Sahagen set up, and paid to set up, RSE Corp. as a Wyoming Corporation and that Sahagen registered, and paid to register, the related websites. (Id. at ¶ 10).

6. Prior to entering into the IP Assignment, Lora learned that Sahagen had an outstanding IRS lien filed in New York in excess of $88,000,000.00, and that he had a long and colorful history of litigation. (Lora Aff. ¶ 11). Because of those issues Lora informed Sahagen that he did not want him to have any control or interest in RSE Corp. (Lora Aff. ¶ 11).

Plaintiffs dispute these stated facts. (See Sahagen Aff. at ¶ 6; Sahagen Dep. pp. 15-21.) The Court has reviewed Plaintiffs' cited materials which indicate Sahagen believes the IRS lien is significantly less. (Sahagen Dep. pp 15-21).

7. Sahagen agreed to be an informal advisor and agreed to receive a monthly payment after the “seed round” of financing was raised. (Defs.' Ex. A, IP Assignment). Those commitments were memorialized in the IP Assignment. (Id.)

Plaintiffs agree but add that Plaintiff Sahagen entered into the IP assignment relying on Mr. Lora's fraudulent misrepresentations. (See Sahagen Aff. ¶¶ 10-51, 54-56, 63-64, 66 and 70; see Sean Jigolyk Aff. ¶¶ 4-5, 9-12, 14, 17-25, 31, 33-36; see Sahagen/Holdings Rescission Letter 12/3/21 Doc. 1, Ex. B).

8. Peter Sahagen and Brian Lora had many discussions about [Sahagen's] idea of a three-tiered structure for RSE Corp. (Lora Aff. ¶ 9).

Plaintiffs agree with these stated facts. (See Jigolyk Aff. ¶ 14) (“All of us agreed and understood that the trust must always have control, including voting control, over [RSE Corp.] and [Holdings, LLC]).

9. That structure contemplated an operating corporation, RSE Corp., a holding company with ownership in the operating corporation, Holdings, LLC, and a future charitable entity that would benefit from dividends paid by RSE Corp. That is the structure that Lora ultimately adopted for the company. (Lora Aff. ¶ 9, Ex. C).

Plaintiffs dispute these stated facts as incomplete and mistaken. (See Jigolyk Aff. ¶ 14.)

10. After making his investment, Lora became the largest shareholder of RSE Corp. and took the role as CEO of RSE Corp. (Lora Aff. ¶¶ 5, 7). In that role, Lora made the decision to transfer RSE Corp. to Delaware. (Lora Aff. ¶ 12).

Plaintiffs dispute these stated facts. Plaintiffs assert that [Lora] made the decision to transfer RSE Corp., Inc. to Delaware as the CEO of RSE Corp., and not as RSE Corp.'s largest shareholder, because Brian Lora is not yet a legal shareholder of RSE Corp., Inc. (See Sahagen Aff. ¶¶ 28, 31-43, 49-51, 62). Plaintiffs contend "[w]hen Brian Lora swears he is a shareholder of RSE Corp., Inc., he is not a shareholder of RSE Corp., instead, he has a contract to receive future shares." Plaintiffs further contend that Sean Jigolyk is the only shareholder of RSE Corp. because Lora did not pay Jigolyk “the $1,000 I was owed for all of my shares in [RSE Crop.] under the Stock Repurchase Agreement.” (Jigolyk Aff. ¶ 28).

11. [Lora] concluded that having the company as a Delaware corporation would help facilitate his efforts to raise investment moneys for RSE Corp. (Lora Aff. ¶ 12).

Plaintiffs dispute these facts. (See Sahagen Aff. ¶¶ 51, 62-63). The Court has reviewed the Plaintiffs' cited materials which include Sahagen's argument that the corporate move was a pretext for Lora to accumulate equity. (Id.).

12. Peter Sahagen was informed of that decision before the transfer and disagreed with that decision. (Lora Aff. ¶ 12). The ownership of RSE Corp. did not change as a result of that transfer. (Lora Aff. ¶ 12). Sahagen's rights under the IP Assignment did not change after the transfer. (Defs.' Ex. A. Intellectual Property Assignment).

Plaintiffs dispute these facts. (See Sahagen Aff. ¶¶ 32-46, 51, 63-64; Jigolyk Aff. ¶¶ 28, 35). The Court has reviewed the cited materials which state Jigolyk owned all of the shares of RSE Corp. before the transfer but that upon the transfer to Delaware, Lora issued all shares to himself and to Holdings, LLC. (Sahagen Aff. ¶ 41).

13. The Plaintiff Trust was not formed until September 3, 2021, approximately 6 months after the purported fraudulent inducement in this matter. (Defs.' Ex. F, Impact Housing Foundation Trust Irrevocable Trust Agreement). It was formed without the knowledge or the involvement of the Defendants. (Lora Aff. ¶ 16). The Defendants did not know of the existence of the Trust until the filing of this lawsuit. (Lora Aff. ¶ 16).

Plaintiffs assert that “everyone including Brian Lora, agreed, before and during March 2021, that the Trust would be created under Wyoming law as soon as reasonably practical.” (Sahagen Aff. ¶¶ 10-18, 20-29, 45; Jigolyk Aff. ¶¶ 9-15, 26-35). Plaintiffs dispute the assertion that the Trust was formed without the knowledge of the Defendants and Defendants were unaware until the filing of this [December 3, 2021] lawsuit." (See Sean Jigolyk Aff. ¶¶ 26) ("I also informed Brian Lora once the trust agreement had been finalized and executed in October of 2021").

14. Notably, and contrary to the caption in this case, the Plaintiff Trust was “formed as a non-charitable trust pursuant to Wyo. Stat. Ann. § 4-10-410, as amended.” (Defs.' Ex. F,...