Barker v. Gottlieb
| Decision Date | 16 October 2013 |
| Docket Number | Civil No. 13–00236 LEK–BMK. |
| Citation | 978 F.Supp.2d 1168 |
| Parties | Charles BARKER III, Plaintiff, v. Joshua L. GOTTLIEB, Jonathan Dubowsky, Donald Borneman, Charles Hall, Scott Harris, The Value Exchange Advisors, also known as/doing business as TVXA, GEMCo–Pacific Energy LLC, aka GPE and Roes 1–25, Defendants. |
| Court | U.S. District Court — District of Hawaii |
OPINION TEXT STARTS HERE
Charles Barker, III, Honolulu, HI, pro se.
Andrew George Odell, William K. Shultz, Cades Schutte, Honolulu, HI, for Defendants.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS
On August 5, 2013, Defendants Joshua L. Gottlieb, Jonathan Dubowsky, Donald Borneman, Charles Hall, Scott Harris, the Value Exchange Advisors, also known as/doing business as TVXA (“TVXA”), and GEMCo–Pacific Energy LLC, also known as GPE (“GPE,” all collectively “Defendants”) filed their Motion for Judgment on the Pleadings (“Motion”). [Dkt. no. 19.] Pro se Plaintiff Charles Barker III (“Plaintiff”) filed his memorandum in opposition to the Motion on October 7, 2013. [Dkt. no. 37.] The Court finds this matter suitable for disposition without a hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawaii (“Local Rules”). After careful consideration of the Motion, supporting and opposing memoranda, and the relevant legal authority, Defendants' Motion is HEREBY GRANTED IN PART AND DENIED IN PART, and Plaintiff's Complaint is HEREBY DISMISSED WITHOUT PREJUDICE.
Plaintiff filed this action on May 15, 2013.1 Plaintiff asserts both diversity jurisdiction and federal question jurisdiction based on the Securities Act of 1933, with supplemental jurisdiction over state law claims. 2 [Complaint at ¶¶ 1–5.] Plaintiff describes the crux of the case in the Introduction section of the Complaint:
The Defendants represented themselves to Plaintiff be [sic] capable and adept project financiers, with access to fiscal resources with which to fund to multiple projects in Hawaii relating to biomass energy and natural resources development. The Defendants have not only abjectly failed to provide this funding, but it has since become revealed that Defendants had no established access to such financial resources ... nor have they subsequently developed any such resources. Moreover, what funds as were eventually produced by Defendants were at such an inadequate dollar scale, and deployed by Defendants in a manner of their own private decisions and choosings [sic], and wholly absent of inclusion and consultation with the project founder Plaintiff—who is a principal in all relevant business matters and related entities—that it resulted in no actualization whatsoever of any of the business intents of the projects, which included biomass-to-electricity, growing of biomass crops and production of biofuel therefrom, commencement of topsoil production and sales, the closing of the 48.83 acre property purchase of the biomass processing facility site at Haina Mill, and the acquisition of the adjacent HEP (Hamakua Energy Partners) power plant.
The Defendants knowingly and intentionally pursued the conduct of the matters of the subject corporate businesses in the exclusion of Plaintiff, to the detriment of both the corporate entities and to Plaintiff herein....
[Complaint at 6.] The projects at issue in the Complaint include: a biomass-to-biofuel facility at the site of the former Hamakua Sugar Mill, in Haina Camp on the island of Hawai'i (“Haina Mill Project”); the development and marketing of a 1,100,000 cubic yard topsoil resource on one of parcels of the Haina Mill property under the name Kama'aina Earth Products (“KAEP” and “the KAEP Topsoil Project”); and the acquisition of the Hamakua Energy Partners power plant (“HEP Power Plant Project”).
Plaintiff is closely connected with several business entities involved in these projects. [ Id. at 10–13.] According to the Complaint, Plaintiff “founded and registered the new company Moku Nui Bioenergy Corporation” for the Haina Mill Project, and he “founded and registered the new company Moku Nui Power Company” for the HEP Power Plant Project. [ Id. at 12.] In addition, he and Defendant Dubowsky are “the sole two officers of” KAEP. [ Id. at 13.].
Plaintiff alleges that Defendants entered into, and subsequently breached, multiple contracts and agreements regarding the projects, causing “loss of opportunity, plus substantive and demonstrable financial harm to Plaintiff.” [ Id. at 7.] He also states that he “has expended extraordinary amounts of time, effort, expenses, and ... an extraordinary amount of work product, ... for the subject projects over the preceding two years, with the clear understanding that Defendants TVXA/GPE were acting earnestly, diligently and honorably, which it is now evident that they were not.” [ Id. at 8–9.] Plaintiff's efforts in the pursuit of the projects included: conducting research; attending meetings; providing data and documents to Defendants; responding to Defendants' requests for information; submitting applications to local utility entities; providing access to proprietary information from various entities regarding biofuel processing; submitting bids; making presentations; providing proprietary information and reports about the HEP Power Plant; providing reports, information, and analyses of relevant state and local laws; finding prospective investors; preparing reports regarding the use of different biomass products; investigating locations for other installations necessary to the Haina Mill Project; and submitting proposals to state agencies and private land owners. [ Id. at 16–19.].
Plaintiff relies primarily on three agreements:
1) an August 18, 2011 Letter of Intent between TVXA, which “represent[ed] the interests of Scott Harris, Don Borneman and Josh Gottlieb and affiliates [,]” and Cogentech—PACIFIC, LLC, also known as CPL, which “represent[ed] the interests of Garrett Smith, Chuck Barker, affiliates” (“8/18/11 Letter of Intent”); [ id., Exh. 1 at 1;]
2)a Joint Venture Agreement dated September 1, 2011 between GPE and CPL (“9/1/11 Joint Venture Agreement”); [ id., Exh. 2 at 1;] and
3) a letter agreement titled “Mana Makoaleo Energy Project (a/k/a ‘GPE 60’)” dated October 13, 2011 (“10/13/11 GPE 60 Letter Agreement”) by GPE to CPL and Haleakala Holdings LLC (“HCL”); [ id., Exh. 3 at 1].
The 8/17/11 Letter of Intent and the 9/1/11 Joint Venture Agreement relate to biomass-to-energy projects on the Island of Hawai'i, [ id., Exh. 1 at 1; id., Exh. 2 at 1,] and the 10/13/11 GPE 60 Letter Agreement relates to the HEP Power Plant Project. [ Id., Exh. 3 at 1.] Plaintiff alleges that Defendants “have failed to perform their functions with funding entities and have failed to perform their functions and responsibilities as to the financial aspects of the transactions.” [Complaint at 15.]
For example, in October 2011, Defendants brought forward Quartis Capital Partners (“Quartis”) as a viable funding source for the projects, but Plaintiff recommended against transferring any due diligence funds to Quartis. Against Plaintiff's recommendation, Defendants transferred approximately $400,000 to Quartis. Plaintiff alleges that Quartis never provided any due diligence and that Quartis was merely a scam. [ Id. at 15–16.] In February 2013, Plaintiff secured a Letter of Interest from a funding group offering a $9,200,000 loan for the purchase of Haina Mill, along with funding for other purchase related expenses, and over $1,000,000 for improvements to the property. Defendants rejected the offer, but did not identify any other sources of funding. [ Id. at 22.].
Plaintiff alleges that, ultimately, “Defendants failed to provide the funding which they had committed to procure as the financial partner, which caused such projectsto not proceed.” [ Id. at 19.] According to Plaintiff, the purchase contract for the Haina Mill Project expired on June 30, 2013. [ Id. at 27.] Thus, Plaintiff alleges that Defendants “breached their contract, and have remained and further aggravated such breach at all times hence.” [ Id. at 19.] Plaintiff also claims that Defendants misappropriated funds intended for the projects and that Defendants engaged in the unauthorized use of the intellectual property which Plaintiff, or others working with him, generated for the projects. [ Id. at 9, 16–17, 26.].
According to the Complaint, or about March 1, 2012, Garrett Smith for CPL tendered a formal notice of breach to TVXA/GPE. Afterward, Defendants allegedly “began a series of continued, repeated and increasingly amorphous attempts to change the relationship, which would be to the extreme detriment of Plaintiff, and diminution of the ownership participation shares of ownership by Plaintiff, and to alter the contractual agreements between the Parties.” [ Id. at 20.].
Plaintiff alleges that, on February 5, 2013, he received a proposed letter agreement from GPE, by Gottlieb and Borneman, which “attempt[ed] to completely abrogate the Defendants['] earlier agreements and contracts” and “attempt[ed] to demand[ ] 87.5% ownership of projects, as well as unilaterally impos[ing] myriad additional, onerous, unreasonable and unacceptable [to Plaintiff] terms....” [ Id. at 21 (some alterations in original); id., Exh. 25.] Plaintiff states that, after significant pressure from Dubowsky, Plaintiff agreed to sign the letter agreement, with the reservation that it would become void unless it was replaced within sixty days by a letter agreement that was acceptable to Plaintiff. [ Id. at 21; id., Exh. 26.] Plaintiff, however, did not receive any revised agreements from Defendants. [ Id. at 26.] Plaintiff alleges that Dubowsky has been attempting to conduct business on behalf of KAEP “without the consultation, inclusion or authorization of the remaining principals and sole other officer of KAEP-the Plaintiff herein.” [ Id. at 27.].
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