Franklin Constr. Grp., LLC v. Shore

• Court: U.S. District Court — Middle District of Tennessee
• Writing for the Court: WAVERLY D. CRENSHAW, JR., UNITED STATES DISTRICT JUDGE
• Citation: Franklin Constr. Grp., LLC v. Shore, 793 F.Supp.3d 928 (M.D. Tenn. 2025)
• Docket Number: 3:24-cv-1255
• Decision Date: 01 August 2025
• Parties: FRANKLIN CONSTRUCTION GROUP, LLC, Plaintiff, v. William SHORE, et al., Defendants.

793 F.Supp.3d 928

FRANKLIN CONSTRUCTION GROUP, LLC, Plaintiff, v. William SHORE, et al., Defendants.

NO. 3:24-cv-1255

United States District Court, M.D. Tennessee, Nashville Division

Filed August 1, 2025

Christopher C. Sabis, Micah N. Bradley, Thomas Hall, Todd E. Panther, Sherrard Roe Voigt & Harbison, PLC, Nashville, TN, for Plaintiff.

Don L. Hearn, Jr., Glankler Brown, PLLC, Memphis, TN, Jerry E. Martin, Matthew Edward McGraw, Seth Marcus Hyatt, Barrett Johnston Martin & Garrison, LLC, Nashville, TN, Joseph C. Gjonola, Nadine Alsaadi, Nicholas P. Roxborough, Roxborough Pomerance Nye & Adreani LLP, Woodland Hills, CA, for Defendants Keith Meadows, HYDS Inc.

Don L. Hearn, Jr., Glankler Brown, PLLC, Memphis, TN, Joseph C. Gjonola, Nadine Alsaadi, Nicholas P. Roxborough, Roxborough Pomerance Nye & Adreani LLP, Woodland Hills, CA, Joseph Dylan Harper, Tara L. Swafford, The Swafford Law Firm, PLLC, Franklin, TN, for Defendant Joseph Heath.

Darrick Lee O'Dell, Spicer Rudstrom, PLLC, Nashville, TN, Nicholas C. Stevens, Robert J. Uhorchuk, Spicer Rudstrom, PLLC, Chattanooga, TN, for Defendant Lundon Johnson.

MEMORANDUM OPINION

WAVERLY D. CRENSHAW, JR., UNITED STATES DISTRICT JUDGE

Franklin Construction Group ("FCG") is a large builder that between 2020 and 2023 employed William Shore ("Shore") as its vice president of residential construction operations. FCG alleges that Shore and his personal company, JWSC, LLC ("JWSC"), conspired with a host of others to defraud FCG out of millions of dollars. FCG filed this lawsuit against Shore and his alleged co-conspirators, claiming: (1) violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c) and (d); (2) conspiracy; (3) fraud; (4) conversion; (5) violation of the Tennessee Consumer Protection Act ("TCPA"); (6) breach of duty of loyalty (Shore only); (7) breach of contract (Lowe's only); (8) unjust enrichment (Lowe's only); and (9) declaratory judgment (Lowe's only). Shore and JWSC have not filed responsive pleadings and appear to be in default. (Doc. No. 81). Tyler Weber has already been dismissed from this action at FCG's request. (Doc. No. 130). Shore's remaining alleged co-conspirators—Keith Meadows ("Meadows"), Joseph Heath ("Heath"), HYDS Inc. ("HYDS"), Dean Bingham, Lundon Johnson, Joel Chevrette, Danny Knowles, Scott Matthews, and Lowe's Companies Inc.—have all filed motions to dismiss FCG's claims against them. (Doc. Nos. 66, 68, 70, 74, 76, 78 and 88).

For the reasons that follow, the Court will drop Dean Bingham, Lundon Johnson, Joel Chevrette, Danny Knowles, Scott Matthews, and Lowe's Companies Inc. ("Lowe's Defendants") from this case because, based on the current pleadings, they are improperly joined. Because the Lowe's Defendants have been dropped from this case, their motions to dismiss (Doc. Nos. 66, 68, 70, 76, 88) are moot and will be denied as such. The motions to dismiss (Doc. Nos. 74, 78) filed by Heath, HYDS, and Meadows ("HYDS Defendants") will also be denied as to the RICO, conspiracy and fraud claims; however, the motions will be granted as to the conversion and TCPA claims.

I. BACKGROUND¹

A. William Shore

Shore is the architect of any alleged fraud or theft against FCG. FCG hired Shore as its vice-president of residential construction operations on November 15, 2020. (Doc. No. 1 ¶ 32). In this role, Shore was responsible for budgeting, hiring subcontractors and suppliers, and approving invoices from outside parties. (Id. ¶ 33). Because of his position within FCG's organization, Shore had the authority and latitude to identify and hire contractors and suppliers who were willing to engage in kick-back schemes with him. As part of these schemes: (1) the contractors or suppliers (at the direction of Shore) would grossly overcharge FCG for work or materials, (2) Shore would have FCG pay the inflated bill, and (3) the contractors or suppliers would pay Shore a portion of the ill-gotten gains (either in goods or cash). According to FCG, during Shore's three-years at the company, he and his co-conspirators unlawfully pocketed millions of dollars of FCG's money. (Id. ¶ 126)

When FCG terminated Shore's employment on September 7, 2023, it thought he was simply bad at his job. (Id. ¶ 35). However, after Shore was terminated, FCG identified irregularities with his records and launched an internal investigation into Shore's activities, including examining Shore's computer and the paperwork he left in his office. Shore's computer, for example, contained Shore's personal financial information and email communications with some of his alleged co-conspirators—facts that helped FCG connect the dots. (Id. ¶ 36). Based on its investigation, FCG believes that Shore worked with the HYDS Defendants and the Lowe's Defendants to inflate FCG's material costs to enrich themselves.

B. Allegations against the HYDS Defendants

HYDS is a California-based construction materials supplier that sources cabinets, cabinet hardware, countertops, light fixtures, flooring, tile, trashcans, trashcan inserts, and bathroom sinks, largely from Asia. (Id. ¶¶ 10, 37-38). Meadows owns HYDS, and Heath is its CEO. (Id. ¶¶ 11-12, 37). Before Shore began working with FCG, FCG and HYDS conducted no business. (Id. ¶ 38). However, in the late summer or early fall of 2021, Shore began recommending HYDS as a supplier and subcontractor. (Id.). While Shore was employed with FCG, FCG paid HYDS $8,731,901.00 for construction materials and labor. (Id.).

FCG claims that no later than September 2021, Shore, Meadows, and Heath agreed that Shore would sign "purchases orders on FCG's behalf for HYDS to supply FCG with labor and materials at excessive prices in exchange for HYDS paying Shore monetary kickbacks and supplying Shore and/or JWSC with labor and materials, which were billed to and paid by FCG." (Id. ¶ 40). Shore was able to perpetrate the scheme by convincing FCG that he had followed FCG's competitive pricing policies and that HYDS' goods and services were the best bargain on the market. (Id. ¶ 42). However, Shore was simply telling HYDS the highest possible price FCG could pay without losing money, and HYDS would then charge that inflated price. (Id. ¶ 41).

According to FCG, the kickback scheme between Shore and the HYDS Defendant followed a familiar pattern over the course of two years. For example:

On September 13, 2021, Shore issued HYDS FCG Purchase Order No. 109 for lighting fixtures. The price Shore and Meadows and/or Heath concocted for those fixtures, which is reflected on the purchase order, was $30,000.00. However, the market price for these fixtures was only $15,000.00, resulting in a fraudulent overpayment by FCG of $15,000.00. Contemporaneously with this transaction, Shore issued an invoice, either from himself or through JWSC, to Meadows or HYDS for $10,000.00, which Meadows or HYDS paid. Confirming that the $10,000.00 payment Shore or JWSC received was a fraudulent kickback on account of FCG Purchase Order No. 109, the Invoice and Payment detail Shore saved on his FCG computer expressly identifies the $10,000.00 payment as being for FCG Purchase Order No. 109.

(Id. ¶ 46). Likewise, on September 13, 2021, "Shore issued HYDS FCG Purchase Order No. 108R for $80,300 for 3,650 light fixtures. Contemporaneously with this transaction, Shore or JWSC received a payment from Meadows or HYDS for $9,125 with a notation that payment was for lights "3,650 @ $2.50." (Id. ¶ 47). In addition to these two examples of how the kickback scheme operated, FCG offers fourteen other non-exhaustive (see id. ¶ 69) examples. (Id. ¶¶ 46-67).

FCG's internal investigation also revealed compromising communications between Shore and the HYDS Defendants. For example, Shore sent Meadows a text message that read: "Stop sending that [sic] emails to work please you are going to get us busted." (Id. ¶ 64). Shore and Meadows also exchanged a series of emails where Meadows identifies the actual cost of shipping containers but tells Shore "Up to you if you want to double this." (Id. ¶ 68).

After Shore was terminated, the HYDS Defendants refused to deliver materials that FCS had already (over)paid for until FCG signed a document releasing Meadows and HYDS from all liability. (Id. ¶ 71). FCG invites the inference that the HYDS Defendants—knowing of their legal exposure for the illegal kickback scheme—held the construction materials hostage so that FCG would be forced into waiving the HYDS Defendants' liability for the fraud they perpetrated with Shore. When that failed, this lawsuit followed.

C. Allegations against Lowe's Defendants.

In addition to the two-year long scheme between Shore and the HYDS Defendants, FCG claims that various employees of Lowe's also conspired with Shore to FCG's detriment. FCG claims that Heath introduced Shore to a Lowe's employee, Dean Bingham ("Bingham"), (id. ¶ 74), and that Shore convinced Bingham and other Lowe's employees to "further defraud" FCG. (Id. ¶ 74).² FCG claims that one method that Shore and the Lowe's employees used to defraud FCG was to engage Shore or JWSC as an independent contractor to perform estimating services for Lowe's on FCG orders. (Id. ¶ 76). This, according to FCG, allowed the Lowe's employees to pay Shore for "fictitious" estimating services (i.e. kickbacks) in exchange for Shore overestimating "the type and quantity of materials needed on FCG's projects" thereby enriching the Lowe's employees through larger bonuses. (Id. ¶¶ 78-80). Lowe's paid Shore or JWSC more than $100,000 to act as an "estimator." (Id. ¶ 85). FCG also claims that Shore's personal computer showed that Lowe's employee Joel Chevrette paid Shore $13,500; Bingham paid Shore $36,500; and Lowe's Pro Supply paid Shore or JWSC $18,550. (Id. ¶ 86). Shore's computer also allegedly showed that Shore had paid Bingham $31,650 for "commissions and fees."³ (Id.).

In addition to the alleged "estimator" scheme, FCG claims that Lowe's employees conspired with Shore to deliver materials to his...