Future Now Enters., Inc. v. Foster

• Decision Date: 19 March 2012
• Docket Number: Case No. 11–10530.
• Citation: 860 F.Supp.2d 420
• Parties: FUTURE NOW ENTERPRISES, INC. and Timothy Cimmer, Plaintiffs, v. John FOSTER, Steven Schweihofer, Great Lakes and Rivers Development, LLC, Blue Water Oil Co., Don Foster, Inc., Don Foster Oil Co., Foster Energy Inc., Foster Energy Services LLC, and Foster Blue Water Oil LLC, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

860 F.Supp.2d 420

FUTURE NOW ENTERPRISES, INC. and Timothy Cimmer, Plaintiffs,

v.John FOSTER, Steven Schweihofer, Great Lakes and Rivers Development, LLC, Blue Water Oil Co., Don Foster, Inc., Don Foster Oil Co., Foster Energy Inc., Foster Energy Services LLC, and Foster Blue Water Oil LLC, Defendants.

Case No. 11–10530.

United States District Court,

E.D. Michigan,

Southern Division.

March 19, 2012.

Michael J. Lebow, Lebow/Gerlach, West Bloomfield, MI, for Plaintiffs.

Brian C. Summerfield, Thomas P. Van Dusen, Bodman, Troy, MI, for Defendants.

OPINION AND ORDER GRANTING MOTION TO DISMISS

DAVID M. LAWSON, District Judge.

The defendants have moved to dismiss the present action brought by the plaintiffs, who contend that they were cheated out of an ownership interest in a company that entered the newly-deregulated market to sell natural gas. The defendants argue that the plaintiffs' five-count complaint does not state any actionable claims, and the claims all are barred by the applicable statutes of limitation. The Court heard oral argument on the motion on June 27, 2011, and after due consideration concludes that the defendants' statute of limitations argument requires dismissal of the complaint as time barred. Therefore, the Court will grant the motion to dismiss.

I.

Plaintiffs Future Now Enterprises, Inc. (FNE) and its sole shareholder, Timothy Cimmer, allege that they embarked on a joint venture with defendants John Foster and Steven Schweihofer to enter the retail natural gas market. The plaintiffs allege that the parties agreed that the plaintiffs would receive a 33% ownership interest in the joint venture. The joint venture initially formed two entities: Macomb County Energy, LLC (Macomb Energy) in Michigan and My Choice Energy, LLC (MCELO) in Ohio. Foster and Schweihofer caused MCELO to be dissolved and transferred Macomb Energy's Michigan retail gas certification to a newly formed Michigan LLC, My Choice Energy (MCEM). Despite promising to do so, Foster and Schweihofer never gave FNE or Cimmer a 33% ownership interest in MCEM. The plaintiffs filed suit, bringing claims for fraud, civil conspiracy, breach of contract, quantum meruit, and breach of fiduciary duty against John Foster, Steven Schweihofer, and a number of companies, corporations,and limited liability companies owned by Foster and Schweihofer.

According to the complaint, in 1999, Cimmer, a Canadian citizen who had developed expertise in retailing natural gas products, formed Future Now Enterprises, Inc., an operations and management company that provides a broad range of services relating to the retailing of natural gas products. In 2001, FNE established its U.S. presence by opening an office in Cleveland, Ohio.

In 2001, the Michigan Public Service Commission (MPSC) announced that it was establishing a natural gas retail sales program as part of the deregulation of the natural gas industry. Aware of the MPSC program, defendants John Foster and Steven Schweihofer (owners of the several corporate and limited liability company defendants), wanted to enter the retail natural gas market but lacked the knowledge and experience to do so. They did, however, have the financial ability to support a retail natural gas business.

Either in late 2001 or early 2002, a mutual acquaintance introduced Cimmer to Foster. The defendants sought to determine whether Cimmer had an interest in forming a joint venture with Foster and Schweihofer and to enter the natural gas retail market. In February 2002, Cimmer and Foster began discussing in earnest the creation of a joint venture between FNE and the defendants in which plaintiff Cimmer and defendant Foster would be principals. Cimmer alleges that he made it clear that “the only basis of his interest in a business venture with the Defendants ... was as an equity owner through FNE.” Compl. ¶ 35. Cimmer says that Foster expressly acknowledged Cimmer's ownership objectives and agreed to them.

By the end of May 2002, Cimmer and Foster had agreed to form a business entity that would market natural gas in Michigan and later Ohio. The agreement, according to the plaintiffs, was that (1) FNE would receive a 33% interest in the new business and would provide services as consideration for its ownership interest, (2) Cimmer would serve as the chief executive of the new business, (3) Cimmer would receive compensation and reimbursement for services and expense, (4) Foster would provide financial backing, and (5) Foster would have 66% ownership in the company. The agreement was not reduced to writing at that time. But it was then that Schweihofer began his involvement with the joint venture, meeting with Cimmer and Foster to set up the initial entity. After being assured that FNE would be a 33% equity owner of the joint venture, Cimmer immediately began work in reliance on the agreement.

Macomb Energy was formed on June 27, 2002 by Schweihofer. Cimmer does not allege that he was named as a member or otherwise received any formal ownership interest in it. He did submit Macomb Energy's registration to the MPSC natural gas pilot program. Cimmer worked throughout the summer of 2002 on the project. In July 2002, Foster provided Cimmer with the financial documents necessary to establish credit with gas suppliers. Cimmer, on behalf of Macomb Energy, submitted one of those applications to Michigan Consolidated Gas Company. The submitted credit application contained information relating to the financial condition and credit of the defendants. Macomb Energy was approved for “Authorized Supplier” status on August 9, 2002. By late summer or early fall, Macomb Energy had begun operations in Michigan.

Cimmer and Foster met on September 6, 2002 to refine the details of the venture. At that meeting, Foster sketched some notes that, according to the plaintiff, memorialized the agreement. However, the notes, attached to the complaint, are far from clear, and the plaintiff does not discuss the meaning of the notes in any detail. Neither party has submitted any other documentation discussing the terms of the agreement.

The plaintiff alleges that shortly thereafter, the parties then decided to enter the Ohio natural gas market under the same terms that the parties agreed upon on September 6, 2002. On October 7, 2002, Cimmer filed articles of organization in Ohio for My Choice Energy, LLC (MCELO). Cimmer, Foster, and Schweihofer were all listed as authorized representatives of the company, and Cimmer was designated as the agent. There is no representation of the ownership of the company, however. The articles of organization listed FNE's Ohio address as the address for MCELO. Cimmer later submitted a revised application to the Public Utilities Commission of Ohio that also listed Cimmer as CEO and one of the owners, but it also appears that Cimmer signed a document dissolving MCELO as of November 2, 2002.

Also on October 7, 2002, Cimmer filed MCELO's application with the Public Utilities Commission of Ohio for certification as a natural gas retailer. The plaintiffs maintain that the application lists Cimmer as one of the three owners of the company along with Foster and Schweihofer.

On November 20, 2002, Schweihofer told Cimmer that MCELO must be dissolved because he and Foster were restructuring their other companies, and MCELO, as it was then constituted, would complicate their restructuring plan. The plaintiffs allege that Schweihofer told Cimmer that Schweihofer's and Foster's companies and FNE would be the owners under the new structure, rather than the individuals. According to the complaint, MCELO was dissolved on December 2, 2002.

On November 20, 2002, Schweihofer, on behalf of defendant Blue Water Oil Co. (BWO), filed articles of organization to form Great Lakes and Rivers Development, LLC (GLARD). On the same day, Schweihofer, unbeknownst to Cimmer, filed articles of organization for Foster Blue Water Oil Company LLC (FBW). FBW immediately entered into an operating agreement with its sole member, GLARD.

Schweihofer filed articles of organization in Michigan for My Choice Energy, LLC (MCEM) on November 20, 2002, also without Cimmer's knowledge. MCEM's sole member was FBW, whose sole member was GLARD, whose sole member was BWO. Cimmer was not listed as a member of MCEM. Schweihofer told Cimmer that once MCEM was up and running and the restructuring was complete, documents reflecting the plaintiffs' ownership interest would be prepared. Apparently, that never happened, however.

From May 2002 until he was fired in 2005, Cimmer says that he continued operating the businesses under the impression that he was an owner through FNE. The plaintiffs contend that Cimmer's work included preparing a foreign entity registration for MCEM, submitting a new application for Macomb Energy to comply with new licensing procedures, and running the daily operations of Macomb Energy and MCELO, including contract negotiation. During this time, Cimmer identified himself as the CEO/President of both Macomb Energy and MCELO with the consent of the defendants.

The plaintiffs allege that MCELO entered into a gas supply agreement with Cincinnati Gas and Electric on December 18, 2003, despite the fact that MCELO was dissolved over a year earlier. The plaintiffs say that the agreement between MCELO and Cincinnati Gas and Electric listed Cimmer as an “owner” in two places and was witnessed by Foster. However, the plaintiffs have not furnished a copy of the document.

In the summer of 2004, either Foster or Schweihofer filed an application with the Michigan Public Service Commission to transfer the retail gas certification from Macomb Energy to MCEM. The plaintiffs acknowledge that by August 2004, they discovered that neither Cimmer nor FNE had an interest in MCEM. They came upon that knowledge when they reviewed the application, which included a copy of the MCEM Operating Agreement. As a result, Cimmer requested a meeting with Foster to discuss creating...