Walshe v. Zabors

• Decision Date: 18 April 2016
• Docket Number: Civil Action No. 15-cv-01218-MEH
• Citation: 178 F.Supp.3d 1071
• Parties: Brian F. Walshe, Plaintiff, v. Robert Zabors, and Enovation Partners, LLC, Defendants.
• Court: U.S. District Court — District of Colorado

178 F.Supp.3d 1071

Brian F. Walshe, Plaintiff,

v.Robert Zabors, and Enovation Partners, LLC, Defendants.

Civil Action No. 15-cv-01218-MEH

United States District Court, D. Colorado.

Signed April 18, 2016

Jena Rae Akin, Laura J. Ellenberger, Anthony L. Leffert, Robinson Waters & O'Dorisio, P.C., Denver, CO, for Plaintiff.

Andrea Marie Glinka Przybysz, Tanner J. Walls, Tucker Ellis, LLP, Denver, CO, Edward Timothy Walker, Vail Resorts Management Company, Broomfield, CO, for Defendants.

ORDER ON MOTIONS FOR SUMMARY JUDGMENT

Michael E. Hegarty

, United States Magistrate Judge.

Before the Court are Defendants' Motion for Summary Judgment [filed December 31, 2015; docket #41] and Plaintiff's Motion for Summary Judgment [filed February 23, 2016; docket #48]. The motions are fully briefed and the Court finds oral argument (not requested by the parties) would not assist in its adjudication of the motions. For the following reasons, the Court grants in part and denies in part the parties' motions as set forth herein.¹

BACKGROUND

I. Procedural History

Plaintiff initiated this action on June 10, 2015 alleging essentially that Defendants breached a partnership agreement and a fiduciary duty owed him; Plaintiff also brings claims for promissory estoppel and unjust enrichment. Complaint, docket #1. Defendants initially responded to the Complaint by filing an Answer, then, after approximately three months into the discovery period, were granted leave to file an Amended Answer and Counterclaims alleging Plaintiff misappropriated trade secrets and breached a fiduciary duty owed them. Dockets ##20, 39.

Plaintiff answered on December 15, 2015; shortly thereafter, Defendants filed the present motion seeking summary judgment and arguing Plaintiff's claims, all based on the existence of a partnership interest in Enovation Partners LLC, fail because Plaintiff was never a “partner” nor “member” of the company. After Defendants' motion was briefed, Plaintiff filed his motion seeking summary judgment and arguing Defendants' counterclaims based on Plaintiff's possession or use of company information fail because Plaintiff was entitled to have the information, the information belonged to Plaintiff, and/or Plaintiff only used any company information to benefit Enovation by collaborating with the company on joint projects.

II. Findings of Fact

Upon review of the motions for summary judgment and the supporting papers attached, the Court finds the following facts, viewed in the light most favorable to the non-moving party.²

1. Enovation Partners LLC (“Enovation”) is a Washington limited liability company with its principal place of business in Des Plaines, Illinois.

2. Enovation was founded in 2013 with three members: Defendant Robert Zabors, Jeffrey Clark, and GTI International (“GTI”), a non-voting corporate member. As of December 30, 2015, the members included Robert Zabors, Jeffrey Clark, Alvaro Daniel Gabaldon, Todd Allmendinger, William Kemp, and West River Equity Partners, LLC - Series E. See Washington Secretary of State record, docket #41-5. 3. Enovation is governed by an operating agreement, which identifies the members of the LLC and dictates how profits and losses are shared and distributed among the members. See Enovation Amended and Restated Operating Agreement (“Operating Agreement”), docket #41-1.

4. Section 2.7 of the Operating Agreement governs the admission of new members, and states:

Section 2.7 New Members. The Members may admit a new Member or Members, as the case may be, to the Company, only if such new Member (i) is approved unanimously by the Members; (ii) delivers to the Company his required capital contribution; (iii) agrees in writing to be bound by the terms of this Agreement by becoming a party hereto; and (iv) delivers such additional documentation as the Members shall reasonably require to so admit such new Member to the Company.

Operating Agreement, § 2.7, docket #41-1.

5. Plaintiff was never a member of Enovation and never signed Enovation's Operating Agreement.

6. On September 11, 2013, Zabors emailed to Plaintiff a “draft” employment offer letter with a message, “basic document for discussion.” Docket #44-4. The letter included a proposed “base salary draw,” “additional compensation potential,” and “equity.” Id. Plaintiff never signed the letter.

7. Plaintiff joined Enovation as an employee on October 1, 2013.

8. Plaintiff has been the owner of a company called Altera Energy d/b/a ION Consulting (“ION”) since its inception in 2010. Deposition of Brian Walshe, November 17, 2015 (“Walshe depo”), 23: 4-22, docket #41-2. ION was not merged with Enovation and was not rendered “inactive” (as that term is defined by the Colorado Secretary of State) during Plaintiff's employment with Enovation. Id. , 59: 16-25, 60: 1-23.

9. Plaintiff electronically signed a co-employment agreement with Enovation and its HR provider, ADP, which made clear that Plaintiff was an “employee-at-will” and that Plaintiff or Enovation was “free to end the employment relationship at any time, for any or no reason, with or without cause or advance notice.”

10. As an employee of Enovation, Plaintiff completed an I-4, a W-4, received a W-2, and received a paycheck where federal and state taxes were withheld. Plaintiff also was to receive a “subjective bonus” based on a “combination” of “top line revenue, profitability, and firm building activity.” Deposition of Robert Zabors, November 12, 2015 (“Zabors depo”), 87: 25, 88: 1-12, docket #41-7.

11. Zabors testified that there was “never” a “partner title” at Enovation; rather, he “wanted people to think over and over again of themselves as working together to grow, and that's my perspective. So we all want to work together as partners.” Zabors depo, 79: 21-25, docket #44-1.

12. The term “founding partner” at Enovation is not a title, but a “descriptor”; “[w]e have people with all kinds of different titles who call themselves founding partners, a wide variety of titles call themselves founding partners.” Id. , 104: 17-25, 105: 1; 152: 4-15.

13. Plaintiff was a “founding partner” in that he was “senior level” and “there during the first year” of the firm's existence. Id. , 105: 3-23, 111: 5-25. The signature block on Plaintiff's email account at Enovation refers to him as “Partner.” Docket #44-8.

14. Zabors referred to Plaintiff as “his partner” or “a partner” at Enovation to third parties during the time Plaintiff worked there. Id. , 135: 6-25; 141: 12-16; dockets ##44-6, 44-7.

15. Like Plaintiff, Zabors expected that Plaintiff would receive shares (equity) in Enovation. Id. , 107: 13-25, 108: 1-7. Such receipt was conditioned upon Plaintiff signing an employment agreement for which Plaintiff and Zabors discussed compensation and equity provisions throughout Plaintiff's year at Enovation. Id. , 109: 12-25, 110: 1-5.

16. Plaintiff believed that he was entering a partnership with Zabors, the “other partners,” and Enovation, and they were going to negotiate and discuss an operative agreement and then sign an LLC agreement. Walshe depo, 40: 14-25. He believes he was “told” he “was joining Enovation Partners as a partner and soon-to-be member.” Id. , 42: 18-22.

17. Plaintiff's share in the partnership was “never defined while [he] was there.” Id. , 43: 18-25, 44: 1-9. He and Zabors “were working toward an agreement” as to his share, but they “never came to an agreement on those issues.” Id. , 83: 8-21. However, Plaintiff understood before he joined Enovation that he and Zabors agreed the partners “would continually distribute new equity every year, and the shares that [he] would earn would be in proportion to [his] revenue generation.” Id. , 130: 9-20. Specifically, Plaintiff believed in September 2013 that he and Zabors had “an understanding and a path that enough equity [was] going to be allocated to dilute the partners so that one person [would] not be controlling all of it.” Id. , 146: 3-25, 147: 1-17.

18. At a September 2013 meeting of the “founding partners” of Enovation — Plaintiff, Zabors, Clark, Allmendinger, Gabaldon, Powell, Kemp, and Wiley — they discussed the “need[ ] to resolve a defined equity and compensation model” and Zabors stated they “would have the compensation model finalized soon and certainly by February so that [they]...could use the proceeds to pay [their] income tax in 2014.” Id. , 155: 11-25, 156: 1-15.

19. The partners never discussed a minimum level of revenue generation from which equity would be allocated, but they discussed a general target of $1 million per partner. Id. , 187: 15-25, 188, 189: 1-3.

20. On a flight from Albuquerque on a Monday in April 2014, Zabors proposed to Plaintiff what he called a “Founding Partner Equity Plan (‘FPEP’)” in which Zabors “would designate some portion of ‘his equity’ to be distributed to the other partners over the next ten years.” Id. , 127: 6-22. Later that week, Plaintiff told Zabors that “if that was what he was proposing and if that was what he is intending, that would not be of interest to me.” Id. , 128: 12-20.

21. On June 5, 2014, Zabors emailed to Plaintiff a draft proposed “Operating Agreement for Enovation Partners, LLC” with a message asking for Plaintiff's review, ideas, and input “as a partner and a thought partner,” and informing Plaintiff of the “capital structure” as follows:

GTI - 20%

Zabors - 45.625%

Clark - 6.875%

Kemp - 2.5%

FPEP - 25%

Docket #44-5.

22. In an email to Zabors on June 19, 2014, Plaintiff discussed his thoughts after a meeting with Zabors on June 17, 2014 concerning (1) Zabors' proposed “equity allocation framework” which was “not attractive enough for [Plaintiff] to join the firm”; (2) Plaintiff's bonus for the fiscal year ending June 2014; and (3) Plaintiff's intent to “present a proposed equity and bonus payout scenario” which would “determine his future role with Enovation” but could also “be used as a template for all partner compensation discussion.” Docket #52-6 at 4-5.

23. In July 2014, Plaintiff sent an email to Zabors with...