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Daimler v. Moehle

United States District Court, W.D. Pennsylvania

July 27, 2018

ERIC DAIMLER, Plaintiff,
v.
CHRIS MOEHLE, ROBOTICS HUB FUND 1, LLC and COAL HILL VENTURES LLC Defendants.

          MEMORANDUM OPINION

          Nora Barry Fischer United States District Judge.

         Plaintiff Eric Daimler (“Plaintiff” or “Daimler”) brought this action alleging that Defendants Chris Moehle (“Moehle”), Robotics Hub Fund 1 LLC (“Robotics Hub”), and Coal Hill Ventures LLC (“Coal Hill”) (Robotics Hub and Coal Hill, together, the “Companies”) made intentional misrepresentations to Daimler intended to induce him into entering a business partnership with Moehle, which included merging their existing companies and creating new ones. (First Amended Complaint, Docket No. 4 at ¶ 1). He further alleges that the Defendants then forced Daimler out of these companies by preventing him from satisfying conditions precedent to a common unit vesting schedule, resulting in the forfeiture of all of his common units in the Companies. (Id. at ¶ 2). In short, Daimler claims that Defendants wrongly forced Daimler out of companies that he helped to create and build. Defendants now move to dismiss Daimler's complaint on the grounds that it fails to state a claim upon which relief may be granted.

         The Court has reviewed the Brief in Support of Defendants' Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6) (Docket No. 17), the Memorandum of Law in Opposition to Defendants' Motion to Dismiss the First Amended Complaint (Docket No. 19), and the Reply Brief in Support of Defendants' Motion to Dismiss Under FRCP 12(b)(6) (Docket No. 20). For the reasons set forth below, Defendants' motion to dismiss (Docket No. [16]) is GRANTED IN PART AND DENIED IN PART.

         I. STATEMENT OF FACTS

         Sometime in 2015, Daimler and Moehle, each of whom operated his own robotics and/or venture finance company, formed a partnership in order to invest in high-growth-potential, early-stage robotics companies. (Docket No. 4 at ¶¶ 10-11). The two agreed to create an equal partnership by combining Moehle's company, Skilled Science, with Daimler's company, Coal Hill; they also created two new entities, Robotics Hub and Robotics Hub Fund 1 LP (the “Fund”). (Id. at ¶¶ at 11-12). Daimler and Moehle amended and restated Coal Hill's operating agreement to reflect Daimler's and Moehle's equal partnership, began working together on marketing strategies, and merged “expenses accrued through the funding of Skilled Science into the fundraising expenses of Robotics Hub.” (Id. at ¶ 14).

         Before beginning the partnership, Moehle told Daimer that General Electric (“GE”) would invest $20 million in the Fund and that he had strong relationships with the National Robotics Engineering Center (“NREC”) and the Robotics Institute (“RI”), both of which would create investment opportunities for their venture. (Docket No. 4 at ¶¶ 15-16). By early 2016, however, Daimler learned that Moehle had misrepresented his relationships with NREC and RI. (Id. at ¶ 18). Nevertheless, throughout 2016, Moehle continued to represent that GE would be investing $20 million. (Id. at ¶ 19).

         In January 2016, the Obama White House appointed Daimler as a Presidential Innovation fellow. (Docket No. 4 at ¶ 29). Daimler, with Moehle's encouragement, accepted the year-long fellowship. (Id. at ¶¶ 30-31). During the fellowship, Daimler advised the White House on robotics and artificial intelligence, and the fellowship generated positive press coverage for Daimler and Robotics Hub. (Id. at ¶¶ 32-33). During the course of the fellowship, Daimler provided unspecified services to the Companies but did not receive any compensation. (Id. at ¶ 34). Daimler and Moehle agreed that Daimler would be paid at a later date. (Id.)

         During public relations and fundraising efforts, as well as joint presentations to potential investors, the Companies and the Fund promoted Daimler and Moehle as equal partners. (Docket No. 4 at ¶¶ 25-26). Both were also designated as “key persons” in the Fund's Limited Partnership Agreement.[1] (Id. at ¶ 24).

         In the spring of 2016, Daimler and Moehle retained Reed Smith LLP to prepare the formation and governing documents, including the Companies' Amended and Restated Operating Agreements and Common Unit Award Agreements. (Docket No. 4 at ¶ 36). Moehle was the main point of contact for the law firm. (Id. at ¶ 37). The Companies' Amended and Restated Operating Agreements and Coal Hill's and Robotics Hub's Common Unit Award Agreements with both Moehle and Daimler are attached to the complaint as exhibits, (Docket Nos. 4-1 through 4-6), and the Court has considered and relied upon each in deciding this motion.[2] See, e.g., Lum v. Bank of America, 361 F.3d 217, 222 (3d Cir. 2004) (in resolving Rule 12(b)(6) motions, “courts generally consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim”) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)).

         Insofar as relevant here, the Amended and Restated Operating Agreements, both dated March 23, 2016, [3] noted that Daimler and Moehle were members of the Companies, and they appointed the two as managers and board members. (Docket Nos. 4-5 and 4-6 at ¶¶ 5.2). The boards of each company were authorized to manage, control and operate each company and had:

the full and complete power, authority, and discretion for, on behalf of and in the name of the Company, to take such action as it may in its sole discretion deem necessary or advisable to carry out any and all of the objectives and purposes of the Company, subject only to [the Operating Agreement and applicable law.]

(Docket Nos. 4-5 and 4-6 at ¶ 5.1). Each Manager on the board had one vote on matters submitted to the board, and, in the event of a tie vote, the board would refer the matter to a Deadlock Arbitrator whose decision would be “final and binding on the Company, the board and the Members.” (Docket Nos. 4-5 and 4-6 at ¶ 5.5(c)). Managers were not entitled to receive compensation for their duties as a manager, nor did the Operating Agreements “confer upon any Manager any rights with respect to continued employment by the Company.” (Docket Nos. 4-5 and 4-6 at ¶ 5.7). The Agreements specifically provided, “[N]othing herein should be construed to have created any employment agreement with any Manager.” (Id.) Officers, however, were entitled to compensation as determined by the board. (Id. at ¶ 6.10). The Agreements noted that neither Moehle nor Daimler had made any capital contributions, and the Agreements provided that neither would be required to make additional capital contributions. (Id. at ¶ 7.2). If additional capital contributions were made, those contributions could be made only “with the consent of the Board and in connection with an issuance of Units.” (Id. at ¶ 7.2). Loans by any member were not to be considered capital contributions under the Agreements. (Id. at ¶ 7.6). The holders of a the members serving the boards. (Docket Nos. 4-5 and 4-6 at ¶¶ 5.2, 5.3). Exhibit A to the Operating Agreements noted that both Daimler and Moehle each had 42 common units in each of the Companies, “which may be subject to vesting, pursuant to a restricted unit award agreement.” (Docket No. 4-5 at 39; Docket No. 4-6 at 40).

         The same day that the Operating Agreements were signed, each Company granted each of Daimler and Moehle the 42 common units referenced above.[4] (Docket Nos. 4-1, 4-2. 4-3, and 4-4). The units vested over time. Moehle's units vested as follows:

▪ 20% vests on the first anniversary of the Date of the Award;
▪ 1.6666% vests ratably on the last day of each month thereafter until the fifth anniversary of the Date of the Award.

(Docket No. 4 at ¶ 38; Docket Nos. 4-1 and 4-2 at 2). In addition, Moehle's units vested only if Moehle was providing Full Time Services to a combination of the Companies, the Fund and the investment manager of the Fund on the Vesting Date.[5] (Docket Nos. 4-1 at 3, ¶ 2(a); 4-2 at 3, ¶ 2(a)). If Moehle stopped working full time, he would forfeit any unvested units. (Docket Nos. 4-1 and 4-2 at 4, ¶ 2(b)).

         Daimler's units, however, vested pursuant to a different schedule. According to the Summaries contained on the first page of the Daimler Awards, 20% of Daimler's units would vest on the date that he had provided twelve consecutive and uninterrupted months of Full Time Services, provided that those services began within one year of the Award. (Docket Nos. 4-3 and 4-4 at 2). If Daimler met those conditions, the remaining 80% of the units would vest on a pro-rata basis on the last day of each month thereafter until the fifth anniversary of the award. (Id.) Like the Moehle Awards, the Daimler Awards stated that, if he stopped providing Full Time Services, he would forfeit any unvested units. (Docket No. 4-3 at ¶ 2(b) Docket No. 4-4 at ¶ 2(b)).

         Each of the four award agreements otherwise appear to contain identical language, which includes a paragraph addressing employment rights. Of note, paragraph 10 of each award, entitled “No Employment Rights, ” provides:

The grant of this Award shall not confer upon the Grantee any right to be retained by or in the employ or service of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee's employment or service at any time. The right of the Company, as applicable, to terminate at will the Grantee's employment or service at any time for any reason is specifically reserved.

(Docket Nos. 4-1, 4-2, 4-3, and 4-4 at ¶ 10) (underline and bold in original).

         Over the course of the partnership, Daimler provided the Companies with financial support. For example, he loaned $125, 000 to the Companies pursuant to a promissory note, which has since been repaid with interest. (Docket No. 4 at ¶¶ 27-28). He advanced personal funds to cover unspecified corporate expenses - including $30, 000 between May and August 2016 - and has been reimbursed $35, 000. (Id. at ¶ 27, 28, 65, and 68). He also provided $100, 000 capital contributions to Robotics Hub and Coal Hill but did not receive units in return, even though he and Moehle (the only two members of the board) had agreed that he would.[6] (Id. at ΒΆΒΆ 67, 135, 174). ...


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