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Bretton J. Bolt v. Francis P. Kirley and Nexion Health

October 17, 2012

BRETTON J. BOLT,
PLAINTIFF,
v.
FRANCIS P. KIRLEY AND NEXION HEALTH, INC., DEFENDANTS,



The opinion of the court was delivered by: J. Paul Oetken, District Judge:

MEMORANDUM AND ORDER

Plaintiff Bretton J. Bolt ("Bolt") brings this action both on his own behalf against Nexion Health, Inc. ("Nexion") and derivatively, on Nexion's behalf, against Francis P. Kirley ("Kirley"). In their Motions to Dismiss, Defendants Kirley and Nexion present several arguments for the dismissal of the three causes of action alleged in Bolt's Amended Complaint. It is only necessary to reach the jurisdictional issues raised by Defendants, which prove fatal to all three claims alleged in the Amended Complaint. As explained below, this Court does not have personal jurisdiction over Defendant Kirley. As a result, the claims against him must be dismissed. Because Bolt's argument that this Court can exercise supplemental jurisdiction over Nexion hinges upon the jurisdictional muster of the claims against Kirley, the claim against Kirley must be dismissed for lack of subject matter jurisdiction.

I.Background

A.Factual Background

The following facts are drawn from the allegations in the Amended Complaint, which are presumed true for purpose of this motion. (Dkt. No.19 ("Am. Compl.").) This summary focuses on the facts pertinent to the motion before the Court.

Defendant Kirley is the majority shareholder, President, and Chief Executive Officer of Nexion, a healthcare and rehabilitation service provider, incorporated under the laws of Delaware. Nexion's principal place of business is in Maryland, though Nexion also has offices in Colorado, Louisiana, and Texas. Plaintiff Bolt is a minority shareholder and, until resigning in May of 2011, he was also the Executive Vice President, Chief Financial Officer, and Secretary of Nexion. Since his departure, Kirley has been the sole director of the company.

Sometime between 2006 and 2007, Kirley formed, in his individual capacity, Maryland Pharmacy Holdings, LLC, which in turn gained a majority stake in a Texas pharmacy. Through a different LLC of which he was the sole owner, Kirley also acquired an ownership interest in an inpatient psychological hospital in Shreveport. Bolt alleges these are only two examples of various business opportunities that Kirley unlawfully took for himself at the expense of Nexion.

At some point, an unidentified company ("Purchaser") began negotiating with Nexion about acquiring Nexion. Kirley, acting as a representative of Nexion, signed a confidential term sheet with Purchaser. However, Kirley never told Nexion's board of directors or shareholders about the term sheet, or even about Purchaser's interest in acquiring Nexion. Instead, Kirley unilaterally decided to reject Purchaser's offer. Bolt alleges that Kirley's behavior in the face of Purchaser's attempted acquisition stemmed from his own personal interest in, inter alia, remaining CEO of Nexion.

On October 21, 2011, Bolt sent a demand letter to Nexion, requesting that the company take action against Kirley for breaching his fiduciary duties to Nexion and self-interestedly thwarting Purchaser's acquisition of Nexion. In his letter to Nexion, Bolt also invoked his right, pursuant to section 5 of the Shareholder Agreement ("SHA"), to receive an accounting and access to certain Nexion information, documents, and records. On December 12, 2011, Nexion's General Counsel, Brian P. Lee ("Lee"), responded to Bolt's letter. Lee stated that, in Nexion's opinion, Bolt's claims regarding Kirley's alleged misdeeds lacked merit. Lee also declined to provide Bolt with the information Bolt requested, contending that Nexion was not required to do so under section 5 of the SHA.

B.Procedural History

On January 24, 2012, Bolt filed a Complaint in this Court. The Complaint was amended on March 16, 2012. In the Amended Complaint, Bolt derivatively brings two claims on behalf of Nexion against Kirley, one alleging various breaches of Kirley's fiduciary duties to Nexion (Count I), the other alleging unjust enrichment at Nexion's expense (Count II). In his Amended Complaint, Bolt argues that Kirley's business ventures were in Nexion's line of business and that Nexion had a tangible expectancy in those ventures. Bolt also individually brings a third claim, premised on a breach of contract theory, against Nexion, for Nexion's failure to provide him with the requested records (Count III).*fn1 Defendant Kirley has moved to dismiss Counts I and II of the Amended Complaint. Defendant Nexion has moved to dismiss Count III.

II.Discussion

A.Motion to Dismiss Standard

To survive a motion to dismiss pursuant to Federal Rule 12(b)(6), a plaintiff must plead sufficient factual allegations "to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court must accept as true all well-pleaded factual allegations in the complaint, and "draw[ ] all inferences in the plaintiff's favor." Allaire Corp. v. Okumus, 433 F.3d 248, 249-50 (2d Cir. 2006) (internal quotations omitted). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ...


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