Court Opinion

ID: 9916615
Source: CourtListenerOpinion
Date Created: 2024-01-10 02:50:45.193651+00
Date Added: 2024-06-11T13:25:40.242726
License: Public Domain

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        STATE OF MAINE                                                         SUPERIOR COURT
        CUMBERLAND, ss.                                                        CIVIL ACTION
                                                                               DOCKET NO. CV-22-203

        MECHANICAL SERVICES,
        d/b/a MAINE CONTROLS,
               Plaintiff,
                                                                                ORDER ON MOTION
                 v.                                                                TO DISMISS
                                                                              STATE OF MAINE
                                                                          Cumberland, ss, Clerk's Office
        JEREMY COLLINS, CRAIG KIRBY,
        and COLLINS AUTOMATION,
              Defendants
                                                                                MAR O8 2023                /: 2§PivJ
                                                                            RECEIVED
                 Before the Court is a Motion to Dismiss brought Defendant Collins Automation. Collins

        Automation, a company formed by the other Defendants Craig Kirby and Jeremy Collins, argues

        under M.R. Civ. P. 12(b)(6) and 9(b) that Count II of Plaintiffs Amended Complaint fails to

        aiticulate a sufficient claim for fraudulent misrepresentation as to Collins Automation and

         therefore, that the Amended Complaint should be dismissed as to Collins Automation. The

        remaining counts do not involve Collins Automation as a Defendant. For the following reasons,

         the Court denies the Motion.

        Background

        The following facts are alleged in the Amended Complaint:

                 Mechanical Services is a heating, ventilation, and air conditioning ("HV AC") contractor

        based in Portland with four other locations in Maine. PL's Amend. Comp!.~ 6. Maine Controls is

         a division of Mechanical Services that specializes in sales, installation, and maintenance of

         automatic digital temperature control components and systems. Id. Maine Controls serves

Plaintiff-A Robert Ruesch, Esq.                               I
Defendant Collins Auto-Robert Cummins, Esq.
Deis Jeremy Collins & Craig Kirby-David Goldman, Esq.
 commercial facilities and educational institutions in Maine, and it supplies products to and

 subcontracts with other HVAC entities in Maine. Id.
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        For about 40 years, Maine Controls has had a business relationship with Schneider

 Electric Buildings America ("Schneider"), which manufactures HV AC components and systems,             I
 wherein Maine Contmls would purchase software and matel'ials from Schneider.            n 7-8. The
relationship was mutually beneficial for both companies. 'if 9.

        Kirby was employed by Maine Controls for about 15 years and was a project programmer

and manager. 'if 13. He gave notice of his intent to leave Maine Controls in February 2021 and

resigned officially on April 30, 2021. 'i['i[ 14-15. Collins was employed at Maine Controls for four

years, as a service technician and later a project manager. 1115. He resigned on May 7, 2021. Jd.

        Collins and Kirby had acknowledg~d receipt of the Mechanical Services Employee

Handbook ("Handbook"), which states that "employees are expected to understand and embrace

the mission and goals of Mechanical Services, Inc. and contribute in the dedicated effo1ts and

work to fulfill the purpose of this organization." 'i['i[ 16-17. It also prohibits solicitation of

Mechanical Services employees for any reason on Mechanical Services Prope1ty 01· work time

and prohibits solicitation of customers for non-related service of goods." 'i['i[ 18-19. It requires

employees to take an active interest in promoting the best relationship between Mechanical

Services and its customers. 'i['i[ 19-20. The conflict of interest policy in the Handbook states that

employees cannot perform any work for customers of or compete with Mechanical Services, 11

22.

        Collins and Kirby worked closely together, and Collins worked directly with Maine

Controls customers. 'if 24. Collins was responsible for managing customer and vendor

relationships. 'if 25, In 2015 and 2016 Schneider announced it would phase out its "IIA'' products,

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 and Kirby, in his role evaluating technology and product development, expressed a resulting

concem about continuing to install them. 1129-30. Kirby expressed in the months and years

prior to his depa1ture from Maine Controls that he had concerns about the quality of Schneider's

products and services.     n 27-28.
        Based on Kirby's advising, Maine Controls developed a relationship with another

manufacturer and installed systems from other vendors, in addition to purchasing Schneider

products and systems to maintain Schneider systems for existing customers, 1131-34. Some

Schneider systems can only be maintained and updated through Schneider proprietary software

and equipment. 11 11-12. In late 2020 or early 2021, Kirby and Collins began planning to form a

competitor company, and through Collins's father, they reserved a business name "Collins

Automation LLC" in February 2021. 1136, 38. They filed for formation of a limited liability

company of the same name in March 2021. 140. Also in early 2021, Collins and Kirby

deactivated a Schneider subscription Maine Controls had used to stay informed about Schneider

products, 1 37.

       In spring 2021, Maine Controls learned Schneider would no longer sell software or

control devices to it. 135. Meanwhile, Kirby and Collins were in conversations with Schneider

on behalf of Collins Automation, and on April 20, 2021 Schneider informed Collins and Kirby

that Collins Automation would be its designated controls vendor in Maine. 1 41. Collins was

aware that Collins Automation's agreement with Schneider meant that Schneider would refuse to

sell to Maine Controls, and he represented to Steve Lizotte, a Maine Controls employee, that the

reason Lizotte could not obtain a software license from Schneider was Schneider's agreement

with Collins Automation. 11 42-44. Still, Maine Controls cannot purchase necessary products

from Schneider. 145.

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        While Collins and Kirby were working for Maine Controls, they were working on a

project for a long-standiug customer ("Customer #1 "), and due in part to their pace, they were

 behind on completion ,i,i 46-47. Completion was fu1ther delayed by their departures from Maine

 Controls. ,i 50. Kirby and Collins have used information obtained through employment with

Maine Controls to solicit Customer#1's business and have hired multiple employees of Maine

Controls. 11il 51-52. One Maine Controls employee now working at Collins Automation was

involved in a pricing proposal with another long-standing Maine Controls customer ("Customer

#2"). After being persuaded to make the change by the former Maine Controls employee,

Customer #2, whose system is made of Schneider components, switched its specifications so that

Maine Controls was replaced by Collins Automation as the only acceptable contractor for its

system. ,i,i 53-58. Despite not being able to purchase Schneider products, Maine Controls is

capable of servicing Customer #2's system. ,i 59.

        Until spring 2021, Schneider had never prevented Maine Controls from purchasing any

necessary products. ,i 60. After Maine Controls and its counsel attempted to reach a compromise

with Schneider, Schneider issued a Notice of Default and Termination on May 25, 2022 to

Maine Controls, which alleged a "failure to maintain sales goals/objectives" and asked Maine

Controls to co11ect the failures or risk termination of its account with Schneider. ,i,i 61-63.

Schneider explained that after termination, Maine Controls would still be able to serve its

existing customer base for 18 months by buying Schneider parts for repair and service. ,i 64.

Even though Maine Controls has ordered parts from Schneider since then, Schneider has told

Maine Controls it is on a "credit hold" and refused to ship anything. ,i,i 66-68. Schneider's

representative in the finance depattment has been instructed by the sales depattment not to

release any orders for Maine Controls. ,i 69. Since Schneider and Collins Automation developed

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a relationship, Schneider has not been responsive and has not answered questions about the

Notice it sent to Maine Controls. ,r,r 70-71.

       Plaintiff Maine Controls brought this action against Craig Kirby, Jeremy Collins, and

Collins Automation. Plaintiffs Count I alleges Breach of Loyalty as to Collins and Kirby; Count

II alleges interference with economic advantage as to Kirby, Collins, and Collins Automation;

and Count III alleges misappropriation of trade secrets as to Collins and Kirby, The Motion

cun-ently before the Court only concerns Count IL

       Specifically, Count II alleges that, as a manager at Maine Controls, Kirby was

responsible for evaluating Schneider products and for Maine Controls' purchasing decisions and

that he used his position to steer Maine Controls away from Schneider, At the same time, it

alleges Kirby and Collins cultivated relationships with Schneid,;r on behalf of Collins

Automation to facilitate Schneiders' decision to stop selling to Maine Controls. It also states that

       Kh:by and Collins, individually, and as representatives of Collins Automation,
       knowingly and fraudulently provided incorrect information and/or withheld
       information from Maine Controls regarding Schneider for the purpose of
       interfering with Maine Controls' business relationship with Schneider for their
       personal benefit and the benefit of Collins Automation. , , , As a result , , , Maine
       Controls has suffered and continues to suffer substantial damages.

Pl. 's Amend. Compl. ,r,r 84-85.

Legal Standard

       On a Rule 12(b)(6) motion to dismiss, the court construes the complaint in the light most

favorable to the nonmoving paity to determine whether the complaint alleges the elements of a

cause of action or facts that may justify relief on any legal theory, Stevens v. Bouchard, 532 A.2d

1028, 1030 (Me. 1987). "In all averments of fraud or mistake, the cii·cumstances constituting

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fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition

of mind of a person may be averred generally." M.R. Civ. P. 9(b).

Discussion

        A well-pied claim for interference with "either an existing contractual relation economic

advantage requires (1) the existence of a valid contract or prospective economic advantage, (2)

interference with that contract or advantage though fraud or intimidation, and (3) damages

proximately caused by the interference." Meridian Med. Sys., LLC v. Epix Therapeutics, Inc.,

2021 ME 24, 151, 250 A.3d 122 (citing Barnes v. Zappia, 658 A.2d 1086, 1090 (Me. 1995);

Harlor v. Amica Mut. Ins. Co., 2016 ME 161, 112, 150 A.3d 793; Currie v. Indus. Sec., Inc.,

2007 ME 12, 131, 915 A.2d 400).

       Fraud in this context involves

        (1) making a false representation (2) of a material fact (3) with lmowledge of its

       falsity or in reckless disregard of whether it is true or false (4) for the purpose of

       inducing another to act or refrain from acting in reliance on it, and (5) the other

       person justifiably relies on the representation as true and acts upon it to the

       damage of the plaintiff.

Rutland v. Mullen, 2002 ME 98, 114, 798 A.2d 1104 (quoting Petit v. Key Bank ofMe., 688

A.2d427, 430 (Me. 1996)).

       Collins Automation points to First Circuit precedent stating that "a complaint must

specify 'the time, place, and content of an alleged false representation."' United States ex rel.

Gagne v. City of Worcester, 565 F.3d 40, 45 (1st Cir. 2009) (quoting United States ex rel. Rost v.

Pfizer, Inc., 507 F.3d 720, 731 (I st Cir. 2007)); see Bean v. Cummings, 2008 ME 18, 1 11, 939

A.2d 676 (federal constructions and comments valuable as aids for M.R. Civ. P 8(a) and 9(b)).

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Ultimately, the test is "whether defendant is fairly apprised of the elements of the claim," TD

Banknorth, N.A, v. Hawkins, 2010 ME 104,124, 5 A.3d 1042.

       Collins Automation argues that Plaintiff has not pled the elements of Count II with the

particularity required of an action alleging fraud. After a review of the whole Amended

Complaint, the Cami concludes Plaintiff's pleading is sufficiently paiticular.

       The following allegations suppo1t Count II. Maine Controls had an established

contractual relationship with Schneider under which Maine Controls purchased Schneider

products frequently to instalJ and repair Schneider systems. Kirby, on behalf of Collins

Automation, interfered with that contract by leading Maine Controls to seek and suppo1t a

replacement vendor for new systems. Specifically, "[i]n the years and months" prior to his

departme from the company, Pl.'s Amend. Compl. 128, Kirby, in his capacity as manager at

Maine Controls, expressed concerns about the quality of Schneider products. United Fish Co. v.

Barnes, 627 F. Supp. 732, 734 (D. Me. 1986) (holding an approximate time frame in which the

fraudulent conduct was alleged to have occurred is sufficient under the rule). While Plaintiff

does not state specifically where this conduct took place, it does state that it was in the context of

Kirby's employment with Maine Controls. Kirby's concerns persuaded Maine Controls to pursue

and continue relationships with other vendors. In late 2020 and/or early 2021, Kirby and Collins

themselves pursued a relationship with Schneider on behalf of a competing company they were

forming. This behavior, according to Plaintiff, shows that Kirby did not actualJy believe it was a

good business decision to stop buying products from Schneider or that Schneider products had

significant quality issues, despite what he advised Maine Controls.

       To the extent that Maine Controls's decision to putsue other vendors in reliance on

Kirby's statements occurred before Collins Automation was conceived, Collins Automation is

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not liable. On the other hand, Plaintiff alleges that after the formation of Collins Automation and

during their employment with Maine Controls, both Collins and Kirby failed to inform Maine

Controls that they were pursuing Schneider's business on behalfofCollins Automation. This

omission was despite their alleged fiduciary duties to Maine Controls. See Glynn v. Atlantic

Seaboard Corp., 1999 ME 53, ~ 12, 728 A.2d 117 (quoting Binette v. Dyer Libra,y Ass 'n, 688

A.2d 898, 903 (Me. 1996)) (holding that where a fiduciary relationship exists between the

parties, omission by silence can may constitute supplying false information). As a result, Maine

Controls did not take steps to preserve its relationship with Schneider and can no longer buy

Schneider products.

       Under this set of facts, Collins Automation could be liable under a theory of respondeat

superior. See Dragomir v. Spring Harbor Hosp., 2009 ME 51, ~ 12,970 A.2d 310; Restatement

(Second) of Agency§§ 212-264; Restatement (Third) of Agency§ 7.03. The Court concludes

that these allegations are sufficient to put Collins Automation on notice of the claim against it

and to meet the requirements of pleading with paiticularity. See Hawkins, 2010 ME 104,124, 5

A.3d 1042. Therefore, the Court denies the Motion to Dismiss,

The entty is

       Defendant Collins Automation's Motion to Dismiss is DENIED.

The clerk is directed to enter this Order on the docket by reference. M.R. Civ. P. 79(a).

  1!?/,_,
DATE                                                     SUPERIOR COURT JUSTICE

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