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Ness & Campbell Crane, Inc. v. Kleppe

United States District Court, D. Oregon, Portland Division

April 6, 2018

NESS & CAMPBELL CRANE, INC., Plaintiff,
v.
KURT O. KLEPPE, Defendant.

          John F. McGrory, Jr. Kaley L. Fendall DAVIS WRIGHT TREMAINE, LLP Attorneys for Plaintiff

          Timothy J. Resch SAMUELS YOELIN KANTOR, LLP Attorney for Defendant

          OPINION & ORDER

          MARCO A. HERNÁNDEZ UNITED STATES DISTRICT JUDGE .

         Plaintiff Ness & Campbell Crane, Inc., brings three claims against Defendant Kurt O. Kleppe. First, Plaintiff brings a breach of contract claim for an alleged breach of the parties' Shareholder Agreement. Second, Plaintiff brings two claims for declaratory relief seeking a declaration and determination of Defendant's breach of the Shareholder Agreement as well as Plaintiff's rights and obligations under the Shareholder Agreement, Redemption Agreement, and Subordinated Promissory Note. Defendant moves to dismiss this action under Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, the Court denies in part and grants in part Defendant's Motion to Dismiss.

         BACKGROUND

         Defendant is a former shareholder and Vice President of Plaintiff. Notice of Removal, Ex. 1 Complaint (“Compl.”) ¶¶ 10, 12, ECF 1-1. Around the time of Plaintiff's formation in August of 2008, Plaintiff and Defendant entered into a Shareholder Agreement that governed the terms of their relationship. Compl. ¶¶ 12, 14; Compl. Ex. 1 at 1 (“Shareholder Agreement”). In addition to providing terms for any sale of stock in the event of an employee's voluntary termination, Shareholder Agreement ¶ 6.2, Defendant agreed to abide by three non-solicitation and non-competition provisions described in sections 13.1(a)-(c) of the Shareholder Agreement “during the 3 years following any sale of his shares.” Compl. ¶ 12. Generally, Defendant agreed (1) not to engage in any business that competes with Plaintiff or provides services related to crane operation and rental within a 300 mile radius of Portland, OR, and Seattle, WA; (2) not to solicit business from any of Plaintiff's customers, cause its customers to cease business with Plaintiff, or cause its customers to change their relationship with Plaintiff; and (3) not to solicit or induce any employees to leave their employment with Plaintiff. Compl. ¶¶ 12(a)-(c).

         On November 6, 2015, Defendant resigned from his position as Vice President and entered into an agreement to sell his shares of stock in the company to Defendant pursuant to the terms of the Shareholder Agreement. Compl. ¶ 14. As part of this sale, the parties entered into a Redemption Agreement and Subordinated Promissory Note that governed the terms of the redemption. Compl. ¶ 14. The agreements provide that in exchange for Defendant's shares, Plaintiff would make annual payments in the amount of $186, 928.26 between September 30, 2016 and September 30, 2020. Compl. ¶ 14. The Redemption Agreement also contains a release provision and integration clause central to the present dispute:

5.2 Release by Company. Company, and each of its successors, assigns, affiliates, officers, directors, stockholders, agents, employees, consultants and attorneys does hereby and forever release, discharge, and acquit Stockholder and his successors assigns and spouse or domestic partner, from and against any and all claims, damages, liabilities, obligations, actions, and causes of action, whether sounding in tort, contract, equity or otherwise, whether known or unknown, whether suspected or unsuspected, and whether arising directly in favor of Company, or by way of assignment, subrogation, or indemnification held by Company.
7.6 Entire Agreement; Modification. This agreement constitutes the entire agreement among the parties, and supersedes all prior agreements and understandings, oral and written, with respect to its subject matter. No modification or amendment of this Agreement will be effective unless it is executed in writing by both parties.

Resch Decl., Ex. 1, ECF 5-1 (“Redemption Agreement”).

         After his resignation, Plaintiff alleges that Defendant went to work as the general manager of N.W. Tower Crane, a crane company in Des Moines, Washington, that had “consistently contracted with [Plaintiff].” Compl. ¶¶ 16-17. Since Defendant began working at N.W. Tower Crane, Plaintiff alleges that “NW Tower Crane has ceased contracting with Ness Campbell” and began using the services of one of its primary competitors. Compl. ¶ 18. Plaintiff further alleges that it has “lost approximately 20 employees” to this same competitor since Defendant began working for N.W. Tower Crane. Compl. ¶ 20. Plaintiff alleges that the cause of both the loss of N.W. Tower's business and its employee are either directly or indirectly attributable to Defendant. Compl. ¶¶ 19-20.

         Plaintiff contends the actions above constitute a violation of the Shareholder Agreement, Compl. ¶¶ 23-25, which it claims survived Defendant's voluntary resignation in 2015. Compl. ¶ 15. Plaintiff accordingly filed this action in Multnomah County on November 2, 2017. Notice of Removal ¶ 1, ECF 1. Plaintiff seeks $2, 500, 000 in damages related to its breach of contract claim as well as declaratory relief, Compl. ¶¶ 25, 33, 41. Defendant removed this action to Federal Court on November 21, 2017, under this court's diversity jurisdiction, Notice of Removal, ¶¶ 4-5, and subsequently filed the present motion to dismiss, Def's Mot. Dismiss, ECF 4.

         STANDARDS

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the claims. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “All allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party.” Am. Family Ass'n, Inc. v. City & Cnty. of S.F., 277 F.3d 1114, 1120 (9th Cir. 2002). To survive a motion to dismiss, a complaint “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face[, ]” meaning “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) (internal ...


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