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Odjaghian v. Engagepoint, Inc.

United States District Court, D. Maryland

July 5, 2018

EDWARD ODJAGHIAN, et al., Plaintiffs,
v.
ENGAGEPOINT, INC., et al., Defendants.

          MEMORANDUM

          JAMES K. BREDAR CHIEF JUDGE

         Edward Odjaghian and Gordon Nasta (“Plaintiffs”) filed suit against their former employer, EngagePoint, Inc., as well as HHS Technology Group, LLC, Brevet Capital Management, LLC, and Bradley White (“Defendants”). Plaintiffs allege that each defendant is jointly and severally liable to them for unpaid wages under the Maryland Wage Payment and Collection Law (“MWPCL”), Md. Code Ann. Labor & Emp't § 3-501, et seq. In addition, Plaintiffs allege that EngagePoint breached its employment contracts with them. Finally, Plaintiffs allege that Brevet Capital violated Maryland Commercial Law Code § 9-610, which governs the conduct of foreclosures. Now pending before the Court is Defendants' Motion to Dismiss Plaintiffs' Complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). (ECF No. 7.) The Motion has been briefed (ECF Nos. 7-1, 17, and 18) and no hearing is required, see Local Rule 105.6 (D. Md. 2016). For the reasons set forth below, Defendants' Motion will be GRANTED.

         I. Background[1]

         Plaintiffs were formerly employed as executives by defendant EngagePoint, a healthcare technology company in Calverton, Maryland. (Compl., ECF No. 1 ¶ 2, 9.) Mr. Odjaghian was employed by EngagePoint from March 1, 2007, through March 15, 2017. (Id. ¶ 20.) Mr. Nasta was employed by EngagePoint from November 2, 2015, through March 15, 2017. (Id. ¶ 21.) Both Plaintiffs had written employment contracts with EngagePoint that entitled them to severance if they were terminated by the company without cause.

         In 2013, EngagePoint started experiencing financial difficulties. The company then took a series of steps to address its financial issues. (Id. ¶ 23.) First, in December 2014, EngagePoint accepted a $20 million loan-secured by EngagePoint's assets-from defendant Brevet Capital, a venture capital firm.[2] (Id. ¶ 24.) (Id. ¶¶26, 28.) EngagePoint also accepted additional loans from Brevet between December 2014 and March 2017, eventually totaling approximately $65 million. EngagePoint failed to make timely payments to Brevet on these loans. As a result, Brevet began to “exercise[] daily control over the day-to-day operation of EngagePoint” and “direct[] EngagePoint's actions.” (Id. ¶ 34.)

         Later, in April 2016, EngagePoint asked several of its employees, including Plaintiffs, to defer their salaries. (Id. ¶ 25.) Plaintiffs agreed to do so and both went without a salary for several months in the spring of 2016. Mr. Odjaghian also deferred his 2013 executive bonus of $217, 568. (Id. ¶ 29.) Then, on March 15, 2017, Bradley White, the CEO of EngagePoint, terminated Plaintiffs' employment without cause. (Id. ¶ 37.) EngagePoint also terminated two other executives on the same day and had previously terminated another two executives in an attempt to save money.

         Plaintiffs entered into severance agreements with EngagePoint “that provided that EngagePoint would pay them their severances and monies owed in exchange for the release of their claims against EngagePoint.” (Id. ¶ 41.) Although EngagePoint owed each of the plaintiffs hundreds of thousands of dollars pursuant to these agreements, it made only one payment of $5, 000 to each on May 11, 2017. (Id. ¶ 43.)

         Shortly thereafter, Defendant White informed Plaintiffs that EngagePoint could not continue to make severance payments to Plaintiffs because Brevet had foreclosed on its loans and sold all of EngagePoint's assets. The foreclosure sale happened very quickly: it was announced on May 27, 2017, and executed on June 5, 2017. Defendant HHS, which is controlled by Brevet Capital, acquired all of EngagePoint's assets-including “significant ongoing streams” of revenue-through the foreclosure auction conducted by Brevet. Despite purchasing EngagePoint's assets on June 5, 2017, HHS was not formed until June 6, 2017. The remaining EngagePoint employees, including Defendant White, were immediately employed by HHS after its formation. (Id. ¶ 59.) “HHS performs the same business with the same products and customers as did EngagePoint” and is owned and controlled by Brevet Capital. (Id. ¶ 62.)

         II. Legal Standards

         A. Standard for Dismissal under Rule 12(b)(2)

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(2) is a test of the court's personal jurisdiction over the defendant. “[W]hen, as here, the court addresses the question [of personal jurisdiction] on the basis only of motion papers, supporting legal memoranda and the relevant allegations of a complaint, the burden on the plaintiff is simply to make a prima facie showing of a sufficient jurisdictional basis to survive the jurisdictional challenge.” New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir. 2005) (quoting Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)). The court must construe the relevant allegations in the light most favorable to the plaintiff. Id. “[T]he plaintiff bears the burden of proving grounds for jurisdiction by a preponderance of the evidence.” Cricket Group, Ltd. v. Highmark, Inc., 198 F.Supp.3d 540, 542 (D. Md. 2016).

         B. Standard for Dismissal under Rule 12(b)(6)

         A complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. An inference of a “mere possibility of misconduct” is not sufficient to support a plausible claim. Id. at 679. However, “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable.” Twombly, 550 U.S. at 556. Even so, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id. at 555. “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (alteration in original) (citation omitted) (quoting Twombly, 550 U.S. at 555, 557).

         III. Analysis

         Plaintiffs allege that each of the defendants qualified as their employers and therefore each is liable for the wages Plaintiffs are still owed pursuant to their severance agreements. Plaintiffs have also brought an additional claim-breach of contract-against only EngagePoint (and HHS as its alleged successor) and an additional claim-invalid foreclosure-against only Brevet Capital. Defendants do not dispute that EngagePoint was Plaintiffs' employer and therefore may be liable for Plaintiffs' unpaid wages. However, Defendants argue that neither Brevet Capital, HHS, nor Mr. White qualify as Plaintiffs' employer under the MWPCL. Additionally, Defendants contend that Plaintiffs have abandoned their contract and foreclosure claims, and therefore those claims should be dismissed. Finally, Brevet Capital argues that the Court lacks personal jurisdiction over it. For the reasons set forth below, Plaintiffs' motion for default judgment against EngagePoint will be granted and Defendants' motion to dismiss will be granted.

         A. Personal Jurisdiction as to Brevet Capital

         Defendants are nonresidents of the State of Maryland, but may be subject to personal jurisdiction here pursuant to Maryland's long-arm statute and consistent with the federal constitutional guarantee of due process. Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 396-97 (4th Cir. 2003). Under Maryland law, the exercise of long-arm jurisdiction is permitted by statute to the extent such jurisdiction is consistent with the Fourteenth Amendment's due process requirements; thus, the “statutory inquiry merges with [the] constitutional examination.” Kortobi v. Kass, 978 A.2d 247, 256-57 (Md. 2009). Two types of personal jurisdiction exist: general jurisdiction, based upon continuous and systematic activities by a defendant in the state, and specific jurisdiction, premised upon a defendant's contacts with the forum state when the suit arises out of those specific contacts. Daimler AG v. Bauman, 571 U.S. 117, 126-27 (2014). If a plaintiff has made a showing of either type, then personal jurisdiction is established. Defendants argue that Plaintiffs have not established either form of personal jurisdiction as to Brevet Capital. The Court agrees.

         First, Brevet Capital is not subject to general jurisdiction in Maryland. Plaintiffs have not alleged any facts that could possibly support general jurisdiction as to Brevet Capital. Brevet Capital is not incorporated in Maryland nor is its principal place of business in Maryland. (ECF No. 7-2.) Moreover, Brevet Capital “does not directly hold or own any assets in Maryland, and is not aware of any indirect interests in assets in ...


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