Yonkov v. Maximus Holding Group LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

ALEXANDRA YONKOV, ) CASENO. 1:23 CV 1317

)

Plaintiff, ) JUDGE DONALD C. NUGENT

)

Vv. )

)

MAXIMUS HOLDING GROUP LLC, etal, )

)

Defendants. ) MEMORANDUM OPINION

) AND ORDER

This matter comes before the Court upon the Motion of Defendant Maximus Holdings

Group LLC (“Maximus”) to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) for Failure to State a

Claim Upon which Relief may be Granted. (ECF #101) Maximus moves for an Order

dismissing Counts 3, 4, 8, 9, 11, 13, 14, 15, 17, 18, 20 and 21 of the Second Amended

Complaint (“SAC”) as they relate to Maximus. The motion is fully briefed and ready for

decision.

Factual and Procedural History

Plaintiff filed a verified complaint seeking a temporary restraining order, preliminary

and permanent injunctions and a money judgment on July 6, 2023 . Her motion for a temporary

restraining order was denied on July 10, 2023. (ECF #9) Plaintiff has since filed First and

Second Amended Complaints. The SAC (ECF #84) purports to assert claims on behalf Plaintiff

Alexandra Yonkov both individually, and derivatively on behalf of Maximus, against

Defendants Maximus, Brickhaus Management, Inc. (“BMI”), Andrew Brickman, Julia Ivanova,

Marcie Brickman, Brickhaus II, LLC and The Mansion at Woodland.' Plaintiff asserts the

following claims in the SAC:

Count 1: Breach of employment contract against Defendants Brickman and BMI;

Count 2: Breach of contract relating to the Maximus operating agreement;

Count 3: Unjust enrichment against Defendants Brickman, Maximus and BMI;

Count 4: Breach of fiduciary duty against Defendants Brickman, Maximus and BMI;

Count 5: Conversion against Defendant Brickman;

Count 6: Common Law Fraud against Defendant Brickman;

Count 7: Securities Fraud against Defendant Brickman;

Count 8: Civil Conspiracy against Defendants Maximus, Brickman, BMI, Ivanova and

Marcie Brickman;

Count 9: Misrepresentation/Promissory Estoppel against Defendants Brickman,

Maximus

and BMI;

Count 10: Libel/Defamation/Invasion of Privacy/False Light against Defendants

Brickman

and Ivanova;

Count 11: Accounting for Maximus and BMI;

Count 12: Judicial Dissolution of Maximus and BMI;

]

A number of Maximus subsidiary LLCs except The Mansion at Woodland have been

dismissed from this action pursuant to their Motion to Dismiss (ECF #103)

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Count 13: Piercing the Corporate Veil of Maximus and BMI;

Count 14: Derivative Action on behalf of Maximus;

Count 15: Indemnity under the Maximus Operating Agreement;

Count 16: Intentional Interference with Employment Relationship against Defendant

Ivanova;

Count 17: Wrongful termination against Defendants Brickman, BMI and Maximus;

Count 18: Retaliation against Defendants Brickhaus, Maximus and Brickman;

Count 19: Civil Liability for Criminal Conduct against Defendant Brickman;

Count 20: Declaratory Judgment;

Count 21: Petition for Receivership of Maximus;

Count 22: Fraudulent Conveyance and/or Transfer involving conveyance of $700,000

from Defendant Marcie Brickman to Defendants Brickman and/or The Mansion at Woodland,

LLC;

Count 23: Misappropriation by Fraud against Defendant Brickman involving transfer of

property from Defendant Saint Helena Gateway Redevelopment Partners, LLC (“St. Helena’’);

Count 24: Replevin against Defendant Brickman;

Count 25: Corporate Successor Liability Against Defendant Brickhaus JI, LLC as a mere

continuation of BMI and/or Maximus.

Standard of Review

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) allows a defendant

to test the legal sufficiency of a complaint without being subject to discovery. See Yuhasz v.

Brush Wellman, Inc., 341 F.3d 559, 566 (6" Cir. Ohio 2003). In evaluating a motion to

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dismiss, the court must construe the complaint in the light most favorable to the plaintiff, accept

its factual allegations as true, and draw reasonable inferences in favorable of the plaintiff. See

Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6" Cir. 2007). The court will not, however, accept

conclusions of law or unwarranted inferences cast in the form of factual allegations. See

Twombly, 550 U.S. at 555; Gregory v. Shelby County, 220 F.3d 433, 446 (6" Cir. Tenn. 2000).

In order to survive a motion to dismiss, a complaint must provide the grounds of the entitlement

to relief, which requires more than labels and conclusions, and a formulaic recitation of the

elements of a cause of action. Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-65 (2007).

That is,“[f]actual allegations must be enough to raise a right to relief above the speculative

level, on the assumption that all the allegations in the complaint are true (even if doubtful in

fact).” Id. (internal citation omitted); see Association of Cleveland Fire Fighters v. City of

Cleveland, No. 06-3823, 2007 WL 2768285, at *2 (6™ Cir. Ohio Sept. 25, 2007) (recognizing

that the Supreme Court “disavowed the oft-quoted Rule 12(b)(6) standard of Conley v. Gibson,

355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed.2d 80 (1957)”). Accordingly, the claims set forth in a

complaint must be plausible, rather than conceivable. See Twombly, 127 S. Ct. at 1974.

On a motion brought under Rule 12(b)(6), the court’s inquiry is limited to the content of

the complaint, although matters of public record, orders, items appearing in the record of the

case, and exhibits attached to the complaint may also be taken into account. Amini v. Oberlin

College, 259 F.3d 493, 502 (6" Cir. Ohio 2001).

Analysis

Maximus moves to dismiss or be dismissed from Count 3 (unjust enrichment); Count 4

(Breach of Fiduciary Duty); Count 8 (Civil Conspiracy); Count 9

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(Misrepresentation/Promissory Estoppel); Count 11 (Accounting); Count 13 (Piercing the

Corporate Veil); Count 14 (Derivative Action on behalf of Maximus); Count 15 (Indemnity

under the Maximus Operating Agreement); Count 17 (Wrongful termination); Count 18

(Retaliation); Count 20 (Declaratory Judgment); and Count 21 (Petition for Receivership of

Maximus) of the SAC. Each count will be discussed in order.

A. Unjust Enrichment (Count 3)

In Count 3 Plaintiff alleges that she conferred benefits on Defendants Brickman and

BMI after the employment agreement was signed in 2019 by serving as Director of Operations

and providing Defendants with a reputable manager to handle all logistics and facets of real

estate operations. Defendants appreciated, accepted, and retained the benefits from Plaintiff but

refused to pay Plaintiff for the benefits. Plaintiff incurred costs, including lost wages, profits

and expenses when she provided these services to Defendants and it would be inequitable for

Defendants to retain these benefits without payment of value. (ECF #84 SAC ff 421-427)

Under Ohio law, the elements of unjust enrichment are: (1) a benefit conferred by a

plaintiff upon a defendant; (2) knowledge by the defendant of the benefit; and (3) retention of

the benefit in circumstances where it would be unjust to do so. Compound Prop. Mgmt., LLC v.

Build Realty, Inc., 462 F. Supp. 3d 839, 868 citing (S.D. Ohio 2020) Baatz v. Columbia Gas

Transmission, LLC, 929 F.3d 767, 776 (6th Cir. 2019) (quoting Johnson v. Microsoft Corp.,

106 Ohio St.3d 278, 834 N.E.2d 791, 799 (2005)). Here, Maximus asserts that the SAC fails to

allege any benefit conferred on Maximus. Indeed, Maximus is not mentioned at all in Count 3

other than in the title. Plaintiff responds by asserting that “Defendants” referred to in Count 3

included Maximus. She points to averments made in paragraph 61 that Defendants (including

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Maximus) did not offer Plaintiff paid maternity leave but she continued to work for

Defendants’ benefit from the maternity ward. However, as noted in paragraph 60, Plaintiff gave

birth on December 8, 2013—long before Maximus was formed as an LLC on December 19,

2019 and more than ten years before she filed SAC. Accordingly, any work done from the

maternity ward in 2013 did not confer a benefit on Maximus.

Next Plaintiff refers to paragraph 224 of the SAC where she avers [after describing

various destructive acts of Defendant Brickman in previous paragraphs] that she had “been

diligently working hard to expand Maximus’s and the subsidiaries’ bottom lines, was otherwise

ignored, and her portion of the profits have yet to be distributed.” Additionally, Plaintiff asserts

that paragraph 422 of the SAC alleges the ways in which she conferred benefits on Defendant

BMI: Plaintiff “conferred benefits on Defendants Brickman and Brickhaus (BMI) after the

Employment Agreement was signed in 2019, by inter alia, serving as Director of Operations

and providing Defendants with a reputable manager to handle all logistics and facets of the real

estate operations.” Plaintiff asserts that since Maximus owns 100% of BMI, and BMI is

essentially the operating arm of Maximus, the benefit Plaintiff conferred on BMI benefitted

Maximus. See MJ Direct Consulting, L.L.C. v. Brooks & Stafford Co., 2016-Ohio-7718, { 40

(8" Dist. Cuyahoga Cty Nov. 10, 2016) (Court found genuine issue of material fact existed as to

whether a benefit conferred to a subsidiary was also received by the parent company). While

Plaintiff's averments of benefits conferred on Maximus are tenuous, the elements of unjust

enrichment have been sufficiently pled and the claim will not be dismissed against Maximus at

this time.

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B. Breach of Fiduciary Duty (Count 4)

In Count 4 Plaintiff asserts that Defendants Brickman, BMI and Maximus breached

their fiduciary duties to Plaintiff. Specifically Plaintiff averred “as an officer, member, and/or

employee of Maximus, Maximus and/or Brickman owed to Plaintiff fiduciary duties of loyalty,

trust and care.” SAC 429. The elements of a claim of breach of fiduciary duty in Ohio are (1)

the existence of a duty arising from a fiduciary relationship, (2) the failure to observe the duty,

and (3) an injury resulting proximately from that breach. Puhl v. U.S. Bank, N.A., 34 N.E.3d

530, 536 (Ohio Ct. App. 2015).

Maximus asserts that it is clear at common law that “a limited liability company owes

no fiduciary duty to its members, either directly or vicariously, for actions taken by its

member.” (ECF #101 p. 4) citing Ligman v. Realty One Corp., Case No. 23051 (Ct.App.

Summit Co.), 2006-Ohio-5061, 9. The Court has read the Ligman opinion but cannot find the

quote set out by Maximus. Indeed, it appears that Ligman did not even concern an LLC.

Maximus also referred to 51 Am.Jur.2d, Limited Liability Companies, §11 in support of its

assertion that an LLC does not owe its members a fiduciary duty. 51 AmJur2d, Section 11 is

titled “Duties and responsibilities of members and managers to limited liability company.”

According to 51 AmJur2d § 11 “[a] limited liability company (LLC), like a partnership,

involves a fiduciary relationship which imposes on the members a duty to exercise the utmost

good faith and honesty in all dealings and transactions related to the company.” Section 11 does

not discuss any fiduciary duties owed by an LLC itself to its members, nor could the Court find

any cases imposing a fiduciary duty on an LLC to its members unless the LLC had assumed

such a duty by contract or statute such as the LLC in Failali v. E. Coast Performance LLC, No.

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5:22-CV-2038, 2023 WL 5671937, at *2 (N.D. Ohio Sept. 1, 2023). In Failali, the defendant

LLC was the sponsor of an ERISA benefit plan and a fiduciary for the Plan under the operation

of the ERISA statute. As such, it owed a fiduciary duty to Plaintiff as a Plan participant.

Plaintiff, citing Rios v. Tower Hill Specialty Grp., LLC, No. 1:20-CV-238, 2022 WL

980752 (S.D. Ohio Mar. 31, 2022), asserts that a limited liability company can absolutely be

held liable for breaching a fiduciary duty owed to its members. See ECF #152 at p.5. In Rios,

the Plaintiff was a minority member of an LLC called Specialty. He asserted a breach of

. fiduciary duty claim against the other members of the Specialty LLC. The other member

defendants were LLCs. The court found that Plaintiff had sufficiently alleged facts to show that

the LLC defendants owed Plaintiff a fiduciary duty stating:

Ohio law applicable at the time provided that members of a limited

liability company owe to each other the fiduciary duties of loyalty

and care—a point Defendants concede. R.C. 1705.281 (2016). (See

Doc. 22, Pg. ID 362.) And Rios alleges that Defendants were

fellow members and owed him such duties. (FAC, Doc. 19, 65.)

THSG was the majority member and the manager of Specialty,

owning 90% of Specialty. (FAC, Doc. 19, Jf 41, 64.) THIG is

allegedly the 100% owner of THSG, and an alter ego of THSG and

Specialty's Board of Managers. (Id. at { 49.) Rios was the minority

member and owned 10% of Specialty. (Id. at 41.) They were all

thus, allegedly, co-members of Specialty. Accordingly, Rios has

adequately alleged that Defendants owed him fiduciary duties.

Rios, 2022 WL 980752, at *6. Thus, an LLC(named LLC1 for this example) may be a member

of another LLC (lets call the second LLC -LLC2). As a member of LLC2, LLC1 may owe

fiduciary duties to other members of LLC2, but there does not appear to any law supporting a

claim that LLC1 owes any fiduciary duty to its own members. As an LLC is an entity, like a

corporation, that can only act through its agents or managers, it makes sense that the entity

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alone does not owe a duty to its members. Rather the fiduciary duty rests on the member or

manager that acts for the LLC.

In Count 4 Plaintiff does not clearly allege that she and Maximus are members of

another LLC, and that Maximus owes her a fiduciary duty as one member to another member of

an LLC. Plaintiff merely avers that “as an officer, member, and/or employee of Maximus,

Maximus and/or Brickman owed to Plaintiff fiduciary duties of loyalty, trust and care.” (ECF

#84 9429) Maximus is not an officer, member or employee of itself. Brickman, as an officer or

employee of Maximus may owe a fiduciary duty to co-member Plaintiff. The only other

defendant that Plaintiff includes in Count 4 is Brickhaus (BMI). According to the Maximus

Operating Agreement, Maximus is the only owner of BMI. (ECF #84-8, Ex. A) As such,

Plaintiff is not a member of BMI with Maximus and thus Maximus would not owe Plaintiff a

fiduciary duty as a co-member of BMI. As such, Plaintiff has failed to aver facts to sufficient to

show that Maximus owes Plaintiff a fiduciary duty. Accordingly, Maximus will be dismissed

from Count 4.

C. Civil Conspiracy (Count 8)

In Count 8 Plaintiff alleges that Defendants Maximus, Brickman, Ivanova and Marcie

Brickman, “directly or indirectly acting in concert, potentially with unknown third parties,

maliciously combined to injure Plaintiff by breaching or assisting in the breach of the

employment agreement and operating agreements, their fiduciary and/or statutory duties to

Plaintiff and/or otherwise by engaging in tortious and/or otherwise unlawful conduct”. (ECF

#84, § 459) She alleges that the Defendants actions were unlawful and that by virtue of the

participation of the Defendants in the conspiracy, Plaintiff incurred damages including

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unreimbursed compensation, loss of investment, lost opportunities, attorneys fees and more. (Id

at J] 460-461)

The Supreme Court of Ohio defines civil conspiracy as “ ‘a malicious combination of

two or more persons to injure another in person or property, in a way not competent for one

alone, resulting in actual damages.’ ” Kenty v. Transamerica Premium Ins. Co., 72 Ohio St.3d

415, 650 N.E.2d 863, 866 (1995) (quoting LeFort v. Century 21—Maitland Realty Co., 32 Ohio

St.3d 121, 512 N.E.2d 640, 645 (1987)). In order to establish a claim of civil conspiracy

plaintiff must allege the following elements: “(1) a malicious combination; (2) two or more

persons; (3) injury to person or property; and (4) existence of an unlawful act independent from

the actual conspiracy.” Aetna Cas. & Sur. Co. v. Leahey Const. Co., 219 F.3d 519, 534 (6th Cir.

2000) citing Universal Coach, Inc. v. New York City Transit Auth., Inc., 90 Ohio App.3d 284,

629 N.E.2d 28, 33 (1993).

Maximus argues that Plaintiff has failed to state a claim against it for civil conspiracy

because (1) Plaintiff has not pled facts to show that Maximus is a “person” capable of joining a

civil conspiracy; (2) the acts that she alleged are “torts for which one person alone is not

perfectly ‘competent’ to commit; and (3) breach of employment agreement or operating

agreement are not unlawful acts separate from the conspiracy itself.

Maximus offers no legal support for its contention that it is not a person capable of

joining a civil conspiracy. A civil conspiracy claim may be asserted against a limited liability

company. See Ohio Bureau of Workers’ Compensation v. MDL Active Duration Fund, Lid.,

476 F.Supp.2d 809, 825-826 (S.D. Ohio 2007).

Maximus’ assertion that the acts and torts alleged by Plaintiff can be achieved by one

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| person is irrelevant—an allegation that one person would not have been able to accomplish the

acts done in furtherance of the conspiracy is not among the elements of the tort of civil

conspiracy. See NPF IV vy. Transitional Health Servs., 992 F.Supp. 77, 83 (S.D. Ohio 1996).

Finally, Maximus argues that breach of an employment agreement or operation

agreement is not an unlawful act. An underlying unlawful act or tort is required before a party

can prevail on a civil conspiracy claim. Dickerson Internationale, Inc. v. Klockner, 139 Ohio

App.3d 371, 380, 743 N.E.2d 984 (2000). In addition to the breach of employment and

operating agreements, Plaintiff has alleged Defendants’ engagement in torts—albeit very

superficially and without reference to any specific torts other than breach of fiduciary duty. See

SAC 4 459. At this early point in the litigation, this claim will not be dismissed against

Maximus.

D. Misrepresentation/Promissory Estoppel (Count 9)

Plaintiff asserts a claim of Misrepresentation/Promissory Estoppel against Defendants

Brickman, Maximus and Brickhaus (BMD). Plaintiff states that Maximus, BMI and Brickman

have made inaccurate representations and/or “concealments” to Plaintiff that were material as to

induce her to enter into relationships and transactions that caused substantial harm to Plaintiff,

her reputation and her business, her equitable and/or legal interests in (or related to) Maximus,

her standing with employees, customers, vendors and suppliers of Maximus who Plaintiff relies

on. Further Maximas, Brickman and BMI were reckless or negligent as to the accuracy, context

and/or truthfulness of the representations and Plaintiff justifiably relied on the representations

or concealments and incurred damages as a result. SAC Jf 463-467.

The elements of a promissory estoppel claim under Ohio law are: (1) a clear,

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unambiguous promise: (2) reliance upon the promise by a person to whom the promise is made;

(3) the reliance is reasonable and foreseeable; and (4) the person claiming reliance is injured as

a result of the reliance on the promise. Stewart v. Everyware Glob., Inc., 68 F. Supp. 3d 759,

766 (S.D. Ohio 2014) citing Weiper v. W.A. Hill & Associates, 104 Ohio App.3d 250, 260, 661

N.E.2d 796 (1995).

Maximus argues that Plaintiff has pled no facts that support a claim that Maximus—the

limited liability company—made any “inaccurate representations and/or concealments”

whatsoever. Plaintiff did not allege that Maximus, the company issued statements or delivered

communications to her, apart from what Brickman may have said. Maximus argues that the

allegations of false statements or misrepresentations made by Brickman in the factual

allegations in the SAC are relatively few and may not have been made in the course of Mr.

Brickman’s position with Maximus. Weighing and fleshing out the factual surroundings of Mr.

Brickman’s alleged statements cannot be accomplished on a motion to dismiss. Plaintiff has

sufficiently pled a claim of promissory estoppel.

E. Accounting for Maximus and BMI (Count 11)

In Count 11, titled Accounting for Maximus and Brickhaus(BMI), Plaintiff avers that

Brickman, BMI and Maximus are obligated to keep the members, investors, officers and

various agents of Maximus informed about the financial affairs of Maximus and BMI and

provide the material facts necessary for Plaintiff and others similarly situated to protect their

interests. Plaintiff avers that to date Brickman, BMI and Maximus have failed and refused to

provide an accounting for Maximus and that she believes that Brickman, BMI and/or Maximus

are not prudently managing Maximus’ assets, and are depleting Maximus’ assets through waste,

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mismanagement and self-dealing. Maximus and BMI have not complied with their tracking and

reporting obligations and to date have not provided financial statements certified as true and

accurate by an authorized officer of Maximus and/or BMI. The harm to Plaintiff is not known

because BMI, Maximus and Brickman have failed or refused to provide an accounting. □□□

478-486.

An action for an accounting is an equitable action. Under Ohio law, “where there is an

adequate remedy at law, an equitable remedy is improper.”Skurka Aerospace, Inc. v. Eaton

Aerospace, L.L.C., No. 1:08 CV 1565, 2011 WL 1134591, at *3 (N.D. Ohio Mar. 25, 2011)

citing McNulty v. PLS Acquisition Corp., Nos. 79025, 79125, 79195, 2002 WL 31875200, { 80

(Ohio App. 8 Dist. Dec.26, 2002). See also Boland v. First Winthrop Corp., 2010 U.S. Dist.

LEXIS 77609, *7-8, 2010 WL 3037076 (S.D.Ohio Aug. 2, 2010) (“Equitable accounting

actions are rare since the advent of the Federal Rules of Civil Procedure because the liberal

standards of the Rules generally afford plaintiffs the opportunity to obtain discovery relevant to

their asserted claim.”); Phillippi v. Jim Phillippi, Inc., 2009 U.S. Dist. LEXIS 66169, *6, 2009

WL 1911763 (S.D. Ohio June 26, 2009) (“Under the Federal Rules of Civil Procedure, in

connection with his breach of fiduciary duty claim, Phillippi has a liberal discovery right to

determine the extent to which Defendants allegedly commingled and misused corporate

funds....But if Phillippi is dissatisfied with Defendants' discovery responses, his appropriate

remedy is a motion to compel discovery-not an accounting claim.”); Bradshaw, 454 F.2d at 79

(“[An accounting] is an extraordinary remedy, and like other equitable remedies, is available

only when legal remedies are inadequate .... the liberal discovery procedures of the Federal

Rules operate to make the legal remedies more ‘adequate’ than before.”); Digital 2000, Inc. v.

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Bear Commc'ns., Inc., 130 F. App'x 12, 23 (6th Cir.2005) (“In light of the broad discovery

available to litigants, accounting actions are of dubious utility.”) (relying on Michigan state

law); Fid. Nat'l Title Ins. Co. v. Title First Agency, Inc., 2008 U.S. Dist. LEXIS 72598, *35,

2008 WL 4371838 (E.D.Mich. Sept. 22, 2008) (“Title First's case is not one of those rare cases,

since its damages are readily ascertainable through discovery.’’)

A cause of action for accounting seeks “a determination by a court of what may be due

the respective parties as a result of the relationship between them.” Moore v. Sweda, 27 Ohio

App.3d 38, 499 N.E.2d 371, 373 (Ohio Ct. App. 1985). See also Bradshaw v. Thompson, 454

F.2d 75, 79 (6th Cir. 1972) (“An accounting is a species of disclosure, predicated upon the legal

inability of a plaintiff to determine how much, if any, money is due him from another.”). The

required elements were “fraud, [a] fiduciary or trust relationship, and necessity.” Sabre Energy

Corp. v. Gulfport Energy Corp., No. 2:19-CV-5559, 2021 WL 2779157, at *4 (S.D. Ohio July

2, 2021) citing Miller Med. Sales, Inc. v. Worstell, No. 91AP-610, 1992 WL 31988, at *6 (Ohio

Ct. App. Feb. 18, 1992) (citing Bonnell v. B. & T. Metals Co., 81 N.E.2d 730, 732 (Ohio Ct.

App. 1948)). Furthermore, a claim for an accounting “must set forth operative facts which,

when construed in the claimant's favor, establish a right to the requested relief.” Executone of

Columbus, Inc. v. Inter-Tel, Inc., No. 2:06-CV-00126, 2007 WL 1144866, at *4 (S.D. Ohio

Apr. 16, 2007) citing Fontbank, Inc. v. CompuServe, Inc., 138 Ohio App.3d 801, 742 N.E.2d

674, 683 (Ohio Ct.App.2000).

Plaintiff avers that she sought financial information from Maximus through Brickman.

To the extent that such information is required to be disclosed in the Maximus operating

agreement, any disclosure failure could be addressed in the breach of contract claim asserted by

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Plaintiff. As such, Plaintiff has remedies at law that would be preferred over an equitable

remedy such as accounting. Plaintiff has asserted breach of fiduciary duty and fraud claims

against Defendant Brickman in other counts, and the lengthy complaint certainly shows the

complexity of the operations included under the Maximus umbrella and the difficulty in

determining if the assets have been prudently managed. The SAC, taken as a whole, alleges

“fraud, [a] fiduciary or trust relationship, and necessity,” sufficient, at this point, to state a claim

for accounting. See Sabre Energy Corp, supra 2021 WL 2779157, at *4.

F. Piercing the Corporate Veil (Count 13)

In Count 13 Plaintiff avers that the organizers of Maximus and BMI have failed to

honor the requirements of Ohio law, by failing to adequately fund and manage Maximus and

BMI to the detriment of its creditors and other stakeholders and asks that Defendant Brickman

remain personally liable for liable for these acts and/or omissions of Maximus.(SAC 490-

492) Maximus moves to dismiss this claim because “piercing the corporate veil” it is not a

cause of action, merely a legal rule or doctrine that permits courts to disregard the formal

corporate structure so that individual shareholders may be held liable for the actions of the

corporation. (ECF #167 at p. 11)

Regardless of whether piercing the corporate veil is a legal doctrine or a cause of action,

the corporate form may be disregarded and individual shareholders held liable for corporate

misdeeds when (1) control over the corporation by those to be held liable was so complete that

the corporation has no separate mind, will, or existence of its own, (2) control over the

corporation by those to be held liable was exercised in such a manner as to commit fraud or an

illegal act against the person seeking to disregard the corporate entity, and (3) injury or unjust

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loss resulted to the plaintiff from such control and wrong. Belvedere Condo Unit Owners' Assn.

v. RE. Roark Cos., Inc., 67 Ohio St. 3d 274, 289(1993) holding modified by Dombroski v.

WellPoint, Inc., 119 Ohio St. 3d 506 (2008). In Dombroski, the Ohio Supreme Court modified

the second element—”to fulfill the second prong of the Belvedere test for piercing the corporate

veil, the plaintiff must demonstrate that the defendant shareholder exercised control over the

corporation in such a manner as to commit fraud, an illegal act, or a similarly unlawful act.

Courts should apply this limited expansion cautiously toward the goal of piercing the corporate

veil only in instances of extreme shareholder misconduct. The first and third prongs of the

Belvedere test are not affected by this ruling and must still be met for a piercing claim to

succeed.” Dombroski, 119 Ohio St. 3d at513.

Whether a cause of action or a form of relief sought, Plaintiff has put Defendants

Brickman, Maximus and BMI on notice that she will seek to pierce the corporate veil in order

to hold Mr. Brickman personally liable. As such, Count 13 will not be dismissed.

G. Derivative Action (Count 14)

In Count 14, Plaintiff purports to assert a derivative claim on behalf of Maximus.

Under Ohio Rule 23.1, a complaining shareholder must (1) spell out the efforts made to have

the directors or other shareholders take the action demanded; (2) explain why he failed in this

effort or did not make it; and (3) show that he fairly and adequately represents the interests of

other similarly situated shareholders. Davis v. DCB Fin. Corp., 259 F. Supp. 2d 664, 670 (S.D.

Ohio 2003) Weston v. Weston Paper and Manufacturing Co., 74 Ohio St.3d 377, 379(1996).

Where a plaintiff does not comply with the requirements of Rule 23.1, the plaintiff has no

standing to bring suit. Grand Council of Ohio v. Owens, 86 Ohio App.3d 215, 220, 620 N.E.2d

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234 (1993).

Here Plaintiff has alleged that she was a shareholder or member of Maximus at the time

of the actions complained of and that she sent letters and or email in January and May of 2023

to Maximus, addressed to Brickman, requesting that Brickman cease violating the terms of the

Maximus operating agreement, cease improper company spending and from hiring outside

consultants without consultation with Plaintiff and alleged the damages to Maximus expected

from the challenged conduct. (See SAC 48, 102, 115, 140, 150, 152, 157, 160, 162, 225) She

also avers that she can fairly represent the interests of Maximus and its stakeholders.

Maximus takes issue with the letters or email notice that purportedly serve as her

demand on the company to take suitable action as is required by Ohio Rev. Code § 1706.612.”

The January 11, 2023 letter serves formal notice that BMI is in breach of her employment

agreement with BMI and the Operating Agreement of Maximus. The letter details specific

breaches relating to various projects and the monetary damages she is or will be caused as a

result of the breaches and requests corrective action within 15 days or she will resign her

position for Good Reason as defined in her Employment Agreement. (See ECF #84, Ex. 4)

The emails attached as Exhibit 29 of the SAC from Plaintiff to Brickman with the

subject line Brickhaus Budget and new hires- stating that she does not agree to people being

A member may not commence a derivative action in the right of the limited

liability company, or a series thereof, until both of the following occur: (A) A written

demand has been made upon the limited liability company or the series to take suitable

action. (B) Ninety days have expired from the date the demand was made unless either of

the following applies:(1) The member has earlier been notified that the demand has been

rejected by the limited liability company or the series; (2) Irreparable injury to the limited

liability company or the series would result by waiting for the expiration of the ninety-day

period. Ohio Rev. Code Ann. § 1706.612 (West)

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hired and given decision making authority without her approval; does not agree with the

increase to the company overhead and budget; and she does not agree to not being paid payroll.

Maximus is not mentioned in the email and it is hard to accept that the email constitutes a

written demand on Maximus. The January 11, 2023 letter points out a number of actions that

purportedly violated the Maximus Operating Agreement relating to various projects, but all of

Plaintiff's complaints center around payments that she is owed under the Operating Agreement.

She clearly is not seeking relief for Maximus in the January 11 letter. As such, the letter does

not meet the notice requirements of Ohio Rule 23.1 or Ohio Rev. Code § 1706.612.

Accordingly, Plaintiff's derivative claim against Maximus is dismissed.

H. Indemnity (Count 15)

Plaintiff asserts that she is entitled to indemnification under Section 5.5(f) of the

Maximus Operating Agreement which provides that Maximus “shall indemnify, hold harmless,

defend, pay and reimburse [Plaintiff] against any and all losses, claims, damages, judgments,

fines or liabilities, including reasonable legal fees or other expenses incurred in investigating or

defending against such losses, claims... by reason of ... any act or omission or alleged act or

omission performed or omitted to be performed on behalf of the Company, any Member or any

direct or indirect subsidiary of the foregoing in connection with the business of the Company.”

(ECF #84, SAC 9511) Plaintiff alleges that she has incurred one or more of the categories of

“losses, claims, damages, judgments, fines or liabilities, including reasonable legal fees or other

expenses incurred in investigating or defending against such losses, claims, damages,

judgments, fines or liabilities, and any amounts expended in settlement of any claims.” Id. □□□□

Further, Plaintiff avers that Maximus has not reimbursed Plaintiff in violation of the Operating

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Agreement.

Maximus argues that the Indemnification provision protects Plaintiff if she acts in good

faith at the request of the Company. It does not compel Maximus to pay her expenses to sue it

or provide assurance that her investment as a member might not be diminished. Plaintiff

counters that her cause of action for indemnity has arisen because Defendant BMI has sued

Plaintiff (by way of a counterclaim asserted in response to the November 10 Complaint) for

actions she took on behalf of BMI and because BMI is a direct subsidiary of the Company [i.e.,

Maximus]. Maximus responds that even if her claim that she sought indemnification a month

before she was sued is credited, the indemnification provision specifically excludes

indemnification for conduct that was not undertaken “in good faith and in a manner believed by

such Covered Person to be in, or not opposed to, the best interests of the Company.” The

Counterclaim alleges the Plaintiff breached her employment agreement, has been unjustly

enriched, breached her fiduciary duties to BMI and converted money from BMI and/or

Maximus. (ECF #99) Defenses to these claims are outside to contractual indemnification of

Section 5.5 of the Maximus Operating Agreement. As such, Count 15 will be dismissed.

I. Wrongful Termination (Count 17)

Plaintiff alleges wrongful termination against Defendants Brickman, BMI and Maximus

in Count 17. She avers that she is a minority member of Maximus and that BMI is a wholly

owned subsidiary of Maximus and that Plaintiff served as Director of Operations at BMI.

Plaintiff states that BMI allegedly terminated her for cause but as a minority member employee

of a closely held company, under Ohio Jaw, she could only be terminated for a legitimate

business reason. BMI failed to terminate Plaintiff for any legitimate business reason.

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Maximus argues that Plaintiff has pled no facts demonstrating that Maximus

participated in any way in her termination or that Maximus had any fiduciary duty to her. All of

her factual allegations regarding her termination center around BMI and Brickman. She had an

employment agreement with BMI, “Brickman callously fired Plaintiff, the Director of

Operations at BMI.” (ECF #84, Ex. 4, SAC § 37) Plaintiff counters that she has alleged that all

of the Defendants (including Maximus) conspired and assisted in Plaintiff's wrongful

termination.” (SAC ¥ 535) It is too early in this litigation to flesh out this claim.

J. Declaratory Judgment (Count 20)

Plaintiff seeks a declaratory judgment pursuant to 28 U.S.C. § 2201(a) which provides

in pertinent part:

Any court of the United States, upon the filing of an appropriate

pleading, may declare the rights and other legal relations of any

interested party seeking such declaration, whether or not further

relief is or could be sought. Any such declaration shall have the

force and effect of a final judgment or decree and shall be

reviewable as such.

Maximus argues that a declaratory judgment is a remedy, not a complaint. Further, the

count does not allege any wrongdoing by Maximus. Plaintiff counters that “[d]eclaratory

judgments are a cause of action authorized under R.C. Chapter 2721.” Am. Business Invests,

LLC v. Shaeena & Allos, LLC, 2023-Ohio-739, 33, 210 N.E.3d 651, 658 (6 Dist. Ct App.

Mar. 10, 2023). In American Business Investments, the Court determined that

any analysis of ABI's estoppel claim, under either a theory of

equitable or promissory estoppel, would not be properly before the

court in a declaratory judgment action. Declaratory judgments are a

cause of action authorized under R.C. Chapter 2721. R.C. 2721.03

states, in relevant part, that “any person interested under a deed,

will, written contract, or other writing constituting a contract” may

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file a declaratory judgment action to have their rights under the

instrument determined. “An action for declaratory judgment is a

remedy in addition to other legal and equitable remedies and may

be granted ‘where the court finds that speedy relief is necessary to

the preservation of rights which might otherwise be impaired.’ ”

(Emphasis added.) State ex rel. Northwood v. Court of Common

Pleas of Wood County, 109 Ohio App.3d 487, 490, 672 N.E.2d 695

(6th Dist.1996), quoting State ex rel. Taft v. Court of Common

Pleas of Franklin County, 63 Ohio St.3d 190, 586 N.E.2d 114

(1992). Since declaratory judgment is a remedy, we find that ABI's

attempt to seek declaratory judgment on another remedy—its

estoppel claim—is unfounded.

Am. Bus. Invs., LLC, 2023-Ohio-739, 7 33, 210 N.E.3d 651, 658. Here, Plaintiff is seeking a

declaration of her rights under her employment agreement and the Maximus Operating

Agreement which is permitted under the declaratory judgment provisions. At this time,

Maximus’ motion to dismiss it from this Count is denied.

K. Petition for Receivership (Count 21)

In Count 21 Plaintiff petitions the Court to appoint a receiver to administer the affairs of

Maximus during the pendency of this action pursuant to Fed. R. Civ. P. 66, 28 U.S.C. § 3103 et

seq., 28 U.S.C. § 1692, and R.C. 2735.01 and 1707.27. Maximus argues that the demand that a

receiver be appointed is not a complaint but a remedy and the Count does not allege any

wrongdoing by Maximus. Finally, Maximus concedes that “Plaintiff is free to argue that the

appointment of a receiver is an appropriate remedy after she establishes wrongdoing. Maximus

will oppose that remedy on the merits if she does so. But whatever the outcome, the

appointment of a receiver is not a count of a complaint.” (ECF #167 at p. 15) So noted, the

Petition for Receivership remains.

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CONCLUSION

\ For the reasons set forth above, the Motion of the Defendant Maximus to Dismiss

Maximus from Count 4 (Breach of Fiduciary Duty) is granted. Further, the Motion to Dismiss

Counts 14 (Derivative Action) and Count 15 (Indemnity) is granted and those claims are

dismissed. The Motion to Dismiss Counts 1, 2, 3, 8, 9, 11, 13 15, 17, 18, 20, and 21 is denied.

IT IS SO ORDERED.

DONALD C. sco

United States District\ Judge

DATED: la 2 Li24

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