Ecogensus LLC v. Pacella

CourtDistrict Court, S.D. New York
DecidedMarch 24, 2022
Docket1:20-cv-03629
StatusUnknown

This text of Ecogensus LLC v. Pacella (Ecogensus LLC v. Pacella) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ecogensus LLC v. Pacella, (S.D.N.Y. 2022).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------------------------X : : ECOGENSUS LLC, VIKINGPEAK : ENERGY FUELS LLC, VIKINGPEAK : MANAGEMENT COMPANY, LLC, : 20-CV-3629(VSB) VIKINGPEAK CAPITAL GROUP LLC and : BJØRNULF ØSTVIK, : OPINION & ORDER : Plaintiffs, : : -against- : : : MATTHEW PACELLA, MICHAEL M. : MELNIK, JAY EDELSON, BENJAMIN : RICHMAN and EDELSON PC, : : Defendants. : : ----------------------------------------------------------X Appearances: Anne W. Salisbury David Joseph Kaplan Debra Joy Guzov Guzov LLC New York, New York Counsel for Plaintiffs Patrick Harry Peluso Woodrow & Peluso, LLC Denver, Colorado Counsel for Defendants Matthew Pacella and Michael M. Melnik Scott M Hare Todd M Brooks Whiteford Taylor Preston LLP Pittsburgh, Pennsylvania Counsel for Defendants Matthew Pacella and Michael M. Melnik Kaan Ekiner Cozen O’Connor Wilmington, Delaware Counsel for Defendants Matthew Pacella and Michael M. Melnik Ryan D. Andrews Alexander Glenn Tievsky Edelson P.C. Chicago, Illinois Counsel for Defendants Jay Edelson, Benjamin Richman, and Edelson PC VERNON S. BRODERICK, United States District Judge: Before me are the motions to dismiss the First Amended Complaint filed by Plaintiffs Bjørnulf Østvik(“Østvik”), Ecogensus LLC (“Ecogensus”), Vikingpeak Energy Fuels LLC, Vikingpeak Management Company, LLC (“VPM”), and Vikingpeak Capital Group LLC (collectively, the “Companies,” and together with Østvik, “Plaintiffs”). Plaintiffs assert claims against Defendants Matthew Pacella (“Pacella”), former counsel of the Companies, Michael M. Melnik (“Melnik”), a former business associateof the Companies,as well as Østvik’s former counsel, Defendants Jay Edelson (“Edelson”), Benjamin Richman (“Richman”), and their law firm Edelson PC(together with Edelson and Richman, the “Edelson Defendants”). Plaintiffs plead a variety of causes of action, chiefly for violation of the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”). Because Plaintiffs’ pleadings do not allege factssufficient to establish personal jurisdiction over the Defendants in New York,the motions to dismiss are GRANTED. Background1 Østvik is a domiciliary of Connecticut and the founder, president, and majority shareholder of the Companies. (FAC ¶ 16.)2 Each of the Companies is a limited liability company organized under Delaware law. (Id. ¶¶ 18–21.) Pacella and Melnik are both domiciliaries of Pennsylvania. (Id. ¶¶ 22–23.) Richman and Edelson are domiciled in Illinois,

and Edelson PC is a professional corporation organized under Illinois law. (Id. ¶¶ 24–26.) In 2016, Østvik met Pacella while he was “part-time ‘special counsel’ at a leading Chicago law firm.” (Id. ¶ 38.) After several meetings, Østvik sent Pacella an offer of employment dated July 12, 2016, which Pacella accepted to become legal counsel for the Companies. (See id.¶¶ 43–44.) Pacella was to be paid an annual salary of $200,000,andthe offer letter mentioned“the possibility of future ‘company equity options.’” (Id. ¶ 44.) In the course of their relationship, Østvik shared with Pacella certain personal, sensitive information that he preferred to keep secret (the “Confidential Disclosures”). (Id. ¶ 46.) In January of 2017, Østvik and Pacella had dinner together in Pittsburgh. (See id. ¶ 55.)

Østvik alleges that, during this dinner, Pacella “made an explicit demand for compensation in exchange for keeping the Confidential Disclosures secret.” (Id. ¶ 57.) “Specifically, Pacella made a reference to”information related to the Confidential Disclosures, stated that “he assumed Østvik would not want any further issues at this time,” and “then immediately changed the subject to his equity compensation package”—Pacella allegedly wanted Østvik togrant him more equity in the Companies. (Id.) Østvik told Pacella “that he would consider” increasing

1This section sets forth the well-pleaded factual allegations from Plaintiffs’ pleadings that are relevant to my disposition on the instant motions. I assume those allegations to be true solely for the purposes of rendering my disposition. SeeKassnerv.2ndAve.DelicatessenInc.,496F.3d229,237(2dCir.2007). I make no finding as to veracity of the allegations in Plaintiffs’ pleadings. 2“FAC” refers to the First Amended Complaint filed on October 12, 2021. (Doc. 145.) Pacella’s equity compensation. (Id. ¶ 58.) “[A]round May 2017,” Pacella urged Østvik to hire the Edelson Defendants “as his personal counsel” to handle certain legal claims Østvik had (the “Edelson Representation”). (Id. ¶ 63.) Pacella had previously practicedlawat Edelson PC for several years. (Id.) Later in June, Østvik met with the Edelson Defendants and hired them for the Edelson Representation. (See id.

¶¶ 66–67.) During this meeting, at Østvik’s urging, the Edelson Defendants agreed that they would not put any of the Confidential Disclosures in writing. (Id. ¶ 67.) In early June of 2017, Pacella reached an agreement in principle with Melnik, who had been a friend of his since college, through which Melnik would extend a high-interest loan to Ecogensus. (See id. ¶¶ 59, 65.) On July 13, 2017, after a business meeting in New York City, “Pacella became angry at Østvik and said he was still expecting an equity ‘plus up’” to his compensation. (Id. ¶ 73.) Østvik told Pacella his “behavior was absolutely unacceptable,” and “Pacella later apologized.” (Id.)

On July 28, 2017, Pacella wrote to Østvik that Østvik should be “entitled to $25,000,000” if he were to prevail in the Edelson Representation, and that “a jury would award this level of damages ‘999 times out of 1000.’” (Id. ¶ 76.) Østvik, however, remained concerned with any litigation strategy that might render the Confidential Disclosures public. (Id.) In September of 2017, Richman “discussed a supposedly hypothetical scenario with Østvik” about how, if a client were to sue his attorney, an attorney would be “free to publish . . . sensitive information about the client” learned in the course of the attorney-client relationship. (Id. ¶ 78.) Around this time, both Pacella and the Edelson Defendants had been “pressure[ing] . . . Østvik to pursue public litigation” to resolve the Edelson Representation, despite Østvik’s reticence to make the Confidential Disclosures public. (Id. ¶ 80.) By late 2017, the Edelson Representation had progressed to mediation. (Id. ¶ 85.) The Edelson Defendants “increased their pressure on Østvik to pursue litigation,” which prompted Østvik to confide in Pacella that hewas thinking of switching firms. (Id.) Pacella told him this would be a “mistake.” (Id.) Over “strong objections” from Pacella and the Edelson Defendants,

a second mediation was scheduled in Chicago for March 2018. (Id. ¶ 88.) This mediation resulted in “a quick resolution for Østvik,” but the settlement Østvikreceivedwas well less than the “$20,000,000” the Edelson Defendants and Pacella had predicted, which left the Edelson Defendants “furious,” as their pay for the Edelson Representation was subject to a contingent fee arrangement. (Id. ¶ 91–92.) In April of 2018, Pacella told Østvik to come to a meeting with him in New York City to discuss business matters with a friend of his who, at the time, was a partner at a major law firm. (Id. ¶ 95.) Pacella then told Østvik that the law firm partner was unable to make the meeting, and Pacella suggested that the two men meet for dinner together instead. (Id. ¶ 96.) At the

dinner meetingin New York, Pacella “warned Østvik that he could ‘bring down’ Østvik and his [C]ompanies,” and he “repeated . . . threats that unless Østvik gave in to his demands, he would ‘destroy’ Østvik,” and that he and “Richman . . . remained very angry that Østvik had been so sensitive about the Confidential Disclosures and pursuing litigation.” (Id. ¶¶ 97–98.) Pacella then “pressur[ed] Østvik to purchase a watch for him.” (Id.

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Ecogensus LLC v. Pacella, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ecogensus-llc-v-pacella-nysd-2022.