Gigunda Group v. Creative Collective Group

2015 DNH 209

• Court: District Court, D. New Hampshire
• Decided: November 9, 2015
• Docket: 15-cv-104-LM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Gigunda Group, Inc.

v. Civil No. 15-cv-104-LM Opinion No. 2015 DNH 209 Creative Collective Group, et al.

O R D E R

Gigunda Group, Inc. (“Gigunda”) brought suit against

Creative Collective Group (“CCG”), Bronwyn Fenton, Selene

Fenton, and trustee defendant American Express Company

(“American Express”) in Rockingham County Superior Court. CCG

and the Fentons removed the case to this court. Gigunda moves

for leave to amend its complaint. CCG and the Fentons object.1

Background

Gigunda describes itself as “an independent, nationally

recognized advisor to large U.S. corporations for providing

strategic thinking, creative and brand advisory services.” Am.

Compl. (doc. no. 14) at 1. Gigunda alleges that in late 2014,

CCG, through its principal, Bronwyn Fenton, approached Gigunda

to partner with CCG in developing a pitch for and ultimately

executing an American Express marketing campaign (“campaign”).

1 The court will refer to CCG and the Fentons collectively as “defendants.” Gigunda alleges that “[t]hrough a pattern of fraudulent and

deceptive representations by [Bronwyn and Selene2] Fenton over a

four-month period, Gigunda was prompted by Fentons/CCG to expend

considerable time, resources and effort to ideate and develop

creative platforms and corresponding operational plans to help

win the business and execute the campaign.” Id. at 1-2.

Gigunda further alleges that neither the Fentons nor CCG ever

compensated it for the work it performed on the campaign.

Gigunda instituted this action, asserting several contract-

based state-law claims, as well as a fraud claim, and a claim

under New Hampshire’s Consumer Protection Act, N.H. Rev. Stat.

Ann. Ch. 358-A. Gigunda’s original complaint named as

defendants CCG, Bronwyn Fenton, Selene Fenton, and American

Express as a trustee defendant.

The defendants moved to dismiss certain claims in the

complaint. On June 10, 2015, after a hearing on the motion, the

court granted the motion in part and dismissed several claims.

In the June 10 order, the court also granted Gigunda’s

motion for leave to file an amended complaint, which Gigunda had

made at the hearing. Gigunda filed its amended complaint on

June 22, 2015, and defendants filed their answer on July 9,

2 Selene Fenton is Bronwyn Fenton’s sister.

2 2015. The amended complaint named the same defendants as the

original complaint.

Gigunda now moves for leave to file a second amended

complaint. Gigunda asserts that the proposed second amended

complaint (“second amended complaint”) is different from the

first amended complaint in three ways. The second amended

complaint: (i) adds “Fenton Group, LLC,”3 as a defendant, (ii)

adds “Everyday is Tuesday,” which Gigunda asserts was CCG’s

billing vendor for the campaign, as a defendant, and (iii)

changes the name of defendant “American Express Company” to

“American Express Travel Related Services, Inc.”

Standard of Review

Federal Rule of Civil Procedure 15(a)(2) provides that a

party who is no longer able to amend the complaint as of right

may amend only with the court’s leave, and that “[t]he court

should freely give leave when justice so requires.” Fed. R. Civ.

P. 15(a)(2). “Because the proposed amendment seeks to add a new

party, the motion is technically governed by Rule 21, which

provides that the court may at any time, on just terms, add or

drop a party . . . .” Sharp v. Deutsche Bank Nat’l Trust Co.,

3 Gigunda asserts that it seeks to add Fenton Group, LLC as a defendant because “Defendants plead that the putative defendant, Creative Collective Group, was a trade name of the Fenton Group, LLC.” Pl.’s Mot. (doc. no. 17) at ¶ 3.

3 No. 14-cv-369-LM, 2015 WL 4771291, at *3 (D.N.H. Aug. 11, 2015)

(internal quotation marks and citations omitted). “However, the

same standard of liberality applies under either [Rule 15(a) or

21].” Podkulski v. Doe, No. 11-cv-102-JL, 2013 WL 3475229, at

*3 (D.N.H. July 9, 2013) (internal quotation marks and citation

omitted).

“[A] district court may deny leave to amend when the

request is characterized by undue delay, bad faith, futility, or

the absence of due diligence on the movant’s part.” Nikitine v.

Wilmington Tr. Co., 715 F.3d 388, 390 (1st Cir. 2013) (internal

quotation marks and citations omitted). “In assessing futility,

the district court must apply the standard which applies to

motions to dismiss under Federal Rule of Civil Procedure

12(b)(6).” Adorno v. Crowley Towing & Transp. Co., 443 F.3d

122, 126 (1st Cir. 2006).

Under Rule 12(b)(6), the court must accept the factual

allegations in the complaint as true, construe reasonable

inferences in the plaintiff’s favor, and “determine whether the

factual allegations in the plaintiff’s complaint set forth a

plausible claim upon which relief may be granted.” Foley v.

Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014)

(citation omitted). A claim is facially plausible “when the

plaintiff pleads factual content that allows the court to draw

the reasonable inference that the defendant is liable for the

4 misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009). Analyzing plausibility is “a context-specific task” in

which the court relies on its “judicial experience and common

sense.” Id. at 679.

Discussion

Defendants object to Gigunda’s motion only to the extent

the second amended complaint adds Everyday is Tuesday (“EDIT”)

as a defendant. Defendants argue that none of the factual

allegations in the second amended complaint supports a claim

against EDIT and, therefore, amending the complaint to add EDIT

as a defendant would be futile.

In response, Gigunda makes two arguments in support of

adding EDIT as a defendant. First, it asserts that it filed a

Petition to Attach with Notice (“petition to attach”) with its

original complaint, which sought to attach the money owed by

American Express to CCG for work performed on the campaign.

Gigunda asserts that “[t]he purpose of the addition of [EDIT] is

simply to allow American Express to ‘recognize’ its vendor and

appropriately secure the funds pending resolution of the

litigation.” Pl.’s Reply (doc. no. 20) at ¶ 4.

Second, Gigunda asserts that EDIT is “for all intents and

purposes, indistinguishable from [CCG] and both law and equity

militate that it be recognized as such.” Id. at ¶ 8. In other

5 words, Gigunda argues that EDIT is CCG’s “alter ego” and,

therefore, it should be named as a defendant in this action.

I. EDIT as CCG’s Billing Vendor

Gigunda states that it is adding EDIT as a defendant in

support of its petition to attach. Gigunda explains that it is

seeking an attachment of payments made by American Express to

CCG, and for that reason named American Express as a trustee

defendant. Because EDIT, as CCG’s billing vendor, would receive

any payments made by American Express to CCG, Gigunda seeks to

add EDIT as a defendant to make it clear to American Express

which payments would be attached.

As such, Gigunda does not allege wrongdoing by EDIT or

allege claims against EDIT in the second amended complaint.

Instead, Gigunda apparently intends to notify American Express

that payments made to EDIT are payments to CCG and that those

are the payments Gigunda seeks to attach. Gigunda provides no

legal support for adding a defendant for that purpose.

Therefore, EDIT’s status as CCG’s billing vendor is insufficient

to add EDIT as a defendant in this action.

II. Alter Ego

Gigunda argues that EDIT is liable for CCG’s conduct

because EDIT “is one and the same as” CCG. Doc. no. 20 at ¶ 5.

6 In support, Gigunda asserts that EDIT shares the same principals

and business manager as CCG, that EDIT has no other employees

and shares the same location as CCG, and that the two entities

“commingle[d] funds.” Id. at ¶¶ 5 & 6. Gigunda contends that

“[i]t follows, then, that EDIT is the alter ego of the initial

individual and corporate Defendants.” Id. at ¶ 6.

Gigunda’s attempt to name EDIT as a defendant based on the

alter ego doctrine is misplaced. In New Hampshire, the alter

ego doctrine is also referred to as piercing the corporate veil.

Bartholomew v. Delahaye Grp., Inc., No. 95-20-B, 1995 WL 907897,

at *10 (D.N.H. Nov. 8, 1995). When courts pierce the corporate

veil, they “disregard the fiction that the corporation is

independent of its stockholders and treat the stockholders as

the corporation’s ‘alter egos.’” Norwood Grp. v. Phillips, 149

N.H. 722, 724 (2003).

Courts in New Hampshire “will pierce the corporate veil and

assess individual liability . . . where the corporate identity

has been used to promote an injustice or fraud.” LaMontagne

Builders, Inc. v. Bowman Brook Purchase Grp., 150 N.H. 270, 275

(2003) (citing Terren v. Butler, 134 N.H. 635, 639 (1991)); see

also Bad Paper, LLC v. Mountain Home Developers of Sunapee, LLC,

No. 11-cv-393-LM, 2013 WL 1821607, at *4 (D.N.H. Apr. 30, 2013)

(noting that a court will pierce the corporate veil where

individuals “hid behind [the corporate defendant] to engage in

7 activities that created liabilities they hoped to avoid”).

Therefore, the alter ego doctrine and corporate veil-piercing

“have been used to do one thing only: hold the owners of

corporations liable for the debts of the corporations they own.”

Michnovez v. Blair, LLC, 795 F. Supp. 2d 177, 186 (D.N.H. 2011).

Gigunda offers no support for the proposition that the

alter ego doctrine can be used to hold a separate entity – as

opposed to a corporation’s owners or stockholders – liable for a

corporation’s actions. See, e.g., id. (noting the lack of

support for the proposition that New Hampshire would adopt an

alter ego or veil-piercing theory “under which an entity other

than [] the owner of a corporation could be held liable for that

corporation’s conduct”). Therefore, Gigunda has not shown that

EDIT, which Gigunda does not allege is an owner of CCG, can be

liable for CCG’s conduct under the alter ego doctrine.

Even if Gigunda had identified any such support, it has not

alleged facts sufficient to show that EDIT was CCG’s alter ego.

There are no allegations in the second amended complaint that

would support the idea that CCG used EDIT to promote an

injustice or fraud, or to shield itself from liability. Indeed,

Gigunda argues that defendants agreed with American Express to

use EDIT for billing purposes “for their administrative

convenience and to expedite payment . . . because [EDIT] had

already been approved as an American Express vendor, obviating

8 the need to process a new payment authorization for” CCG. Doc.

no. 20 at ¶ 2. As such, Gigunda alleges that EDIT was used as

the billing vendor for the campaign out of convenience to

American Express, rather than for any unlawful purpose.

Further, although Gigunda asserts in its motion that CCG

and EDIT share the same principals, customers, and locations,

and that EDIT had no other employees or assets, none of those

assertions is alleged in the second amended complaint.4 See

Sykes v. RBS Citizens, B.A., 2 F. Supp. 3d 128, 137 n.10 (D.N.H.

2014) (“As with a motion to dismiss under Fed. R. Civ. P.

12(b)(6), in making futility determinations, the court must

limit itself to allegations in the complaint . . . .”). The

only factual allegation in the second amended complaint

concerning the relationship between EDIT and CCG is that the two

entities shared the same business manager. Gigunda offers no

support for the proposition that sharing the same business

manager is sufficient to characterize one entity as the alter

ego of the other. There are simply no factual allegations in

4 Indeed, the assertion that CCG and EDIT have the same location is directly contradicted by the allegations in the second amended complaint. Compare Sec. Am. Compl. (doc. no. 17- 1) at ¶ 2 (listing CCG’s address as 279 Spillway Road in West Hurley, New York) with id. at ¶ 6 (listing EDIT’s address as 2147 Bay Street, San Francisco, California).

9 the second amended complaint to demonstrate that EDIT is CCG’s

alter ego.5

Therefore, the second amended complaint does not state a

claim against EDIT. To the extent Gigunda’s motion seeks leave

to amend its complaint to add EDIT as a defendant, it is denied

on futility grounds.

Conclusion

For the foregoing reasons, Gigunda’s motion for leave to

file a second amended complaint (doc. no. 17) is granted except

to the extent it names Everyday is Tuesday as a defendant.

Gigunda shall file the amended complaint as allowed in this

order on or before November 20, 2015.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

November 9, 2015

cc: Kenneth C. Bartholomew, Esq. Chad L. Edgar, Esq. Lawrence B. Gormley, Esq. Rose Marie Joly, Esq. Debra L. Mayotte, Esq.

5Gigunda alleges in conclusory fashion that EDIT was an entity “controlled by the individual defendants.” Doc. no. 17-1 at ¶ 12. Such an allegation, even if credited, is insufficient to show that EDIT was CCG’s alter ego.