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Hiring Automation LLC v. Simple Onboard LLC

United States District Court, N.D. Alabama, Middle Division

January 30, 2019

HIRING AUTOMATION, LLC, Plaintiff,
v.
SIMPLE ONBOARD, LLC; NEON WORKFORCE TECHNOLOGIES, INC.; SYNERGI HOLDINGS, INC. F/K/A SYNERGI PARTNERS, INC.; AND SHANNON SCOTT, Defendants.

          MEMORANDUM OPINION

          KARON OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE

         This matter comes before the court on Defendant Synergi Holdings, Inc.'s Motion to Dismiss. (Doc. 15). Plaintiff Hiring Automation, LLC, filed this case against Synergi, Simple Onboard, LLC, Neon Workforce Technologies, Inc., and Shannon Scott in this court on May 21, 2018, (doc. 1), and amended its complaint on August 14, (doc. 13). Synergi then filed a motion to dismiss Counts II, III, and V of Hiring Automation's amended complaint as those counts relate to Synergi. (Doc. 15). For the reasons below, the court WILL GRANT Synergi's motion to dismiss Count III and DENY Synergi's motion to dismiss Counts II and V.

         I. Factual Background

         Plaintiff Hiring Automation alleges that it agreed to sell its software known as “Click Onboard” to Defendant Simple Onboard in 2015. As part of this Software Acquisition Agreement, Simple Onboard allegedly agreed to pay Hiring Automation a sum certain, an ongoing royalty fee, and a portion of the sales price in the event a third party purchased either Click Onboard or Simple Onboard. Plaintiff also alleges that Defendant Neon Workforce agreed to guarantee Simple Onboard's obligations under the Software Acquisition Agreement, though Hiring Automation does not provide any additional details about the relationship between Simple Onboard and Neon Workforce.

         Hiring Automation alleges that Simple Onboard breached the Software Acquisition Agreement and owes Hiring Automation money. Hiring Automation alleges that Neon Workforce also owes it money as Simple Onboard's guarantor under the Software Acquisition Agreement.

         Subsequent to the formation and alleged breach of the Software Acquisition Agreement, Defendant Synergi purchased all of Neon Workforce's stock in exchange for notes payable to Neon Workforce's three shareholders, one of whom was Defendant Shannon Scott. (Docs. 12 at ¶ 14; 15-1 at 11). So Synergi now fully owns Neon Workforce and still owes Mr. Scott under the terms of the Stock Purchase Agreement. (Doc. 15-1 at 12-13).

         The Stock Purchase Agreement between Synergi and Neon Workforce's former shareholders includes a standard indemnification clause, under which the selling shareholders must indemnify Synergi for any losses it incurs as a result of undisclosed Neon Workforce liabilities. (Doc. 15-1 at 19, 44). The Stock Purchase Agreement also provides that neither “Neon nor any of its Subsidiaries is a guarantor or otherwise is liable for any Liability (including indebtedness) of any other Person.” (Id., at 33).

         Hiring Automation's amended complaint does not allege any wrongdoing against Synergi. But Hiring Automation alleges that by owning Neon Workforce, which guaranteed Simple Onboard's payments under the Software Acquisition Agreement, Synergi is a proper defendant in this case as to Counts II, III, and V.

         Count II of Hiring Automation's amended complaint requests an accounting of Simple Onboard and Neon Workforce's financial records. It also includes Synergi to the extent that “Synergi has either merged its operations with Neon, has absorbed Neon's accounting function or otherwise has the accounting records of Neon.”

         Count III of the amended complaint alleges that the indemnification clause in the Stock Purchase Agreement between Synergi and Mr. Scott created an express trust, with Synergi as trustee and any undisclosed Neon Workforce creditor as a beneficiary. As an alleged creditor of Neon Workforce, Hiring Automation brings this claim as beneficiary against Synergi to enforce its rights under the alleged express trust.

         As an alternative claim, Count V of Hiring Automation's amended complaint requests this court to impose a constructive trust on the funds Neon Workforce allegedly owes Hiring Automation, which Synergi now controls.

         This court found as moot Synergi's original motion to dismiss after Hiring Automation amended its original complaint. (Doc. 14). In a largely similar motion to dismiss the amended complaint, Synergi now moves the court to dismiss it from all three claims, arguing that Hiring Automation's amended complaint does not state a cause of action against it. Synergi also argues that Hiring Automation has not pled facts sufficient to pierce Neon Workforce's corporate veil and hold Synergi liable for Neon Workforce's debt as its shareholder.

         Hiring Automation simultaneously filed its amended complaint and response to Synergi's motion to dismiss the original complaint. (Docs. 12-13). But Hiring Automation did not timely file, and indeed never filed, any response to Synergi's motion to dismiss the amended complaint.

         II. ...


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