United States District Court, D. New Hampshire
Proffe Publishing, Inc.
Wolfgang Lindner, et al. Opinion No. 2016 DNH 211
K. Pinsonneault, Esq., Jeremy David Eggleton, Esq.
N. Laplante United States District Judge.
case concerns a contract dispute between plaintiff Proffe
Publishing, Inc. (PPI), a financial newsletter publisher, and
defendant Wolfgang Lindner, whom PPI hired as its assistant
editor in 2011. PPI alleges that Lindner, once ensconced in
his new position, executed contracts that purported to serve
PPI but which, in reality, improperly enriched Lindner and
various associates. PPI has sued Lindner, two German-based
companies Lindner allegedly controls, x-services, UG and J.L.
Consult, GmbH, and two of Lindner's hires, Peter Kunze
and Egbert Woelk. Alleging diversity jurisdiction, 28 U.S.C.
§ 1332, Proffe asserts six causes of action: 1)
conversion (against Lindner); 2) fraudulent concealment
(against all defendants); 3) breach of fiduciary duty
(against Lindner, Kunze and Woelk); 4) civil conspiracy
(against all defendants); 5) breach of the covenant of good
faith and fair dealing (against all defendants); and 6)
breach of contract (against all defendants). The defendants
have moved to dismiss the case in its entirety, arguing: that
this court lacks subject matter jurisdiction to hear the case
due to a contractual forum selection clause; that the
plaintiff's claims are barred by New Hampshire's
three-year statute of limitations; and that all of
plaintiff's claims fail to state a claim for which relief
can be granted. See Fed.R.Civ.P. 12(b) (1), (6). The court
has reviewed the parties' submissions, and heard their
oral arguments. As a general matter, the parties'
disagreement over which of several disputed contracts control
this litigation makes resolution of the case on a motion to
dismiss difficult. More specifically, the court finds that
neither of the potentially operative forum selection clauses
are mandatory and that the Complaint sufficiently alleges
both monetary damages that exceed the jurisdictional
threshhold and facts that support each cause of action.
Finally, because the defendants' statute of limitations
defense targets plaintiff's claimed damages, rather than
its asserted causes of action, the court need not resolve
that issue at this early stage of litigation. Accordingly,
defendants' motion is denied.
court culls the following facts from plaintiff's first
amended Complaint and from information contained in documents
on which the complaint relies. Haley v. City of
Bos., 657 F.3d 39, 46 (1st Cir. 2011).
publishes several weekly financial newsletters. One such
newsletter is Proffe's Trend Portfolio, of which
Michael Proffe is editor-in-chief. Defendant Lindner holds
15% of PPI's stock and served as a
director. In December 2011, PPI contracted with
Lindner to pay him 5000 euros per month to serve as Trend
Portfolio's assistant editor. Lindner's
responsibilities included submitting weekly market reports to
Michael Proffe concerning PPI's own investments. Although
Lindner never returned a signed copy of the contract with
PPI, the parties acted in accordance with its terms until May
November 2015, PPI and defendant x-services agreed to an oral
contract, pursuant to which x-services would provide PPI with
information technology, administration, bookkeeping and
customer relations services for a fee of 4500 euros per
month. PPI alleges that Lindner is the sole member of
x-services. Both Lindner and x-services were required to
submit monthly invoices as a prerequisite to payment.
Lindner's role gave him access to PPI's financial
accounts and information technology systems.
August 2013, Lindner retained defendant Kunze, a friend with
software (but no management) experience, to act as CEO of PPI
and assume some of Lindner's responsibilities. Kunze was
to be paid $3000 per month. Lindner's fee remained
2015, Proffe met with Lindner, Kunze and PPI's
accountants to address Proffe's concerns that Lindner
wasn't performing his contractual obligations and that
neither Lindner nor Kunze were properly submitting
documentation of PPI's revenues and accounting. In
particular, Kunze authorized Lindner to be paid for providing
services as a vendor even though Lindner hadn't submitted
invoices. The failure to document expenses prevented
PPI's accountants from generating balance sheets or
profit and loss statements. PPI subsequently discovered that
these failures concealed numerous payments to Lindner or
entities he controlled (defendants x-services and J.L.
Consult) totalling $82, 000 more than what they were due
under their agreements with PPI.
result of the May 2015 meeting, Lindner and Kunze provided
assurances that the Lindner-controlled entities would not be
paid without first submitting invoices. In addition, they
assured Proffe and the PPI accountants that they would timely
provide revenue information, bank and credit card statements
and vendors' invoices so that accurate financial
information could be made available to PPI management.
also agreed -- on behalf of PPI -- to Lindner's request
to modify Lindner's independent contractor agreement. The
new agreement provided that J.L. Consult would assume
Lindner's obligations under the 2011 contract, and
increased the monthly fee for vendor services from 5, 000 to
7, 000 euros. Proffe signed the new contract on behalf of PPI
and delivered it to Lindner. As with the earlier contract,
Lindner did not return a signed copy. Nevertheless, PPI and
Mr. Lindner acted according to its terms for about six
six weeks after his May 2015 meeting with Proffe, Lindner and
the accountants, Kunze resigned from PPI citing a conflict of
interest. Nevertheless, in August 2015 Kunze signed an
agreement, in his role as CEO of PPI, to retain defendant
Woelk as an independent contractor to take over Kunze's
responsibilities under his vendor agreement with
Woelk was paid $3, 000 per month to work 4 hours per week
under the August 2015 agreement.
first suspected during October 2015 that something was awry
at PPI when an x-service employee resigned and informed
Proffe that Lindner was engaging in questionable business and
accounting practices. Upon further examination, Proffe
discovered that neither Lindner nor Kunze provided PPI's
accountants with any financial information after June 30,
2015, and that J.L. Consult and x-services continued to
receive payments without first submitting invoices.
Additionally, Proffe discovered that Lindner, Kunze and Woelk
had concealed the unauthorized payments to Lindner, J.L.
Consult and x-services in amounts totaling at least $82, 000,
and that x-services failed to maintain software systems and
provide accountants with financial information, in
contravention of its agreement with PPI. Lindner, Kunze and
Woelk concealed the unauthorized payments by limiting the
paper trail. One method they employed was to list PPI's
accounts payable in lump sums by aggregating multiple vendors
in a single ledger entry, thus hindering the discovery of
improper payments. In addition, while bank statements
revealed the precise amounts paid to vendors, only Lindner,
Kunze and Woelk had access to them.
November 21, 2015, Proffe ordered the suspension of payments
to J.L. Consult and x-services until Lindner provided a
satisfactory explanation for these vendors' failure to
submit invoices before being paid and for the failure to
provide PPI's accountants with the financial information
promised at the May 2015 meeting. Proffe gave Lindner a
December 10, 2015 deadline to comply. Lindner did not meet
the deadline, and on December 18, 2015, made arrangements for
PPI to pay x-services 6, 250 euros despite Proffe's order
to suspend payments to it. Lindner proceeded to make it
difficult, if not impossible, for PPI to operate without his
direct involvement. He blocked Proffe's access to PPI
bank accounts and refused to turn over corporate
documentation, passwords for servers and firewalls, and
information to access PPI's account with its internet
service provider. PPI spent a substantial amount of time and
money retaking control of its accounts. On January 17, 2016,
Lindner accessed the PPI accountants' servers and
downloaded all of PPI's bookkeeping information. He also
accessed PPI's accounts at a financial institution at
around the same time.
January 2016, PPI shareholders holding 85% of PPI's stock
voted to remove Lindner as a PPI director and to terminate
PPI's agreements with Lindner, J.L. Consult and
x-services effective January 18, 2016. These shareholders
also resolved to initiate legal action against Lindner to
recover PPI's property. At around the same time, PPI
terminated Woelk's vendor agreement and demanded that he
return all PPI property. A few weeks later, Woelk turned over
some of PPI's property in a meeting with Proffe. PPI
alleges on information and belief that Woelk failed to bring
with him several binders of financial information that PPI
needed to file its tax returns. Consequently, PPI was forced
to incur the expense of recreating its 2015 financial
same time, Woelk also delivered to Proffe papers that
purported to be PPI contracts with J.L. Consult and x-services
bearing dates of May 20, 2015, and signatures by Lindner and
Kunze (“the Woelk contracts”). PPI argues that
these purported contracts are invalid because Proffe neither
approved of nor signed them, and did not even know about them
until February 1, 2016. The Woelk contracts differ from the
revised contracts bearing Proffe's signature in ways that
are disadvantageous to PPI but highly favorable to J.L.
Consult and indirectly to Lindner. For example, the contract
increases the fees to be paid to J.L. Consult while reducing
its obligations to PPI. In addition, the J.L. Consult
contract was backdated to 2010, contained no non-compete
provision, gave J.L. Consult a unilateral right to increase
the fees charged by up to 5% per year and provided J.L.
Consult with broad indemnification rights and highly
favorable termination rights.
Complaint alleges that Lindner continues to submit
“worthless” copy for weekly newsletters despite
PPI's termination of its contracts with J.L. Consult and
x-services and denial of access to records of PPI's
investments that form the basis for the newsletters. In
addition, Lindner continues to send invoices on behalf of
J.L. Consult and x-services in the amounts specified in the
contracts delivered by Woelk.