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The 31-page document alleges Culbreath used his knowledge of trade secrets and proprietary information and got help from a former City of Huntsville official to develop the Parkside Town Centre, while undermining negotiations for a joint venture between Huntsville and Madison as well as Breland’s recruitment of Cabela’s.
The 31-page document alleges Culbreath used his knowledge of trade secrets and proprietary information and got help from a former City of Huntsville official to develop the Parkside Town Centre, while undermining negotiations for a joint venture between Huntsville and Madison as well as Breland’s recruitment of Cabela’s.
The 31-page document alleges Culbreath used his knowledge of trade secrets and proprietary information and got help from a former City of Huntsville official to develop the Parkside Town Centre, while undermining negotiations for a joint venture between Huntsville and Madison as well as Breland’s recruitment of Cabela’s.
TOWN INVESTMENTS, L.L.C.; 8075 MADISON BLVD., L.L.C.; and 8121 MADISON BOULEVARD, L.L.C.,
Plaintiffs,
v.
MICHAEL W. CULBREATH; JAMES B. PACKARD; ATTITUDE, L.L.C.; MUSHASHI, LLC; and FICTITIOUS DEFENDANTS 1-100,
Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Civil Action No. __________________
COMPLAINT Plaintiffs Breland Companies, L.L.C. (Breland Companies), Old Town Investments, L.L.C. (Old Town), 8075 Madison Blvd., L.L.C. (8075) and 8121 Madison Boulevard, L.L.C. (8121 and, together with Old Town and 8075, Breland Affiliates) 1 file this complaint against Defendants Michael W. Culbreath (Culbreath), James B. Packard (Packard), Attitude, L.L.C. (Attitude), Mushashi, LLC (Mushashi) and Fictitious Defendants 1-100 (together with Culbreath, Packard, Attitude and Mushashi, Defendants) and, pursuant to an investigation and upon knowledge, information and belief, allege as follows: PARTIES 1. Breland Companies is a Delaware limited liability company, whose sole member is Breland Enterprises DE LP. Breland Companies is qualified to do business in the state of Alabama. Breland Companies, together with the rest of the Breland Family of Companies, develops, builds and manages residential and commercial real estate projects throughout the
1 Breland Companies and its subsidiaries, affiliates and related entities (including Breland Affiliates) are collectively referred to as the Breland Family of Companies. ELECTRONICALLY FILED 8/18/2014 4:23 PM 47-CV-2014-901714.00 CIRCUIT COURT OF MADISON COUNTY, ALABAMA JANE C. SMITH, CLERK
2 Southeastern United States. Its projects include office, industrial, retail, multi-family, single family, specialty and mixed-use developments. 2. Old Town is a Delaware limited liability company, whose sole member is Breland Enterprises DE LP. Old Town is a Breland Affiliate that owns approximately 276 acres located at the intersection of Interstate 565 and Zierdt Road. Old Town is qualified to do business in the state of Alabama. 3. 8075 is a Delaware limited liability company, whose sole member is Breland Enterprises DE LP. 8075 is a Breland Affiliate that owns certain real property and improvements on Madison Boulevard. 8075 is qualified to do business in the state of Alabama. 4. 8121 is a Delaware limited liability company, whose sole member is Breland Enterprises DE LP. 8121 is a Breland Affiliate that owns certain real property and improvements on Madison Boulevard. 8121 is qualified to do business in the state of Alabama. 5. Culbreath is an individual residing in Madison County, Alabama. Culbreath may be served with process at his residence at 81 Lake Forest Boulevard, Huntsville, Alabama 35824, or any other manner authorized by law. From April 4, 2005 to July 27, 2012, Culbreath worked for Breland Companies and on behalf of the Breland Family of Companies as an executive officer. 6. Packard is an individual residing in Madison County, Alabama. Packard may be served with process at his residence at 3060 High Mountain Road, Huntsville, Alabama 35811, or any other manner authorized by law. 7. Attitude is an Alabama limited liability company, whose members -- Culbreath and Packard -- are citizens of the state of Alabama. Attitude may be served with process by
3 serving its registered agent, James B. Packard, at 3060 High Mountain Road, Huntsville, Alabama 35811. Attitude develops and manages residential and/or commercial properties. 8. Mushashi is an Alabama limited liability company, whose members -- Culbreath and Packard -- are citizens of the state of Alabama. Mushashi may be served with process by serving its registered agent, James B. Packard, at 3060 High Mountain Road, Huntsville, Alabama 35811. Mushashi develops and manages residential, multi-family and/or commercial properties. 9. Fictitious Defendants 1-100, whether singular or plural, are those persons, enterprises and/or entities (and their parents, subsidiaries, predecessors, successors, heirs, partners, members, shareholders, employees, agents and other persons acting for, in concert with or on their behalf) that: (1) breached any obligation or duty to, misappropriated or stole from, or otherwise defrauded or deceived Breland Companies and/or Breland Affiliates; (2) participated, benefitted from, and/or otherwise were directly or indirectly involved in the acts and/or omissions alleged below; (3) conspired with or aided and abetted Defendants or their agents to commit the underlying torts alleged below; or (4) had possession, custody or control of or received confidential, proprietary information and/or trade secrets of the Breland Family of Companies. The true names and legal identities of Fictitious Defendants 1-100 are unknown to Breland Companies and Breland Affiliates at this time, but they will be added by amendment, individually and jointly, when ascertained. Fictitious Defendants 1-100 are liable to the Breland Companies and Breland Affiliates, as set forth in more detail below. Fictitious Defendants 1-100 must be joined as parties in this action because, without them, complete relief cannot be afforded among those already parties. Alternatively, Fictitious Defendants 1-100 may be joined in this action because the relief sought by Breland Companies and Breland Affiliates against
4 Defendants is joint, several or alternative in respect of or arising out of the same transaction, occurrence or series of transactions or occurrences and common questions of law or fact will arise in this action. 10. Defendants, and each of them, acted individually or as the agent, servant, employee, partner or co-venturer of one another or were otherwise engaged in a joint enterprise. Alternatively, Defendants, and each of them, acted through their agents, servants, employees, partners and/or co-venturers and are liable to Breland Companies and Breland Affiliates under respondeat superior and/or agency theories, or are otherwise vicariously liable. JURISDICTION AND VENUE 11. Breland Companies and Breland Affiliates seek, among other things, compensatory, statutory and punitive damages in excess of $10,000, together with injunctive and other equitable relief. This Court has jurisdiction over the subject matter of this action pursuant to Ala. Code 12-11-30, -31 and -33 (1975). 12. Pursuant to Ala. Code 6-3-2 (1975) -- supplemented by Rule 82 of the Alabama Rules of Civil Procedure -- and Ala. Code 6-3-7 (1975), venue is proper in this Court because: (1) Attitude and Mushashi have a principal place of business in Madison County, Alabama; (2) Culbreath and Packard reside in Madison County, Alabama; and (3) a substantial part of the acts and/or omissions giving rise to this action occurred in Madison County, Alabama. 13. The Court has personal jurisdiction over Defendants because: (1) they resided and transacted, and continue to reside and transact, business within the state of Alabama; (2) the claims asserted in this action arose from or are connected with purposeful and tortious acts or omissions committed by them, in whole or in part, in or directed toward a resident of the state of Alabama; (3) they have committed tortious acts or omission, directly or indirectly, that caused substantial harm in the state of Alabama; and (4) they have had continuous and systematic
5 contacts with the state of Alabama by engaging in numerous activities that have had an effect in this state. Accordingly, Defendants are amenable to suit in the state of Alabama. FACTUAL ALLEGATIONS COMMON TO ALL CLAIMS 14. In early 2005, Culbreath contacted Louis Breland (Breland) about a potential employment opportunity with the Breland Family of Companies. During the early meetings between Culbreath and Breland, Culbreath communicated with Breland about his background, experience and qualifications. Culbreath made certain express and implied misrepresentations to Breland about the proposed business relationship, including, but not limited to, that he would: (1) be truthful, honest and fair with the Breland Family of Companies; (2) work on behalf of the Breland Family of Companies (rather than its competitors); (3) perform all duties and obligations owed by him to the Breland Family of Companies; and (4) maintain the confidentiality of documents and information related to the business of the Breland Family of Companies, including, but not limited to, its existing and prospective developments. Based on Culbreaths representations during his initial meetings with Breland, Breland Companies hired Culbreath in April, 2005 as its Chief Operations Officer (COO). As an executive officer of Breland Companies (and an integral member of the Breland Family of Companies), Culbreath was in charge of all operating activities associated with existing and prospective residential and commercial projects (including the construction, management, investment in and/or development of these projects). Each of these existing and future projects utilized a single purpose entity such as the Breland Affiliates. 15. Culbreaths duties included identifying potential residential and commercial sites for Breland Companies to develop through single purpose entities and further identifying prospective tenants for these developments. Culbreaths duties also included selling lots on behalf of the Breland Family of Companies.
6 16. Culbreath worked for Breland Companies and on behalf of the Breland Family of Companies between April, 2005 and July, 2012. During the course of this seven (7) year period, Culbreath had access to their confidential, proprietary information and/or trade secrets, including, but not limited to, the method and manner in which they identified, developed and invested in residential and commercial real estate projects. Culbreath also had access to confidential, proprietary information and/or trade secrets related to specific residential and commercial projects the Breland Family of Companies was working to develop. 17. Without their knowledge, during the time Culbreath worked for Breland Companies and on behalf of the Breland Family of Companies, he used their confidential, proprietary information and/or trade secrets for the benefit of himself and the other Defendants. 18. Breland recently discovered that, during the term of his employment, Culbreath intentionally and continuously committed blatant acts of economic espionage and self-dealing, misappropriating numerous business opportunities for himself, Defendants and their developments. 19. Defendants are, and were, willing participants in a conspiracy to misappropriate, steal from and otherwise defraud the Breland Family of Companies. Using the confidential, proprietary information and/or trade secrets Culbreath gained through his employment, he and the other Defendants developed competing projects, lured away prospective tenants and otherwise acted to the detriment of the Breland Family of Companies. 20. Although the breadth of their unlawful activities remains unknown, at least four (4) specific projects were compromised by Culbreath and the other Defendants. 21. Beginning in 2006, Old Town began trying to develop a large-scale retail project on the 276-acre site it owns at the intersection of Interstate 565 and Zierdt Road in the city of
7 Madison, Alabama (Madison) (the Old Town Project). As the COO of Breland Companies, Culbreath was intimately involved in every aspect of the Old Town Project. 22. Between 2006 and 2012, Breland and Culbreath worked together on the Old Town Project, including, but not limited to, developing plans, seeking infrastructure funding and identifying prospective tenants. Old Town (specifically Breland) identified Cabelas Inc. (Cabelas) as a proposed anchor tenant. 23. In 2009, Brelands and Culbreaths efforts to develop the Old Town Project culminated in a joint venture proposal to Madison and the city of Huntsville, Alabama (Huntsville) whereby Huntsville could participate in the infrastructure funding (i.e., roads and other improvements) in exchange for the right to share in the projects future sales tax revenues. For a number of reasons, this was a novel proposal, especially considering the fact that the Old Town Project was located entirely within Madison. 24. Old Town, Madison and Huntsville came to an agreement in principle, which provided for a 50/50 split of the future sales tax revenues generated from the Old Town Project between Madison and Huntsville (for a period of fifty (50) years) (the Joint Venture). Breland recently learned that while Culbreath was supposed to be working on the Joint Venture and the Old Town Project, he was secretly conspiring with the other Defendants to develop a competing project called Parkside Town Centre directly across and down Interstate 565 from the Old Town Project (the Parkside Project). Defendants developed the Parkside Project during (and after) Culbreaths employment with the Breland Companies by using the confidential, proprietary information and/or trade secrets of the Breland Family of Companies.
8 25. In early 2009, Stan McDonald approached Culbreath in his capacity as the COO of Breland Companies. Stan McDonald told Culbreath his family wanted to sell a portion of their farm, commonly referred to as the old McDonald place, more specifically defined as: Lot 1, according to the plat of Research Park Lake 5 Phase 3, a resubdivision of Lot 1 of a resubdivision of Lot 2 of Research Park-Lake 5 Subdivision, as recorded in Plat Book 45, Page 34, and Lot 2 of Research Park Lake 5 Second Addition, as recorded as Instrument No. 20051215000842120 in the Office of the Judge of Probate in Madison County, Alabama (Tract 1). For reference and orientation of the general area, a true and accurate satellite image and survey are provided below depicting Tract 1, which generally consists of the real property to the east of Lake 5, around the south of Lake 5 to the railroad tracks, and to the west of Lake 5.
9
26. Because of a utility and drainage easement granted and conveyed by members of the McDonald family to Huntsville in 1987 around the perimeter of Lake 5 (the Easement), all or a large portion of Tract 1 was undevelopable. However, this also made the property extremely cheap. 27. Instead of communicating the opportunity to purchase Tract 1 to the Breland Family of Companies (as he was obligated to do), Culbreath decided to usurp this opportunity for himself and the other Defendants. 28. Culbreath took the opportunity to Packard and they hatched a conspiracy to cheaply acquire Tract 1 (which was burdened by the Easement), create the Parkside Project and directly compete with the Old Town Project. 29. Culbreath, Packard and/or other Defendants approached Dallas Fanning, the then- Director of Urban Development for Huntsville, (Fanning) about vacating the Easement that encumbered Tract 1 so it could be developed after they secretly acquired it. 30. Although Fanning knew of the critical nature of the Easement for Huntsvilles current and future stormwater drainage needs in the area of Cummings Research Park (Research
10 Park) and Bridge Street Town Center (Bridge Street), Fanning promised Defendants to take the necessary action to cause Huntsville to vacate the Easement after they had Tract 1 under contract with the McDonald family. This would allow Defendants to acquire Tract 1 cheaply. 31. On February 3, 2009, Packard entered into a contract with the McDonald family to purchase Tract 1 for $306,000 (or $0.21 per square foot). The contract for purchase and sale of Tract 1 between Packard and the McDonald family had a contingency: if the McDonald family could not get the Easement covering Tract 1 vacated by Huntsville, Packard could walk- away from the deal and get his earnest money back. However, Defendants knew the escape clause would be unnecessary with Fanning working to vacate the Easement. 32. On September 29, 2009, Packard and the McDonald family executed a second contract for purchase and sale of Tract 1, which purportedly novated the February 3, 2009 contract, but kept the same contingency requiring the McDonald family to vacate the Easement covering Tract 1. Again, the contingency requiring vacation of the Easement was illusory. 33. Fanning kept his promise to Defendants. On the eve of his retirement from Huntsville, Fanning caused Huntsville to vacate 27.844 acres of the Easement (leaving approximately 6 acres covered) so Defendants could acquire and use Tract 1 for the Parkside Project. By Ordinance Nos. 09-1025 and 09-1026, the Huntsville Council authorized the vacation of a portion of the Easement covering Tract 1. Ordinance Nos. 09-1025 and 09-1026 specifically state that said easement or portion being vacated is not presently used and is no longer needed for a public or municipal purpose. 34. Fanning caused Huntsville to vacate the Easement for no money, and Huntsville is now purchasing a portion of it back from Defendants for $2,106,000. Not surprisingly, Fanning now works for Defendants.
11 35. Huntsville vacated 27.844 acres of the Easement on Tract 1 by quitclaim deeds recorded with the Madison County Probate Office on October 26, 2009. With the contingency in the contract between Packard and the McDonald family satisfied, Packard closed the sale of Tract 1. 36. On November 13, 2009, the McDonald family conveyed Lot 1 of Tract 1 to Packard by general warranty deed. Packard immediately (on November 20, 2009) conveyed Lot 1 of Tract 1 to Attitude. On November 22, 2009, the McDonald family conveyed Lot 2 of Tract 1 to Attitude by general warranty deed. Attitude subsequently conveyed Lot 2 of Tract 1 to Mushashi by quitclaim deed. 37. Not only did Culbreath steal the opportunity to purchase Tract 1 from the Breland Family of Companies, he was actively involved with Defendants in the work surrounding acquisition of Tract 1, the vacation of the Easement and other aspects of the Parkside Project all while he was on the payroll of Breland Companies. 38. After obtaining Tract 1 largely clear of the Easement, Defendants worked to convert Lot 1 of Tract 1 to condominium units so they could avoid having to comply with Huntsvilles requirements for a public road. On September 17, 2010, Attitude filed a Declaration of Condominium for Research Center of Research Park, a Condominium in the Madison County Probate Office, which converted Lot 1 of Tract 1 into two separate condominium units. For reference and orientation, a true and accurate survey is provided below depicting Units 1 and 2 of the Research Center of Research Park Condominium (Research Park Condo).
12
39. During this time, the Breland Family of Companies mistakenly believed that Culbreath was complying with his fiduciary duties and otherwise working on their projects, including the Old Town Project. They now know that Culbreath was surreptitiously working with Fanning, Packard and the other Defendants to acquire Tract 1, vacate utility and drainage easements (including the Easement), develop the Parkside Project and otherwise interfere with the Old Town Project. 40. Contemporaneously with the condoing of Lot 1 of Tract 1, Packard incorporated Research Center of Research Park Condominium Association, Inc. (Research Park Condo Association) to provide for the maintenance, operation and management of the condominium known as Resource Center of Research Park Condominium. Packard created an executive board for the Research Condo Association, which consisted of Packard and his brother, Tim Packard, as well as Culbreath. Notwithstanding his position as the COO of Breland Companies (which Packard knew of), Packard appointed Culbreath to the executive board of the Research Park Condo Association and Culbreath accepted the appointment. Defendants concealed this from the Breland Family of Companies.
13 41. By a vote of two-thirds of the voting members of the Research Park Condo Association and the action by Attitude in October, 2011, Lot 1 of Tract 1 went from two (2) condominium units to four (4) condominium units. For reference and orientation, a true and accurate survey is provided below depicting Units 1-4 of the Research Park Condo.
42. By October 2011, Defendants, including Culbreath, were attempting to attract a hotel to the Parkside Project and, specifically, to one or more units of the Research Park Condo. Culbreath knew Old Town was in discussions with a major hotel developer about constructing a nationally branded hotel at the Old Town Project. While employed with Breland Companies and working on behalf of the Breland Family of Companies, Culbreath met and negotiated with a hotel developer to sell or offer for development a unit of the Research Park Condo (instead of promoting the Old Town Project). Old Town recently learned that Culbreath acknowledged his wrongful conduct to the hotel developer, specifically telling him not to disclose their meeting to anyone because he worked for a developer [Breland Companies] who would be very upset. Through Culbreaths deceit and deception, as well as the use of confidential, proprietary information and/or trade secrets of the Breland Family of Companies, Defendants secured the
14 construction of a Hampton Inn & Suites and a Home2 Suites for the Parkside Project on Unit 3 of the Research Park Condo. 43. In addition to luring the hotels to the Parkside Project, Defendants interfered with Brelands efforts to secure other potential tenants for the Old Town Project, including Calhoun Community College (Calhoun). 44. In 2011, Breland and Culbreath (or their agents) were negotiating with Calhoun to be one of the primary tenants for the Old Town Project. Culbreath was actively involved in these negotiations with Calhoun, including communications related to the proposed rental rate and lease structure. 45. For reasons unknown to Breland at the time, Calhoun ultimately selected the Parkside Project as its preferred site to recommend to its Board of Directors. Breland recently learned that Calhoun selected the Parkside Project as its preferred site because Culbreath had an interest in the Parkside Project and was secretly working with the other Defendants to convince Calhoun (and other prospective tenants) to select the Parkside Project over the Old Town Project. Culbreath and the other Defendants persuaded Calhoun to select the Parkside Project using the confidential, proprietary information and/or trade secrets of the Breland Family of Companies. 46. Breland became suspicious about the amount of time Culbreath spent with Packard and confronted him. Culbreath assured Breland that he and Packard were not involved in any improper conduct stating: Packard and I are just friends. He is my only friend and I have told him not to speak to me about business because it would be a conflict of interest. 47. Little did Breland know, but Culbreath, Packard and/or the other Defendants had been working for more than two (2) years on the Parkside Project, actively trying to sabotage the
15 Old Town Project and the Joint Venture (i.e., the project between Huntsville and Madison to share funding and tax revenues from the Old Town Project). 48. After Defendants (including Culbreath) convinced two (2) hotels to locate at the Parkside Project and Calhoun to choose the Parkside Project as its preferred site, Culbreath turned his focus to conspiring with Packard and the other Defendants to deter Cabelas from locating its outdoor superstore at the Old Town Project. 49. In order to attract Cabelas, Defendants needed to expand the Parkside Project. However, Defendants lacked the money to acquire additional property. Therefore, they conceived an elaborate scheme for Huntsville to finance the entire expansion of the Parkside Project under the guise of attracting Cabelas. Defendants convinced Huntsville to participate in their scheme so it could have all of the tax revenues from Cabelas, not just the fifty percent (50%) it would have received through the Joint Venture. 50. A few of the more specious parts of the actual and proposed transactions between Defendants and Huntsville include: a. Huntsville intends to pay Defendants $3,584,200 for a landscape buffer and a right of way. It is unprecedented for Huntsville to purchase property for landscaping between two (2) commercial developments and a right of way -- which Huntsville always requires developers to give to it.
b. Huntsville intends to pay Defendants $2,100,000 to expand Lake 5, even though Huntsville had the right to expand its use of Lake 5 through the Easement when the Parkside Project materialized (until Fanning caused Huntsville to vacate it, as described above).
c. Huntsville will pay more than $1,000,000 to fill in a portion of Lake 5, and then simultaneously pay to expand it on another side.
51. Concurrently with their efforts to acquire the property to expand the Parkside Project, Defendants convinced Huntsville to withdraw from the Joint Venture. This interfered
16 with the proposed funding for the roads and infrastructure improvements for the Old Town Project, which Old Town, Madison and Huntsville had been painstakingly negotiating for years. 52. Based on the actions of Defendants, in early 2013 Huntsville refused to sign the Memorandum of Understanding negotiated by the parties to the Joint Venture and their counsel. This allowed Defendants to misrepresent to Cabelas (and other potential tenants) that Breland Companies and Breland Affiliates would not be able to timely develop roads and other infrastructure for the Old Town Development. 53. As a direct result of Defendants unlawful actions, Cabelas chose the Parkside Project as the site of its first outdoor superstore in Alabama. 54. Culbreath and the other Defendants accomplished all of this by using the confidential, proprietary information and/or trade secrets of the Breland Family of Companies that Culbreath misappropriated during his employment. 55. Culbreaths wrongful acts and omissions during his employment with Breland Companies and work on behalf of the Breland Family of Companies are not limited to the Parkside Project. Culbreath engaged in a number of other unethical, deceitful and deceptive acts (identified below), including forming and/or participating in other competing projects, taking kickbacks and otherwise stealing from the Breland Family of Companies. The other Defendants willingly participated in and benefited from Culbreaths unethical, deceitful and deceptive acts. 56. Aside from the Parkside Project, Culbreath violated his duties and engaged in wrongful conduct related to the business of 8075 and 8121. 8075 and 8121 own retail shopping centers on Madison Boulevard (the 8075 / 8121 Project). Part of Culbreaths duties and responsibilities during his work on behalf of the Breland Family of Companies included locating and maintaining tenants for the 8075 / 8121 Project. During his employment, Culbreath secretly
17 owned and promoted a competing development with Defendants on Madison Boulevard. As he did with the Parkside Project, Culbreath ignored his duties and obligations to the Breland Family of Companies by using confidential, proprietary information and/or trade secrets to steal (and attempt to steal) tenants and potential tenants from 8075 and 8121 in favor of Defendants. 57. Also, Breland Companies recently discovered that, during the course of his employment, Culbreath required various business partners of the Breland Family of Companies to pay him kickbacks, personally taking money and residential lots that should have been paid or transferred to the Breland Family of Companies. For example, Breland Companies learned that Culbreath forced Jeff Mullins to make a cash payment to Culbreath in order to do business with the Breland Family of Companies. 58. Similarly, Culbreath, personally and through Defendants, accepted real property (specifically, lots) for payment of debts that were owed to Breland Companies (or the Breland Family of Companies). One such instance involved a debt owed to Breland Companies by Real Estate Land Developers, Inc. (RLD). In 2008, Culbreath told Breland Companies that RLD did not have the money to meet its contractual obligations and that Breland Companies should accept three (3) lots from RLD in lieu of payment. Breland Companies did so based on Culbreaths recommendation as its COO. Breland Companies has now learned that, in 2009, RLD transferred to Culbreath and/or the other Defendants additional lots in connection with its debt -- instead of transferring them to Breland Companies. 59. Breland Companies also recently discovered that, during his employment, Culbreath operated and participated in a competing residential construction business antagonistic to and in competition with the Breland Family of Companies.
18 60. The extent of Culbreaths and the other Defendants wrongdoing remains largely unknown due to the measures taken by them to conceal their illicit activities, including setting up and using secret email addresses to perpetrate their wrongful acts and omissions. However, Defendants continue their efforts to divert actual and/or prospective contractual and business relations away from the Breland Family of Companies. 61. Culbreath and Defendants are nothing more than common thieves. All of the above referenced acts were actively concealed from the Breland Family of Companies and were not discovered until 2014. CAUSES OF ACTION Count I Breach of Contract 62. Breland Companies and Breland Affiliates reallege and reassert the preceding factual allegations as if fully set forth herein. 63. Culbreath entered into a valid and binding contract with Breland Companies and/or Breland Affiliates which was supported by adequate consideration. 64. Culbreaths employment contract required him to, among other things, act as an agent for and in the best interests of the Breland Family of Companies in connection with their operating activities. 65. Culbreath breached his contractual agreement with Breland Companies and/or Breland Affiliates by, among other things: (1) failing to fulfill his duties and obligations to the Breland Family of Companies; (2) failing to deal in good faith, fairly and honestly with the Breland Family of Companies; (3) failing to honor or otherwise comply with his promises and obligations to the Breland Family of Companies; (4) failing to adequately represent the interests of the Breland Family of Companies; (5) improperly competing with the Breland Family of
19 Companies; (6) misappropriating confidential, proprietary information and/or trade secrets of the Breland Family of Companies; (7) usurping business opportunities; and (8) otherwise committing the acts described herein. 66. Breland Companies and/or Breland Affiliates have fully performed their obligations pursuant to their contractual agreement with Culbreath, and any condition precedent has been satisfied. 67. Breland Companies and Breland Affiliates have suffered damage as a direct and proximate result of Culbreaths breaches. 68. Culbreaths acts are part of an overall scheme or conspiracy and were willful, wanton, malicious, oppressive, reckless and/or were undertaken with the intent to defraud. Count II Breach of Fiduciary Duty 69. Breland Companies and Breland Affiliates reallege and reassert the preceding factual allegations as if fully set forth herein. 70. Culbreath, as an employee and executive officer of Breland Companies and/or Breland Affiliates, owed, and continued to owe during his employment relationship, fiduciary duties to the Breland Family of Companies, including, but not limited to, the highest obligation of good faith, fair dealing, loyalty and due care. These duties encompassed, without limitation, obligations to: (1) make full and complete disclosure of all material facts that might affect business decisions and operations of the Breland Family of Companies; (2) use care, skill and diligence in the performance of his duties and obligations; (3) fully and completely disclose all competitive interests or other conflicts of interest; (4) exercise a high degree of honesty, loyalty, integrity and good faith; (5) prevent and prohibit self-dealing; (6) refrain from competing with business activities and operations of the Breland Family of Companies; (7) avoid interfering with
20 actual and/or potential contractual or business relations for his personal gain to the detriment of the Breland Family of Companies; (8) avoid usurping business opportunities; and (9) safeguard the confidential, proprietary information and/or trade secrets of the Breland Family of Companies. 71. The fiduciary duties imposed on Culbreath specifically encompassed the corollary duties of an agent to disclose information that is relevant to the affairs of the agency entrusted to him and to refrain from placing himself in a position antagonistic to his principal concerning the subject matter of the agency. The duty not to use or communicate confidential information of the principal for the agents own purposes or those of a third party precluded Culbreaths use of the confidential, proprietary information and/or trade secrets of the Breland Family of Companies in a manner antagonistic to their interests. 72. The Breland Family of Companies reposed trust and confidence in Culbreath that he would abide by his fiduciary duties. Culbreath violated and breached his fiduciary duties of care, honesty, candor, good faith and loyalty by, among other things, committing blatant acts of economic espionage, self-dealing, and systematic misappropriation and/or usurpation of the actual and/or prospective contractual and business relations of the Breland Family of Companies. Culbreath placed himself in a position inimical to his duties to the Breland Family of Companies. 73. Culbreath violated and breached his fiduciary duties by, among other things: (1) using the confidential, proprietary business information and/or trade secrets of the Breland Family of Companies; (2) orchestrating a scheme to defraud the Breland Family of Companies; (3) procuring secret profits from the Breland Family of Companies; (4) usurping or allowing others to usurp business opportunities that rightfully belonged to the Breland Family of Companies; (5) acting adversely to the interests of the Breland Family of Companies; (6)
21 misrepresenting information to and concealing information from the Breland Family of Companies; and (7) making misrepresentations to actual and/or potential contractual or business relations of the Breland Family of Companies. 74. As a direct and proximate result of the Culbreaths disloyal acts, Breland Companies and Breland Affiliates have sustained significant damages, including, but not limited to: the loss of business and commercial reputation, goodwill, profits, business and economic opportunities. Culbreath is not entitled to any salary, commissions, bonuses, dividends, benefits, or other monetary payments received from Breland Companies and/or Breland Affiliates during the period in which he breached his fiduciary duties. Culbreath must disgorge and return all payments made to him by Breland Companies and/or Breland Affiliates during the period of his disloyalty and self-dealing, which appears to span the entire length of his employment. 75. Culbreaths acts are part of an overall scheme or conspiracy and were willful, wanton, malicious, oppressive, reckless and/or were undertaken with the intent to defraud. Count III Fraudulent Misrepresentation 76. Breland Companies and Breland Affiliates reallege and reassert the preceding factual allegations as if fully set forth herein. 77. Where a fiduciary, such as Culbreath, fails to disclose a material fact, there is actionable fraud. 78. Before and at the inception of his employment relationship, Culbreath made certain express and implied misrepresentations to Breland Companies and Breland Affiliates including, but not limited to, those misrepresentations contained in paragraphs 14 through 61 above and that Culbreath would: (1) be truthful, honest and fair with the Breland Family of Companies; (2) work on behalf of the Breland Family of Companies (rather than their
22 competitors); (3) perform all duties and obligations owed by him to the Breland Family of Companies; and (4) maintain the confidentiality of documents and information related to the business of the Breland Family of Companies, including, but not limited to, existing and prospective developments. 79. Culbreath further misrepresented his relationship with Packard to Breland Companies and Breland Affiliates at various times during his employment. These misrepresentations included, but were not limited to, that he and Packard were just friends and did not discuss business because that would be a conflict of interest. 80. Culbreath made these misrepresentations of material fact willfully to deceive, recklessly without knowledge or by mistake and innocently. 81. Culbreaths misrepresentations induced Breland Companies and Breland Affiliates to act or refrain from acting, including, but not limited to: hiring and retaining Culbreath; giving Culbreath access to confidential, proprietary information and/or trade secrets; sharing business prospects with Culbreath; permitting Culbreath to negotiate and deal with business partners; and otherwise allowing him to work on the Old Town Project, the 8075 / 8121 Project and other developments and matters associated with the Breland Family of Companies. 82. Breland Companies and Breland Affiliates reasonably relied on and acted to their detriment as a result of Culbreaths misrepresentations. 83. Culbreaths fraud and misrepresentations caused substantial loss and damages to Breland Companies and Breland Affiliates. 84. Culbreaths acts are part of an overall scheme or conspiracy and were willful, wanton, malicious, oppressive, reckless and/or were undertaken with the intent to defraud.
23 Count IV Fraudulent Suppression 85. Breland Companies and Breland Affiliates reallege and reassert the preceding factual allegations as if fully set forth herein. 86. Culbreath suppressed facts which were material to Breland Companies and Breland Affiliates, including, but not limited to, those material facts in paragraphs 14 through 61 above, and that he would not: (1) be truthful, honest, and fair with the Breland Family of Companies; (2) work on behalf of the Breland Family of Companies; (3) perform all duties and obligations owed by him to the Breland Family of Companies; or (4) maintain the confidentiality of documents and information related to the business of the Breland Family of Companies, including, but not limited to, existing and perspective developments. 87. Similarly, Culbreath suppressed various business opportunities (such as the opportunity to acquire Tract 1); his self-dealing (including the kick-backs he received); competing businesses; and involvement with and work on behalf of the Parkside Project and the other Defendants. Culbreath was bound to disclose these and other material facts to Breland Companies and Breland Affiliates as a result of his position and role with Breland Companies and Breland Affiliates and/or due to the particular circumstances of this case. Culbreath also provided Breland Companies (and the Breland Family of Companies) information which was likely to mislead without complete and accurate communication of that information, including, for example, his relationship with Packard. 88. Culbreath recklessly suppressed these facts, without true knowledge thereof, or suppressed these facts by negligence or mistake, but did so with the intention that Breland Companies and Breland Affiliates rely on the information Culbreath was giving to them.
24 89. Culbreaths fraudulent concealment or suppression and deceit caused substantial loss and damages to Breland Companies and Breland Affiliates. 90. Culbreaths acts are part of an overall scheme or conspiracy and were willful, wanton, malicious, oppressive, reckless and/or were undertaken with the intent to defraud. Count V Misappropriation of Trade Secrets 91. Breland Companies and Breland Affiliates reallege and reassert the preceding factual allegations as if fully set forth herein. 92. Culbreath had access to and obtained a variety of confidential, proprietary information and/or trade secrets of the Breland Family of Companies, including, but not limited to: price lists, customer lists and cost information, all of which constitute trade secrets within the meaning of the Alabama Trade Secrets Act, Ala. Code 8-27-2(1) (1975). 93. Despite substantial efforts to maintain their secrecy, Defendants used and disclosed confidential, proprietary information and/or trade secrets, without a privilege to do so, including those related to the Old Town Project, the 8075 / 8121 Project, Bridgewater Landing, Iredell and Magnolia Park. 94. Defendants wrongfully misappropriated from Breland Companies and Breland Affiliates the following types of information: i. information used in the Breland Family of Companies trade or business; ii. information included or embodied in a formula, pattern, compilation, computer software, drawing, device, method, technique, or process; iii. information not publicly known and was not generally known in the trade or business; iv. information that could not be readily ascertained or derived from publicly available information;
25 v. information subject to reasonable efforts to keep said information secret and confidential; and vi. information with significant economic value. 95. Defendants actions in obtaining, using and disclosing, without a privilege to do so, this confidential, proprietary information and/or trade secrets breached the confidence reposed in Culbreath by Breland Companies and Breland Affiliates. 96. Defendants have obtained, used and disclosed, without a privilege to do so, this confidential, proprietary information and/or trade secrets to injure and cause Breland Companies and Breland Affiliates to suffer loss of business and profits. 97. Defendants unlawful misappropriation of this confidential, proprietary information and/or trade secrets caused Breland Companies and Breland Affiliates irreparable injury and, unless restrained and enjoined, Defendants will continue to commit such acts. Breland Companies and Breland Affiliates remedies at law are not adequate to compensate them for these inflicted and threatened injuries, entitling them to additional remedies, including injunctive relief. 98. Defendants acts are part of an overall scheme or conspiracy and were willful, wanton, malicious, oppressive, reckless and/or were undertaken with the intent to defraud. Count VI Tortious Interference with Actual or Prospective Contractual and/or Business Relations 99. Breland Companies and Breland Affiliates reallege and reassert the preceding factual allegations as if fully set forth herein. 100. Breland Companies and Breland Affiliates had substantial rights in and maintained a business relationship with their customers, tenants, prospective tenants and business partners, including those described above (such as Huntsville and the McDonald Family), to which Defendants were all strangers.
26 101. Defendants knew of these contractual and business relationships. 102. Notwithstanding their knowledge, Defendants willfully, intentionally, with malice and without justification or privilege acted to induce, and did induce, them to discontinue their actual and/or prospective contractual or business relationships with Breland Companies and Breland Affiliates. 103. Defendants used improper means, including deception, to interfere with contractual and/or business relationships of Breland Companies and Breland Affiliates. 104. Defendants interference was intentional and designed to disrupt the actual and/or prospective relationships between the Breland Companies and Breland Affiliates and the individuals and entities described above, including, but not limited to: the McDonald Family, Huntsville, Cabelas, the hotel developer, Calhoun and other prospective tenants. Defendants engaged in a course of conduct that was intentionally and foreseeably calculated to undermine and/or destroy Breland Companies and the Breland Family of Companies actual and/or prospective contractual or business relations. 105. As a direct and proximate result of the acts of tortious interference with Breland Companies and Breland Affiliates contractual and business relations, Defendants have caused substantial damage and injury to Breland Companies and Breland Affiliates, including, but not limited to: the suspension of business dealings, lost profits and damage to their goodwill and business reputations. 106. Defendants acts were part of an overall scheme or conspiracy and were willful, wanton, malicious, oppressive, reckless and/or were undertaken with the intent to defraud.
27 Count VII Business Defamation and/or Trade Libel 107. Breland Companies and Breland Affiliates reallege and reassert the preceding factual allegations as if fully set forth herein. 108. Defendants made the false statements described above to actual and/or prospective contractual or business relations of Breland Companies and Breland Affiliates, including, but not limited to: Huntsville, Cabelas, the hotel developer, Calhoun and other prospective tenants. For example, Defendants have repeatedly disseminated false information that Old Town will not be able to timely secure roads to the Old Town Project. 109. As a direct and proximate result of Defendants false and defamatory statements Breland Companies and Breland Affiliates have suffered substantial damage and injury, including, but not limited to: injury to their reputation and pecuniary loss and damage. Moreover, unless restrained and enjoined, Defendants will continue to make defamatory statements. 110. No remedy at law is adequate to compensate Breland Companies and Breland Affiliates for these inflicted and threatened injuries, entitling them to additional remedies, including injunctive relief. Count VIII Unjust Enrichment 111. Breland Companies and Breland Affiliates reallege and reassert the preceding factual allegations as if fully set forth herein. 112. Defendants improperly used and procured the assets and business of the Breland Family of Companies by, among other things: stealing the property for the Parkside Project, Cabelas, the hotels, Calhoun and other prospective tenants; misappropriating the confidential,
28 proprietary information and/or trade secrets of the Breland Family of Companies; competing with the Breland Family of Companies; usurping business opportunities; and otherwise committing the illegal and unfair business practices described above. Defendants benefited and continue to benefit, directly or indirectly, from their wrongful acts and omissions. 113. By their wrongful acts and omissions, Defendants have been unjustly enriched at Breland Companies and Breland Affiliates expense. 114. The circumstances of Defendants unjust enrichment are such that they should, in good conscience, make restitution to Breland Companies and Breland Affiliates, which includes, without limitation, disgorging all personal property, profits, benefits and/or other compensation obtained by from their wrongful conduct. Count IX Civil Conspiracy 115. Breland Companies and Breland Affiliates reallege and reassert the preceding factual allegations as if fully set forth herein. 116. Defendants recklessly, willfully and intentionally conspired with one another in callous disregard for rights and interests of the Breland Family of Companies to accomplish an unlawful end or to accomplish a lawful end by unlawful means. Defendants agreed to commit each of the wrongful and tortious acts discussed above, including, but not limited to, breach of contract, breach of fiduciary duties, misrepresentation, suppression, misappropriation of trade secrets, tortious interference with contractual and/or business relations and business defamation. Defendants devised a plan to accomplish their ends. 117. The intent and purpose of the conspiracy, and the underlying combinations of unlawful acts and misconduct committed by Defendants, was to steal information, resources, assets and business opportunities of the Breland Family of Companies to benefit their own
29 interests and pursue their competing developments. Defendants had a financial motive or incentive to accomplish the conspiracy. 118. By entering into this conspiracy, Defendants have permitted, encouraged and induced all of the wrongful and tortious acts and omissions discussed above. 119. Breland Companies and Breland Affiliates have suffered, and continue to suffer, severe, immediate, and irreparable harm, damage and injury by the wrongful acts committed in the course of the conspiracy. PRAYER FOR RELIEF WHEREFORE, premises considered, Breland Companies and Breland Affiliates respectfully request that Defendants be summoned to appear and answer, and that upon final trial, the Court enter a judgment for Breland Companies and Breland Affiliates and against Defendants as follows: A. for actual damages, consequential damages, punitive and exemplary damages, statutory damages, and pre- and post-judgment interest; B. for preliminary and permanent injunctive relief; C. for the imposition of a constructive trust on Defendants businesses formed and operated as a result of Defendants wrongful actions and/or on any and all real and personal property (including, but not limited to: securities, assets, revenues, profits or proceeds of Defendants businesses); D. for restitution and disgorgement of all ill-gotten gains unjustly obtained and retained by Defendants; E. for attorney and expert witness fees, court costs, and all other expenses associated with the prosecution of this action; and F. for such other and further relief to which Breland Companies or Breland Affiliates show they are justly entitled at law or in equity.
30 JURY DEMAND Breland Companies and Breland Affiliates demand trial by jury of all claims or issues so triable. Dated: August 18, 2014 /s/ Walter A. Dodgen Walter A. Dodgen Matthew B. Reeves Stephen D. Davis MAYNARD, COOPER & GALE, P.C. 655 Gallatin Street, SW Huntsville, Alabama 35801 Telephone: (256) 551-0171 Facsimile: (256) 512-0119 tdodgen@maynardcooper.com mreeves@maynardcooper.com sdavis@maynardcooper.com
Attorneys for Plaintiff Breland Companies, L.L.C.; Old Town Investments, L.L.C.; 8075 Madison Blvd., L.L.C.; and 8121 Madison Boulevard, L.L.C.
31 Plaintiffs will personally serve Defendants at: Michael W. Culbreath 81 Lake Forest Boulevard Huntsville, Alabama 35824
James B. Packard 3060 High Mountain Road Huntsville, Alabama 35811
Attitude, L.L.C. c/o James B. Packard 3060 High Mountain Road Huntsville, Alabama 35811
Mushashi, LLC c/o James B. Packard 3060 High Mountain Road Huntsville, Alabama 35811