SUNTUITY SOLAR, LLC v. ROSEBURG
3:21-cv-17801
D.N.J.Jun 30, 2022Background
- Suntuity Solar and Empire Solar were competitors; defendants Roseburg (CFO) and Buchmiller (CEO) co-owned Empire.
- In June–July 2021 Empire sought financing; Suntuity loaned about $1.5M under a secured note and later advanced roughly $550K after becoming Empire’s manager under a Letter Agreement.
- Defendants allegedly misrepresented Empire’s 2020 revenue/profit and concealed material liabilities and insolvency (Am. Compl. alleges $10–50M undisclosed liabilities); Rock Creek was later retained as CRO and Empire filed Chapter 7.
- Suntuity alleges Defendants also made false, disparaging statements to Empire employees and third‑party dealers that Suntuity caused the bankruptcy and would not pay commissions, harming Suntuity’s dealer relationships.
- Suntuity sued asserting seven claims: legal/equitable fraud; New Jersey Uniform Securities Act; Utah Uniform Securities Act; fraudulent nondisclosure; civil conspiracy; tortious interference; and defamation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Adequacy of fraud pleading under Rule 9(b) | Complaint identifies who, what, when, where, how of misrepresentations | Complaint lacks speaker/listener, specifics, timing, scienter | Complaint satisfies Rule 9(b) general particularity requirements |
| Common‑law/equitable fraud (reliance and scienter) | Suntuity reasonably relied on defendants’ financial representations; scienter may be alleged generally | Suntuity unreasonably relied and failed to plead scienter with specificity | Reliance adequately pleaded; scienter adequately alleged generally under Rule 9(b) |
| NJ Uniform Securities Act claim | NJUSA claim requires misstatement, scienter, causation, injury; reliance not required | Defendants urge reliance and loss causation requirements from federal law | NJ law eliminates reliance requirement for NJUSA; claim adequately pled |
| Utah Uniform Securities Act claim | Suntuity asserts Utah claim arising from same transactions | Contract contains New Jersey choice‑of‑law clause | UUSA claim dismissed as New Jersey choice‑of‑law governs absent public policy showing |
| Fraudulent nondisclosure (duty to disclose) | Suntuity argues a special relationship/near‑fiduciary duty existed during deal talks | Defendants say creditor/debtor/arm’s‑length negotiations preclude fiduciary duty | Dismissed for failure to allege facts showing a duty of disclosure or special relationship |
| Civil conspiracy | Suntuity alleges an agreement to procure loans by concealing liabilities | Defendants contend no particularized agreement; parallel conduct insufficient | Dismissed for failure to plead an agreement with the particularity required for fraud‑based conspiracy |
| Tortious interference with business relations | Defendants’ disparagement caused dealers to express concern and curtailed business | Defendants argue plaintiff failed to allege tangible damages | Claim survives at pleading stage; allegations of lost dealer business and reputational harm are sufficient to proceed |
| Defamation | Defendants made false statements to dealers and employees about Suntuity and commissions | Defendants argue allegations insufficiently specific and fail to identify listeners or statements | Defamation claim adequately pled with alleged defamatory statements, recipients, and reputational injury |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading requires allegations sufficient to state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (courts accept well‑pleaded facts and disregard legal conclusions)
- Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir.) (accept well‑pleaded factual allegations as true)
- In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198 (3d Cir.) (Rule 9(b) demands who, what, when, where, how)
- In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410 (3d Cir.) (limitations on extrinsic materials on motion to dismiss)
- Kaufman v. I‑Stat Corp., 754 A.2d 1188 (N.J.) (NJUSA dispenses with reliance element)
- United Jersey Bank v. Kensey, 704 A.2d 38 (N.J. Super. Ct. App. Div.) (situations giving rise to duty to disclose)
- Filmlife, Inc. v. Mal "Z" Ena, Inc., 598 A.2d 1234 (N.J. Super. Ct. App. Div.) (fraud may be used to avoid contract despite integration clause)
- Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159 (3d Cir.) (conspiracy claim requires specific allegations of agreement)