United States District Court, D. Nebraska
MEMORANDUM AND ORDER
Smith Camp Chief United States District Judge.
matter is before the Court on the Motion for Preliminary
Injunction, ECF No. 21, and Motion to Enjoin, ECF No. 69,
filed by Plaintiff Nebraska Data Centers, LLC (NDC). Also
before the Court are various Motions, ECF Nos. 65, 66, 67,
68, and 72, filed by Defendant Leo Khayet. For the reasons
stated below, NDC's Motion for Preliminary Injunction
will be granted in part, and its Motion to Enjoin will be
granted. Khayet will be permitted to refile his Motion to
Dismiss, ECF No. 68, in compliance with the Court's local
rules, or file another responsive pleading to the Amended
Complaint on or before February 2, 2018.
along with all of its “affiliates and Principals,
” entered into a Consulting Agreement with Khayet on
August 8, 2017. Consulting Agreement, ECF No. 2, Page ID 6.
The Consulting Agreement provided that
NDC has asked [Khayet] to introduce or re-introduce [NDC] to
targeted family offices, high net worth individuals,
strategic real estate investors and other capital groups
and/or individuals identified in Appendix A that have the financial
ability to purchase the assets of NDC [ ]: including all
tangible and intangible assets.
Id. Under the Consulting Agreement, Khayet was
entitled to compensation only if NDC consummated a sale with
one of the parties listed in Appendix A within thirty-six
months of execution. Id. Khayet was not authorized
to act as an agent or negotiate on NDC's behalf and NDC
agreed that it would not “execute transactions with any
[parties identified in Appendix A], without [Khayet's
the Parties entered into the Consulting Agreement, Nebraska
Colocation Centers, LLC, and Timber Ventures, LLC,
entered into a separate Mutual Confidentiality and
Nondisclosure Agreement (Confidentiality Agreement). ECF No.
12, Page ID 34. Khayet was the president of Timber Ventures,
and Nebraska Colocation Centers was a trade name registered
to NDC. The purpose of the Confidentiality Agreement was to
facilitate execution of the Consulting Agreement.
after the Parties entered into the Consulting Agreement,
their relationship deteriorated. NDC became concerned that
Khayet would be unable to find a satisfactory buyer, and NDC
decided to reduce its communications with Khayet. On October
4, 2017, NDC sent Khayet a letter notifying him that NDC was
terminating the Consulting Agreement and ordering Khayet to
cease all activity in connection with the Consulting
Agreement. Termination Letter, ECF No. 2, Page ID 11-12. NDC
cited Khayet's apparent inability to find an acceptable
buyer and persistent, inappropriate communications with
NDC's officers and owners, as the basis for its decision
to terminate. Pl.'s Br. Mot. Prelim. Inj., ECF No. 22,
Page ID 99. The Consulting Agreement did not include a clause
or provision addressing termination by either party.
Khayet received the termination letter, he insisted he had a
right to attempt to perform under the Consulting Agreement.
He made several attempts to communicate with Joel Mogy, a
trustee for the Ralph and Barbara Edwards Insurance Trust,
which is a member of NDC. Mogy Declaration, ECF No. 22-3. He
also made several attempts to communicate with officers of
NDC. Cushing Declaration, ECF No. 22-1; E-mail
Correspondence, ECF No. 22-2, Page ID 138. And he reached out
to an architect that NDC retained to prepare for a potential
sale of the company. Knott Declaration, ECF No. 25-1, Page ID
170. NDC alleges the foregoing communications were
persistent, inappropriate, and aimed at decreasing NDC's
value as well as disrupting NDC's own efforts to
consummate a sale of its assets. NDC was also concerned when
it learned Khayet was interested in purchasing NDC's
assets. NDC concluded “it is reasonable to assume
Khayet has been contacting potential third-party buyers of
NDC in an effort to prevent NDC from completing a sale of its
business assets.” Pl.'s Br. Mot. Prelim. Inj., ECF
No. 22, Page ID 101. NDC further asserts “Khayet may
also be disclosing confidential information about NDC . . .
October 5, 2017, NDC filed the Complaint, ECF No. 1,
requesting a declaratory judgment to determine the
Parties' rights and obligations under the Consulting
Agreement. Specifically, the Complaint sought a declaration
(a) no amount is due or owing to Defendant under the
Agreement; (b) [NDC] has complied with all terms and
conditions of the Agreement and has not breached any of the
terms and conditions of the Agreement; and (c) the Agreement
is terminated, except with respect to those terms and
conditions which survive the termination of the Agreement.
Complaint ¶ 15, ECF No. 1, Page ID 3. On October 18,
2017, Khayet told NDC's counsel that he did not accept
NDC's termination of the Consulting Agreement and, citing
his perceived rights under the Consulting Agreement, he
asserted he will not stop seeking potential buyers. ECF No.
22-2, Page ID 129. On November 2, 2017, NDC filed its Amended
Complaint, ECF No. 11, adding claims against Khayet for
tortious interference with a business relationship or
expectancy; fraud; negligent misrepresentation; breach of
contract; violations of the Junkin Act, Neb. Rev. Stat.
§ 59-805; unfair competition; violations of the Nebraska
Uniform Deceptive Trade Practices Act, Neb. Rev. Stat. §
87-302 et seq.; and trademark infringement. Am. Comp., ECF
No. 11. The Amended Complaint also requested injunctive
relief and, on November 17, 2017, NDC filed its Motion for
Preliminary Injunction, ECF No. 21, that specifically asked
the Court to enjoin Khayet and any of his agents and
representatives from engaging in the following conduct:
(1) discussing contacting, or otherwise communicating with
any entity or person (other than Khayet's legal counsel)
any matter referencing, relating to, or associated with the
Consulting Agreement; (2) holding Khayet (or any of
Khayet's agents, affiliates or representatives) out as an
agent, affiliate or otherwise as a person authorized to
transact business on behalf, of NDC; (3) contacting or
otherwise communicating with regard to any matters related to
the Consulting Agreement with: (i) NDC's customers,
vendors, service providers and business partners known to
Khayet or disclosed to Khayet under the terms of the
Consulting Agreement or Confidentiality Agreement; (ii) NDC;
(iii) NDC'[s] officers: Mr. Jerry Appel, Mr. Martin S.
Appel and Mr. Todd Cushing; (iv) NDC's employees; (v)
NDC's owners: the Ralph and Barbara Edwards Insurance
Trust, the Christine Alison Edwards Tandy Trust, the Gary
Livingstone Lenhart Trust, and the Lauren Avery Edwards
Lenhart Trust (the “Trusts”); (vi) the trustees
of NDC's owners, Mr. Martin S Appel and Mr. Joel Mogy
(the “Trustees”); and (vii) NDC's affiliate:
American Nebraska Limited Partnership (the
“Affiliate”) and its owners, the Trusts, and
their respective Trustees; and (4) taking any action intended
to harm NDC, its officers, its employees or business
operations, the Trusts, the Trustees or the Affiliate.
Pl.'s Br. Mot. Prelim. Inj., ECF No. 112-13.
Court held a hearing on the Motion on December 7, 2017, and
an attorney, Benjamin Maxell, appeared on behalf of
Khayet. The Court heard oral arguments from
counsel and set deadlines for supplemental briefing; Khayet
was given until December 29, 2017, to submit a brief in
opposition to the Motion, and NDC was to submit any reply
brief on or before January 12, 2017. ECF No. 33. The Court
also requested that Mr. Maxell instruct Khayet not to contact
NDC or any of its officers, principals, vendors, or clients;
and that any such contact was to be made through counsel. On
December 11, 2017, Khayet moved for an extension of time to
respond to the Amended Complaint and the Court ordered that
he respond on or before December 26, 2017. ECF No. 35.
December 19, 2017, Mr. Maxell moved to withdraw as counsel
for Khayet, ECF No. 39, and NDC filed a Motion for Contempt
of Court, ECF No. 40, because Khayet continued to attempt to
communicate with NDC principals and officers. The Court held
another hearing on December 21, 2017, regarding the two
newest motions. The Court permitted Mr. Maxell to withdraw;
denied the Motion for Contempt of Court; and issued a
Temporary Restraining Order. TRO, ECF No. 53. On December 26,
2017, Khayet again moved for an extension of time to respond
to the Amended Complaint, and the Court ordered that he
submit a response on or before December 29, 2017. ECF No. 54.
The Court also reminded Khayet that he was permitted, but not
required, to submit a brief in opposition to the pending
Motion for Preliminary Injunction on or before December 29,
filed a motion to dismiss the Amended Complaint, ECF No. 61,
which failed to comply with the Court local rule, NECivR
7.1(a)(1)(A). In that motion, Khayet argued that the Court
has not permitted him enough time to obtain counsel; that the
Court lacks personal jurisdiction over him; that venue is
improper; and that NDC's claims are “not adequately
pled.” Id. Khayet did not file a timely brief
in opposition to the Motion for Preliminary
Court has denied Khayet's repeated motions for additional
extensions of time, and it denied his Motion to Dismiss
Plaintiff's Amended Complaint in Lieu of Answer for
failure to comply with the Court's local rules. ECF No.
63. Khayet has resubmitted a Motion to Dismiss along with a
Motion for leave to submit it out of time. ECF Nos. 65-68.
The resubmitted Motion to Dismiss also fails to comply with
the Court's local rule NECivR 7.1(a)(1)(A).. Khayet also
filed a complaint against Todd Cushing, the president of NDC,
in the United States District Court for the District of
Kansas. Khayet v. Cushing, 2:17cv2624 (D. Kan.
October 26, 2017).
Motion for Preliminary Injunction
in the Eighth Circuit apply the factors set forth in
Dataphase Sys., Inc. v. CL Sys., Inc., 640 F.2d 109,
114 (8th Cir. 1981) (en banc), when determining whether to
issue a preliminary injunction. Those factors are: “(1)
the threat of irreparable harm to the movant; (2) the state
of balance between this harm and the injury that granting the
injunction will inflict on other parties litigant; (3) the
probability that movant will succeed on the merits; and (4)
the public interest.” Id. “No single
factor is determinative.” WWP, Inc. v. Wounded
Warriors, Inc., 566 F.Supp.2d 970, 974 (D. Neb. 2008).
“A preliminary injunction is an extraordinary remedy
and the burden of establishing the propriety of an injunction
is on the movant.” Roudachevski v. All-Am. Care
Centers, Inc., 648 F.3d 701, 705 (8th Cir. 2011) (citing
Watkins, Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir.
2003)). “The purpose of a preliminary injunction is to
‘preserve the relative positions of the parties until a
trial on the merits can be held.'” Paisley Park
Ents., Inc. v. Boxill, 253 F.Supp.3d 1037, 1043 (D.
Minn. 2017) (quoting Univ. of Texas v. Camenisch,
451 U.S. 390, 395 (1981).
Likelihood of Success on the Merits
deciding whether to grant a preliminary injunction,
likelihood of success on the merits is most
significant.” S.J.W. ex rel. Wilson v. Lee's
Summit R-7 Sch. Dist., 696 F.3d 771, 776 (8th Cir. 2012)
(quoting Minn. Ass'n of Nurse Anesthetists v. Unity
Hosp., 59 F.3d 80, 83 (8th Cir.1995)). With respect to
this factor, it is not necessary for the movant to prove they
are more likely than not to prevail, the movant “need
only show a reasonable probability of success, that is, a
fair chance of prevailing” on the merits. Kroupa v.
Nielsen, 731 F.3d 813, 818 (8th Cir. 2013);
Dataphase, 640 F.2d at 113. NDC's Amended
Complaint enumerates nine separate claims, but it is only
necessary to demonstrate a likelihood of success on one of
its claims. League of Wilderness Defenders/Blue Mountains
Biodiversity Project v. Connaughton, 752 F.3d 755, 759
n.1 (9th Cir. 2014); accord Abbott Labs. v. Andrx Pharm.,
Inc., 473 F.3d 1196, 1201 (Fed. Cir. 2007).
seeks three declarations from the Court: (1) “no amount
is due or owing to [Khayet] under the Agreement;” (2)
NDC has complied with all the terms and conditions of, and
has not breached, the Agreement; and (3) “the Agreement
is terminated, ” with the exception of ...