Conocophillips Alaska, Inc. v. Wright

          ORDER RE EX PARTE MOTION FOR TEMPORARY RESTRAINING ORDER

          SHARON L. GLEASON, UNITED STATES DISTRICT JUDGE.

         Before the Court at Docket 3 is Plaintiff ConocoPhillips Alaska, Inc.'s (“ConocoPhillips”) Ex Parte Motion for Temporary Restraining Order and Preliminary Injunction. Also before this Court at Docket 6 is Plaintiff's Motion for Expedited Consideration of its Ex Parte Motion for Temporary Restraining Order and Preliminary Injunction.

         In its Complaint, ConocoPhillips asserts eight counts against Forrest Wright, Amanda Wright, Nathan Keays, Kelly Keays, Eco Edge Armoring LLC, David Benefield, Wright Capital Investments, LLC, and DB Oilfield Support Services (“Defendants”) including: (1) RICO claims, (2) embezzlement, (3) fraud, (4) conversion, (5) unjust enrichment, (6) breach of contract, (7) constructive trust, and (8) piercing the corporate veil.^[1] ConocoPhillips asserts that Defendants engaged in a scheme wherein former employee Forrest Wright fraudulently obtained approval from ConocoPhillips to hire and pay vendors for services and materials never rendered or provided.^[2]

         ConocoPhillips seeks a temporary restraining order with the stated purpose of preventing Defendants from “withdrawing, transferring, or dissipating in any manner any funds, or selling any real or personal property (including vehicles) until such time as the Court has ruled further on a Motion for Preliminary Injunction, or otherwise prevent the transfer or sale of any assets purchased, or partially purchased, paid for or maintained with the fraudulently obtained, embezzled funds.”^[3] According to ConocoPhillips, it employed Forrest Wright as a Senior Drilling and Wells Planner in Anchorage until December 5, 2019, when he resigned.^[4] In this position, Mr. Wright had the authority to propose and approve suppliers for ConocoPhillips.^[5] Beginning in February 2019, Mr. Wright sought to include DB Oilfield Support Services (“DB Oilfield”) and Eco Edge Armoring, LLC (“Eco Edge”) among ConocoPhillips' approved vendors. The former is owned by Mr. Wright's father-in-law, Defendant David Benefield, and the latter by Defendants Nathan and Kelly Keays.^[6]

         ConocoPhillips asserts that between April and October 2019, Mr. Wright fraudulently obtained approval to purchase materials and services from DB Oilfield and Eco Edge totaling more than $7, 000, 000.^[7] ConocoPhillips alleges that these materials and services were never provided, but that Mr. Wright used misrepresentation and fraud to convince his colleagues at ConocoPhillips that they had been provided and to pay the vendors.^[8]

         The security manager for ConocoPhillips, Jeff Laughlin, launched an investigation into Mr. Wright upon receiving an anonymous tip that Mr. Wright had authorized payments of nearly $4, 000, 000 to DB Oilfield for products that had never been delivered.^[9] Mr. Laughlin's investigation revealed that Mr. Wright sought and received approval to authorize DB Oilfield as a vendor; Mr. Wright's father-in-law, Mr. Benefield, was the vendor contact.^[10] Mr. Laughlin discovered that DB Oilfield obtained a business license in Alaska just three days before Mr. Wright proposed them as a vendor. Moreover, the day after he proposed them as a vendor, Mr. Wright himself contacted an IT specialist to create, among other things, a website for DB Oilfield.^[11]

         DB Oilfield invoiced ConocoPhillips in the amount of $4, 148, 000 for a patented pipe racking system that it purportedly delivered to a Fairbanks railroad yard.^[12] Mr. Wright confirmed that the pipes were delivered and were in use in Fairbanks, but through his investigation, Mr. Laughlin spoke with senior drilling supervisor, Rick Bjorhus, who “confirmed with individuals at the Fairbanks railyard that there were no racks or inspection shelters of the type allegedly sold to ConocoPhillips by DB Oilfield.”^[13]

         In the course of his investigation, Mr. Laughlin determined that in February 2019, Mr. Wright also initiated the process to approve Eco Edge as a vendor.^[14] Mr. Keays was the vendor contact for Eco Edge, and wrote to Mr. Wright offering “pipe inspection and inventory services” at the Fairbanks railroad yard in the amount of $2, 075 per day.^[15] Mr. Wright obtained approval for these services, and Eco Edge submitted invoices for pipe inspection totaling $439, 930.^[16] Mr. Bjorhus confirmed that none of the contractors at the Alaska Railroad, or the drilling operators at the Alpine oilfield had ever heard of or been in contact with anyone from Eco Edge.^[17]

         In addition to the pipe inspection services, Mr. Keays offered Mr. Wright 11, 000 feet of “joint retainers” (sections of pipe) at a liquidation price.^[18] Mr. Keays claimed the joint retainers were stored at Unique Machine in Anchorage. Mr. Wright convinced his colleagues at ConocoPhillips that the joint retainers were a good deal using a fictitious email exchange with Pat Hanley, the president of Cal IV Pipe, quoting a higher price.^[19] During his investigation, Mr. Laughlin confirmed with Mr. Hanley that the email was fabricated, and did not come from him.^[20] Mr. Laughlin also spoke with the president of Unique Machine, Chris Shumate, who knew nothing about Mr. Keays, Eco Edge, or the joint retainers that were purportedly stored in his facility.^[21] Nevertheless, Eco Edge invoiced ConocoPhillips for the joint retainers in the amount of $974, 474 on April 15, 2019 and of $495, 000 on April 17, 2019.^[22]

         Finally, Mr. Laughlin determined that Forrest and Amanda Wright formed Wright Capital Investments LLC (“Wright Capital”) in Nevada on or around July 21, 2019 and, shortly thereafter, used Wright Capital to purchase more than $4, 000, 000 worth of real estate in Las Vegas.^[23]

         LEGAL STANDARD

         The standard for obtaining a temporary restraining order is the same as that for a preliminary injunction. Plaintiffs seeking injunctive relief must establish “(1) they are likely to succeed on the merits; (2) they are likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in their favor; and (4) a preliminary injunction is in the public interest.”^[24]

         Injunctive relief is an equitable remedy, and “[t]he essence of equity jurisdiction is the power of the court to fashion a remedy depending upon the necessities of the particular case.”^[25]

         DISCUSSION

         Based on the record before it, the Court finds that ConocoPhillips is likely to succeed on the merits of this action and obtain a judgment ordering a return of their funds. Among other things, Plaintiff has provided an affidavit from its security manager, Mr. Laughlin, that provides extensive and detailed evidence resulting from his investigation in support of Plaintiff's allegations against Defendants.

         Further, ConocoPhillips has demonstrated that it is likely to suffer irreparable harm if injunctive relief is not ordered with respect to Defendants' funds and assets. In light of Plaintiff's complaint against them, Defendants would be incentivized to make their funds and assets unavailable, to the extent possible, thereby irreparably harming ConocoPhillips in the amount that it is unable to recover. The record demonstrates that Defendants have already pursued a $4, 000, 000 out-of-state real estate opportunity.^[26]

         The Court finds that the balance of equities tips in ConocoPhillips' favor. Although Defendants will undoubtedly be burdened by the constraints on their financial freedom that Plaintiff seeks, the loss is only temporary. In contrast, should Defendants dispose of or otherwise make unavailable their funds and assets, ConocoPhillips could be permanently harmed. Moreover, injunctive relief to prevent Defendants from transferring funds or assets received from ConocoPhillips is in the public interest. The public has a vested interest in preventing ...