1 CIT ES/ JURY
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`LE-VEL BRANDS, LLC
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`Plaintiff,
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`v.
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`LACORE HOLDINGS, INC., TERRY L.
`LACORE, and LACORE
`ENTERPRISES, LLC,
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`
`FILED
`DALLAS COUNTY
`11/16/2018 2:42 PM
`FELICIA PITRE
`DISTRICT CLERK
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`Angie Avina
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`CAUSE NO. DC-18-14242
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`§
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`IN THE DISTRICT COURT
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`44TH JUDICIAL DISTRICT
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`DALLAS COUNTY, TEXAS
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`Defendants.
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`PLAINTIFF’S FIRST AMENDED PETITION
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`Plaintiff Le-Vel Brands, LLC (“Le-Vel”) files this First Amended Petition against
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`Defendants LaCore Holdings, Inc. (“LaCore Holdings”), Terry L. LaCore (“LaCore”), and LaCore
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`Enterprises, LLC (“LaCore Enterprises” and together with LaCore Holdings and LaCore, the
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`“LaCore Defendants”). In support of its Petition, Le-Vel would respectfully show the following:
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`I.
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`DISCOVERY CONTROL PLAN
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`1.
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`Le-Vel requests that discovery in this matter be conducted at Level 3, pursuant to
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`Texas Rule of Civil Procedure 190.4.
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`II.
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`RELIEF
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`2.
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`Le-Vel seeks over $1,000,000.00 in damages, as well as other non-monetary relief.
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`III.
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`PARTIES
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`3.
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`Plaintiff Le-Vel is a Texas limited liability company with its principal place of
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`business in Collin County, Texas.
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`4.
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`Defendant LaCore Holdings is a Texas corporation whose registered office is 901
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`Sam Rayburn Highway, Melissa, Texas 75454. La Core Holdings was served with process and
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`has made an appearance in this lawsuit.
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`PLAINTIFF’S FIRST AMENDED PETITION
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`5.
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`Defendant LaCore is an individual residing at 522 LaCore Lane, Melissa, Texas
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`75454. LaCore was served with process and has made an appearance in this lawsuit.
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`6.
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`Defendant LaCore Enterprises is a Texas limited liability company whose
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`registered office is 901 Sam Rayburn Highway, Melissa, Texas 75454, and it may be served with
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`process by serving its registered agent for service of process, Terry L. LaCore.
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`IV.
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`JURISDICTION AND VENUE
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`7.
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`The Court has subject-matter jurisdiction over this action because the amount in
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`controversy is more than the minimum jurisdictional amount.
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`8.
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`Venue is proper in Dallas County, Texas, pursuant to Texas Civil Practice and
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`Remedies Code Section 15.035 based on Le-Vel’s written Royalty Agreement, as defined herein,
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`which forms the basis for many of Le-Vel’s claims and states that “Each party hereto agrees that
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`(i) this Agreement is performable in Dallas County, Texas, (ii) venue in any proceeding to enforce
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`or interpret any provision of this Agreement is properly in Dallas County, Texas, and (iii) such
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`party is subject to the jurisdiction of the federal and state courts in Dallas County, Texas.”
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`9.
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`Venue is also proper in Dallas County, Texas, pursuant to Texas Civil Practice and
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`Remedies Code Section 15.002(a)(1) because all or a substantial part of the events or omissions
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`giving rise to the claim occurred in Dallas County, Texas.
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`V.
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`FACTUAL BACKGROUND
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`10.
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`In 2012, Jason Camper (“Camper”) and Paul Gravette (“Gravette,” together with
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`Camper, the “Founders”) began developing a new direct sales company, Le-Vel, which is a health
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`and wellness company that strives to enhance the lives of its customers through proven products
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`designed to achieve weight management, immune support, energy and performance, mental
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`clarity, and relaxation support. Le-Vel develops nutritional products and markets them to
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`PLAINTIFF’S FIRST AMENDED PETITION
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`consumers through a network of individual distributors, utilizing those distributors’ personal and
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`social networks.
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`11.
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`In creating Le-Vel, the Founders drew from over 25 years of combined industry
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`experience in direct sales of nutritional supplements, much of which was spent with companies
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`founded entirely or in part by the Founders.
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`12.
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`Camper had, at that time, a long and close relationship with LaCore, going back to
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`2007, when he helped start a direct sales nutritional supplement company with LaCore. Since
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`2007, Camper and LaCore have shared a relationship of trust and confidence in which they would
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`share industry thoughts and advice and collaborate on solutions to certain industry issues. Gravette
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`also had a long relationship of trust and confidence with LaCore, dating back to around 2010 when
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`Gravette and LaCore collaborated on a nutritional supplement project. Based on these
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`relationships of trust and confidence, the Founders, by and through Le-Vel, sought financing from
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`LaCore because, they believed, he could offer both financing and provide staffing, resources, and
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`infrastructure for the new company.
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`13.
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`The LaCore Defendants, knowing that the Founders were already taking steps to
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`manufacture product, develop their distribution network, design web graphics, program computer
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`systems, build a back office, and construct shipping and distributor commissions systems, strung
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`out the negotiations, making Le-Vel’s need for cash more pressing with every passing day. During
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`negotiations, LaCore began abusing the trust and confidence Le-Vel and the Founders had in him,
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`and negotiations quickly became a one-sided money grab. Originally, Le-Vel sought a loan or
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`investment of $100,000 from LaCore, but LaCore offered to finance only $45,000 through a
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`promissory note with 15% interest. In addition to the proposed promissory note, the LaCore
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`PLAINTIFF’S FIRST AMENDED PETITION
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`Defendants demanded a 10% equity interest in Le-Vel and a 3% royalty payment of Le-Vel’s gross
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`revenue.
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`14.
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` Because of their time sensitive situation, Le-Vel and the LaCore Defendants
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`entered into three separate agreements: (1) a promissory note in the amount of $45,000, plus 15%
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`interest per annum (the “Note”); (2) a Company Agreement, wherein LaCore received a 10%
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`equity stake in Le-Vel (the “Company Agreement”); and (3) a royalty agreement, granting LaCore
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`Holdings a 3% royalty interest in gross profits (the “Royalty Payments”) of Le-Vel (the “Royalty
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`Agreement”).
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`15.
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`Le-Vel, as borrower, and LaCore Enterprises, LLC, as holder, entered into the Note.
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`LaCore Enterprises, LLC agreed to loan Le-Vel $45,000, plus 15% interest per annum. Le-Vel
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`timely and fully paid back the amount borrowed in a matter of months, thereby satisfying the terms
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`of the Note.
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`16.
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`Additionally, Le-Vel and LaCore Holdings agreed to the Company Agreement,
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`granting LaCore Holdings a 10% membership interest. Le-Vel subsequently purchased LaCore
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`Holding’s 10% membership interest on March 7, 2016.
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`17.
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`The Royalty Agreement provided that the Note, the Company Agreement, and the
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`Royalty Agreement constituted the entire agreement of the parties. The Royalty Agreement on its
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`face is completely devoid of any consideration given by the LaCore Defendants. Consequently,
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`Le-Vel made the decision to reduce the Royalty Payment in July 2018 and then eliminate the
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`Royalty Payment in its entirety. Le-Vel made this decision because it became apparent that the
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`Royalty Agreement lacked any consideration by LaCore Holdings and the LaCore Defendants
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`breached and continue to breach their fiduciary duties.
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`PLAINTIFF’S FIRST AMENDED PETITION
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`18.
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`On September 14, 2018, LaCore Enterprises, not LaCore Holdings, delivered a
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`demand and notice of claim letter to Le-Vel for the alleged past due amount of the July 2018
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`Royalty Payment. Additionally, LaCore Enterprises, in spite of receiving $32,688,207.94 in
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`royalty payments from Le-Vel over the past six years, requested an independent audit of Le-Vel’s
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`finances for the last twenty-four (24) months.
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`19.
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`First and foremost, LaCore Enterprises is not a party to the Royalty Agreement.1
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`Furthermore, the Royalty Agreement is unenforceable for lack of consideration.
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`20.
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`Alternatively, the Royalty Agreement fails because the LaCore Defendants did not
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`provide the purported consideration discussed by the parties. LaCore provided no meaningful
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`support, staffing, resources, or infrastructure and has played absolutely no role in the growth and
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`sustainability of the Company. To the contrary, the LaCore Defendants affirmatively acted and
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`continue to act against Le-Vel’s interests and without regard to their fiduciary duty by competing
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`directly and unlawfully against Le-Vel through other companies, which, on information and belief,
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`were funded by the royalty payments furnished by Le-Vel to the LaCore Defendants, attempting
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`to steal Le-Vel’s salesforce (“Promoters”), and wrongfully disclosing Le-Vel’s confidential and
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`trade secret information. The Royalty Agreement specifically provides that Le-Vel may withhold
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`the Royalty Payment upon a showing of “fraud, breach of fiduciary duty, or other willful or
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`intentional misconduct” of LaCore Holdings.
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`21. More particularly, through their relationship of trust and confidence with the Le-
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`Vel, the LaCore Defendants acquired numerous Le-Vel trade secrets, including Le-Vel’s
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`proprietary software and back-office systems, software code, branding strategies, pay and
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`commission structures, marketing details, customer support plans, and product formulas.
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`1 LaCore Enterprises claims LaCore Holdings transferred all of its rights under the Royalty Agreement to LaCore
`Enterprises; therefore, LaCore Enterprises has been added to this lawsuit as a necessary party.
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`PLAINTIFF’S FIRST AMENDED PETITION
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`Likewise, the LaCore Defendants created one or more companies to compete with Le-Vel, using
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`the information acquired from Le-Vel, and attempted, and continue to attempt, to steal Le-Vel’s
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`Promoters, and harm Le-Vel through multiple misrepresentations regarding the viability of Le-Vel
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`and falsely attacking the quality of Le-Vel as a company and its products.
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`22.
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`Prüvit Ventures, Inc. (“Pruvit”) was one such company to which the LaCore
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`Defendants disclosed Le-Vel’s trade secrets, and in conjunction with Prüvit, they have used those
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`trade secrets to unfairly compete directly with Le-Vel. Prüvit’s software, back-office systems,
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`branding, marketing, commission structure, and customer support all mirror Le-Vel’s. In addition,
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`Prüvit made misrepresentations regarding Le-Vel, its products, its compensation structure, and its
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`sustainability in order to steal Le-Vel’s Promoters.
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`23.
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`On information and belief, Prüvit is owned by and shares all offices and resources
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`with the LaCore Defendants and was funded through royalty payments made by Le-Vel to the
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`LaCore Defendants.
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`24.
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`Through extensive time, labor, skill, and money, Le-Vel has gone on to become an
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`extremely successful company, and the 3% Royalty Payments have amounted to $32,688,207.94
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`at the time of the filing of this lawsuit. The Royalty Agreement wholly and completely lacked
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`consideration, or alternatively, Le-Vel never received any consideration in exchange for its
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`obligation, as LaCore has played no role in Le-Vel’s success and has provided no meaningful
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`staffing, resources, or infrastructure in exchange for this incredible sum of money. Instead, LaCore
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`has taken the over $32,000,000.00 and, on information and belief, used it to fund competing
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`companies, which attempt to steal Le-Vel’s Promoters and unlawfully use Le-Vel’s trade secrets.
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`PLAINTIFF’S FIRST AMENDED PETITION
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`VI. CAUSES OF ACTION
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`Count One: Declaratory Judgment
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`25.
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`26.
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`Le-Vel re-alleges and incorporates the paragraphs set forth above.
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`Le-Vel is entitled to a declaratory judgment under Texas Civil Practice and
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`Remedies Code Chapter 37 that: (1) the Royalty Agreement is unenforceable because it lacks
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`consideration; alternatively, (2) the Royalty Agreement was terminated because of the LaCore
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`Defendants’ “fraud, breach of fiduciary duty, or other willful or intentional misconduct,” and
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`therefore, the LaCore Defendants are not entitled to the 3% Royalty Payment as set forth in
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`paragraph 1 of the Royalty Agreement; and alternatively (3) the LaCore Defendants’
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`consideration, if any, totally and completely failed, invalidating the Royalty Agreement and
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`preventing any recovery thereon.
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`27.
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`Although the Royalty Agreement recites consideration as “the covenants and
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`agreements contained herein, and other valuable consideration,” the Royalty Agreement is silent
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`as to any covenants or agreements on the part of the LaCore Defendants. The plain and
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`unambiguous language of the Royalty Agreement establishes that the LaCore Defendants received
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`the 3% Royalty Payment without exchanging any bargained for consideration.
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`28.
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`Alternatively, the Royalty Agreement was terminated because the LaCore
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`Defendants’ “fraud, breach of fiduciary duty, or other willful or intentional misconduct.” Le-Vel
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`had a fiduciary relationship with LaCore based on a relationship of trust and confidence that
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`existed before, and apart from, the Note, the Company Agreement, or the Royalty Agreement. The
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`LaCore Defendants breached their fiduciary duties to Le-Vel by failing to act in good faith and
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`with candor with respect to the business and the financing transaction, and failing to refrain from
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`competing with Le-Vel.
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`PLAINTIFF’S FIRST AMENDED PETITION
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`29.
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`Specifically, the LaCore Defendants acquired numerous Le-Vel trade secrets,
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`including Le-Vel’s proprietary software and back-office systems, software code, branding
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`strategies, pay and commission structures, marketing details, customer support plans, and product
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`formulas, and after misappropriating these trade secrets, the LaCore Defendants disclosed those
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`trade secrets to third parties, including Pruvit, and in conjunction with Pruvit, have used those trade
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`secrets to unfairly and unlawfully compete directly against Le-Vel. In addition, Prüvit has made
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`misrepresentations regarding Le-Vel, its products, its compensation structure, and its sustainability
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`in order to steal Le-Vel’s Promoters.
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`30.
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`The LaCore Defendants’ breaches benefitted the LaCore Defendants through the
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`profits and other benefits they gained through their competing operations, and through utilizing
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`valuable confidential information. The LaCore Defendants’ breaches also caused injury to Le-Vel
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`in the form of lost distributors, customers, sales, and profits.
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`31.
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`Alternatively, the LaCore Defendants’ consideration, if any, totally and completely
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`failed, invalidating the Royalty Agreement and preventing any recovery thereon, as the LaCore
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`Defendants provided no staffing, infrastructure, or meaningful resources in exchange for the over
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`$32,000,000.00 in royalty payments made by Le-Vel to the LaCore Defendants; rather, the LaCore
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`Defendants, on information and belief, used this money to fund companies that unfairly and
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`unlawfully compete against Le-Vel.
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`32.
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`Le-Vel maintains an interest in the Royalty Agreement, which affect its rights,
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`status, and legal relations. Le-Vel is therefore entitled under Tex. Civ. Prac. & Rem. Code §
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`37.004 to have the validity of the Royalty Agreement determined by this Court in a declaration of
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`Le-Vel’s rights, status, and legal relations.
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`PLAINTIFF’S FIRST AMENDED PETITION
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`33.
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`All parties who have an interest that would be affected by such declaration are
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`parties to this action.
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`34.
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`Le-Vel requests all reasonable and necessary attorneys’ fees and costs incurred in
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`pursuit of this declaratory judgment action, including trial and appellate fees and costs, as provided
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`for by Texas Civil Practice and Remedies Code Section 37.009.
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`Count Two: Breach of Fiduciary Duty
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`Le-Vel re-alleges and incorporates the paragraphs set forth above.
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`Le-Vel had a fiduciary relationship with LaCore based on a relationship of trust and
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`35.
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`36.
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`confidence that existed before, and apart from, the Note or the Company Agreement. The LaCore
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`Defendants breached their fiduciary duties to Le-Vel by failing to act in good faith and with candor
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`with respect to the business and the financing transaction, and failing to refrain from competing
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`with Le-Vel.
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`37.
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`Specifically, the LaCore Defendants created one or more companies to directly
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`compete with Le-Vel, using, on information and belief, the money from the royalty payments to
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`fund such companies, and have attempted, and continue to attempt, to steal Le-Vel’s Promoters
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`and harm Le-Vel through multiple misrepresentations regarding the viability of Le-Vel and falsely
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`attacking the quality of Le-Vel’s products.
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`38. Moreover, the LaCore Defendants acquired numerous Le-Vel trade secrets,
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`including Le-Vel’s proprietary software and back-office systems, software code, branding
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`strategies, pay and commission structures, marketing details, customer support plans, and product
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`formulas, and after misappropriating these trade secrets, the LaCore Defendants disclosed those
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`trade secrets to third parties, including Prüvit, to unfairly compete with Le-Vel. In addition, Prüvit
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`PLAINTIFF’S FIRST AMENDED PETITION
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`made misrepresentations regarding Le-Vel, its products, its compensation structure, and its
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`sustainability in order to steal Le-Vel’s Promoters.
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`39.
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`The LaCore Defendants’ breaches benefitted the LaCore Defendants through the
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`profits and other benefits they gained through their competing operations, and through utilizing
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`valuable confidential information. The LaCore Defendants’ breaches also caused injury to Le-Vel
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`in the form of lost distributors, customers, sales, and profits.
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`40.
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`The LaCore Defendants’ breaches were intentional, which entitles Le-Vel to
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`exemplary damages under Texas Civil Practice & Remedies Code section 41.003(a).
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`Count Three: Breach of Contract
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`41.
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`42.
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`Le-Vel re-alleges and incorporates the paragraphs set forth above.
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`Alternatively, and to the extent the Court determines that the Royalty Agreement is
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`an enforceable agreement, LaCore Holdings breached the Royalty Agreement. Le-Vel fully
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`performed its contractual obligations under the Royalty Agreement through June 2018. LaCore
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`Holdings breached the Royalty Agreement by LaCore, as representative of LaCore Holdings,
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`disclosing Le-Vel’s confidential and trade secret information to third parties, including Prüvit,
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`without express written consent of Le-Vel, by creating companies to directly and unlawfully
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`compete with Le-Vel and funding such companies through, on information and belief, royalty
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`payments received from Le-Vel, and by such companies attempting to steal Le-Vel’s Promoters
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`through lies and misrepresentations.
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`43.
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`As a result of the foregoing actions, Le-Vel has suffered damages in an amount
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`exceeding the minimum jurisdictional limits of this Court.
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`44.
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`Furthermore, because of the the LaCore Defendants’ breaches, Le-Vel was forced
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`to retain the services of Shapiro, Bieging, Barber, Ottenson LLP to institute this action.
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`PLAINTIFF’S FIRST AMENDED PETITION
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`Consequently, Le-Vel is entitled to collect reasonable attorneys’ fees, both at the trial court level
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`and on any appeal, pursuant to Section 38.001 et seq., of the Texas Civil Practice and Remedies
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`Code.
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`45.
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`46.
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`Count Four: Misappropriation of Trade Secrets
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`Le-Vel re-alleges and incorporates the paragraphs set forth above.
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`Le-Vel owned trade secrets, as described above. Without express or implied
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`consent, the LaCore Defendants used or disclosed one or more trade secrets of Le-Vel. The LaCore
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`Defendants’ misappropriation of trade secrets caused injury and damages to Le-Vel by depriving
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`Le-Vel of the exclusive rights or ownership proprietary software and back-office systems, software
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`code, branding strategies, pay and commission structures, marketing details, customer support
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`plans, and product formulas.
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`47.
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`As a result of the foregoing actions, Le-Vel has suffered damages in an amount
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`exceeding the minimum jurisdictional limits of this Court.
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`VII. RESCISSION
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`48.
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`Based on the Court’s declaration that the Royalty Agreement is unenforceable
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`because such agreement lacks any consideration, or alternatively, the LaCore Defendants’
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`consideration totally failed, Le-Vel seeks rescission of the Royalty Agreement. Specifically, Le-
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`Vel seeks an Order requiring the LaCore Defendants to return to Le-Vel the Royalty Payments in
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`the amount of $32,688,207.94 that were improperly paid pursuant to the unenforceable or
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`invalidated Royalty Agreement.
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`VIII. CONDITIONS PRECEDENT
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`49.
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`All conditions precedent have been performed or have been waived by the LaCore
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`Defendants.
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`PLAINTIFF’S FIRST AMENDED PETITION
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`IX.
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`JURY DEMAND
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`50.
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`Le-Vel hereby requests a jury trial and will pay the jury fee.
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`PRAYER
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`WHEREFORE, PREMISES CONSIDERED, Plaintiff Le-Vel Brands, LLC respectfully
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`requests Defendants LaCore Holdings, Inc., Terry L. LaCore, and LaCore Enterprises, LLC be
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`cited to appear and defend the action alleged herein, that the requested declarations be entered, and
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`that Le-Vel be awarded actual, consequential, special, and exemplary damages, prejudgment and
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`post-judgment interest as allowed by law, reasonable attorneys’ fees pursuant to the Texas Civil
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`Practices and Remedies Code, and all other relief, both general and special, legal and equitable, to
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`which Le-Vel is entitled.
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`Respectfully submitted,
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`SHAPIRO BIEGING BARBER OTTESON LLP
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`By:
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`/s/ Kevin T. Schutte
`Kevin T. Schutte
`Texas Bar No. 24033050
`kschutte@sbbolaw.com
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`5430 Lyndon B Johnson Freeway, Suite 1540
`Dallas, Texas 75240
`Telephone: (214) 377-0149
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`ATTORNEYS FOR LE-VEL BRANDS, LLC
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`CERTIFICATE OF SERVICE
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`I hereby certify that a copy of the foregoing was served on all counsel of record in
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`accordance with the Texas Rules of Civil Procedure on the 16th day of November, 2018.
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`Kevin T. Schutte
`Kevin T. Schutte
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`PLAINTIFF’S FIRST AMENDED PETITION
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`PAGE 12
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