Local business sued for $1.2 million

A Libby business and its three principals could be on the hook for more than one million dollars as a result of a lawsuit filed in federal court last month.

The suit, filed by Evolve Custom LLC dba Createk Dec. 18, 2015, alleges local business WRT II Inc., also known as Wildlife Recapture Taxidermy, and its three owners, Kevin Neidigh of Troy, Milfred Kevin “Mel” Siefke of Libby and Anne Siefke of Libby, owe Createk at least $1.2 million in damages for failing to honor the terms of a January, 2015, contract between the parties.

“Plaintiff, Evolve Custom LLC dba Createk, by counsel, brings this civil action seeking money judgment against defendants for breach of contract, unjust enrichment and other causes of action as recited below,” Createk attorney Mark Obenshain wrote in the complaint.

According to the complaint, Createk designs, builds and installs habitats in museums, theme parks and stores. The company was contracted by WRT to install habitats in various Dick’s Sporting Goods stores around the country pursuant to a contract between WRT and Dick’s. Createk installed three habitat displays, as ordered by WRT, in stores in Troy, Mich., Charleston, S.C., and Polaris, Ohio between January 19, 2015 and August 12, 2015. For those installations, Createk billed WRT $273,075.31, but was never paid.

“After each natural habitat was installed in the aforementioned stores by Createk, WRT was sent an invoice,” Obershain wrote. “WRT did not object to the installations after they were completed. WRT did not object to the invoices, which totaled $273,075.31. This sum remains unpaid. Demand for payment was made by Createk to WRT. WRT has breached its obligations under the supply agreement by failing to pay Createk for each completed natural habitat installed in the aforementioned Dick’s Sporting Goods stores.”

Createk further claims WRT issues a purchase order for an additional habitat in Asheville, N.C., for which they invested no less than $150,000, which has also not been paid by WRT.

Additionally, the supply agreement between the two companies guarantees WRT will purchase a minimum of $1.2 million in product from Createk, regardless of whether or not WRT takes possession of said product.

Section six of the contract, attached as Exhibit D to the complaint, specifies the terms. “Supplier shall supply each product at the cost of $150,000, as may be modified in writing by mutual agreement, per each of the eight or more supply/install locations. Payment terms are 100 percent of purchase order price at least 60 days in advance of scheduled installation date set by purchase order. Time is of the essence as to payments and the terms of this Article 6. Payment shall not constitute acceptance of products and shall be subject to adjustment for shortages, defects, non-conformance and other failures of supplier to meet any terms or conditions of this agreement. This supply agreement guarantees the minimum purchase of $1,200,000 worth of product whether or not the buyer takes hold of the products under its own accord.”

The agreement, signed by Mel Siefke as president of WRT and dated Jan. 12, 2015, was for a term of one year.

The complaint makes an alternative allegation of unjust enrichment on the part of WRT and the three owners, alleging WRT received payment from Dick’s Sporting Goods for the completed installations, but never paid Createk what was owed under the terms of the contract.

“Despite WRT being paid by Dick’s Sporting Goods Inc. – even before Createk made or installed its natural habitats in the Dick’s Sporting Goods stores – WRT has failed to pay Createk,” Obershain wrote in the complaint. “WRT knew that it was receiving the products and services provided by Createk as a benefit, and that Createk expected to be paid for the work performed, and products installed on WRT’s behalf. Accordingly, WRT has been unjustly enriched by Createk.”

Createk further alleged at least one of the principals of WRT improperly transferred funds from the company account, constituting conversion and fraudulent transfer.

“In November 2015, in a phone conversation between the president of WRT, Mel Siefke and Mr. Greg Fritz (the CEO of Createk), Mr. Siefke admitted that Dick’s Sporting Goods Inc. had, in fact, paid WRT sufficient funds to pay the $273,075.21 owed to Createk,” Obershain wrote. “But during the same phone conversation, Mr. Siefke alleged that Mr. Neidigh (the vice president of WRT) had frozen WRT’s bank account, due to a personal dispute between Neidigh and the Siefkes, and consequently WRT refused to, or could not pay Createk.”

Based upon that admission, Obershain argued one or more of the individual defendants violated their fiduciary obligations as offers and acted in their own interests in a personal dispute.

“Thus, upon information and belief, one or more of the individual defendants, acting as officers of WRT, effectively looted WRT before it was dissolved by the State of Montana as a fraudulent scheme to deprive WRT of resources to satisfy its obligations to pay Createk under the supply agreement.”

The WRT II Inc. corporation was dissoved Dec. 1, 2015, by the Montana Secretary of State for failing to file an annual report.

Obershain wrote in the complaint that the corporate shield of WRT should be ignored and the individual defendants held liable for the debt based upon the dissolution of the corporation and the alleged fraudulent actions of the principals.

“Individual defendants Neidigh, Ann Siefke and Mel Siefke exercised complete control and domination over WRT, and the supply agreement entered into between Createk and WRT,” Obershain wrote. “This control and domination was used by Neidigh, Ann Siefke and Mel Siefke to perpetrate the breach of contract, unjust enrichment, conversion, fraudulent transfer or otherwise violate WRT’s legal duties under the supply agreement in contravention of Createk’s legal rights. Because of this direct, proximate and consequent result of the control asserted by Neidigh, Ann Siefke and Mel Siefke over WRT, Createk has suffered injury and unjust loss.”

The plaintiff asked the court for at least $1.2 million in damages, as well as interest, attorney fees and costs of litigation.

A telephone message left for Mel Siefke Jan. 8 was not returned as of press time Jan. 11.